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No.1 ,Politics  Jun 05, 2010

CHALLENGES FOR PRIME MINISTER KAN

On June 8, Deputy Prime Minister and Minister of Finance Kan Naoto assumed the office of prime minister and appointed a cabinet, becoming Japan’s sixth prime minister in five years. In the following, we will explore some of the reasons for this extraordinary rate of turnover, review Kan’s career and qualifications, and discuss the policy and political challenges that confront the new prime minister.

The Roots of Failure

A look back over the brief tenures of Japan’s four previous prime ministers–Abe Shinzō, Fukuda Yasuo, Asō Tarō, and Hatoyama Yukio–reveals a fairly consistent pattern. In each case the cabinet started out with high approval ratings but very soon fell from public favor, and in each case this loss of public support made it difficult or impossible for the prime minister to stay in office. Abe made the decision to resign, partly for health reasons, when the Liberal
Democratic Party’s losses in the July 2007 House of Councillors election made it difficult for him to continue. Asô fell from office when the LDP went down to defeat in the August 2009 general election. Fukuda and Hatoyama both stepped down amid low public approval ratings.

With the exception of Asō, these short-lived prime ministers all took office without the benefit of substantial cabinet experience. Abe and Fukuda had both served as chief cabinet secretary, but neither had ever headed a ministry, and Hatoyama had no cabinet experience whatsoever. A prime minister must be thoroughly versed in the policymaking process in order to guide the administration and set basic policy directions for the cabinet as a whole, and experience as a cabinet minister provides an important opportunity to learn the nuts and bolts of drafting legislation, keeping the bureaucrats under control, and so forth. In addition, politicians with cabinet experience have been in the position of taking orders from the prime minister, experience that they are able to put to use when it comes time for them to give the orders as prime minister. In the case of Abe, Fukuda, and Hatoyama, a lack of cabinet experience surely contributed to the failure of leadership that caused the public to lose confidence in the government. And this would suggest that in the future, political experience, and particularly experience in the cabinet, should be considered an important qualification for the office of Japanese prime minister.

The Right Stuff

With this in mind, let us briefly review the career of Prime Minister Kan. Born in 1946, Kan attended the Tokyo Institute of Technology, where he participated in the student movement, graduating in 1970. In 1980 he won his first House of Representatives election as a candidate from the small left-leaning party Shaminren, or Social Democratic Federation (now defunct). In 1994, he joined the centrist New Party Sakigake–a small splinter group that played a role in the anti-LDP coalition cabinet formed around that time–and headed the party’s policymaking unit. In 1996 he was appointed minister of health and welfare in the cabinet of Prime Minister Hashimoto Ryūtarō. During his time at the head of the Health and Welfare Ministry, he won kudos for his efforts to get to the bottom of the spread of HIV-tainted blood in the 1980s, a scandal involving his own ministry. Later in 1996, he played a key role in the founding of the Democratic Party of Japan and became its first leader.[1. The original Democratic Party of Japan was founded in 1996; the current DPJ was formed in 1998 through a merger with some smaller parties.–Ed.] The party’s leadership passed to Hatoyama in 1999 but returned again to Kan in 2002. With Kan as president, the DPJ merged with Ozawa Ichirō’s Liberal Party in September 2003. In May 2004, Kan was again obliged to resign as president. With the DPJ’s general election victory and the advent of the Hatoyama cabinet in September 2009, he was appointed deputy prime minister and state minister in charge of national strategy. From January 2010 until Hatoyama’s resignation in June, he served as minister of finance.

Prime Minister Kan faces a number of policy challenges. In the area of foreign policy, he needs to work on improving relations with Washington, which grew strained under the previous administration. Washington will be looking to Kan to implement the Japan-US agreement on the transfer of US Marine Corps Air Station Futenma to Henoko, a plan that is extremely unpopular in Okinawa Prefecture. Transfer of the base to Henoko will involve the construction of facilities off the coast, and for that the national government needs the approval of the prefectural governor. The key condition for successful execution of the plan will thus be Kan’s ability to persuade the people of Okinawa to accept it.

The domestic challenges facing Kan are no less daunting, but in this area he has a wealth of cabinet experience to draw from. Topping the list is the matter of Japan’s huge fiscal deficit. The national budget for fiscal 2010 relies on ¥44.3 trillion in deficit-covering government bonds, as compared with ¥37.3 trillion in tax revenues. Although Kan only served as finance minister for five months, that was clearly enough to impress on him the seriousness of Japan’s fiscal situation. This is why he insisted that the DPJ’s platform for the coming upper house election include a reference to reform of the tax system, including the possibility of an increase in the consumption tax, with a promise to consider the LDP’s proposed rate of 10%. If the government succeeds in raising the consumption tax, that will go a long way toward easing Japan’s fiscal crunch. But it cannot truly solve the problem without reining in the skyrocketing social security expenditures, which place a serious and ever-increasing strain on the national budget. Here Kan should be able to make good use of his prior experience as minister of health and welfare.

Economic growth is another critical challenge. It is no accident that the Kan cabinet approved a “new growth strategy” on June 18, less than two weeks after the new administration was launched. The strategy lists a wide range of policies needed to keep the Japanese economy growing in the years ahead. In truth, every cabinet since Abe Shinzō’s has focused on policies for economic growth, but with the administration changing every year or so, economic policy has lacked continuity. In this case, however, continuity can be maintained despite the change in administration, since Kan was closely involved in crafting the growth strategy adopted by the Hatoyama cabinet at the end of December 2009 as minister in charge of national strategy. This gives the Kan cabinet a better shot at actually implementing its growth policies and giving them time to work.

Having served as a cabinet minister, Kan should also have a good grasp of what it takes for the prime minister to exercise strong leadership vis-à-vis his cabinet, and this should make it easier for the cabinet to function as a unified whole and carry out his policies consistently.

A Critical Test Just Ahead

In the near term, the most difficult challenge facing Prime Minister Kan is the House of Councillors election scheduled for July 11. The outcome is critical for Kan for two reasons. First, if the DPJ’s performance is disappointing, the prime minister could be held responsible when the DPJ chooses a party president this September. Although opinion is divided within the DPJ on an appropriate target for the coming election, Kan himself has made it the DPJ’s goal to win 54 of the 121 seats that will be up for grabs in July. If the party meets that goal, Kan’s control of the government and the party is likely to remain unchallenged. At this time, the goal appears reachable, given that a recent opinion poll showed a full 50% of the public supporting the new Kan cabinet–and only 27% indicating nonsupport–even after the prime minister mentioned the need to increase the consumption tax. Taxes are shaping up to be one of the key issues in the coming election, and any reference to a tax increase by the prime minister would ordinarily work against the ruling party. But since the LDP has already committed itself to doubling the consumption tax rate, Kan’s statement seems unlikely to erode the DPJ’s support significantly.

A more fundamental problem is that unless the DPJ captures a majority of upper house by itself it will need to form a coalition in order to pursue its legislative agenda. The DPJ is currently allied with the People’s New Party, but the DPJ and PNP differ sharply on matters of economic policy, raising the question of whether Kan will move to change coalition partners after the election. The choices would probably boil down to the New Kōmeitō, which has been cooperating with the LDP for a number of years now, and the fledgling Your Party, a recent LDP spinoff.

If Prime Minister Kan can maintain the current cabinet approval rating over the next few weeks, shepherd his party through the House of Councillors election relatively unscathed, and secure a second term as DPJ president, he will be in a good position to settle down and focus on the policy issues outlined above. Since the term of office for current members of the House of Representatives does not expire until August 2013, the cabinet will have three years to govern before the next national election. If all goes well, the Kan cabinet will be on track to become the first durable administration since that of Koizumi Jun’ichirō (2001-6).

Translated from an original article in Japanese written for Japan Echo Web. [June 2010]

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