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No.10 ,Politics  Mar 28, 2012

TO OVERCOME REPEATED “NATIONAL CRISES”

Photo : Ishihara Nobuo

Ishihara Nobuo

As a deputy chief cabinet secretary, I served seven prime ministers from Takeshita Noboru to Murayama Tomiichi. During this period, I worked hard to introduce the consumption tax, was preoccupied with reconstruction from the Great Hanshin-Awaji Earthquake, and was stuck around the clock in negotiations with the United States, including the Japan-U.S. Structural Impediments Initiative and the Uruguay Round.

The Democratic Party of Japan is facing many political challenges, and its ability is being tested. There is a strong debate over whether to raise the consumption tax rate to enable fiscal reconstruction. Reconstruction from the Great East Japan Earthquake is progressing at a snail’s pace. Farmers are bitterly opposed to the Trans-Pacific Partnership (TPP). Interestingly, these policy challenges are oddly similar to the challenges that I addressed as a deputy chief cabinet secretary.

Unfortunately, the Democratic Party of Japan government has not achieved any significant results in response to these challenges. Why? I believe that the main reason is a lack of personal connections. From my 2,600 days as a deputy chief cabinet secretary, I am convinced that you need relationships of trust and a network of personal connections to produce results in any policy challenge.

Disconnection between the Prime Minister’s Office and bureaucracies caused by a misconception of the administrative vice ministers meeting

As reported in the media, trust between the Prime Minister’s Office and the bureaucracy has broken under the Democratic Party of Japan government. For example, the government decided to abolish the administrative vice ministers meeting because it believed that it effectively made final decisions before the Cabinet meeting made final adjustments. However, I believe that the government’s decision is based on its misunderstanding of the reality.

The administrative vice ministers meeting did not work out policies. The meeting was a place to make final adjustments among ministries. They checked whether there were any differences in opinion about the items to be discussed in the Cabinet meeting. The meeting discussed only issues that ministers had already made final decisions on. Before ministers made the final decisions, bureaucrats had adjusted opinions with the representatives of the Policy Research Council of the Liberal Democratic Party under the LDP government. Bureaucrats never made decisions on their own. The Democratic Party of Japan government incorrectly believed that the administrative vice minister meeting effectively had policymaking power and that the Cabinet meeting simply rubberstamped the decisions.

Under the veil of leadership by politicians, the Democratic Party of Japan government refused any involvement by bureaucrats. In addition to abolishing the administrative vice minister meeting, they made a crucial decision to introduce a system where only parliamentary posts–minister, senior vice ministers, and vice ministers–at each ministry participate in decision-making, excluding all bureaucrats. Following that, a sense of distrust between the Prime Minister’s Office and bureaucracies grew, and the Democratic Party of Japan government experienced repeated policy failures, especially with the stalled relocation plan for the Futenma air base.

As is well known, former Prime Minister Hatoyama Yukio reversed overnight a compromise that was finally reached following a long discussion. There is no evidence of Mr. Hatoyama having asked defense authorities or the Foreign Ministry about the past arguments. Mr. Hatoyama seems to have said that the air base should be relocated from Okinawa Prefecture, sensing the atmosphere around the base, when he visited the site and talked to the people who live there.

Mr. Hatoyama went back on his word. However, trust not only with the bureaucracy but also with locals was destroyed. As a result, the relocation plan for the Futenma air base reached a deadlock, which has not yet been broken.

No policies are made suddenly. Every policy, including that on the Futenma air base, is made after long discussion, in which a compromise is reached. Bureaucrats are the people who are most conversant with the past discussions and background. It is true that elected politicians should make final decisions on policies, but it is wrong for politicians to refuse to listen to bureaucrats who have considered government in a particular field without political motives.

The relationship between the Prime Minister’s Office and bureaucracies has worsened. Based on my experience of serving as a deputy chief cabinet secretary for many years, I do not think that any major job can be done without communication between bureaucrats and the administration. I believe the Hatoyama administration and Kan (Naoto) administration were not able to facilitate the handling of policy issues because of a lack of communication.

Fortunately, Prime Minister Noda Yoshihiko seems to know that politics will not work unless the bureaucracy is involved. I have heard that he has been trying to mend relations with the bureaucracy. I do hope that he will continue to do so, not for bureaucrats but for the people of Japan.

Consumption tax introduced thanks to Prime Minister Takeshita’s personal connections

Voters despaired of the Liberal Democratic Party, and its government was replaced. However, former prime ministers who belonged to the party had the ability to build a network of connections to varying degrees. I imagine that they learned how to work with and unite people while leading a faction. I recall former Prime Minister Takeshita Noboru as one of them.

Mr. Takeshita was very good at getting people to do things. He knew a range of bureaucrats, especially those in key positions, of each ministry very well. I have heard that former Prime Minister Tanaka Kakuei also knew bureaucrats very well. Mr. Takeshita seems to have made active contact with bureaucrats, studied their characteristics, and made efforts to get to know each of them.

When I worked for the Ministry of Home Affairs, I dealt with finance and thus matters requiring coordination with other ministries and agencies for many years. I felt proud of being familiar with the good and bad aspects of people in the top echelon in each ministry. However, Mr. Takeshita had a number of acquaintances at the level of division chief at each ministry and had a larger circle of acquaintances than I, who had worked in the bureaucracy for many years. He remembered not only their personality and areas of specialty but also their relatives. I was often surprised at his network of personal connections.

The Prime Minister’s Office discusses personnel affairs involving vice ministers and director-generals of bureaus. Mr. Takeshita had connections with almost all people proposed by the ministries. I remember that he viewed materials, saying, “This person is good” or “This man is eccentric.” Personal connections like these build strong trust with the bureaucracy, which are of great help when you deal with big jobs and seek to realize policies.

Faction leaders and influential politicians of the LDP knew top-echelon bureaucrats to a greater or lesser extent. That is why they were able to make organizations perform when they needed to.

Back to Mr. Takeshita, I believe his greatest achievement was the introduction of the consumption tax.

Former Prime Minister Ohira Masayoshi advocated the introduction of a general consumption tax for the first time in the general election in 1979. As a result, the LDP suffered a stunning setback. The prime minister resigned, and discussions on the consumption tax were stalled.

The debate on consumption tax resumed when Mr. Nakasone was prime minister. At that time, fiscal reconstruction had resulted in little success, and the argument that the ratio of direct and indirect tax needed to be reviewed became mainstream. The argument said that indirect taxes, including the consumption tax, should be raised. The Nakasone (Yasuhiro) administration submitted a bill for introducing a sales tax, today’s consumption tax, in 1987, but the bill was killed after the LDP was defeated in nationwide local elections in the spring of that year. The debate on consumption tax was stalled again. Everyone involved thought that a consumption tax would not be able to be introduced for some time to come.

Despite the failures by these two powerful politicians, Mr. Takeshita overcame the challenge thanks to his tenacity. I believe that his skills in networking in addition to his persistence enabled him to achieve the introduction of consumption tax, despite stronger opposition than that which the Democratic Party of Japan is facing today.

The trust that Mr. Takeshita built was not limited to those with the bureaucracy. He built a wide range of strong relationships with the business community, the press, the ruling party, and opposition parties.

For example, Japan Chain Stores Association Chairman Shimizu Nobutsugu was staunchly opposed to a consumption tax, voicing strong opposition day in and day out, but maintained very good personal relations with Mr. Takeshita, talking to him in a friendly manner. This kind of good relationship is a decisive factor.

It was not possible that Mr. Shimizu would change his opposition, given his situation. However, out-and-out resistance can be avoided because of good relations. If you can convince opponents that the outcome is inevitable, then you may come to a compromise. Personal relations make that possible. I believe that is why Mr. Takeshita valued personal connections highly.

Mr. Takeshita had a very close relationship with Mr. Yamagishi Akira, who advocated a non-LDP government and became president of the Japanese Trade Union Confederation (Rengo). Needless to say, Rengo was opposed to consumption tax from the perspective of workers. It was important that the prime minister was able to discuss with the head of Rengo.

The business community seems to be positive about the introduction of a consumption tax. However, it was very skeptical when Mr. Takeshita was president. The Japan Chamber of Commerce and Industry, the Central Federation of Societies of Commerce and Industry, Japan, and the National Federation of Small Business Associations did not support the consumption tax at all. The burden of consumption tax is borne not by business operators but by consumers. Why was the business community strongly opposed to consumption tax then? The real reason was that they feared that all irregularities in transactions that had been more or less allowed would be brought to light in the process of collecting consumption tax.

Considering this fear, Mr. Takeshita adopted a book method, which allowed vagueness, instead of a slip system, which would have made tax amounts clear. Trust is indispensable for revealing true intentions, like that of the business community. Without trust, people present only their public stance. If you cannot discover their true intentions, you cannot find a compromise. I would like to emphasize once again that Mr. Takeshita was able to get the considerable task done thanks largely to his network of personal connections.

Mr. Ozawa’s strength in dealing with opposition parties

I would like to add that Ichiro Ozawa’s personal connections, in addition to those of Mr. Takeshita, contributed to the successful introduction of the consumption tax.

The cooperation of Komeito was key to the introduction of consumption tax. However, being a party of the people, Komeito was strongly opposed to the consumption tax. Mr. Ozawa, who was then a parliamentary deputy chief cabinet secretary, convinced Komeito to cooperate with the LDP. Mr. Takeshita also regarded Komeito as the key and contacted former Komeito Chairman Yano Junya at critical moments in Diet proceedings. However, I believe that the largest factor was Mr. Ozawa’s negotiations with leaders of Komeito behind the scenes.

Incidentally, Mr. Ozawa worked hard to deal with opposition parties to give additional aid of 9 billion dollars to the multinational force in the Gulf War triggered by Iraq’s invasion of Kuwait.

In the Gulf War, even poor countries such as Bangladesh sent troops and ships, but Japan did not dispatch any force. In the circumstances, the U.S. Treasury Secretary directly requested financial cooperation from Japan. The Prime Minister’s Office and the LDP were convinced that refusal to grant financial assistance would create ill feeling between Japan and the United States. It was thus determined to provide assistance.

The Communist Party and the Socialist Party were absolutely opposed as usual. Thus the LDP had to secure cooperation from Komeito and the Democratic Socialist Party. However, Komeito was reluctant to cooperate because of the strong opposition of the women’s division of Soka Gakkai to cooperation in the Gulf War. In the circumstances, Mr. Ozawa persuaded former Komeito Secretary General Ichikawa Yuichi, with whom Mr. Ozawa was thought to have strong ties, to cooperate.

The same applies to the introduction of consumption tax and to diplomatic negotiations. The key to success is whether people involved in a range of organizations, including the Prime Minister’s Office, political parties, and bureaucracies, can make the best of their personal connections.

After the change of government, former Prime Minister Naoto Kan showed a willingness to increase the consumption tax. The Noda administration said that it aims to enact bills in preparation for consumption tax hikes during the ordinary diet session in 2012. However, I wonder whether the Democratic Party of Japan government can overcome the serious hurdles that stymied former Prime Ministers Ohira and Nakasone. When I wonder whether the government has established the kind of personal relations that Mr. Takeshita and Mr. Ozawa have built, I cannot help but feel that the government is unreliable.

The Uruguay Round similar to the TPP

Let me discuss the Japan-U.S. Structural Impediments Initiative. Following the liberalization of beef and orange imports, the United States called on Japan to ease regulations in its economy in line with international rules. That was a request for deregulation involving all ministries and agencies, and they all hated it. Politicians alone cannot solve the problem. It can be solved only if the Prime Minister’s Office and relevant ministries cooperate with each other.

The U.S. request involved self-interested aspects and misunderstandings. The request could not be taken at face value. The director of the Cabinet Councilors’ Office on External Affairs helped to fathom the real intentions of the request. The director was personally acquainted with an influential staff member in the White House and used that connection to obtain information to reveal the U.S.’s true intent. The director also communicated the intent of the prime minister to the U.S. president using that same personal connection.

Obviously, careful domestic coordination was indispensable for the deregulation. In the course of discussions on the Japan-U.S. Structural Impediments Initiative, revisions to the large-scale retail store law, which was designed to protect local shopping streets from large new stores, and the antimonopoly law were required. The power of the party was needed, and Mr. Ozawa, who was then secretary-general of the LDP, did a great job. Revising the large-scale retail store law was inconceivable for politicians who represented the interests of commerce and industry, but Mr. Ozawa brought these politicians under his control. Without political skill like this, political challenges cannot be overcome.

Next, let me discuss the Uruguay Round negotiations. The negotiations are very similar to the Trans-Pacific Strategic Economic Partnership Agreement (TPP) negotiations that the Democratic Party of Japan government is desperately trying to join. Under the GATT Uruguay Round trade agreement in 1993, the Japanese government was required to import a certain amount of rice from 1995. However, the government was able to finalize the negotiations to prevent the agreement from having a lethal effect on rice producers in Japan. I could say that the negotiations are a typical example of the Prime Minister’s Office, bureaucracies, and political parties making the best of their personal connections to find common ground.

In the Uruguay Round negotiations, the United States made a self-centered demand. To the Japanese, rice cultivation means more than just a portion of the farming industry. It has great symbolic significance and as such is a key industry. However, the U.S. representatives did not understand that, however minutely the Japanese representatives explained. U.S. rice millers just put forward abstract principles, saying, “Open the market” and “Let us compete on a level playing field.” It is perfectly obvious that Japanese agriculture would not work if those requests were accepted.

Meanwhile, the Agriculture Ministry repeatedly objected strongly to market liberalization. Both the ruling LDP and the Socialist Party were stubbornly opposed to it. Negotiations were out of control. However, they were brought to a conclusion thanks largely to bureaucrats, especially Shiaku Jiro, a former councilor of the Ministry of Agriculture, Forest and Fisheries. Those bureaucrats built good relations with staff at the U.S. Department of Agriculture through negotiations about beef and oranges. The personal connections were useful. The bureaucrats met with representatives of the Agriculture Department almost every day and ate with them sometimes. They checked each other’s position over and over and searched for common ground. Bringing negotiations to a final compromise depends to a large extent on the personal relations of those in charge. Major challenges are always overcome with the power of the people.

The Cabinet not united after the earthquake

I was surprised by the delays by the Democratic Party of Japan government after the Great East Japan Earthquake. The reaction to the earthquake did not require difficult political decisions. The work required was very simple: promptly ordering people in the government familiar with the affected areas, especially in the Ministry of Land, Infrastructure, Transport and Tourism and the Ministry of Agriculture, Forestry and Fisheries, to reconstruct the disaster-stricken areas. However, former Prime Minister Kan Naoto excluded bureaucrats again. As a result, the reconstruction made little progress, and piles of rubble remained. If the government remains in turmoil, the situation could remain unchanged for a year.

When the Great Hanshin-Awaji Earthquake occurred, the prime minister was Mr. Murayama Tomiichi. Mr. Murayama was roundly criticized for being late in taking initial action. Within three days of the quake, however, he had appointed Mr. Ozato Sadatoshi of the LDP as minister in charge of matters related to the earthquake and assigned deputy vice ministers of ministries under him so that every decision could be made.

Mr. Murayama said to the ministries, “The Cabinet will give full support to what Mr. Ozato decides to do. The Cabinet will take responsibility.” Reconstruction after the earthquake proceeded rapidly because of that statement.

In contrast, after the Great East Japan Earthquake occurred, it took considerable time before a minister in charge of matters related to the earthquake was even appointed. Moreover, the minister resigned soon after taking up his position. It was four months after the earthquake before a new minister actually got to work. There was not a moment to lose. Disaster victims needed to be helped as soon as possible. In the emergency, the government stuck to immature political leadership, excluded bureaucrats, and delayed reconstruction. This was unforgivable.

Moreover, in the course of the government’s reaction to the earthquake, it was revealed that the prime minister did not build trust even within the Cabinet. Minister of Economy, Trade and Industry Kaieda Banri declared in mid-June that safety measures at nuclear power stations in Japan were appropriate, and said that the government would take responsibility for the safety of nuclear power stations. Local chief executives showed some understanding of the resumption of nuclear power plants. However, former Prime Minister Naoto Kan made a unilateral announcement in July that the government would conduct stress tests on all of the country’s nuclear plants to learn the extent to which the plants could endure severe accidents caused by earthquakes and tsunamis. The announcement came as a complete surprise.

Announcements like this make it hard for ministers to perform their duties, because the government and people working in the field are confused, wondering who is making the final decision. I realized that the Cabinet had built trust neither with ministers nor with the bureaucracy. Given the situation, the Cabinet could not possibly get things done. I suspect that the Cabinet had not built any trust with the people.

Incidentally, I felt something was wrong with the screening process that the Democratic Party of Japan government conducted to so much fanfare to avoid wasting tax revenues. I would like to point out that the government cannot achieve significant results by knocking people down loudly in front of media cameras.

I was once involved in a review of government-affiliated corporations. We did not achieve sufficient results, but I realized that you need to get the bureaucracy involved and convince it if you really want to carry out administrative reform. Otherwise, you will face out-and-out resistance and will give them an escape route. You cannot achieve results if you make enemies of the people with whom you need to work.

Looking back, I believe that the factions of the LDP had the function of cultivating human resources. The strengths in personal relations of Mr. Takeshita and Mr. Ozawa may have been cultivated in the factions. The factions of the LDP had cozy relations with industry groups and always encountered trouble associated with political funds and other problems. For that reason, they were considered to be the root of all evil. However, they certainly gave vitality to politics. As the factions always competed with each other, politicians became familiar with their factions and adept at building a consensus. I believe that the faction leaders all learned how to run organizations and how to treat people.

I am not about to say that factional politics should be revived. I would only like to say that large jobs are always done based not on posts or theories but on human relations. Nothing can be done without trust. I hope that the Democratic Party of Japan will strive to build human relations in its own way to fulfill its public mandate.

Translated from “Shohizei, sisai-fukko, nichibei boueki kosho — Kurikaesu ‘Kokunan’ wo norikiru tameni (To overcome Repeated National Crises — Consumption Tax, Earthquake Reconstruction, Japan-U.S. Trade Negotiations),” Chuokoron, January 2012, pp. 58-65. (Courtesy of Chuo Koron Shinsha) [January 2012]

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