Stop That Man!

4 minute read

They fumed quietly as Junichiro Koizumi railed against them, and an adoring public feverishly supported him. They held their tongues after the Sept. 11 terrorist attacks, as Koizumi used the global crisis to fend off critics. But now, with an economy in free fall, the ranks of the jobless swelling and consumer demand shrinking, the bureaucrats so maligned by the populist Prime Minister with the shiny mane are striking back. “It’s time for revenge,” says a Ministry of Finance careerist.

Civil servants in Japan have always been more than clock-punching paper pushers. Before the Meiji restoration, the top bureaucrats were samurai who learned to wield pens instead of swords. These days, the cadre who serve in Japan’s key ministries are the country’s best and brightest, drawn from among the finest graduates of lite colleges. They’re the academic warriors who survived and thrived in exam hell and then were chosen as the trusted stewards of Japan Inc. They’re used to getting their way and running the economyand countrywith smug aplomb. Didn’t they, after all, engineer Japan’s postwar economic miracle? Kenji Eda, 45, graduated from the University of Tokyo in 1979 and was one of 20 recruits hired by the Ministry of International Trade and Industry (MITI). “Our salaries were low, we worked a lot of unpaid overtime, but we didn’t care,” says Eda. “I was proud of myself. We were admired by the public.” They were also lavishly rewarded upon retirement with lucrative amakudari sinecurescushy private-sector jobs with firms that had grown fat on government contracts.

Yet a decade of economic doldrums and a never-ending series of corruption scandals have badly eroded the public’s confidence in these mandarins. Of more than 800,000 government employees at various federal agencies, an inner circle of some 19,000 wield the real power. During his campaign for the premiership, Koizumi took on the Old Guard of his own Liberal Democratic Party (LDP) and their alliesthese erito kanryo (lite civil servants)and he won, promising broad reforms that would curtail the bureaucracy and even close down some government agencies.

Koizumi set his sights on eliminating 163 state-subsidized corporations that serve as postretirement employment centersgolden parachute factories that cost taxpayers a whopping $44 billion a year. He also imposed a top-down management style, often overriding bureaucrats’ concerns. And he wouldn’t defend them, refusing to appeal a court victory by leprosy patients against the Health Ministry. “The bureaucrats are worried,” says political analyst Takao Toshikawa. “Each one understands the necessity for change, but as a whole they want to maintain their vested interests.”

Several ministries have stalled on devising privatization plans. The Transport Ministry has attempted to block the merger of four highway construction agencies, and the Trade Ministry has tried to save a national oil company targeted for extinction simply by moving the firm’s functions to other departments. Over at the Ministry of Foreign Affairs, civil servants have conducted a smear campaign against the acerbic but popular Foreign Minister, Makiko Tanaka, ever since she started cracking down on corruption. “Koizumi is a tough negotiator, but if the bureaucrats keep lining up against him, then they could cause a stalemate and we might have to have new elections,” says Yoshiaki Murakami, an ex-bureaucrat at MITI who runs an M&A consulting firm.

Now on every front Koizumi appears to be giving ground. Promises to rein in the budget? This month, he caved in to demands from the Ministry of Trade and Finance, as well as the LDP old guard, for extra budgets totaling more than $40 billion. Promises to overhaul the bureaucracy? Even his minister in charge of reform assured functionaries: “We only need to submit minor proposals.” Koizumi’s own party bosses and Construction Ministry mandarins have joined forces to prevent him from halting road construction projectsone of the country’s most lucrative pork barrels, costing the nation $2.5 billion a year.

But Koizumi isn’t relenting completely. Last week, he won approval to get rid of seven public companies on his personal chopping block after agreeing not to pull the plug totally on highway projects. The bureaucrats, though, may still derail the cuts when it comes time to work out the details. Koizumi is smart enough to know that in previous power struggles between political reformers and the erito kanryo, the latter have always prevailed. Morihiro Hosokawa lasted nine months. Ryutaro Hashimoto, two-and-a-half years. This time, with Koizumi in office only seven months, the bureaucrats aren’t taking any chancesbecause if they don’t strike back now, they may not be around to take on the next Prime Minister.

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