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Ozawa: The Man Who Wants to Save Japan

13 minute read
Michael Elliott and Coco Masters / Tokyo

Ichiro Ozawa says that he’s fond of working at practical things, that he “doesn’t like to be showy on the stage.” He had better get used to the limelight. If current polling trends continue and if — a big if — he can avoid a fatal taint from the latest of Japan’s money-politics scandals, the leader of the Democratic Party of Japan (DPJ) could soon be Japan’s next Prime Minister. An election for the lower house of the Diet has to be called by Sept. 10, but the surmise in Tokyo is that it may come as early as May 24, which is, by coincidence, Ozawa’s 67th birthday. If the DPJ does indeed supplant the ruling Liberal Democratic Party (LDP) and form a government, the significance of its victory would be enormous. The LDP has held power continuously (save for a brief period in 1993) since the modern Japanese political system took root in 1955. And it would not just be any old opposition leader who would be taking over; it would be the man who for nearly 20 years has been a backroom maverick in Japan’s political system, who detests the LDP, and who has long argued that Japan and its politics had to change if the nation was to reach its potential.

Convincing Japanese of the need for change is never easy, but Ozawa finds himself tantalizingly close to power precisely because the country so urgently needs fresh ideas. The global recession has hit Japan harder than any other developed nation. Exports are plummeting, Japan’s economy is contracting at double-digit rates and the country’s industrial giants are reeling. Rarely has “stay the course” seemed so grossly inadequate as a solution, yet the LDP seems unable to mount a credible recovery effort, and the public is fed up with the bumbling half measures of party hacks. (Read “Sony’s Woes: Japan’s Iconic Brands Under Fire.”)

Japan seems hungry to dismiss the old guard. But is Ichiro Ozawa really the outsider he appears to be? And where will he take Japan if he gets the chance to lead it?

First, that scandal, which could yet derail his progress. On March 3, Ozawa’s chief secretary, Takanori Okubo, was arrested by the Tokyo District Prosecutor’s office on charges of taking, and falsely reporting, illegal political donations from dummy corporations linked to the company Nishimatsu Construction. The donations are alleged to have been funneled through Ozawa’s political fund. In a March 7 interview with TIME, Ozawa said that he was “very surprised” by the arrest, and that the case involved merely “errors in the statement of political fundraising records” of the sort that in the past required only a “kind of correction.” The investigation has since widened to include alleged donations from Nishimatsu to LDP politicians, but the main focus so far has been on the DPJ. Ozawa says he will not step down from the party chairmanship; nonetheless, a few days after the arrest was made public, three newspaper polls found a majority of respondents thinking that he should do so.

The Ozawa Paradox

For all ozawa’s support in the polls when compared with Japan’s Prime Minister Taro Aso — the third lackluster holder of that office since Junichiro Koizumi resigned in 2006 — the dim view taken of his alleged role in the Nishimatsu scandal illuminates the paradox of Ozawa’s place in Japanese politics. He is at one and the same time the single most radical critic of the Japanese postwar political establishment (it was his decision to bolt the LDP in 1993 that led to its only period out of office) and a supreme exemplar of it.

The son of a politician himself, like so many other Japanese leaders (including that other maverick, Koizumi) he entered the Diet when he was just 27. Michael Green, chairman of Japan research at the Center for Strategic and International Studies in Washington, who knew Ozawa more than 20 years ago, remembers him back then as a traditional politician “focused on bringing home the bacon” to his constituency in Iwate prefecture in northeastern Honshu. His mentors include both Kakuei Tanaka, Prime Minister from 1972 to 1974, who treated Ozawa like a son and arranged his marriage, and Shin Kanemaru, who served as Deputy Prime Minister and LDP vice president. Both were legendary political fixers, as was Ozawa before he left the party; both were eventually mired in corruption scandals. When Japan was riding high in the 1980s, commentators liked to say that it had a “first-rate economy and third-rate politics.” Like it or not, for much of his career Ozawa was deeply embedded in the very political system that was the subject of such disdain. It is hardly surprising that at the first whiff of scandal, his popularity should decline.

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But Ozawa is not, and has never been, just a political insider. Since the early 1990s he has articulated a vision of Japan as a place that had to be a “normal country,” one that had its own interests, in which national goals were set by its elected politicians, and in which the bureaucracy’s job was to implement a political program rather than shape policy themselves. During his interview with TIME, held in the DPJ’s modest headquarters in Tokyo’s Nagatacho district, Ozawa was asked if his analysis of the need for Japan to be a “normal country” was still relevant. “Totally relevant,” he said with emphasis. “We have to make a fundamental change to the current system in which the government is led primarily by the bureaucracy, and we have to replace it with the government under which the politicians will take the lead to formulate policies and execute those policies under their own responsibility.” His contempt for the present LDP government was something to see. Since some politicians in the “ruling camp” are “totally dependent on the bureaucrats,” he said, “they have nothing to do.”

It’s hard to argue that the LDP’s performance of late has been anything but miserable. Each of the three leaders since Koizumi — Shinzo Abe, Yasuo Fukuda and Aso, has seemed less impressive than the last. Last month, Aso’s Finance Minister, Shoichi Nakagawa, was forced to resign after appearing to be drunk (he said he was suffering the after-effects of cold medication) at a press conference during an important international meeting. “Typically recessions were good for the LDP,” says Jesper Koll, president and CEO of Tantallon Research Japan, “but this time around it is sort of pathetic. The government has no credibility. Any policy that comes out now gets greeted not with just a yawn but with utter indifference.”

Nor is Ozawa wrong in seeing that Japan faces enormous challenges. At home, it confronts a rapidly aging population and declining birthrate. The number of those aged over 65 is projected to jump from 28 million today to 35 million by 2025, by which time nearly 30% of the population will be elderly. This demographic shift will put enormous strain on corporate Japan, which is running out of workers — something that could be ameliorated by substantial immigration if Japan’s leaders were bold enough (none has been) to prepare a traditionally closed society to open itself up. And an aging society will play havoc with demand for medical services and pensions. (Read “Chinese Immigrants Chase the Japanese Dream.”)

Overseas, Japan, which just 20 years ago was the subject of books (how strangely they read now) predicting it would overtake the U.S. as the world’s No. 1 economy, must cope with a resurgent competitor to its east. China’s economic model is now admired around the world as a model, as Japan’s once was. Asia has never seen a time when both China and Japan were simultaneously strong. That does not mean such a state of affairs is impossible; it does mean that both nations will need wise leaders if they are not to turn into bitter rivals. (It is not a small point to say that the U.S., too, will need wisdom if it is to convince the two East Asian giants that both can be valued partners of Washington.)

Above all, Japan has to cope with the fact that the economic model on which it built both its postwar prosperity and social stability is broken. Japan’s spectacularly successful export-oriented industries were responsible for creating the world’s second largest economy, and their lifetime-employment policies, with generous benefits, obviated the need for a comprehensive social safety net of the sort familiar to Western Europeans. Then came the bubble. After financial markets were liberalized in the 1980s, Japan went on a debt-fueled binge that made modern Americans look as thrifty as Amish farmers. The stock market soared into the stratosphere, and property prices went so haywire that it was common to claim that the land on which the Imperial Palace sits in the center of Tokyo was worth more than California.

As bubbles do, this one burst. While Japan’s bureaucrats dithered, failing to face up to the crisis in the financial system, the economy went into a long “lost decade.” The stock market plunged, then limped, then plunged again. (The Nikkei index is down 82% from its peak in 1989, and recently hit a 26-year low.) Banks that had once been the envy of the world had to be recapitalized. Growth picked up again after the turn of the century, as demand in China and the U.S. grew, only to be clobbered by the global recession and the collapse of external demand. In January, Japan’s exports were an astonishing 46% less than they had been a year before.

The Search for Security

Ozawa’s analysis of what needs to be done is clear. There is, he recognizes, “no going back to the traditional system … We have to incorporate free competition as well as the market mechanism into the lifelong-employment system.” The key to success is to rely less on exports and more on domestic demand — a prescription that, a DPJ policy document says tartly, “has been on the table for the past 20 years.” But Ozawa recognizes that to encourage the Japanese to shop rather than stash their cash in safety-deposit boxes, something more than exhortation is needed. “We have to give a sense of security to the population,” he says. That implies, given the demographic challenge, real reform of health care and retirement benefits. Even the younger generation, Ozawa says, are “worried that they will not be entitled to any pension benefits.” Koll reinforces the point. “Anything that you can do to assure the Japanese people that their retirement future is provided for,” he says, “is going to go a long, long way in boosting the economy where it needs it, in domestic demand.”

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Others are not so sure. Gerald Curtis, professor of politics at Columbia University, who has studied and written about Japan for many years, recognizes that the DPJ wants to strengthen the safety net, but wonders if it has the determination to launch the sort of stimulus package that Barack Obama got through the U.S. Congress in a matter of weeks. Ozawa can come across as all politics, “his own Karl Rove,” as Curtis puts it, rather than one who thinks through policies carefully.

But as Prime Minister, he will have to do just that. In the past, there have been times when Ozawa’s determination for Japan to be a normal country with a sense of its own interests seemed likely to make him an awkward partner for the U.S. For example, Ozawa recently suggested that under a DPJ-led government the presence of the Seventh Fleet, based at Yokosuka, would be “enough” U.S. military for East Asia — a remark that implied that all other U.S. bases in Japan should be closed. While he says that the relationship with the U.S. is “the most important that Japan has,” Ozawa puts some daylight between himself and Washington. He told TIME: “When it comes to an exercise of military power which will be implemented or carried out by the U.S. alone, then Japan is not able to go along with the U.S. But if the international dispute settlement is to be arranged within the United Nations framework, with the cooperation of the international community, then … Japan should be proactive in rendering support as much as possible.”

Green of the Center for Strategic and International Studies says Ozawa’s “Captain Ahab – like quest” to destroy the LDP has at times led him to adopt an anti-U.S. tone, causing some collateral damage to the U.S.-Japan alliance. But every Japanese leader understands the reality of life. Should he become Prime Minister, Ozawa’s determination to hold on to power, says Green, “will lead him to pursue a strong alliance with Washington.”

Getting Out of a Funk

Right now, the key challenges facing Japan are domestic. The Japanese, in a funk since the bubble burst, know that things cannot go on like they have. “Japanese people wish for a fundamental change, but there’s no one to vote for,” says Tomoaki Iwai, a professor of political science at Nihon University in Tokyo. Koll says that “the real question is whether politics can be sexy again for the younger generation — something that you actually want to be involved with, not only because it affects your life but affects your future.”

And that gets to the heart of it. The question is not simply whether someone who is as deeply steeped in Japanese political culture as Ozawa — who at times seems as motivated by replacing the LDP as he is by a clear analysis of where Japan should be headed — can be a sexy agent of change. It is whether Japan really wants to go through the wrenching transformation of its economy and society that the new century seems to demand.

To be sure, Japan has the capacity to renew itself. It has done so twice in modern times, first after the Meiji Restoration in the late 19th century, when a traditional, closed society modernized so thoroughly that by 1905 it was able to defeat a major European power, Russia, in war; and again after 1945, when a new economy was built from the ashes.

But there is in Japan always a nostalgia for a supposedly simpler past rather than an unpredictable future. In Tokyo’s Ota Memorial Museum of Art this month there is an exquisite exhibition of ukiyo-e woodblock prints by Yoshu Chikanobu, displaying Japan during the Meiji period when Western habits — European music and military uniforms, guns, crinolines — were beginning to replace the old ways.

The presentation of the modern within the classical confines of ukiyo-e prints is oddly unsettling, as if the artist could not quite come to terms with the new world, and perhaps didn’t want to. In one print, for example, a woman in traditional kimono and lacquered hair watches wistfully as a young girl, hair flying behind her, joyfully rides a bicycle.

Will Japan get on its bike and pedal off to meet the future with confidence? There are many — and not just in Japan — who would dearly love to know the answer.

With reporting by Yuki Oda/Tokyo

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