A Conversation with Ichiro Ozawa

Ichiro Ozawa, president of Japan’s main opposition party, the Democratic Party of Japan (DPJ), has been a behind-the-scenes political player for more than 20 years. But the ruling Liberal Democratic Party of Japan is losing its grip on power, and Ozawa might be stepping into the premiership after the next general election. At his office in DPJ headquarters in Nagatacho, the heart of Tokyo government, Ozawa spoke with TIME’s Michael Elliott and Coco Masters about reforming the economy, the trouble with bureaucrats and U.S.-Japan cooperation. (Read “Ozawa: The Man Who Wants to Save Japan.”)

TIME: President Ozawa, you’ve always had a reputation for 25 years as being a man behind the scenes in Japanese politics. Do you want to be Prime Minister?

OZAWA: I don’t say that I really like doing jobs behind the scenes. Rather I’m very much good at, fond of, working at practical things and therefore I don’t like to be showy on the stage.

In responding to your question, if I was able to win the general election as the President of the Democratic Party of Japan (DPJ), and I am supported by the majority of the voters, then I am ready to deliver my responsibility.

TIME: I think that’s a yes. But what do you think is the main concern of the Japanese electorate and how would you address that concern?

OZAWA: Looking back over the past 10 years, the government under the Liberal Democratic Party promoted excessive deregulation in the name of globalization and reforms. If you take a look at the situation in the area of national income, (corporate) managers were able to increase their income by twice to three times, and shareholders’ dividends increased by twice that again. But the real income of salaried workers declined by 7% to 8 %. This demonstrates an excessive market economy produced a handful of super-rich people and the income gap widened. We have to rectify the disparities in the distribution of income.

Now Japan’s economy has been hard hit by this financial crisis. Under these circumstances, Japan’s traditional safety net — the lifetime employment system — was forced to be changed to a great extent. As a result of policies particularly pursued by the Koizumi administration, this employment system has completely collapsed. As a result we are witnessing a large growth in unemployed people, which creates a lot of concern.

TIME: Is the answer to go back to the traditional Japanese conception of lifelong employment, or is it to create a genuine social safety net with a reformed pension system and reformed medical care system?

OZAWA: Well, we have no intention of going back to the traditional system. We have to incorporate free-market competition into the lifetime employment system. But we need to keep the good aspects and benefits of that old system so that we can mix them together.

TIME: We’ve seen what U.S. President Barack Obama’s administration has done in his first 100 days. If the DPJ takes power in the next general election, what can we expect?

OZAWA: We have already come up with a timetable for actions to be taken after we take power. But the general election has been delayed again and again and again, and so we have not disclosed our timetable yet. As for specific issues — for example pension reforms and medical insurance reforms and employment issues — of course we have to deal with those. However, more important is that we have to make fundamental reform in the current government system, in which the government is led primarily by the bureaucracy. We have to replace this with a system in which the politicians take the lead to formulate the policies, make decisions on policies and execute those policies. The current government is totally dependent on and controlled by the bureaucracy. For that very reason, in difficult times like these, even when politicians in the ruling camp want to make changes, they have nothing to do.

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TIME: You have long argued that Japan needed to be a “normal” country, a country in which politicians took responsibility. Do you think this is as relevant today?

OZAWA: Totally relevant. Without this reform we will not be able to create a new Japan. However, I would like add the following point so that I am not misunderstood. I’m not saying that bureaucracy is unnecessary. What I’m saying is that the basic policy course should be set by politicians. And once the course is set the specific policies are supposed to be implemented by the bureaucrats. That means that the bureaucrats, like the politicians, are supposed to do their own jobs.

TIME: Some economists have said that Japan is yet to recover from the lost decade. What specifically are you going to do about reinvigorating domestic demand?

OZAWA: When you take a look at the overall economy as far as Japan is concerned, personal spending accounts for more than 60% of GDP; in the case of the United States it is more than 70%. So that means to sustain personal consumption we have to give assurance to the people that they will be able to have a stable income and that their future is assured. Therefore, real income has to be raised, and we have to give a sense of security to the population through reforms to the pension system. I’m very concerned about the younger generation. They are worried they will not be entitled to any pension benefits in the future.

TIME: What you’re saying is that if people have a sense of security they won’t just put their money under the bed, they’ll go out and spend it and domestic demand will grow. If people feel safe, that they’re going to be able to pay their medical bills, that they’re going to have a pension, then they will be encouraged to increase domestic demand?

OZAWA: That is true. And at the same time, as I mentioned earlier, we have to make some change to income distribution to benefit the average person.

TIME: The alliance between the U.S. and Japan is one of the cornerstones of international security. How does Japan see the relationship?

OZAWA: I consider that the Japan-U.S. alliance is the most important relationship for Japan — not only in the political field, but also in the economic field as well as in culture and the arts. The two countries have to develop a friendly relationship built on mutual trust.

TIME: And national security?

OZAWA: It is quite natural to say that the two countries have to pursue a very close relationship in the area of national security. If Japan is exposed to any kind of military attack, we can exercise our right to self-defense, and also, according to the terms of the Japan-U.S. Security Treaty, we can request assistance from the United States. In other words, it is only in such a case that we can exercise our right to defense, whether individually or collectively.

That’s about a military attack on our own sovereignty. But when it comes to global disputes, these should be settled through international cooperation. In other words we have to take a U.N.-centered approach to solve such problems. I think President Obama and his administration also supports this kind of approach. The Bush administration started wars in Afghanistan and in Iraq without any consensus in the international community. At this point in time the United States has reconfirmed and recognized the fact that such disputes will not be settled by a single country. In other words, when it comes to an exercise of power by the United States alone, then Japan is not able to go along. But if the international dispute settlement is arranged within the U.N. framework, with the cooperation of the international community, then my view is that Japan should be proactive in rendering support as much as possible. That position is starkly different from the position taken by the LDP.

TIME: The Obama administration stresses cooperation in Afghanistan. What would a DPJ-led government do about increasing Japan’s role there?

OZAWA: As far as Afghanistan is concerned, there is a U.N.-led military organization there called ISAF. Japan will be able to render as much support as possible to that kind of organization under a DPJ government. However, what ISAF is trying to do is to bring peace by suppression, by force. My philosophy is that no people can be ruled by sheer force. In the past Afghanistan was a self-sustaining country in terms of food supply, but now the self-sufficiency rate has plunged to a level of 40%. They are living in a kind of sheer poverty, and what is most needed is to give a stable life to the majority of people living in Afghanistan. That means that guns should be replaced with ploughshares. By doing so, those people will be able to rebuild their lives. And in this situation, al-Qaeda and the Taliban will naturally not be able to thrive.

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TIME: The relationship between Japan and China is obviously one of those things that interests the whole world, not just the region. How do you see the two countries relating to each other in the next few years?

OZAWA: The Japan-China relationship is important next to the relationship with the United States.

Looking at the past relationship between Japan and the United States and Japan and China, I should say that the Japanese government has failed to come up with very clear explanations of their own positions. For that very reason they failed to have a solid and substantive discussion with these two countries.

I have had the experience of being involved in economic trade negotiations with the United States because after several rounds of negotiations, there was no one on the Japanese side that was willing to take up that responsibility. The biggest problem, when I got involved in the negotiations, was not about substantive issues. Rather, the American side thought the Japanese negotiators were lying, and they didn’t keep their promises. I spent about half the negotiation time convincing them that I would keep my promises. The same situation applies in our relations with China. Every time an official from China visits Japan and meets with a Japanese official, they always take up the issue of history. But they do not take up the issue of history when they meet me. I say a lot of things that might in fact sound very tough on their ears.

But the biggest problem in regard to China is that the contradiction between their market economy and communist rule has grown immensely. In this situation there is a unique role that can be played by Japan, given the fact that Japan is similar to China in terms of culture and ethnicity and has a relationship that spans more than 1,000 years. Using this unique position, Japan should make every effort, together with the United States, to persuade and encourage China to move toward democratization.

TIME: In the past week, there have been allegations about money politics in Japan, allegations about illegal campaign contributions. What is your reaction?

OZAWA: Whether we are talking about political contributions, or the accounts of private entities, or government agencies, what is crucially important is full disclosure. We have to make everything open. My view is that Japanese society is a very closed society. But when it comes to political donations, I think that politicians should be able to rely on donations from anyone and should be able to use them as they wish, so long as everything is fully disclosed, and is available to the Japanese voters. It is up to the voters to make the decision as to whether such donations are rational or not.

I disclosed all the information with regard to all the political donations given to me and how those donations were used. There was some criticism with regard to non-disclosure regarding the spending of political donations —I think it happened a year or two ago — and so I decided to release all the receipts to the press. To my knowledge I am the only Diet member who disclosed all the information relating to political donations to that extent.

TIME: Were you surprised that these allegations were made last week as we approach an election? Might they result in you stepping down as President of the DPJ?

OZAWA: I was, I was surprised, I was very surprised. My secretary was arrested by the prosecutors and the reason for the arrest was entry errors in the political fundraising records. Similar things have happened many times over not only with politicians, but also with ministers as well as former prime ministers. When this has happened before, the only thing that was often required was to make corrections (to entry errors). But in this case, all of a sudden my secretary was arrested. So I was very surprised by the whole thing and I was also very puzzled about how that happened.

TIME: OK, last question: I’ve read many times that you have always been fascinated by the history of the Meiji Restoration of the late 19th century. Is there something about that period that people can take today and use to reform Japan?

OZAWA: I believe that the Meiji Restoration is one of the greatest revolutions in global history. The Meiji government took as their policy to pursue, catch up and surpass the Western powers. I am convinced that we have to carry out a similar revolution of the same magnitude. But the Meiji Restoration was achieved by force. We will bring about a revolution by democratic means, by achieving a majority in the election.

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