Sat, Oct 06, 2012 - Page 9 News List

Crises present opportunities
and risks for Japan

The Japanese public is searching for a party that can seize opportunities to make changes for the better

By Masahiro Matsumura

The JRP aspires to be a ruling party, or at least a kingmaker in Japanese politics, but it has an almost exclusively domestic agenda and suffers from a dearth of talent below Hashimoto.

Without a comprehensive agenda and expertise in foreign and security policy, the party will most likely stumble badly should it come to power.

It is almost certain that the next general election will not produce a parliamentary majority for a single party. Given the parties’ ideological, organizational, and policy disarray, Japan will enter a period of profound uncertainty, ultimately leading to an unprecedented political shakeup.

This prospect may seem surprising, given that Japan has already lost two decades since its economy’s bubble burst in the early 1990s. However, after a short-lived non-LDP government, successive coalition governments until 2009 had the LDP at their core.

Japan’s hidebound postwar regime has been insulated, externally and internally, by relatively unchanging geostrategic and economic conditions. The country remains the world’s largest creditor, and has slowly but steadily eliminated enormous non-performing loans in its banking sector. Moreover, the Cold War never ended in East Asia, requiring the preservation of a US-led security system centered on the US-Japan alliance — an alliance that appears to presuppose a pliant Japanese political system. In fact, the system’s resilience in absorbing huge disruptions — the 2008 financial crisis and the earthquake last year — is one key reason for its survival.

Thus, Japan remains broadly credible, at least relative to the US and the EU.

The yen’s appreciation reflects markets’ assessment that Japan’s economic position is stronger than that of the US and the EU, which are burdened with serious structural problems of their own. With a huge capital surplus and very low interest rates in a time of creeping deflation, Japan now has a golden opportunity to invest in public infrastructure, education, defense, and overseas projects — a burst comparable to the British Empire in the late 19th century.

However, Japan is unable to seize these opportunities because its political system is incapable of producing competent leadership. Given rising tensions in Asia, the question is how long this can last. China’s rise and the US’ relative decline present not only a danger for Japan, but also an opportunity — and perhaps the needed momentum boost — for real reform.

Masahiro Matsumura is professor of international politics at St Andrew’s University (Momoyama Gakuin Daigaku) in Osaka.

Copyright: Project Syndicate

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