Embattled Japanese PM struggles to defend his reforms

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Last updated at: (Beijing Time) Thursday, July 18, 2002

Embattled Japanese PM struggles to defend his reforms

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Japanese Prime Minister Junichiro Koizumi is now trying hard to defend his structural reforms amid increasing strong resistance from old-guard politicians, a series of political scandals involving his party members, and an increasingly impatient public.

In April 2001, Koizumi won his office with an impressive landslide election on the promise to renovate Japan's stagnant economy and clean the dirty, pork-barrel politics that tarnished his ruling Liberal Democratic Party (LDP).

Now over a year later, the prime minister is criticized for notbringing significant changes to Japan politically and economicallyas he promised.

Koizumi, whose popularity waned after he fired his popular Foreign Minister Makiko Tanaka, found hard to carry out his key structural economic reforms with little support from LDP and a growing disenchanted public.

He was eventually forced to make a series of compromises unwillingly.

At the center of Mr. Koizumi's structural reform program, in which much-needed financial reform was to loom large, was privatization of the post office.

Japan's enormous postal system delivers the mail but acts as the world's largest bank and largest insurer, stifling competitionin both areas and limiting the development of Japanese finance.

Japan's powerful House of Representatives finally passed the postal bill last week, but old-guard politicians have successfullywatered down both post-office reform and other financial changes so much as to make them virtually meaningless.

The bills were dubbed as a defeat for the prime minister, whichwill make other reforms even more difficult.

Analysts said Koizumi's battle for significant changes has already been lost.

At the same time, Koizumi faces mounting pressure within the LDP to reshuffle his Cabinet and LDP executives in September. Power struggles between Koizumi and his LDP rivals are intensifying.

But the passage of the postal bills nevertheless moves the behemoth of postal system in the direction of competition, and there can be some further debate when an advisory panel to the prime minister reports at the end of this month.

Koizumi himself admitted the difficulty of reforms but he also made it clearly that he will carry out the reform unswervingly.

He warned old-guard politicians not to reject the program, saying that he has many ways to deal with objections.

Koizumi himself knows clearly that getting Japan's economy backon track is crucial for him, and he repeatedly vowed to go on withhis reform whatever the difficulties.

But the prime minister may soon become a lame duck with increasing resistance from inside his party and dwindling support rate among the Japanese public following his recent backsliding and failures in parliament.

One piece of good news for the embattled prime minister is thatthe Japanese economy which, after years of recession, grew at an annualized rate of 5.7 percent in the first quarter of this year, the first growth in the past four quarters.

But the sustainability of that mild and export-aided recovery will be in question amid a faltering US rebound and diving dollar.

Analysts say Koizumi can not expect much from the mild recovery.

For the Japanese prime minister, it is a hard and critical timeto defend and carry on his economic reforms.

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