In this edition of TPR News: DPJ President Ichiro Ozawa offers his resignation amid the failure of a DPJ-LDP grand coalition, consumption tax set to rise, Governor Higashikokubaru second-guesses the use of his image to promote Miyazaki products, Mister Donut joins the swelling ranks of food companies involved in product-dating scandals, former NOVA CEO Nozomu Saruhashi talks with the Osaka Labor Bureau and more on the NOVA mess, plus rising taxi fares and increased coporate income.
Politics

The big news in politics, of course, is that DPJ leader Ichiro Ozawa offered his resignation as the head of the party in a press conference on Sunday. On Friday, Prime Minister Yasuo Fukuda offered the DPJ a partnership in a coalition and, according to Ozawa, granted some substantial concessions related to the deployment of the Self Defense Forces. Specifically, Fukuda was ready to agree that the SDF could not be dispatched without prior approval of the UN.

Ozawa, thinking that gaining power in the House of Representatives would allow the DPJ to fulfill its pledges to the public, took the offer back to the DPJ executive committee, which promptly rejected it, criticizing their leader for not promptly doing so himself. Ozawa said he saw this as equivalent to a vote of no confidence and was resigning to “take responsibility for causing confusion within and outside of Minshuto caused by [his] handling [of Fukuda’s offer].”

DPJ Secretary General Yukio Hatoyama urged Ozawa not to resign.

When asked whether Fukuda had really approached him offering a power-sharing agreement or he had, in fact, approached Fukuda, as widely rumored, Ozawa ripped into the media for libelously spreading rumors designed to destroy him, his political career, and his party. He pointedly and by name excepted the Asahi Shimbun and the Nikkei Shimbun.

In contrast to the DPJ executives who were apparently appalled that their president would even consider a tie-up with the ruling LDP-New Komeito coalition, local DPJ chapters outside of the Kanto area supported the grand alliance initiative, as did about 60% of the LDP’s 47 prefectural chapters, according to an Asahi Shimbun survey. Local DPJ leaders in Tokyo, Saitama, Chiba, and Kanagawa, as well as nine others, though, saw the proposed alliance as a betrayal of the DPJ’s long fight for two-party politics and unnecessary in light of the DPJ’s resounding electoral success in the July 29th House of Councillors election.

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Ozawa’s departure comes when he was finally showing the long-hidden political chops that had propelled him to the top of the DPJ after the party’s younger leaders had failed to seal the deal in the top spot. In July, Ozawa silenced his critics by proving that he could lead the party to victory at the polls and, by using the leverage of the DPJ’s House of Councillors majority to block the DLP’s proposed MSDF bill, he showed he knew how to use power once he got it.

Losing a fairly popular, well-known, and experienced leader will certainly not help the DPJ, which needs someone to whip the party into line. It’s a shame that the event that caused him to leave was, on its face, a failure to be knee-jerk anti-anything-LDP.

On one hand, Ozawa was a horse trader of the old school of Japanese politics, a former power broker in the LDP, and everyone knew it. With him at its head, it was simply no tpossible for the DPJ to push for a new way - cleaner, more honest politics - with a straight face.

On the other hand, the trouble with Ozawa was not that he was too willing to cut a deal with his opponents, as DPJ executives seem to think, but that he kept up his “principled” intransigence in the face of conciliatory overstures from Fukuda. When Fukuda replaced Abe, TPR, along with myriad others, predicted that his role would be to offer compromises that he knew the DPJ would not or could not accept, thus appear moderate and willing to compromise while making the DPJ appear to be the opposite, and thus put the LDP in a better position for a future general election. Ozawa had to know this was coming, but slid nicely into the trap laid for him anyway.

Upon Ozawa’s departure, longtime DPJ celebrity Naoto Kan will serve as acting president, which, should he wind up in the job permanently, could be a good thing for the DPJ. Nevertheless, the tumult sure to arise within the DPJ can be nothing but good for the LDP.

In other political news, the governmental Tax Commisision came to the conclusion, on Friday, that the only way to cover the nation’s growing social welfare expenditures was to raise the consumption tax, currently at 5%. The Tax Commission did not, however, say by how much or when the consumption tax should be raised and is unlikely to do so before the LDP unveils its tax reform plan in mid-December.
In addition to growing medical bills incurred by an aging population, the government, already drowning in debt, has to find a way to pay for the increase in its share of basic public pension payments from one-third to one-half by fiscal 2009, which begins in April of next year.

Making an increase in the consumption tax an uphill slog, though, is the DPJ camp’s steadfast opposition to an increase.

Until this past weekend, the big political story had been the MSDF’s refuelling mission in the Indian Ocean. US Ambassador Thomas Schieffer even went so far as to hint that a failure to renew the mission would be giving comfort to terrorists and might cause tension in the US’s relationship with Japan. The Pentagon, though, disagrees.

While briefing Japanese reporters last week, a Pentagon official said, “This isn’t really something that has an effect one way or the other on the alliance. This is fundamentally about the debate within Japan about what should Japan’s role and mission be.”

The official then went on to point out that while the absence of Japanese refueling ships might reduce operational flexibility, for example, by forcing patrol boats to head into port for refueling, most of the fuel went to the ships of countries other than the US and the lack of fuel coming from the MSDF wouldn’t hinder American operations in the region.

In other words, just as everyone watching this whole kerfuffle has long known, Japan’s role in the Indian Ocean was one of political symbolism, not actual military necessity. The question of when and under what conditions the SDF can be dispatched, though, remains important and is one Japan will have to answer if its role in international affairs is going to go beyond political symbolism for the US.

When comedian and lover of young girls Sonomanma Highashi resumed the use of his real name, Hideo Higashikokubaru, and won the governorship of his native Miyazaki prefecture, he almost immediately set about using his celebrity to help boost the local economy. The main thing he did was set aside copyright concerns and allow his image to be used to promote all things Miyazaki (and some things only ever-so-slightly Miyazaki.) From free-range chicken and shochu, for which Miyazaki is famous, to the ubiquitous junk sold in every prefecture (think cell phone straps and small, stale cookies that no one actually likes, but everyone buys and receives due to the necessity of omiyage, which apparently cannot be anything worth buying or handing out), Governor Higashikokubaru’s image is as iconic as that of any individual in the nation at the moment - with Miyazaki omiyage shops popping up as far away as Shinjuku’s Southern Terrace.

The ploy definitely raised Miyazaki’s profile, however, it has also backfired of late. Not only is celebrity endorsement not exactly a long-term plan for economic recovery, the celebrity Governor’s image has adorned a raft of mislabeled products over the past nine months - particularly imported eel and chicken labeled as the more expensive domestic varieties. Governor Higashikokubaru’s office is now worried that his image is being used to imply official sanction of products that have no such thing and is considering drawing up a set of rules for the use of his image in the promotion of products. Perhaps Miyazaki should also think about what it’s going to do when it either no longer has a celebrity governor or the novelty of his celebrity wears off.

Business and the Economy

Mr Donut has found itself at the center of Japan’s latest food scandal. Last week, the Yomiuri reported that the donut chain had been using expired syrups in some of its drinks. Company spokesperson Aikira Kita told reporters, “We’re extremely sorry for causing our customers concern and trouble.” He then added that the firm did not think there were any health risks posed by the syrup, and that no complaints had been received from customers.

According to a recent Japan Times commentary, the Ministry of Agriculture received about 1,240 tips concerning violations of food sanitation codes from June to September of this year, nearly triple the number received in the same time frame last year.

Sources at the Osaka Labor Bureau have said that former Nova President Nozomu Saruhashi has spoken with them and admitted that the firm failed to fulfill salary obligations to employees. According to the Asahi Shimbun, the labor bureau may seek criminal charges against Saruhashi on suspicion of violating the Labor Standards Law.

On Sunday, it was reported that twelve firms have had applied to act as ’sponsors’ for the rehabilitation of Nova. Although the bankruptcy administrators have declined to name the interested parties, they say that the course of Nova’s future should be plotted out as early as this coming week. One of the major sticking points is expected to be the value of Nova’s assets, which appears to be far lower than what the firm had claimed on its balance sheets.

At the same time, rival firms have started offering lessons in exchange for Nova points, according to the Daily Yomiuri. In a separate article, the paper informs us that public schools across the nation that had used Nova to contract English teachers for their students are now without teachers and in many cases are likely to remain so for the remainder of the year.

On Nova’s own website, an announcement appeared on Monday reading, “We would like to determine the sponsor by Thursday this week (November 8th) at the latest…As we will proceed in this way, we ask that you wait at home until November 8th. We plan to hold another explanatory session when the stage of a definite announcement is reached, which we will notify you of later.”

And also on Monday, a lawyer representing former Nova president Nozomu Saruhashi filed a report at the Osaka District Court, asserting that claims made against him regarding use of company funds for personal reasons and possibly illegal moves made with shares in the company were not true. The report says that it will explain claims that have been made against Saruhashi that are “untrue.”

On Monday, the Nikkei published an article in English saying that Nova “is having difficulty finding a bailout sponsor,” and that a breakup of the firm is “emerging as a possibility.” Meanwhile, the Japanese edition of the Nikkei published an article saying that a resolution to the situation should come about in a few days.

From December 3, taxi fares are set to increase in Tokyo and nearby Kanagawa Prefecture. The price hike, the first of its kind since April 1997, will push the lowest fare to 710 yen. If you plan on driving yourself, the news isn’t much better. Gasoline prices are set to increase to an all-time high of 150 yen per liter. Gas station operators and oil distributors are worried that the price hike will force drivers to use more public transportation.

This past week saw no dearth of economic reports and data. In October, new automobile sales were up 2.0% against the same month last year, according to data released by the Japan Automobile Dealers Association. October’s figures followed 28 consecutive months of decline, and also appear to show that Toyota now holds a greater than 50% share of the domestic automobile market.

On Wednesday, the Bank of Japan voted 8-1 to keep the nation’s benchmark interest rates at 0.5%. In its Outlook for Economic Activity and Prices report, the bank reported, “Japan’s economy is expanding moderately” despite the fact that, “The pace of improvement in the household sector, however, has remained slow relative to the strength in the corporate sector.”

The corporate sector has been performing very well indeed; stronger, in fact, than it has been in 16 years. On Monday, the National Tax Agency announced that income at Japan’s corporations totaled 57.08 trillion yen in the 12 months to June 30 of this year. That figure was 13.3% higher than last year, and surpassed the previous record of 53.12 trillion yen, which was set in the 1990 tax year. However, only 32.4% of those firms were operating in the black. The National Tax Agency also said that wages fell for the ninth straight year in fiscal 2006.

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