In this edition of TPR News: Fukuda falls past the point of no return; “fifty-nining”; consumer confidence down again; oil from algae; more international flights from Haneda; Kanto growing as Japan shrinks; US Navy reacts to a spate of very public crimes committed by its personnel in Japan; Japan is the world’s fifth most peaceful nation; the rising profiles of Koizumi and Koike; and much, much more.

Politics

It’s all politics in the purest sense this time around.

Is Yuriko Koike going to be Japan’s next Prime Minister?

Wouldn’t that be a surprise - conservative Japan having a woman at the head of government before the US. (Before Hillary Clinton supporters chime in, it’s over. It’s been over for a while.)

Many, if not most observers of Japanese politics (and probably most residents of Japan) chuckle, at best, and scoff, at worst, before moving on to other topics. Kingmaker Yoshiro Mori and Koike herself have referred to such a possibility as a “joke.” Nevertheless, the story has legs, popping up as a subplot to Western news items about or mentioning the former Defense Minister (the first woman in that job.)

Why the attention? Koike has some powerful supporters. Former Prime Minister Junichiro Koizumi made her one of his “assassins” in the September 2005 snap election and has long extolled her virtues. (Attractive as she may be, at 55 she’s a fair bit past Koizumi’s preferred age range - half his age - which precludes the idea of seduction and points to his seeing something politically viable in her.) She has now been included in the “Parliamentary League to Achieve the Kyoto Protocol Goal,” or Mokusatsu Giren, with Koizumi and Hidenao Nakagawa - LDP Secretary General under Prime Minister Abe and Chief Cabinet Secretary under Mori. Neither Koizumi nor Nakagawa, both pretty conservative in the right-leaning sense, is scoffing at the idea of fellow conservative Koike’s ascension to the top of the LDP.

Launched on April 1st, Mokusatsu Giren claims a membership of 60 Diet members, with Nakagawa as chairman and Koizumi as “supreme advisor” and officially exists to encourage Japan to cooperate within the government, as well as internationally, to achieve the aims of the Kyoto Protocol - aims that include emissions targets that, despite recently announced plans to cut emissions by 80% by 2050, Japan has dramatically failed to meet, to put it mildly (and that is putting it mildly.) At it’s first press conference, the group criticized Japan for dropping gasoline taxes when the rest of the world is raising them to discourage consumption. (Cynically, such a statement from LDP members could be seen as a swipe at the DPJ, especially given low tax-favoring Nakagawa’s chairmanship of the group, reformer Koizumi’s affiliation notwithstanding.) Officially, Yuriko Koike is involved not only because she is a fairly popular Diet member, but also because she was Environment Minister under Koizumi.

Unofficially, the group exists to promote Koike as successor to the flailing Yasuo Fukuda, whose administration looks less and less likely to make it to autumn. This is the view favored by some among the chattering classes, not least because none of the high profile members of Mokusatsu Giren is credible as an environmental advocate. It is also worth mentioning that Taro Aso, the man most often mentioned as a likely PM and LDP President is not exactly well-liked by many of his colleagues in the LDP.

The possibility of Koike becoming PM is often mentioned in connection with the possibility of Koizumi using his popularity and influence to leave the LDP and form a new party, a “third way” in Japanese politics, pulling some reformist LDP Diet members away. In this scenario, Koike would be Koizumi’s candidate - not impossible, as the current LDP leadership has spent much of its time essentially trying to undo Koizumi’s reforms and as Koike’s loyalty and political career debt is more to Koizumi than to the LDP, which she joined in 2002, after a decade in the Diet. As Koizumi is still by far the public’s favorite option for Prime Minister, it is not unrealistic that his party would rather quickly gain in popularity and, hence, Diet seats. It is also not unlikely that he would succeed in attracting a significant number of reformist LDP members.

Enough speculation and backroom talk, though. On to things that have already occurred, which means polls, polls, polls as Prime Minister Fukuda sees his administration’s viability slipping away.

Some call it “forcing,” others calling it “ramming,” still others call it “railroading.” We’ll be a little more neutral and say that the LDP-led supermajority in the House of Representatives again made use of the provisions of Article 59 of the Constitution to push through. . . Oops. We need a new verb.
On Tuesday, the LDP fifty-nined a bill through the Lower House maintaining Tanakaism for another decade. The Cabinet, though, formally approved a plan to allow gas tax revenues to be used for general purposes - a policy sought by both Prime Minister Fukuda and the opposition camp - mere hours before the vote. The new bill would continue the venal and counterproductive practice of limiting the use of gas tax revenues to road construction.

Just as you, dear reader, are surely now doing, myriad observers, including members of the ruling coalition, immediately pointed the glaring contradiction between the bill and the Cabinet’s policy. The opposition DPJ, whose majority in the Upper House had previously rejected the bill, demanded that the bill be scrapped. When that, unsurprisingly, was ignored by the ruling camp, the DPJ issued an emergency motion calling for a joint meeting of both Houses to resolve the paradoxical inconsistency. Unsurprisingly, that motion was also rejected.

The Cabinet said that the government would continue to build “necessary” roads while allowing gas tax revenues to be used for other purposes, without explaining how that would work legally or whether “necessary” roads would continue to mean karaoke machines, vacations, parties, massage chairs, and other goodies for bureaucrats at the Ministry of Land, Infrastructure, and Transport. (Yours truly, for one, is going to spend a few hundred thousand yen a year on delightful jizake instead of paying his income taxes. It’s simply the philosophy of “Framers’ Intent” applied in a modern, Japanese context. TPR, though, does not encourage anyone to follow this policy as we still want the hospitals to be staffed and kids to have teachers. Just as only MLIT bureaucrats are allowed to steal public road construction funds for their own leisure, only we are allowed to withold tax money to spend it on sweet, dry, delicious daiginjo. You have to think of your own way to screw people.)

The gas tax itself was, as expected, fifty-nined through the Lower House on the first of the month - a move opposed by 66% of respondents to the Asahi Shimbun’s poll of that weekend. 54% disapproved of the fifty-nining of the bill, whereas only 29% found it appropriate. A majority - 59% - also said they didn’t support Fukuda’s Cabinet, with the Prime Minister’s approval ratings dropping five percentage points from the last survey to a new low of 20%.
In the same survey, the DPJ passed the LDP in popularity for the first time since last August, shortly after gaining a majority in the Upper House. 28% of respondents said they supported the DPJ, to only 24% for the LDP. Were an election held today, 39% said they’d vote for the DPJ, while only 22% said they’d vote for the LDP.
67% of respondents to the early May poll supported placing gas tax revenues in general funds and 59% disapproved of earmarking such revenues for road construction - figures which led to a fall in Fukuda’s and the LDP’s approval ratings in the next poll. Approval and disapproval of a gas tax itself were even at 44% each.

In the latest poll, the Cabinet’s approval rating dropped to 19% - below the level at which former Prime Minister Nakasone said it would be over for Fukuda. The disapproval rating rose to 65%. 82% of respondents said they did not trust Fukuda to effect changes to the way gas tax revenues are used.

The Cabinet’s policies were also unpopular - a mere 41% approved of the Cabinet’s adoption of Fukuda’s aforementioned plan to place gas tax money in the general fund, despite 67% approving of the plan itself at the beginning of the month, a change that could suggest a growing distaste for the LDP in general, one based on perceptions of the party, either in addition to or instead of stances on issues alone. On health insurance - the other key issue - 75% were opposed to the new senior citizens’ health insurance scheme - an apparently confusing and poorly functioning system that is believed to have caused one of the largest drops in Fukuda’s approval rating when it was introduced.

While only 31% of respondents approved of the DPJ’s handling of the gas tax debate, the opposition camp garnered 53% approval to the ruling camp’s 30% when people were asked about handling of health insurance for the elderly. The DPJ wants to abolish the system.

Public taste for new people at the top is growing quickly. 49% of respondents to the Asahi poll said elections should be held as soon as possible, while only 41% said there was “no need to rush.” While it still seems likely that Fukuda will last through the G8 Summit in Toyako, Hokkaido in July, the likelihood of a probably futile Cabinet reshuffle is increasing and Fukuda’s administration is sure to see its end not long after if the LDP hopes to retain any public support.

In a Yomiuri Shimbun poll asking respondents what they thought of Fukuda and DPJ leader Ichiro Ozawa’s respective handling of political issues, both men received 37% approval. (This is different from Cabinet approval, on which the Yomiuri found similar numbers to the Asahi - 26.1% approval, a record low in that poll and substantially higher than Kyodo’s 19.8% and NHK’s 21%.) Ozawa fared a good deal better when people were asked about the leaders’ political beliefs and goals - beating Fukuda 45% to 33% - and leadership ability - 53% to 27%. 42% thought Ozawa was better at explaining himself, 28% thought Fukuda was. The only bright spot for Fukuda was that 55% found him friendlier than Ozawa - small consolation to a leader in the almost indisputable throes of the political equivalent of a terminal illness. Good guy to have a beer with, just don’t let him run the country.

Despite the Cabinet’s unstable position and the opposition’s earlier threats, the DPJ has decided against submitting a censure motion against the Prime Minister in the House of Councillors, instead opting to continue duking it out openly in the Diet. This decision, according to an unnamed New Komeito member, was made out of fear that the public would disapprove of a censure motion and, as we mentioned earlier, the DPJ desperately needs to win public support as the LDP’s loss has not necessarily been the DPJ’s gain.

While there is no rule specifying what would happen after a censure motion was passed, the DPJ has said it would be counterproductive for them to continue to hold committee meetings after such a move, thus paralyzing the Diet until the end of the ordinary session on June 15th - a move unlikely to please voters already upset by the gridlock and lack of accomplishment over this and the previous Diet session. Perhaps more important is the fact that a censure motion would be purely symbolic as only Fukuda has the power to dissolve the Diet and he is not required to hold elections until September 2009.

Business and the Economy

Last month, there was a slight rise in Japan’s consumer confidence levels, though it was not seen as indicative of a truly more optimistic view of the economy amongst consumers. Last Friday, the Cabinet Office reported that consumer confidence had taken a turn for the worse again in April.

April’s numbers seem dire indeed: The overall consumer confidence score fell from 36.7 points to 35.2, which was lower than the 36.1 seen in February. April’s score was the lowest since 34.7 was registered in March 2003.

The Consumer Confidence Index generates five scores, each of which is considered positive when above 50, and pessimistic when below the 50 mark. Here’s a breakdown for March’s figures, with the change from last month:

• Consumer Confidence Index: 35.2 (-1.5)
• Overall Livelihood: 33.0 (-1.4)
• Income Growth: 37.5 (–1.2)
• Employment: 36.0 (-1.6)
• Willingness to buy durable goods: 33.2 (-2.0)

These are some strong drops. We need to keep in mind that although every category except for Employment rose in March, the falls in April brought them back under their February levels. The Overall Livelihood score is at its lowest level ever, Income Growth and Employment are at their lowest levels since December 2003, and Willingness to Buy Durable Goods fell to its lowest level since March 1997.

A year ago, the overall consumer confidence score stood at 47.4. Since then, it has fallen in 10 of the past 12 months, showing a 0.1 point rise in September 2007 and a 0.6 point rise in March 2008.

The Employment score is 15.7 points lower than a year ago, while Willingness to Buy Durable Goods has fallen 15.2 points.

Household spending on durable and semi-durable goods in Japan fell 3.65% in February and 10.41% in March. With April’s figures just around the corner, it will be interesting to see if the decline in actual spending has been constrained, or if the expectation of lower summer bonuses will eat further into big-ticket spending.

Speaking of durable goods, it seems as though car prices will be certain to rise over the coming year, as Nippon Steel gears up to push a record price increase of 25,000-30,000 yen per ton of steel onto Toyota, according to Bloomberg. This will be an increase on the 80,200 yen per ton currently being charged. Nippon Steel claims that rising material costs will take a 41% bite out of annual profits. Will Toyota and other carmakers now be forced to pass on higher costs?

The Cabinet Office report also noted that 86.2% of respondents expect the price of goods in Japan to rise in the next 12 months. This was up 0.5% from 85.7% in March, though below the record high of 86.5% seen in February.

A recent Nikkei article reminds us that while the idea of using algae as a source of oil is not brand new, in the past it has never been seen as economically viable. That may be changing…

According to the article, Professor Makoto Watanabe at the University of Tsukuba is breeding a green algae called Botryococcus in his laboratory. Botryococcus is special because it produces large hydrocarbon molecules as a by-product of photosynthesis. According to the professor, if Botryococcus is cultivated efficiently, there is potentially no limit to the amount of oil it could produce.

Although the algae is currently producing less than half of the ten grams per liter that would make it cost-effective against oil, the algae also consumes carbon dioxide, and thus appears to yield more energy than it consumes. One current challenge is that only about 60% of the oil produced can currently be extracted, and the professor is looking at ways to boost that ratio.

In order to potentially boost productivity, Watanabe is hooking up with Denso to create a larger outdoor facility that should provide a greater yield of the green stuff.

According to the article, given a yield of 10 grams of oil per liter, it would take an area the size of Fukushima Prefecture to grow enough algae to meet Japan’s oil needs. Thus, a natural solution seems to be to cultivate the algae at sea. However, one major obstacle remains: the freshwater Botryococcus needs to mutate or be genetically engineered into a strain that can survive the high seas.

Alternative souces of oil and energy will become necessary as gas prices continue to rise. While the retail price of a liter of gasoline remained steady at 106.1 yen, failing to break last week’s record high, average prices at the pump are expected to push 170 yen per liter this summer. To draw a comparison for our American listeners, that would put Japanese gas prices at just shy of $6.30 per gallon at current exchange rates.

In workplace news, both Toyota and McDonald’s have decided to start paying overtime to most employees in response to repeated defeats in the courts related to death due to overworking (karoshi) and uncompensated overtime. Toyota used to pay employees for only two of their monthly overtime hours related to quality control (kaizen) because the extra work was regarded by management as voluntary. Likewise, McDonald’s was formerly in the practice of not paying branch managers overtime based on the falsehood that such employees were members of the upper levels of the company hierarchy. Both companies have since come to the conclusion that it is in their best interests to fully compensate employees for the long hours that they put in. The decision is expected to have a cross-industry ripple-effect as other major businesses fall in line with the court verdicts and the example set by Toyota and McDonald’s.

Finally, as a part of the ongoing bid to bring 10 million tourists to Japan’s shores per year, and thus help boost the economy, the Transport Ministry has decided to recommend that Haneda Airport double the number of international flights arriving at, and departing from, its runways by as early as the year 2010. The total number of international arrivals and departures would total 60,000 if such a scenario were to be put in place, with most of the extra flights being scheduled during the seven hours (11 pm to 6 am) that Narita Airport in Chiba is closed. The extra 30,000 flights per year would mean 24-hour international access to Japan from airports all across the globe.

Society

The shrinking of the Japanese population has many side effects. One of them is the gravitation of young people to major urban centers to look for work. Such was the story in 2007 when people moving into the Kanto region outpaced those moving out by more than 150,000. Less and less elbow-room can be expected on trains across the capital for years to come.
In other demographically-charged news, more than 10% of Japan’s population is now in the 75 and older bracket. More generally, the elderly, classified as those 65 and older, have now eclipsed the 20% mark as a slice of the population pie. That percentage is expected to double by 2055. This, of course, spells disaster for Japan’s flailing social security system. This is the first time that any country has encountered such a situation, so Japan is going to have to figure out how to handle this one one its own. One idea was to raise consumption taxes to 18% to cover the deficiencies exposed by the current pension system.

A legislative council committee is looking into lowering the age of majority from the age of 20 to 18. Some view the move as a necessary prod to get teenagers to become more mentally mature. Others see it is a frivolous move that merely moves Japan in line with other industrialized nations.

The US Navy plans to run psychological tests on personnel in Japan in response to a spate of crimes recently committed here.

“The navy personnel will be asked via a questionnaire about their associations with friends and others in and out of their own teams, off-duty lifestyles and drinking habits, as well as experience with illegal drugs. Psychological tests will be conducted to examine their personalities and level of satisfaction with their lives.”

The George Washington, an aircraft carrier, will be deployed to Japan in August of this year.

Incidentally, Staff Sergeant Tyrone Hadnott, the talk of the nation after he was accused of raping a junior high school girl back in February, was convicted by a military court on charges of “abusive sexual conduct”. It was deemed that he did not have intercourse with the girl, but his earlier admission that he forcibly kissed her would easily have been enough evidence to convict him on the abusive sexual conduct charges.

Meanwhile, Lance Corporal Larry A. Dean, 20, and Gunnery Sergeant Jarvis D. Raynor, 35, were handed prison terms in separate courts martial earlier this month. Two other marines will be tried in June for their respective roles, alongside Dean and Raynor, in the alleged gang-rape of a woman near Hiroshima last October. Hadnott, Dean and Raynor have all had their rape charges dropped, but strict military sentencing has meant that lesser charges, such as adultery in Raynor’s case, have translated into additional incarceration for the suspects.

Japan joined New Zealand as the only two non-European countries to crack the top ten in the recently-released Global Peace Index. Japan placed fifth again this year while New Zealand placed fourth. The index measures some 24 different variables in order to determine the relative peacefulness of each nation. Meanwhile, South Korea placed 32nd, France 36th, the UK 49th, China 67th, the US 97th, Russia 131st, North Korea 133rd, and Iraq 140th (Iraq was in last place). It was the second year in a row that Japan placed 5th. Iceland, a new entry into the index this year, came out on top.

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