A big stride in privatisation

Published : Aug 12, 2005 00:00 IST

Japanese Prime Minister Junichiro Koizumi's campaign for economic reforms scores a victory with the passage through the House of Representatives of a Bill to privatise the country's postal system.

P.S. SURYANARAYANA in Singapore

IN early July, Japanese Prime Minister Junichiro Koizumi won a decisive, though politically bruising, round in his sustained battle for economic reforms on the domestic front. An epochal Bill, providing for the privatisation of Japan's mammoth postal services, was passed by the House of Representatives, the Lower Chamber of the Diet (Parliament), by a slim margin of five votes. The tally was 233 for and 228 against, with some members of Koizumi's own Liberal Democratic Party (LDP) voting against the Bill. Nearly 110 hours of heated debate in the relevant special committee preceded the voting.

While political success in such severe circumstances was sweet indeed for Koizumi, arguably the most-reform-minded leader in post-imperial Japan, he knew at the same time that the battle was far from won. By mid-July, uncertainty still loomed large in respect of the next round of his campaign for economic reforms and also the chances of United Nations Security Council reforms that might benefit Japan. Pledging to "give my all to ensure this Bill is enacted" in the House of Councillors, the Upper Chamber of the Diet, he promised the reformists in Japan that he would brace for that fight.

It is a matter of some irony that Japan, despite being a sluggish economic superpower in recent years, is mulling over privatisation of the postal services in an otherwise largely capitalist system.

At the time of voting in the Lower House, the number of civil servants manning the postal services was estimated at about 4,00,000. The post office savings schemes and the life insurance sector, also run under the postal services, are virtual treasure chests, the cumulative funds involved being 340 trillion yen (over $3 trillion). This amount, as the House of Representatives was told, did not include the mail network system. It is, therefore, easy to understand why Parliament members should have been wary of transferring such a system to the private sector.

For several decades since the defeat of imperial Japan in the Second World War and the measured introduction of Western-style democracy under the MacArthur-era Constitution, Japanese politicians, especially those belonging to the Liberal Democratic Party, have had the "satisfaction" of presiding over a parallel capitalist system with Japanese characteristics.

The collapse of the Japanese imperial economy at the end of the Second World War and the colossal human losses that the country suffered by the mid-1940s led to a distinctive economic structure. The post-imperial Japanese leaders, who needed time to become acceptable players in the international domain, wanted to put their country's economy back on course by whatever means possible. This relatively less ideological approach to economic resurgence accounts for the obvious anomaly of Japan, "a market-oriented society", trying to privatise its postal services so late in the day.

More significantly, the idea of political control over the cash-rich postal services has had a magical effect on Japan's domestic scene. While the Japanese political class has been no stranger to private enterprise and capitalist "mores" even before Koizumi's assumption of office, the "glamour" of managing the postal services through the good offices of civil servants has been an attraction since the early decades of the post-imperial period.

Keeping this in mind, Koizumi has said that his policy is one of "leaving to the private sector what it can do" and "leaving to the localities what they can do". The postal services Bill, in his view, "is at the heart of such reforms" and it "is an important pillar that will support the revitalisation of the economy" by bringing into being the ideal of "small government". Koizumi wants to prove to his critics that they are following old-fashioned economics. With the new knowledge-based economy being the buzzword in Japan, he aims to prove that privatised postal services would be not only economically more profitable but also socially innovative and people-friendly.

Koizumi's defence is even mundane in some details: "The Bill has been compiled in a way that gives ample consideration to maintaining post offices in sparsely populated areas and on isolated outlying islands. Once privatisation is realised, post offices will not be confined to providing the three services they have provided to-date. Instead, they will have the freedom to venture into different lines of business, fully utilising the knowledge and ingenuity that characterise the private sector."

Not all the opponents of post privatisation can be dubbed "shadow shoguns" as the popular impression about political power brokers in Japan is. Egalitarian socialism has not been the mainstream political credo in Japan since the time it accepted the military umbrella of the United States while charting out a course of economic recovery for the post-imperial period under the Yoshida Doctrine.

Accounting for the resistance to Koizumi's move are other factors as well - the aura of postal services as a national asset (rather than a private domain) and the resulting political "leverage" for ruling party activists.

Koizumi has been at odds with the "established" power-based political system. While his economic policies are aimed at "reforms" of the financial and government sectors, too, his efforts to rid the party system of the influence of power brokers have opened another avenue for much debate and action. On foreign policy, he has placed Japan firmly on the side of U.S. President George W. Bush in his ongoing wars in Iraq and Afghanistan in the name of a "global anti-terror campaign". Koizumi's action has produced a popular backlash in the form of a heightened anti-war awareness.

A question that is being heard increasingly is whether Koizumi's grand support for Bush will at all produce a political dividend in the form of a permanent seat for Japan in the U.N. Security Council. While China has openly opposed Japan on the grounds that it has not veered away from its imperial past in its attitude towards neighbours, the U.S., too, is dragging its feet despite assurances of firm support for Tokyo.

It is against this background that Koizumi has tried to emphasise that an efficient Japanese economy (which, in his view, could be brought about through privatisation reforms) would be in tune with Tokyo's political aspirations and finance-related role at the U.N.

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