Country Report Japan May 2011

Outlook for 2011-15: Political stability

The catastrophe that struck Japan on March 11th will have a profound effect on domestic politics, as it has already ended all speculation that there could be either a general election or a change of prime minister within the next six months. Before the earthquake and tsunami and the ensuing nuclear crisis, the political future of the prime minister, Naoto Kan of the ruling Democratic Party of Japan (DPJ), looked bleak. His popularity had crashed, his party was feuding and the government had failed to secure the passage of legislation to implement the budget for fiscal year 2011/12 (April-March). Speculation was rife as to how long Mr Kan could survive as prime minister, but the disaster of March 11th has given him a second chance. Although the crisis-management challenges facing Mr Kan and his government are daunting, this is not a time during which the country may safely hold a general election or even change prime minister.

The authorities' initial reaction to the natural disasters was rapid and competent. In contrast to the lethargic response to the 1995 Kobe earthquake, large-scale relief operations were launched immediately and foreign assistance welcomed. However, Mr Kan took the risky step of assuming personal command of the crisis at the Fukushima Daiichi nuclear plant, which has been seriously damaged by the earthquake and tsunami. There are signs that the move may have backfired on him as the situation at the stricken facility worsened in April. Indeed, the ruling party performed badly in several prefectural and municipal elections that took place in the middle of that month, suggesting dissatisfaction with the prime minister's performance. On balance, however, if the authorities continue to orchestrate a creditable rescue and reconstruction effort, the effect of the catastrophe on the government's standing is likely to be either neutral or positive. Moreover, the government may benefit on the policy front. A sense of emergency and national solidarity led to an end to partisan obstruction of the 2011/12 budget-this was passed in late March, after several months of obstruction by the main opposition Liberal Democratic Party (LDP)-and could even galvanise support for the bold reforms that Mr Kan has proposed to tackle Japan's festering economic problems. At present the DPJ has a large majority in the House of Representative (the lower house of parliament), but it is in a minority in the House of Councillors (the upper house), where the impasse over budget legislation was created.

© 2011 The Economist lntelligence Unit Ltd. All rights reserved
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