The opposition Democratic Party of Japan (DPJ) has gained a landmark victory in Japan's general election, with prime minister Taro Aso conceding defeat shortly after 10 pm yesterday. While official results have yet to be released, current media projections give the DPJ 308 of the 480 seats in the Lower House of the Japanese parliament, a massive jump from the 112 seats they held prior to the vote. The incumbent Liberal Democratic Party (LDP) took 119 seats, roughly a third of their previous number. Prime Minister Aso has said he will resign as leader of the LDP, taking responsibility for the severity of his party's electoral drubbing. DPJ leader, Yukio Hatoyama, a U.S.-trained engineer from one of Japan's most prominent political dynasties, is now set to become prime minister of Japan. Despite heavy rainfall in Tokyo and the coastal areas of eastern Japan, turnout in the election was reportedly high, apparently topping the 70% who voted in the last Lower House election in 2005.

The Historic Loss of the Liberal Democratic Party

The result put an end to almost five decades of unbroken rule by the LDP, underscoring the depth of public anger with years of weak leadership and the party's inability to pull the country out of a deep economic slump.It also highlighted the LDP's loss of support among traditional alliance networks, such as the farm lobby and the construction industry. With many of these groups feeling betrayed by former Prime Minister Junichiro Koizumi's reform efforts and a steady fall in public works projects, the LDP was no longer able to count on their fealty.

Some of Japan's political stalwarts were among the casualties in single-seat constituencies. Nobutaka Machimura, leader of the LDP's largest faction, ex-finance minister Shoichi Nakagawa, and former LDP secretary-general Tsutomu Takebe, all lost their seats. Other victims included LDP heavyweights such as former prime minister Toshiki Kaifu and former finance minister Kaoru Yosano. The "Koizumi Children", who mainly come from urban areas and keep traditional support networks at arms length, also fared poorly during yesterday's vote—another indication that a serious factor behind the LDP loss was the rejection of the right-wing, hawkish politics characteristic of the Koizumi era. Although some of these politicians may be re-elected through the proportional representation electoral process, the losses will undoubtedly leave the party with a power vacuum in its senior ranks. The new leaders that emerge will have to re-group on the sidelines, establishing the party as a viable opposition force that is able to hold the DPJ to account. A party presidential election is due to be held in September. While it is not clear who would want the leadership post, several LDP lawmakers are viewed as potential candidates to replace Aso. These include the current agriculture minister Shigeru Ishiba, former LDP presidential candidate Nobuteru Ishihara, and Yoichi Masuzoe, Japan's minister of health, labour and welfare.

Outlook and Implications

Major Change?

While the DPJ fell short of the two-thirds simple majority in the Lower House which would have given it full control over the legislative agenda, the result signifies a strong stamp of approval for its campaign manifesto premised on the Barack Obama-like theme of change. If successfully implemented, its domestic policy agenda of increased social spending and government reform could lead to a significant break from Japan's post-war paradigm. However, in the realm of foreign policy, there is unlikely to be any major transformation in the Tokyo administration's current relations with their Washington counterparts. Although the DPJ has called for a more equal relationship with the United States which could potentially lead to greater assertiveness, the two countries are likely to remain close allies.

Fragile Economic Outlook

The party is facing serious challenges as it accedes to power during a period of high unemployment and an uncertain global economic outlook. The question of whether the DPJ will be able to translate its stimulus policies with longer term growth strategies is an important one. Critics have argued that the DPJ proposal to allocate more money to households in an attempt to increase consumption is an example of foolish populism, while the country is saddled with a GDP-to-debt ratio of 170–180%. Indeed, prior to the election, the Keidanren, Japan's largest business lobby, denounced DPJ economic plans as "weak", expressing particular dismay at the party's pledge to reduce greenhouse gas emissions.

Maintaining Intra-Party Unity

Despite its strong mandate, the DPJ will also need to move forward at a measured pace as it attempts to wrest control of policy from the bureaucrats. If carried out skilfully, this would mark a significant move away from the corruption and back-room politics associated with the Japanese post-war political system. If handled badly, the party could inadvertently end up alienating itself from the very institutions that it needs to run the country. As a fractured group comprising former LDP members, socialists, and defence hawks, Hatoyama will need to make careful efforts to build consensus among its members. The collapse of the only other non-LDP government in 1993 after just 11 months in power provides a stark reminder of the pitfalls along the way.

Hatoyama will also have to exert extreme caution as he selects his new cabinet in order to limit the possibility of future rifts on key issues ranging from agricultural policy to tax rates. The selection process is likely to take place over the next two or three weeks after he is confirmed as prime minister. Hatoyama was recently quoted as saying that he will allocate top positions, such as finance and foreign ministers, to senior members of the party. Potential candidates include Hirohisa Fujii, who served as finance minister in the early 1990s, and Kaytsuya Okada, party secretary general. Also vying for the top jobs will be Akira Nagatsuma, known for his role in exposing the government pension scandal under the Fukuda administration, and Naoto Kan, who is known for his confrontational attitude towards the bureaucracy.

Perhaps most importantly, Hatoyama will need to think carefully about the role that he allocates to former DPJ chief, Ichiro Ozawa. Ozawa is credited with turning the DPJ into a viable party for government. Having merged the Liberal Party with the nascent DPJ in 2003, he guided the group towards the political centre, creating consensus on domestic and foreign policy issues, while establishing greater unity and discipline. He remains a formidable political force in the party, commanding the loyalty of a large segment of party members. Hatoyama knows that his support will be crucial to the success or failure of the incoming government, but will have to balance this knowledge against the need to shed the party's corruption-tainted image. Ozawa was forced to resign as party chief due to a political donations scandal involving a top aide in May.

As the DPJ inherits a laundry-list of problems, including the global economic downturn as well as fiscal, demographic, and welfare issues, it remains to be seen whether intra-party cracks will be able to withstand the pressures of governmental responsibility. Indeed, the DPJ will have a limited period of time to enjoy the euphoria of victory as elections to the Upper House are due next year.

Global Insight (Reino Unido)