Foreign Investors and Observers Remain Skeptical about Koizumi

John de Boer (University of Tokyo & GLOCOM Platform)

News reports coming from Japan seem to indicate that foreign observers are more pessimistic about Prime Minister Junichiro Koizumi's ability to follow through on his latest pledge to decrease public works spending and implement reforms than are the Japanese themselves. While approval ratings shot up among voters in Japan, according to an Asahi Shimbun poll, the international media remained cautious about the sustainability of Koizumi's "revival" and its potential impact on fiscal reform.

After witnessing a gain of ten points in Koizumi's public approval rating from 37% to 47% since June, David Pilling of the Financial Times recognized that the rebound in popularity was a "sign that the Japanese public might be less disgruntled with their Prime Minister than foreign investors" (July 23, "Koizumi enjoys slight rebound in popularity amid reshuffle plans"). The rise in public support reportedly stemmed from Koizumi's latest pledge to cut public works spending from 5.1% of the Japanese GDP to 4.8%.

Although specialists such as Columbia University Professor, Gerald Curtis characterized this ten point rise as Koizumi's "coming back to life", most questioned how sustainable Koizumi's re-found popularity would be. In fact, doubts surfaced immediately after Mr. Koizumi made the announcement. Reuters commended Koizumi's pledge as a "rare concrete development in Koizumi's policy agenda", however, voiced skepticism highlighting the fact that many of Koizumi's political rivals had special interests in the construction sector (July 19, "Japan's PM calls for public worlds to be scaled back"). A few days later (July 21) Reuters portrayed a more definitive stance by quoting a political analyst at UBS Warburg as stating that, "Will it be sustained? Probably not, because the party will stand in the way and make any significant change impossible''. CNN was equally pessimistic noting that, "Koizumi continues to talk fervently about reform but has achieved little" (Alex Frew McMillan, "Koizumi trimming Japan's public works", July 19).

According to the international media, the key to Koizumi's convincing foreign investors and observers about his ability to push through with reforms will be whether he gets his way in the anticipated cabinet reshuffle scheduled for September. While most sources recognize that PM Koizumi is one of the few post-war Japanese PM's to enjoy grassroots support, the consensus is that this is not enough. The main determinant of Koizumi's success, according to the Financial Times, Reuters, the New York Times and others, will be whether or not he will be able to stand up to the "old guard" conservatives in the LDP who have been the main beneficiaries of public works projects and are consequently staunch opponents to any serious reform plan. Despite Koizumi's bold declarations and his popularity revival among the public, international observers remain in a "I'll believe it when I see it" mode. For now, skepticism continues to reign outside of Japan.

Articles:

• "Japan's PM calls for public works to be scaled back", Reuters, 19 July 2002
• Alex Frew McMillan, "Koizumi trimming Japan's public works", 19 July 2002
• "Renewed reform hopes boost Japan's PM poll rating", Reuters, 21 July 2002
• David Pilling, "Opinion poll boost for Koizumi may limit reshuffle", the Financial Times, 22 July 2002
• David Pilling, "Koizumi enjoys slight rebound in popularity amid reshuffle plans", the Financial Times, 23 July 2002