The Ozawa Phenomena in Japanese Politics

In the volatile Japanese politics in which political power has transitioned from the decades-old stranglehold of the Liberal Democratic Party (LDP) to the Democratic Party of Japan (DPJ) for the first time in Japan’s post-War political history (barring a short failed experiment in 1993), the balance is threatening to swing back to the LDP following a money politics scandal involving DPJ supremo and king maker Ichiro Ozawa. Questions are being asked as to how allegations of money laundering involving Ozawa makes the DPJ different from the scandal-plagued conservative administration of the LDP. Ozawa, the DPJ’s secretary general, has come under the scanner by the Public Prosecutor’s Office over a land purchase in 2004 by his political funding group, Rikuzankai.

The current allegations centre on the source of the fund that was used in an unregistered purchase of Tokyo land in October 2004. The political funding allegedly came illegally from corporate donations, especially from a consortium building a dam in Ozawa’s home prefecture, Iwata, to buy land and amounted to over $4 million. One of the company’s executives confessed that he paid $500,000 to an aide of Ozawa as a donation after the contract to build the dam was awarded. Iwata is located in the Tohoku region on Honshu Island. Ozawa has insisted that the money came from his own pocket but the statements by the company executives contradicted this assertion. Ozawa is under pressure to come clean on the allegations.

The impact of this allegation on the DPJ’s reputation has been huge. The scandal not only threatens to undermine Ozawa’s growing influence over government policy but has already resulted in the approval rating of the Hatoyama government plummeting sharply to 40 per cent in January 2010 from 50 per cent in December 2009 since the news of arrests related to the scandal broke out. Pressure is mounting on Ozawa that he should own responsibility for the scandal and resign from his post. The architect of the DPJ’s victory that catapulted Hatoyama to power in August 2009 elections, and one-time member of the LDP, Ozawa was also involved in an earlier funding scandal in 2009, which forced him to step down as party president, allowing Hatoyama to take over.

Ozawa has defied growing calls for his resignation despite the arrest of three of his aides on charges of misreporting campaign donations. Of the three, 36-year-old Tomohiro Ishikawa is an elected DPJ member to the Lower House. The likely negative impact of these arrests on the crucial elections to the Upper House in July 2010 cannot be ignored. Unless Ozawa can provide a convincing argument that he was in no way involved in the money laundering operations, he may be forced to resign soon but whether the Ozawa phenomena will not be a factor in the forthcoming mid-year Upper House elections cannot be discounted. Given his experience and maturity, Ozawa is likely to remain the key strategist in the upcoming Upper House elections. If the Ozawa phenomenon does not lose its charm and influence stemming from the scandal, the DPJ may succeed in gaining enough seats. If this happens, Hatoyama can afford to ignore his coalition partners, enabling him to implement his legislative agenda. In that case, the scandal would not negate the administration’s proposed 7.2 trillion yen ($79 billion) stimulus package necessary to restore the country’s economic health.

But since a sizable bloc of the DPJ, known as “Ozawa’s children” are already tainted by their association with Ozawa and the Rikuzankai scandal, and if some of them are proved to have received money, the LDP may register a political comeback.

There is another dimension to this tale. The DPJ government has resolved to curb the bureaucracy’s enormous power in influencing government policy. Though the roles of the prosecutors and bureaucrats are different, there exists a strong bond between the two and Hatoyama’s reform agenda to curtail the unbridled power of the bureaucrats also included prosecutors. As a result, Ozawa cannot expect a clean walkover. Prosecutors are dependent on government funds but their first concern would be to remain independent and powerful. Notwithstanding the fact that Hatoyama has fully backed Ozawa, cracks have begun to occur within the DPJ with some members airing the view that Ozawa should resign. That the scandal has already tarnished the image of the party, which presented itself to the people as a reformist, cannot be discounted.

If debate over the scandal deepens, Ozawa will come under increasing pressure to step down. As the Diet is scheduled to pass the fiscal 2010 budget soon, and the current Diet session closes in mid-June just before campaigns to the elections to the Upper House heats up, Ozawa may step down by the end of March, allowing time to work his campaign strategy. Any other course will make it difficult for Hatoyama to sustain his government’s unity. If public approval continues to decline, the alliance could crumble.

Arresting Ozawa is an option but that would be a demanding task. The Diet is in session now and lawmakers have immunity. Even if Ozawa is arrested after the Diet session which is likely to end mid-June, the prosecutors’ motives will be questioned as elections to the Upper House will be held the following month. The prosecutors also do not have direct evidence that Ozawa was indeed involved in the scandal. Moreover, dissent within the DPJ is mild and members have been cautious in criticising their own boss and this silence within the party only strengthens Ozawa’s grip on the DPJ. In particular, “Ozawa’s children” or specifically “Ozawa girls” like Ai Aoki and Kazumi Ota, owe their political careers to Ozawa and are unlikely to abandon him.

Ozawa’s clout, power and influence in the Hatoyama government remain formidable and seem unlikely to diminish. Even the suspected reason behind the resignation of the Finance Minister Hirohisa Fujii in January 2010 owing to “ill health” was that Fujii had fallen out with Ozawa in 2009 after he criticized the latter over a different political money scandal. The criticism by the LDP over Ozawa’s “dictatorship” over the DPJ does not erode the DPJ’s dependency on Ozawa. His allegedly “autocratic and despotic” attitude has only strengthened the party and not made it weaker and that is how the DPJ perceives Ozawa’s role. No wonder, Ozawa rejected outright demands for him to step down.

Under these circumstances, the opposition LDP cannot do much, except make noise on the money scandal until the July election and wait for public approval to plummet further, eventually pressuring Ozawa to step down, as happened when Ozawa stepped down as DPJ president in 2009. At that time, one of his aides was charged with accepting illicit donations from Nishimatsu Construction Co. on behalf of Ozawa’s fund management body, Rikuzankai. At the moment, the DPJ does not have any strong figure like Ozawa who can replace him. Ozawa’s acumen in strategising a way for the party to get a majority in the July Upper House poll is indispensable for the DPJ. There are, of course, second rung leaders in the DPJ like Deputy Secretary General Azuma Koshiishi and Diet chief Kenji Yamaoka, who could be possible successors. Though both are close to Ozawa, their command over the party’s large and diverse group of lawmakers cannot match that of their boss. Both lack the charisma that makes a political leader successful and as such their contributions in the Upper House election campaign will be marginal.

If dissent within the DPJ grows, Ozawa is capable of splitting the party and walk away with some 150-odd of his loyal followers. The Ozawa factor will suit the LDP which can whip up the shady fund transfer issue in its campaign trail. Even in the worse-case scenario of Ozawa stepping down as the DPJ secretary general over the money transfer scandal, his influence in the party is unlikely to diminish. The Ozawa phenomena will continue to be a factor in Japanese politics so long as he decides to remain in politics. Health permitting, Ozawa is likely to remain an active player in Japanese politics and it would be immature to write his political obituary soon.