(Adds details)
By Tetsushi Kajimoto
TOKYO, July 2 (Reuters) – Japanese political heavyweight
Ichiro Ozawa, one of the key figures behind the ruling party’s
rise to power, led dozens of lawmakers out of the party on
Monday, but the government will retain its majority in the
powerful lower house of parliament.
Indeed, the departure of Ozawa, 70, and his followers could
put Prime Minister Yoshihiko Noda in a better position to
consolidate control on his fractious party and cut deals with
the opposition, whose help he needs to pass laws since they
control the upper house, which can block bills.
“I’m sure Noda has the champagne on ice. He’ll be happy to
see the back of Ozawa,” said Jeffrey Kingston, director of Asia
studies at Temple University’s Japan campus.
“Ozawa has a lot of baggage and has just been a headache for
the party and Noda in particular.”
Ozawa, known as the “Shadow Shogun” for his backroom deals,
and his followers quit over a plan to double the sales tax to 10
percent in three years.
The proposal, aimed at curbing ballooning public debt, was
passed by parliament’s lower house last week with the help of
the opposition. But 57 lawmakers in Noda’s Democratic Party of
Japan (DPJ) voted against it, with 15 others abstaining or
absent.
Forty lower house members and 12 in the upper chamber – many
of them rookies – will resign from the DPJ, an aide told
reporters. That would bring down the ruling party’s numbers in
the 480-member lower house to 249 from 289.
However, Kyodo news agency said later the number had been
revised to 50 in total after two lower house MPs said they would
not leave the party.
Ozawa, whose smaller party merged with the then-opposition
Democrats in 2003, has argued the planned tax hike violates
campaign pledges made when the Democrats swept to power three
years ago, promising to curb the powerful bureaucracy and cut
wasteful spending before raising taxes.
Many people are also wary of raising the tax at a time when
Japan’s recovery from last year’s triple blow of a big
earthquake, tsunami and nuclear crisis is not yet assured.
But Noda, a former finance minister, has insisted it is
vital to get Japan’s fiscal house in order and find ways to fund
the bulging social welfare costs of a fast-ageing population.
“Noda said he risked his political career to raise the sales
tax hike, so he did. His message was that he didn’t really care
about the party more than he cared about raising the sales tax,”
said Koichi Haji, chief economist at NLI Research Institute.
“I think the (main opposition) Liberal Democratic Party
(LDP) will cooperate in passing through the sales tax hike bills
and other budget-related bills through parliament,” he added.
“This is a positive step forward.”
OZAWA’S CLOUT FADING
Japan has suffered a string of credit downgrades in the past
two years largely because of its failure to make progress in
tackling its debt, already twice its annual economic output and
the worst among advanced industrialised countries.
So the tax plan’s approval in the lower house marks a
milestone for a nation long trapped in a cycle of revolving-door
governments and policy gridlock.
Ozawa’s defection could well make it easier for Noda to
cooperate with the LDP and its one-time partner, the New Komeito
party, in getting the legislation through the upper house.
“We can keep the main scenario that tax and social security
reform bills will be cleared at the upper house as well,” said
Kyohei Morita, chief economist at Barclays Securities Japan.
Ozawa, a strategist and master of backroom deals during his
four-decade political career, has long been a paradox.
Fans have seen him as a reformer for advocating a bigger
global role for Japan and the reduction of bureaucrats’ control
over policies. Critics paint him as an old-style schemer.
Ozawa was a rising star in the LDP before he bolted in
1993, setting off a chain reaction that briefly ousted the
conservative party. He then devoted the next two decades to
creating a viable alternative.
But he has suffered setbacks in recent years, including
being forced to resign as DPJ leader over a funding scandal
before its historic victory in 2009, a win some credited him
with orchestrating. He then lost a party leadership race in 2010
and last year, his favoured candidate was defeated by Noda.
Many analysts see his influence now waning, one reason
being a generational shift in political circles and voter
distaste for the old style politics he came to symbolise.
“Ozawa knows what people want to hear … (but) it’s a
popular message by an unpopular man,” Kingston said.
(Additional reporting by Leika Kihara, Kaori Kaneko and Linda
Sieg; Editing by Linda Sieg and Raju Gopalakrishnan)
