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Vol. 74/No. 24      June 21, 2010

Japan: Prime minister quits
amid opposition to U.S. base
(front page)
Just eight months after coming to office in a landslide election victory, Japanese prime minister Yukio Hatoyama resigned due in large part to opposition to his decision to maintain a major U.S. air base in Okinawa.

The August 2009 election victory of Hatoyama’s Democratic Party of Japan (DPJ) ended a half century of rule by the Liberal Democratic Party. During his campaign Hatoyama pledged to move the U.S. Futenma base off Okinawa. Instead, in spite of large demonstrations in Okinawa demanding its removal, he acceded to U.S. pressure and agreed to keep the unpopular base on the island, although it will move to a less populated area.

Hatoyama also announced the resignation of Ichiro Ozawa, the secretary-general of the DPJ, who was embroiled in a political funding scandal.

The DPJ rapidly chose Finance Minister Naoto Kan to take Hatoyama’s place. Kan was ratified by Japan’s parliament June 4, becoming the country’s fifth prime minister in just four years.

Kan immediately stated that he would honor the agreement with Washington on Okinawa, saying that U.S.-Japanese ties are the “cornerstone” of Tokyo’s foreign policy, including the “North Korean issue.”

The instability in the Japanese government is also a reflection of the deep economic crisis that began in the 1990s, known as the “lost decade.”

The Japanese economy, the second largest in the world after the United States, showed the crisis of capitalism earlier than other imperialist countries.

Japan’s real estate bubble began to collapse in 1990, including an 80 percent drop in commercial property prices. The financial crisis became acute there in 1997; by 1999 the Tokyo stock market was almost two-thirds below its 1989 peak, while Japanese banks held $1 trillion in bad loans. An anemic recovery in the middle of this decade was not enough to solve the problem.

The Japanese government has a huge public debt, nearly 200 percent of the country’s gross domestic product, one of the largest in the world. Official unemployment has jumped from 3.8 percent in May 2007 to more than 5 percent today. For decades unemployment in Japan was below 4 percent. In the latest available figures, one in six Japanese lived below the official poverty line in 2007, one of the highest among the major imperialist powers.

The increase in unemployment and lower paying jobs has caused a housing crisis for many workers. The January 2 New York Times reported on the Capsule Hotel Shinjuku 510 in Tokyo. The hotel rents out plastic capsules “no larger than 6 1/2 feet long by 5 feet wide, and not tall enough to stand up in” to workers who can’t afford to rent an apartment. An upper bunk in the capsules—which have no doors, only pull-down screens—costs about $640 a month.  
Deflationary spiral
Japan is in the midst of a deflationary spiral. Consumer prices fell 1.9 percent last year. In March the Bank of Japan doubled a loan program to banks to 20 trillion yen (US$222 billion) in an attempt to combat deflation, with little impact. In April prices dropped again for the 14th consecutive month.

The deflation-driven price war has forced other competitors out of the market. U.S-based Wendy’s closed its operations in Japan December 31.

The Democratic Party of Japan hopes that the selection of Kan to replace Hatoyama will prevent a big loss in July’s election for the upper house of the Japanese parliament. Unlike previous prime ministers who came from Japan’s political “dynasties” that have controlled both main capitalist parties, Kan, the son of a factory manager, is put forward as a populist and “a self-made man.”

There are divisions within Kan’s party. “Calls for the government to move the air base out of the prefecture aren’t likely to change,” said Denny Tamaki, DPJ candidate in Okinawa, according to the Daily Yomiuri’s online English edition June 4. “Without a fundamental solution of the Futenma [air base] issue, I don’t think it’ll be possible to maintain a stable administration.”  
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