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Chapter Eleven
Period of President Nakasone's Leadership

Following Prime Minister Suzuki's resignation, Yasuhiro Nakasone was chosen to lead the LDP as its 11th President by the Party's members and fraternal members in the first Presidential election to be held in four years. Nakasone subsequently formed a fresh and energetic new cabinet.

At the start of his term, Prime Minister Nakasone stressed his intention to make "compassion and responsibility," "direct dialog with the people," and "easily understandable government" the basic principles of his administration. Other top priorities included "maintaining peace at home and abroad," "encouraging the development of healthy democracy," and "ensuring that Japan becomes a country with a strong welfare system and culture." Prime Minister Nakasone asked for the people's cooperation in attaining all of these goals.

In foreign affairs, Prime Minister Nakasone pledged to "promote market liberalization measures that would contribute to the maintenance and strengthening of free trade" and "contribute to the revitalization and expansion of the world economy." He further promised to "strengthen Japan's cooperative ties with the free world including the United States, neighboring countries in Asia (beginning with members of ASEAN), and Western European countries in an effort to maintain global peace," while "promoting arms reduction and comprehensive security frameworks."

In domestic politics, the Nakasone administration made continuing the work that the Suzuki Cabinet had begun to promote administrative and fiscal reform one of its top priorities. Along with this, other important items on Prime Minister Nakasone's political agenda were "the restructuring of the Japanese National Railways (JNR)," "research, development, and application of creative technology," "efforts to enhance the productivity of and otherwise strengthen agricultural, forestry, and fishing industries," "the modernization of small and medium-sized enterprises," "the promotion of measures to increase the nation's greenery," "an increase in support for cancer research," "developing new initiatives for housing and urban redevelopment," and "the strengthening of policies concerning juvenile delinquency."

It should be kept in mind that many of Prime Minister Nakasone's basic political positions, goals, and policy priorities were highly reflective of his unique political philosophy and historical consciousness at the time. First, he believed that the political, military, and economic order that had long supported peace and prosperity in the postwar period was on the brink of collapse. In light of this, he was also of the opinion that Japan, as the free world's second largest economic superpower, had a special responsibility to work with other advanced democracies such as the United States and countries in Western Europe to establish a new peace and restructure the global economic order. Prime Minister Nakasone further argued that it was absolutely essential for the government to conduct an exhaustive review of existing practices and policies so that changes could be made that would help the country to adjust to slower economic growth and the rapid aging of its population by rekindling the development of healthy democracy and reinvigorating the nation's society and economy.

At his first official policy speech as Prime Minister, Nakasone stated that "Our country has now reached a dramatic turning point in postwar history." He further expressed his intention not to allow established attitudes to constrain him as he carried out a comprehensive evaluation of postwar politics and promoted the formulation of new political structures and foreign and domestic policies that would enable the country to respond more effectively to changing times.

With these ideals and convictions firmly in mind, Prime Minister Nakasone set out to complete a remarkably ambitious political agenda.

His accomplishments in international diplomacy began with a trip to South Korea in early January of 1983 - the first such official visit made by a Japanese Prime Minister since the re-establishment of formal ties between the two countries. Through meetings with President Chun Do-hwan, Prime Minister Nakasone successfully resolved a long-standing issue between Japan and South Korea by arranging for 4 billion dollars to be used for bilateral economic cooperation. In addition, Chun and Nakasone declared in a joint statement released at the conclusion of their talks that a "new dimension" had been added to Japanese-Korean relations. Both parties also agreed to work to develop broader grassroots ties between Japan and Korea.

Immediately following his trip to South Korea, Prime Minister Nakasone traveled to the United States to meet with President Reagan. Their exchange of opinions on a number of important international and bilateral issues contributed greatly to the strengthening of friendly relations between the two countries. During these discussions, Prime Minister Nakasone expressed his belief that "Japan and the United States share a common destiny that binds them together across the Pacific." He also stressed the need for Japan actively to share responsibilities for peace and security in the region. Prime Minister Nakasone's diplomacy successfully increased levels of trust between Japan and the United States and is undoubtedly deserving of praise for contributing significantly to earlier efforts by the Ohira and Suzuki administrations to promote the development of a strong Japan-U.S. relationship.

In addition to improved relations with the United States, Prime Minister Nakasone also emphasized the need to develop closer ties with neighboring countries in the Asian-Pacific region. During visits he made to five ASEAN countries and Brunei at the end of April, Prime Minister Nakasone pledged to help leaders there cope with the effects of the global recession in large part by working steadily to build upon the work of successive administrations to strengthen economic cooperation. Finally, his statement that "Japan cannot be prosperous unless ASEAN countries are prosperous as well" was warmly received by people throughout the region.

One of the major highlights of Prime Minister Nakasone's distinguished diplomatic career was undoubtedly the prominent role he played in the summit meeting of advanced industrialized countries held in the historic American town of Williamsburg in May of 1983.

At the opening of the meeting, Prime Minister Nakasone introduced a proposal designed to facilitate the development of common policies that would alleviate concerns about the future. The proposal stressed the need for advanced industrialized countries (1) to increase their level of solidarity and cooperation, (2) to work to control inflation and produce sustainable growth by managing their domestic economies in balance with the international economy, promoting extensive structural adjustments, and strengthening the global system of free trade, (3) to promote North-South dialog and provide more aid to support the self-help efforts of developing countries, and (4) to coordinate their actions concerning East-West economic relations. Speaking in reference to talks taking place at the time between the United States and the Soviet Union on intermediate-range nuclear forces (INF), Prime Minister Nakasone also strongly advocated that such problems be resolved "from a global perspective." Other leaders supported this idea and Nakasone's promotion of it is deserving of special mention as it helped to increase cooperation among countries in the free world during a period in which all were extremely concerned about the dangers posed by the Soviet Union's SS-20 ballistic missile program.

In addition to these diplomatic efforts, Prime Minister Nakasone promoted a series of market liberalization policies as part of his efforts to ensure that Japan continued to fulfill its international responsibilities to support and strengthen the free trade system.

In January of 1983, the Nakasone administration approved a comprehensive market liberalization policy that reduced tariffs on a total of 75 tradable goods (47 agricultural items and 28 industrial items). Determined to move beyond traditional liberalization policies that were often focused narrowly on tariff reductions, the Nakasone Cabinet took yet another step forward by removing many non-tariff trade barriers (import inspections, product standards, etc.) that had become deeply embedded in Japanese society. It complemented this with the passage of the "Law to Promote Market Liberalization" (Shijo Kaiho Sokushin-ho) that established the principle of equal treatment for foreign and domestic products. These policies met with great success and rank among the Nakasone administration's most important accomplishments.

The top priority of the Nakasone administration in domestic politics was without a doubt the vigorous promotion of administrative and fiscal reform. Although a sharp drop in public revenues in both fiscal 1981 and fiscal 1982 ultimately made it impossible by fiscal 1984 to end the government's dependence on deficit bonds, Prime Minister Nakasone's strict adherence to the principle of "fiscal reconstruction without tax increases" and establishment of an unprecedented minus 5 percent ceiling on spending increases produced a budget in fiscal 1983 whose general account expenditures exceeded those of the previous year by only 1.8 percent. It was the most austere budget in Japan's history.

During the same period, the Provisional Commission on Administrative Reform was in the process of completing the work it had begun under the Suzuki Cabinet. It issued its fourth set of recommendations concerning the promotion of administrative reform in February of 1983 followed by a final report in March of the same year. In May, the Nakasone Cabinet approved an "Outline for Administrative Reform" (Gyosei Kaikaku Taiko) that included detailed policies and a prioritized schedule for implementation. During the 98th Ordinary Session of the Diet held that spring, the government continued to pursue reforms that were in keeping with the Provisional Commission's recommendations. These efforts included the swift passage of a "Law Establishing a Temporary Deliberative Council to Promote Administrative Reform" (Rinji Gyosei Kaikaku Suishin Shingikai Secchi-ho), a "Temporary Measures Law for the Reconstruction of the Japan National Railways" (Nihon Kokuyu Tetsudo Keiei Saiken Rinji Sochi-ho), and various legislation concerning the consolidation of public pensions.

1983 was a year of elections in Japan. In April, the Party enjoyed considerable success in the 10th Unified Local Elections. In June, the 13th House of Councillors Election was held under a revised electoral law that replaced the national district system with a proportional representation system requiring voters to cast ballots for political parties based on candidate lists rather than for individual candidates. This system worked to the LDP's advantage and enabled it to strengthen its majority position. Unfortunately, the Party did not fare as well in the 37th House of Representatives General Election held in December. Partly as a result of a historically low voter turnout rate of 67.94 percent, the LDP lost 35 seats and its simple majority. This prompted the Party to enter into an agreement with the New Liberal Club to form a parliamentary group, the Liberal Democratic Party and New Liberal National Federation (Shin Jiyu Kokumin Rengo), which provided it with a secure majority of 267 seats and enabled it to maintain control of the government.

In a special session of the Diet following the election, LDP President Nakasone was again chosen to serve as Prime Minister and immediately formed his second cabinet.

In the midst of some of the most remarkably stable domestic commodity prices in Japan's postwar history, the economy began to show signs of increased potential for growth. At the same time, the Nakasone Cabinet recognized the need to make fundamental reforms to a government whose structures and functions had greatly expanded over time. In order, then, to create a more efficient and modern system of administration, the government established the "Management and Coordination Agency" (Somu-cho) in July of 1984, streamlined the operations of its regional offices, reformed the medical insurance system (Iryo Hoken Seido), and made sweeping changes to the Japan Tobacco and Salt Public Corporation and the Nippon Telegraph and Telephone (NTT) Public Corporation. In addition to these major administrative and fiscal changes, Prime Minister Nakasone initiated widely popular reforms in education as well.

As Nakasone was the only individual to present himself as a candidate in the run up to the LDP Presidential election in October of 1984, he was automatically chosen to remain in office.

The year 1985 was of special historic importance as it marked the 40th anniversary of the end of the Second World War, the 30th anniversary of the Party's birth, and the 100th anniversary of the establishment of a cabinet system of government in Japan. In addition, the Party's organization had expanded to include a record number of 3,645,843 members nationwide. When the 497,324 members of the Liberal National Congress were added to this, the LDP's total size swelled to over 4.1 million individuals. This surge in membership enabled the Party to further strengthen its support base. On November 15, the LDP formally celebrated its 30th anniversary. Many in the Party took this opportunity to praise the past accomplishments of pioneering individuals in the LDP who had worked so diligently and with such great success to improve the lives of the Japanese people and create an important role for Japan in the international community. As part of a continuing commitment to create constructive and visionary policies well into the future, the Party also adopted a "special declaration" (tokubetsu sengen) and a "new policy platform" (shin seisaku koryo). These achievements provided further evidence that both the LDP and Prime Minister Nakasone were continuing to make impressive progress in many areas as the 21st Century rapidly approached.

1985 was a memorable year in world history as well. The West's deployment of the INF (Intermediate-range Nuclear Forces) provided the impetus for the resumption of arms reduction negotiations between the United States and the Soviet Union. Further hopeful signs that East-West tensions might be easing were provided by the work of the Soviet Union's newly-appointed General Secretary Mikhail Gorbachev to promote arms reduction and peaceful coexistence. During his visit to the Soviet Union to attend the funeral of the late General Secretary Chernenko, Prime Minister Nakasone met with Gorbachev and pressed for the resolution of the two countries' territorial disputes. In response, the Soviets agreed to work with Japan to create a stable bilateral relationship. In China, a revitalized leadership put the country on the path to reform and greater openness. On the Korean Peninsula, dialog between North and South had improved. In contrast to these positive developments, however, economic friction in the global economy among advanced nations became increasingly serious and fueled the growth of protectionism. Fears had also increased that the rapid accumulation of debt in developing countries might become a major source of instability in the global economy with the potential to hinder its development. At the same time, the trade imbalance between Japan and the United States had become a problem of special concern for both countries. Recognizing this, the Nakasone Cabinet decided upon a number of new market liberalization measures to be introduced in the form of a special "Action Program." During the Bonn Summit in May, he also stressed the need to begin a new round of trade negotiations as soon as possible.

In the fall, Prime Minister Nakasone gave a commemorative address to the United Nations on the occasion of its 40th anniversary celebration. He took the opportunity to outline Japan's basic foreign policy objectives including the promotion of peace and arms reduction, the extension of cooperation on free trade and to developing countries, and contributions to the development of the world's diverse cultures and civilizations. During the same period, President Reagan, who was preparing to hold the first high level talks with the Soviet Union in six and a half years, requested that an "emergency summit meeting" of Western nations be held. While Western leaders at the summit reaffirmed their commitment to unity, Prime Minister Nakasone reminded them of the necessity as well of resolving arms reduction issues at a global level such that Asia's interests would not be unduly sacrificed. This principle was met with unanimous approval. Forty years after its defeat in the War, Japan had without question succeeded in becoming one of the world's leading countries.

In December of 1985, the Emperor visited the Prime Minister's official residence for the first time to attend a ceremony commemorating the 100th anniversary of the establishment of Japan's cabinet system of government.

The political outlook for 1986 indicated that this year, too, would be an eventful one. The second Tokyo Summit was scheduled for May. This was to be followed that summer by an election for the House of Representatives. In addition, an election was planned for the LDP presidency when Nakasone's term expired in the fall. Finally, there was speculation that the Diet might be dissolved and a general election called for later in the year.

Prime Minister Nakasone's efforts to prepare for the Summit, which included a visit to Canada in January and another to the United States in April, were rewarded with an enormously successful set of meetings in Tokyo. The "Tokyo Economic Declaration" adopted at the Summit helped to strengthen unity among participant countries by stressing the need both to promote economic growth without inflation and to coordinate national economic policies.

In domestic politics, perennial concerns about the outcome of elections had pushed the geographic redistribution of seats for the House of Representatives to the top of the political agenda. This process began shortly after the 1983 general election when Japan's Supreme Court ruled that seats must be reapportioned in order to rectify an inequitable state of affairs in which the voter-to-representative ratios of some electoral districts were 4.4 times larger than those of others. In 1985, the LDP responded to this by submitting a plan to the Diet to increase the number of seats in six districts and reduce the number of seats in six others. Unfortunately, opposition parties refused to accept the plan and it failed to pass. If a solution to this problem was not found, the possibility existed that the legality of future elections would be brought into question. To avoid such a potentially destabilizing situation, the LDP drew up a new proposal in which the number of districts gaining seats and losing seats would be increased to eight and seven respectively, thereby reducing disparities among the size of their voter-to-representative ratios to a maximum of 3 times. This reformulated plan was subsequently passed during the 104th Ordinary Session of the Diet.

On June 2, 1986, the Diet's extraordinary session came to a close and the Diet itself was dissolved to make way for a simultaneous, double election of the Upper and Lower Houses. The Party defined this election as one that would "determine the pathway that Japan follows as it enters into the 21st Century." During the campaign, Prime Minister Nakasone made it clear that he did not intend "to introduce a major indirect tax to which the public and members of the Party are opposed." In addition, he stressed the importance of progress that the LDP had made both in promoting administrative and educational reforms and in improving social infrastructure. In the election on July 6, the Party secured 304 seats in the House of Representatives and 74 in the House of Councillors (when combined with those won by independents who received LDP backing). It was the most stunning electoral victory in the LDP's history.

Following the election, the Third Nakasone Cabinet was formed. In light of the outstanding gains the LDP had made under Nakasone's leadership, the LDP approved a one-year extension of his presidential term to October 30th of the following year at a Joint Plenary Meeting of Party Members from Both Houses of the Diet held in September.

Also in 1986, a grand ceremony was held in April to commemorate the 60th year of the Japanese Emperor's reign.

The year 1987 opened with heated political debates centered on tax reform proposals that had been drawn up in December of the previous year by the LDP Research Commission on the Tax System. The proposals called for a reduction in income, residential, and corporate taxes to be combined with the creation of a new indirect tax, the "sales tax." Opposition parties were highly critical of the plan, arguing that it ran counter to a pledge Prime Minister Nakasone had previously made "not to introduce any new major indirect taxes." This greatly complicated deliberations on the budget from the very start of the Diet session. The opposition was further emboldened by the Socialist Party's victory in a by-election held in Iwate Prefecture for the House of Councillors in March and the LDP's poor showing in unified local elections held in April. Criticism within the LDP of the Party leadership's policies increased as well. Although the skillful mediation of the Speaker of the House of Representatives paved the way for the eventually passage of the budget, the sales tax was rejected.

Another issue of particular concern for the government was the increasing seriousness of trade friction between Japan and the United States. This situation was in large part a product of Japan's international trade surpluses that in 1987 were the largest in history - a total of 100 billion dollars of which 50 billion was with the United States. In February of this year, President Reagan submitted a bill to Congress for the Omnibus Trade and Competitiveness Act. In March, he accused Japan of violating a bilateral agreement on semiconductors and announced his intention to impose trade sanctions under Section 301 of the 1974 Trade Act. This was followed in April by strong American demands that Japan do more to promote domestic demand. In response, Prime Minister Nakasone made an urgent trip to the United States where he managed to convince the American President to lift the sanctions as soon as possible. He also worked to facilitate structural adjustment within the Japanese economy by compiling an emergency economic package in the form of a supplementary budget totaling 6 trillion yen that was subsequently passed during the 109th Extraordinary Session of the Diet. The considerable success of these measures set the tone for the more thorough restructuring of the Japanese economy in the future.

During the summer and early fall, much attention in political circles was focused on the upcoming contest for the Party Presidency. In addition to the three "new leaders," Secretary-General Noboru Takeshita, General Council Chairman Shintaro Abe, and Finance Minister Kiichi Miyazawa, former Party Vice-President Nikaido also announced his intention to run for the office. It was initially thought that a preliminary election by Party members and Party fraternal members would be held as Party rules required this in the event that four or more candidates had entered the race. However, Nikaido's withdrawal the day before this balloting was announced eliminated the necessity of taking such a special step and cleared the way for a vote only among members of the Party in the Diet.

During the campaign, each candidate outlined his vision for the future. Takeshita expressed a desire to revitalize regional communities so as "to create a cultural and economic nation open to the world." Miyazawa proposed the creation of a 21st Century "lifestyle superpower" (seikatsu taikoku). Abe in turn advocated "new growth" and "creative diplomacy" as part of an effort to build a "new Japan."

The date for the election was pushed forward from October 30 to October 20. In the run-up to voting, however, negotiations took place with the aim of further reducing the number of candidates. At the conclusion of these, President Nakasone chose Takeshita as his successor. This appointment was then finalized at an extraordinary party convention held on October 31.

In domestic politics, Prime Minister Nakasone worked diligently to consolidate the nation's postwar political system through administrative, fiscal, tax, and educational reforms. Under the banner of "Japan as an international nation," he was also successful in securing a place for the country in the Western bloc, defending the global system of free trade, extending aid to developing nations, and in general improving Japan's political and economic standing in the world community. Finally, Prime Minister Nakasone's 1,806 days in office made his administration the third longest in postwar history - ranked behind only those of Prime Ministers Sato and Yoshida.

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