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Chapter Twenty
Period of President Koizumi's Leadership

Following the resignation of President Yoshiro Mori in April 2001, much attention was focused on the upcoming Party presidential election. Four candidates ran for the vacancy: Taro Aso, Minister of Finance, Ryutaro Hashimoto, former Prime Minister, Shizuka Kamei, chairman of the Party Policy Research Council and Junichiro Koizumi, former Minister of Welfare and Labor.

Mr.Koizumi campaigned on financial and economic reform using such slogans as “putting a ceiling on government bond issuances to 30 trillion yen,” “paying off bad debts”, and “revival of finance and industry”. He also put forward his long-held view that the postal services must be privatized, insisting that the private sector can assume responsibility. At the presidential election on April 24, Mr.Koizumi obtained a majority of 298 votes and was duly elected the 20th President of the LDP.

Party President Junichiro Koizumi was appointed as the 87th Prime Minister at the 151st ordinary session of the Diet on April 26, 2001. President Junichiro Koizumi carried out a campaign pledge that officers of the Party would be assigned on merit and not according to factional representation. The Prime Minister appointed a variety of young and female Diet members as Cabinet ministers, along with civilians. These decisions appealed greatly to the Japanese public.

Prime Minister Junichiro Koizumi delivered his first keynote address at the plenary session of the House of Representatives and House of Councillors. His speech reflected his determination to implement social and economic restructuring free of restrictions, fear or hesitation. He made clear his basic approach that without structural reform there could be no economic recovery, and that all that can be accomplished by the private sector should be left in the hands of the private sector, and all that can be delegated to local government, should be delegated to local government. Regarding foreign policy and security, Prime Minister Koizumi stressed the importance of international cooperation that maintains good relations with neighboring countries underpinned by the Japan-U.S. alliance.

Public opinion polls taken just after the formation of his cabinet showed an approval rating for the Koizumi Cabinet at a record 87 %, the highest in history. This shows the expectations of the Japanese public for his reform agenda.

The Diet session ended on June 29 and the 19th election for the House of Councillors was officially announced on July 12. In this election, a proportional representation election system was introduced: voters could cast a vote for either the political party or the individual candidate, so that winners are decided from candidates who obtained most number of votes. The election for the House of Councillors took place on July 29, with the LDP winning 64 seats on the back of Koizumi's popularity. (This represented a majority of the 121 seats in the election.)

September 11, 2001 sent shockwaves around the world. Prime Minister Junichiro Koizumi delivered his policy speech to the 153rd extraordinary session of the Diet, on September 27, 2001. Citing the preamble of the Constitution of Japan, he said: “We believe that no nation is responsible to itself alone, but that laws of political morality are universal.” He referred to the September 11 attacks and said that Japan would take the necessary action to implement the seven-point immediate measures he had promised the US. The Anti-Terrorism Special Measures Law passed a plenary session of the House of Councillors on October 29, endorsed overwhelmingly by the three ruling parties of the LDP, the Komeito and the Conservative Party. The bill was enacted on November 2.

One of the planks of structural reform proposed by PM Koizumi was the establishment of the Council on Economic and Fiscal Policy. Responding to the criticism of the existing administrative system, the council was established to develop economic and fiscal policies under the leadership of the PM. Among its members are four private citizens who provide a different perspective. On June 11, 2001, the Council proposed a draft fiscal guideline policy. The budgetary processing framework was promoted by the leadership of the PM's office and included banking and finance policies, social security policies as well as a review of relationships between the central government and local governments.
Another initiative was the establishment of the Council for Regulatory Reform within the cabinet office and operating as an advisory body to the Prime Minister. This council, comprising 15 members from the private sector, presented recommendations directly to the prime minister, based on the Act of Establishment of Cabinet Office.
Prime Minister Koizumi also established a round-table to consider the future management of the three business operations of Posts and Telecommunications and another to consider the electoral system for prime minister, which would act as an ad hoc consultative agency reporting directly to the Prime Minister. He launched many initiatives including establishment of the council for decentralization reform in the Cabinet Office, so that the PM's office could drive the decision making process in government.

In the early morning of September 17, 2002, Prime Minister Koizumi flew to North Korea in a surprise visit accompanied by Deputy Chief Cabinet Secretary Shinzo Abe. In talks with General Secretary Kim Jong-Il, the Prime Minister raised the long-standing issue of the abductions of Japanese by North Korean agents in the 1970s. The General Secretary acknowledged the abductions, stating, “some of our special agency people behaved rashly. I have punished those who were responsible.” In admitting the involvement of the state in the abduction for the first time and offering his apologies, the General Secretary prompted Prime Minister Koizumi to sign the Pyongyang declaration for the recommencement of normalization talks. As a result of the visit, five of the abductees? Mr.Kaoru Hasuike and Mrs. Yuko Hasuike, Mr.Yasushi Chimura and Mrs. Fukie Chimura, and Mrs. Hitomi Soga? were returned to Japan by a Japanese government chartered plane of on October 15 2002. Prime Minister Koizumi paid a second visit to North Korea on May 22, 2003 for further talks with General Secretary Kim Jong Il.

The ruling party LDP led a united effort by the Japanese government with the backing of the international community to resolve the abduction issue as well as the issue of the six missile launches, including the ballistic missile Taepo Dong, launched by North Korea in July 2006.

On March 19, 2003, coalition forces of the U.S. and the UK launched a military operation against Iraq. They deployed aerial bombardments and missile strikes to the capital Baghdad. President Bush announced the outbreak of war against Iraqi on television; Prime Minister Koizumi soon held a press conference where he expressed his support of the American action. The following day, the Liberal Democratic Party expressed the view that, while the disarmament of Iraq by military means was a difficult decision by the US and UK, it was unavoidable and acceptable under the circumstances. The LDP hoped that the aims of incursion would be achieved speedily and the use of armed forces would soon cease. The restoration of peace and stability for the Iraqi people was the desired end.
A bill, Special Measures on Humanitarian and Reconstruction Assistance in Iraq, was submitted to the Diet on June 13, 2003. Having had heated discussions on the definition of ‘non combat zones’ that would allow Japanese Self Defense Force personnel to assist the coalition forces, the bill passed a plenary session of the House of Councillors just before dawn on July 26.

On September 8, 2003 the Party's presidential election was announced. Four candidates ran for office; Masahiko Komura, Shizuka Kamei, Takao Fujii, and Junichiro Koizumi. The ballot was held on September 20 and conducted in Party headquarters. Mr.Koizumi obtained the majority in the first electoral round and was reelected Party President. At the 157th extraordinary session of the Diet convened on September 26 the Prime Minister dissolved the House of Representatives, a de facto dissolution by common consent between the ruling and opposition parties.

LDP faced a difficult problem in one of its reform measures? the introduction of an age-limit for candidates. A proposal adopted by the Political Reform Headquarters in 2000, that any candidate running for the proportional election must not be older than 73 years old at the time of official confirmation as a Party candidate, was to be implemented in the 2003 election. Through direct negotiations by the President Koizumi, those who were subject of this age-limit restriction expressed their intention to retire.

In the election the LDP formally announced its first party manifesto: “Declaration of Koizumi's Reforms - Liberal Democratic Party's campaign pledges 2003”. This publication was partly in response to the campaign manifesto released by the opposition Democratic Party.

On November 9, the 43rd general election was held and Liberal Democratic Party obtained 237 seats, falling just short of a single-party majority of 240. With the aid of non-LDP Diet members, the Party garnered 240 seats to maintain its position as the leading party in the Diet.

On January 19, 2004, the 159th ordinary session of the Diet was convened. The dispatching of the SDF to Iraq was approved, and seven emergency-related pieces of legislation and three treaties were approved. Further, on May 21, laws concerning judicial system reform were enacted and a jury system was introduced in Japan.

Bills concerning pension reform, the most important legislation before the Diet at that time, passed a plenary session of the House of Councillors on June 5. The passing of the bill was a difficult process with many pitfalls. It was revealed some cabinet ministers had failed to pay their pension dues; while the quality of the operations and management of the Social Insurance Agency was exposed as poor, especially its protection of personal information. The opposition parties used these issues to attack the government and the Diet debates were often heated.

The 20th election for the House of Councilors was officially announced on June 24, 2004, and took place on July 11. The result was a loss of one seat by the Liberal Democratic Party to 49 seats. In this election, however, more than 80% of the House of Councillors’ seats were occupied by the two major parties. This reflected a trend that had been developing since the House of Representatives election in 2003 where the Japanese people appeared to prefer a two-party system.

Despite the loss of one seat, the ruling coalition of the Liberal Democratic Party and Komeito maintained the majority as a whole by receiving the support of the incumbents not up for re-election. As a result, Prime Minister Junichiro Koizumi expressed his intention of serving the next term, and the continuation of the coalition with the Komeito was confirmed.

The 162nd ordinary session of the Diet was convened on January 21, 2005. Prime Minister Junichiro Koizumi delivered his speech on administration policies expressing his determination to pass a postal service privatization bill before the session ends. Heated arguments on this privatization bill took place within the Party. Though some were still opposed, the General Council of the Party approved the submission of the bill to the Diet on April 27. On July 5, an open vote was taken on bills on the privatization of postal services in a plenary session of the House of Representatives and the bills were passed by a narrow margin of five votes. However, the bills were rejected in a plenary session of the House of Councilors on August 8. In the afternoon of the same day, Prime Minister Koizumi called an extraordinary cabinet meeting and formally decided to dissolve the House of Representatives in accordance with the Constitution Article Seven. He called this election the “postal services dissolution” election.

In the extraordinary board meeting of the Liberal Democratic Party, the executive officers decided to disendorse thirty-seven Diet members for the next election who had voted against the bills in the House of Representatives. The LDP instead put forward the same number of LDP Party candidates from the constituencies of the dissenters. The mass media called these rival candidates ‘assassins’ and covered their campaigns everyday. The Party made urgent public pleas for new candidates to run for the House of Representatives. The party had more than 1,000 applicants in response. Many of these applicants were officially endorsed as candidates to the districts not previously contested by the LDP.

On the election trail, Prime Minister Koizumi was wildly cheered by crowds whenever he spoke on the need for postal services privatization. The opinion polls revealed a dramatic surge in popularity for the Prime Minister Koizumi and the LDP. Despite these encouraging signs, LDP candidates maintained the intensity of their electioneering throughout the tense campaign.

The 44th general election for the House of Representatives, officially announced on August 30, resulted in a landslide victory for the LDP on September 11. The LDP, with 212 seats at the time of dissolution, won a further 84 more seats to hold 296 seats in the single-seat districts. The LDP also overwhelmingly won in the proportional representative system, resulting in the ruling party holding a two-thirds majority in the House of Representatives.

On September 21, the 163rd Special Session of the Diet was convened, and Junichiro Koizumi assumed the office for his third term. The postal services privatization bills were approved at the cabinet meeting and submitted to the Diet on September 26. They passed a plenary session of the House of Representatives on October 11, a plenary session of the House of Councillors on October 14, and were duly enacted.

With its landslide victory, the Liberal Democratic Party and the Koizumi Cabinet were able to initiate many of the reforms during the last five years. First, the bad-loan problems of the major banks were addressed. Bad debts were 8.4% in March 2002, but had fallen to 1.8% by March 2006. Secondly, more than 1,500 regulatory reforms had been implemented in the five years to March 2006. Thirdly, bills related to reform of the health care system were passed in June 2006. Fourthly, regarding the primary balance, the nominal GDP ratio improved to around 2% from FY 2001 to FY 2006. Four road-related public corporations were privatized in October 2005. An administrative reform law to provide the foundations for ‘simple but effective government’ was passed in May 2006. In efforts to reform state and local finances, three trillion yen of tax revenue were transferred to local governments, a review of tax revenue allocated to local governments was undertaken, and reallocations of 4.7 trillion yen in government subsidies were conducted during FY2004 to FY2006.

In acknowledging one of the party policy platforms held ever since the formation of the LDP, an independently-established Japanese constitution, the Party officially announced the draft of a new Japanese Constitution, embodying the Party's principles, on October 28, 2005. This was prior to the Party Convention on November 22 commemorating the 50th anniversary of the Party's Foundation.

In the sphere of diplomatic relations, the Japan-U.S. relationship was very strong, thanks to the personal relationship of mutual trust between Prime Minister Junichiro Koizumi and President George W. Bush. The two governments consulted one another about various global problems such as terrorism and the problems of Iraq and North Korea.

The term of office of the President Koizumi ended on September 30, 2006, and the presidential election was undertaken accordingly. Three members of the House of Representatives? Shinzo Abe, Sadakazu Tanigaki, and Taro Aso? ran for the presidency in a campaign that was lively. On September 20, an interested nation watched the official counting of votes cast by members of the Party, and the voting and counting the ballots cast by the Party Diet members were conducted in the Party headquarters. Mr.Shinzo Abe was elected the 21st Liberal Democratic Party president.

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