Japan’s Upper House of Parliament voted down legislation to split up and sell the country’s postal service on Monday, prompting Prime Minister Junichiro Koizumi to follow through on a threat to call snap elections that could shake the ruling party’s grip on power.
Defections from Koizumi’s own Liberal Democratic Party (LDP) helped defeat the reform package by a 125-108 vote, dealing a painful setback to the prime minister’s long-time quest to privatise the postal savings and insurance businesses and open their massive deposits to private investors.
Koizumi called an emergency Cabinet meeting, and ministers — with one dissenting vote — decided to dissolve the Lower House of Parliament, Minister of Foreign Affairs Nobutaka Machimura said.
”I assume the prime minister made a difficult decision,” Machimura told reporters. ”He had said he would dissolve the Lower House if the Bills were voted down, so I supported his decision.”
Media reports said the LDP and its coalition partner, the Komeito Party, have agreed to hold the ballot on September 11.
Campaigning for the chamber’s 480 seats is to begin on August 30.
The dissent over the package revealed deep divisions within the LDP, which has held on to power almost uninterruptedly since its founding in 1955. Reform is expected to be a major issue in the campaign, and some speculate that it could split the LDP into separate camps.
The legislative package would have created the world’s largest private bank, but opposition was strong among opposition and LDP lawmakers who said the measure would cut postal services to rural areas and lead to layoffs.
Proponents were disheartened by the vote.
”These were the Bills that put us at the crossroads, whether Japan can create a small government or it is headed toward creating a big government,” said Economy Minister Heizo Takenaka, the main architect of the reform. ”The rejection is a major blow to Japan’s future and its economy.”
The opposition Democratic Party, meanwhile, started gearing up for an election fight, submitting a no-confidence measure against Koizumi’s government. The party has made strong gains in elections last year’s Upper House elections and in the previous Lower House ballot in 2003.
”We’ve been steadily making efforts for this day,” Democratic Party leader Katsuya Okada told his party members. ”Now we have finally came to this opportunity to change the government.”
Shizuka Kamei, a leading LDP opponent of the reforms, suggested he regrets the divisions that the legislation had created within the ruling party. Top lawmakers had tried to convince Koizumi over the weekend not to go ahead with his election threat.
”The results shows the conscience of the Upper House,” Kamei said. ”The prime minister should come to his senses. It will be bad for Japan if we do something like this over and over.”
Proponents of the reform said it was needed to put the postal saving system’s massive deposits into the hand of private investors and provide a strong jump-start to the economy, which is only now emerging from a decade-long slowdown.
Privatising Japan Post, which has 330-trillion yen ($2,9-trillion) in savings and insurance deposits, would create the world’s largest bank.
Those funds have financed the massive public works projects central to the LDP’s pork-barrel system, while the network of unionised postal workers has long proved a bastion of support for the party.
Opponents, including some in his own party, argue that privatisation would reduce postal services in rural areas and lead to layoffs among the 400 000 postal-system workers. They also say the new, giant bank would drive private financial institutions out of business.
Some opponents also said they are tired of Koizumi’s heavy-handed attitude.
”It is extremely abnormal to tell lawmakers to vote for the Bills or Parliament will be dissolved,” said Tatsuo Kawabata, secretary general of the Democratic Party.
The vote could change the face of Japanese politics if, as some predict, the LDP splits in nationwide elections with members opposing the Bills forming a new party.
The showdown was stirring memories of an eight-month period between 1993 and 1994 — the only time in the past 50 years that a non-LDP bloc controlled the government after groups of lawmakers broke with the LDP in the wake of a power struggle.
Analysts say a nationwide election could give the Democratic Party, the largest opposition bloc, a shot at improving its standing because LDP members who voted against the Bill in the Lower House wouldn’t receive party endorsements.
Parliament’s more powerful Lower House approved the privatisation Bill last month by a razor-thin margin. The package would have privatised Japan Post by 2017 and divided it into private companies handling mail delivery, banking and insurance. — Sapa-AP