How the DPJ Will Change Japan

Who said Japanese politics are boring? There's an electoral earthquake looming this fall, when the ruling Liberal Democratic Party looks set to be turfed out for the first time (with one brief exception) since the Eisenhower administration. Waiting to take over is the Democratic Party of Japan, led by Ichiro Ozawa, a legendary political scrapper known as "the Destroyer." Ozawa promises nothing less than to turn Japan into a true two-party democracy, revolutionize its government and send most U.S. troops packing. Boring? Hardly.

Yet no one should celebrate just yet. Like all good dramas, this one recently had a major plot twist: just as he seemed set to drive a stake through the LDP's sclerotic heart, Ozawa was skewered by a bribery scandal that has divided the country and his own party. Critics call it proof that he suffers from the corruption and cronyism that has long poisoned Tokyo politics. Ozawa supporters insist the scandal was cooked up as a last-ditch attempt by the old order to protect itself. "This is a sign we're getting close," says one DPJ insider.

Whatever the truth, the DPJ is indeed now close enough to power to consider just how it would rule if it gets the chance. And the answers are anything but clear. The Democrats are a ragbag of independents, socialists and former LDP members set adrift after the last big bang in Japanese politics, in the mid-1990s, when the ruling party lost power for 10 months. Ozawa, himself an LDP defector, played a key role then in creating the first non-LDP administration since 1955. But that history offers little insight into his policy proclivities, for the coalition was an unstable liberal-conservative hybrid that quickly disintegrated. Ozawa's opponents now claim he's a power-hungry opportunist and a socialist to boot. "His ultimate political goal is to dismantle the LDP government," not rescue Japan, according to the right-leaning Sankei Shinbun newspaper.

Perhaps. The problem is that no one knows for sure. Conservatives have been spooked by DJP promises to redirect about 10 percent of the national budget—or ¥20.5 trillion ($210 billion)—toward building what it calls a social safety net, which would offer more help for the old, the poor and the childless, as well as a $250 monthly children's allowance aimed at boosting the nation's plummeting birthrate. Establishment figures also fret about what will happen to the half-century-old U.S.-Japan alliance. Ozawa threw the cat among the pigeons in January, when he said that Japan hosts "too many" American troops—a sign he might be prepared to send some of them home. This followed his actions last year to block the use of Japanese ships to refuel U.S. vessels around Afghanistan. At the time, Ozawa argued that Japan's policy violated its pacifist constitution and was a sign of cravenness toward the U.S. "The alliance means an equal relationship. If it is just following what the U.S. says," he declared last October. Pundits now say that as prime minister, Ozawa might push for a major rethink of the bilateral relationship. Karel Van Wolferen, a veteran Japan observer, says, "Ozawa might be enough of a switch to make Washington sit up—momentarily—and stop taking Tokyo for granted."

Or not. Figuring out what the DJP really plans remains difficult, since the party is deeply divided between liberals and lawmakers known to be close to the LDP line. This has led other observers to argue that Ozawa might have to shelve his more controversial initiatives, such as the defense rethink. "However unsatisfying the [U.S.-Japan] relationship is now, there are too many things broken for them to get around to fixing this yet," says Tobias Harris, author of the blog Observing Japan.

Virtually everyone agrees that "broken" is the right adjective for Japan's current state. The country is snared in its worst economic crisis since World War II. At the end of last year it suffered the biggest quarterly contraction in 35 years, shrinking twice as fast as the euro zone and more than three times faster than the United States. Chronic structural problems, including an aging population and a mountain of public debt—180 percent of GDP—have added to what one commentator recently called "the stench of decay." The LDP is powerless to stop this decline. National policy is dominated by competing factional interests that have left the country rudderless. The government's addiction to public-works spending—about $70 billion has been budgeted for highways and rails over the next decade—is now widely viewed as catastrophically wasteful, and the bureaucracy has grown far too powerful, according to Masaru Tamamoto, a senior fellow at the World Policy Institute.

That explains why one of the clearest positions Ozawa has taken concerns government reform. In his book, "Ozawa-shugi" ("Ozawa-ism"), published after he took control of the party in 2006, Ozawa promised to attack the bureaucracy by moving authority for budgets and policy back to the cabinet, uniting his government around a binding manifesto and speaking with a unified voice. "The idea is to create a system where the government thinks and the bureaucrats assist, not the other way around," says Mari Miura, a political-science professor at Sophia University in Tokyo. Harris says it's about "building a government that is capable of making the agenda and sticking to it, then forcing the bureaucracy to go along." Yukio Hatoyama, the DPJ secretary-general, says the party intends "to go to war with the bureaucracy" in order to remove its hands from the purse strings and redirect billions of dollars away from wasteful public works toward education, health and other "much needed" areas.

Still, executing even these promises will depend on how the party actually does at the polls, says Miura. If the Democrats win in a landslide, they'll be able to call the shots. But if they're forced into a coalition, the wish list will be whittled down. On the one hand, Ozawa seems achingly close: the DPJ won a big victory in July 2007, when it took control of Parliament's upper house. And the LDP prime minister, Taro Aso, is now wallowing in single-digit approval ratings. Aso is so unpopular he's been reduced, in effect, to trying to bribe the electorate with a much-criticized ¥2 trillion (about $20.5 billion) cash handout to every citizen in the country.

There's no telling how badly the emerging scandal has damaged Ozawa's chances. In mid-March, Ozawa's top political secretary, Takanori Okubo, was indicted on charges alleging he violated laws governing the use of political funds. Prosecutors claim Okubo cooked the books of the DPJ's political funding organization to hide $360,000 in donations from a construction firm.

Okubo denies the charges, and he and Ozawa have insisted they're politically motivated. Some observers agree. "It is entirely predictable," says Van Wolferen. The establishment is "silently cooperating to try to take him down. It is like antibodies around a dangerous pathogen"—a claim given credence by the fact that the Japanese media knew about the story for weeks but sat on it until the prosecutor's office made its move, rather than launch an independent investigation.

Whatever the truth, many exasperated Japanese have taken Okubo's indictment as a grim warning that the DPJ is little better than the party it seeks to replace. "People's expectations of the DPJ are vanishing considerably," said Democrat lawmaker Katsuhiko Yokomitsu in late March. He and other lawmakers have called on Ozawa to step down, but for the time being the Destroyer is holding firm. "It's my lifetime dream and my last task as a politician" to bring down the LDP, he tearfully told the party faithful recently. Now the whole country is watching to see if he'll get the chance.