Monday, September 18, 2006

Japan's Prime Minister Koizumi's Legacy

CNN--Japan Election
CNN--Legacy of Koizumi
Yahoo! News
Miami Herald

Japan will be electing a new prime minister on September 20th, replacing Junichiro Koizumi. Koizumi became prime minister in 2001, the 11th in 13 years—facing challenges of a heavy bureaucracy and stagnant economy. He is widely credited with bringing Japan back into economic prosperity.

Koizumi’s successor will take over the strongest economy in a decade, with growing business confidence, GDP growth, and consumer confidence. Koizumi, a member of the Liberal Democratic Party (LDP), made commitments for structural reform during the darker days of the Japanese economic malaise, and such structural reform has strengthened Japanese pressures and helped ease deflation concerns.

Koizumi’s most unprecedented effort was his attempt to normalize North Korean-Japanese relations. However, he leaves office with no successful normalization—and his likely successor is a hard-line critic of the reclusive communist state. Shinzo Abe, likely the next prime minister, has already sworn against any compromise. Koizumi’s greatest success on the Korean issue occurred in 2004 when he made an additional trip to Pyongyang and secured the release of five kidnap victims of the North Korean regime. He does leave office, however, under heightened tensions as Japan is considering a new set of financial sanctions against North Korea.

Koizumi may be forever remembered as one of the most influential and maverick politicians in the history of post-war Japan. Jesper Koll, a Merrill Lynch economist in Tokyo describes Koizumi’s legacy as one in which confidence was instilled in the nation. He continues “Japan is back, and people here again think, ‘We deserve to be the second most important economy in the world.” Furthermore, when Koizumi took over, “Japan was desperate, the banks were bankrupt, and you had an economy that was on the brink of depression.”

Koizumi’s departure leaves serious questions for the Pacific Rim and beyond. What will be result of his reforms, as Koizumi alienated members of his party who will likely flock back to the LDP with his departure? Moreover, as he leaves office, will the olive branch extended by Koizumi to North Korea continue? Or will extended economic sanctions begin?

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