Japan's pension scandal deals blow to two-party system

Just when Japan's politicians appeared to be finally gaining some credibility with the public, the nation's rickety pension system sneaked up and pulled the rug from under their feet.

The latest political scandal in the corridors of power in Tokyo has already forced two high-profile lawmakers to quit their posts - and also all but sinks the opposition's chances in summer elections in what is likely to mark a setback for Japan's progress toward a genuine two-party political system.

Naoto Kan, leader of the main opposition Democratic Party of Japan, tendered his resignation Monday evening in the face of an uproar over his failure to pay compulsory national pension premiums.

Last Friday, the chief government spokesman Yasuo Fukuda, one of the longest serving ministers in the cabinet, quit for the same reason. At least six ministers have skipped pension payments, a slip-up that voters find particularly hard to swallow, given concerns over whether the system will be able to support Japan's rapidly aging population.

"What has become evident in this latest episode, is that these leaders haven't turned out to be the upright politicians that citizens thought they had sent [into power]," says Takashi Yoshino, a political science professor at Waseda University in Tokyo.

To be sure, many of the nonpayment indiscretions were minor and over a decade old. Some lawmakers forgot to start making payments when the system became obligatory in 1986, while others such as Kan forgot to switch to the pension program when they assumed positions in government, or lost their status as salaried company employees.

In addition, nonpayment among the general public is by no means a rarity, given fears among young people the system will be long gone by the time they retire. By 2050, it is estimated that over 35 percent of Japan's population will be over 65.

But public disillusion with politics has not been helped by Prime Minister Junichiro Koizumi's decision not to seek the resignation of other ruling Liberal Democratic Party cabinet members who skipped the payments. A weekend poll by Tokyo Broadcasting System showed that 51 percent of the public was dissatisfied that other such cabinet members as Sadakazu Tanigaki, the minister of finance, had been let off the hook.

The scandal comes just as lawmakers' reputations in Japan were on the rise. In particular, the public has high regard for Mr. Koizumi, given his modest success in getting the economy out of a decade-long slump. His approval ratings are generally around 50 percent, an unusually strong level of support for a Japanese prime minister in his third year in office.

The government has also just negotiated the safe release of five Japanese hostages in a high-stakes kidnapping drama in Iraq, in what many considered to be a severe test of Koizumi's leadership. Analysts consider him to have been lucky to escape more serious political fallout from his decision to send the nation's Self Defense Forces to Iraq in the largest deployment of Japanese military force since World War II.

It is the Iraq issue, and the pensions scandal that will dominate the debate leading up to the July upper house election, says Professor Yoshino. The risks Koizumi faces over his Iraq policy were thrown into stark light Monday, when a Dutch soldier was killed and another injured in an attack in the Iraq city of Samawah, where Japanese troops are deployed. If Japanese troops are attacked in Iraq, the issue will become a flash point, Yoshino says.

But the pensions scandal has probably helped Koizumi more than it has hurt him. While he has lost an able politician in Mr. Fukuda and his image has taken a mild beating, the resignation of Mr. Kan has crippled the opposition. There appears to be no one willing to take over leadership of the Democrats in their hour of need, only a few months before what could be a dismal election result. The task may fall to Ichiro Ozawa, the cantankerous veteran lawmaker who led the smaller Liberal Party until its recent amalgamation with the Democrats.

In a lower house election last November, the Democrats scored big gains against the government - the election was hailed as the coming of age of a true two-party system for Japan, and many hoped it signaled the beginning of the end of a 50-year domination of Japanese politics by the LDP.

But now that the Democrats are in disarray, there is little hope of a repeat of that success in July.

"As far as Mr. Koizumi is concerned, he has vanquished his foe before the upper house elections and stabilized the government's position as a result," says Shinichi Ichikawa, a strategist at Credit Suisse First Boston in Tokyo.

Yoshino agrees. "The Democrats need to get a new leader and completely change their image," he says.

• Sanae Kawanaka contributed to this report from Tokyo.