What can the Yakuza explain anyway?

Having read and enjoyed Jacob Adelstein's Tokyo Vice, it was with considerable interest that I read his article "The Last Yakuza" in the World Policy Journal (h/t to Corey Wallace).

Like Wallace, I have no particular expertise with which to assess the role played by the Yakuza in Japanese society. But also like him, I am skeptical about what political outcomes we can actually attribute to organized crime.

In brief, Adelstein argues that after decades of deep ties to the LDP — which organizations didn't have deep ties to the LDP when it was Japan's hegemonic ruling party? — leading Yakuza organizations have shifted their allegiances to the DPJ as it took control of the upper house in 2007 and then the lower house and with it the cabinet in 2009.

The main consequence of this shift, Adelstein suggests, is that the Hatoyama cabinet included Kamei Shizuka, head of the People's New Party, who is known to have links to organized crime. Without questioning those links, I think there is a far simpler explanation for Kamei's presence in the Hatoyama government, an explanation that does not require any reference to the Yakuza. Wanting to streamline decision making in the new coalition government, the DPJ included both Kamei and his SDPJ counterpart Fukushima Mizuho in the cabinet and created a special cabinet committee to coordinate policy among the ruling parties. Kamei, I think, was there so as to concentrate coalition negotiations within the government. The ease with which Kan Naoto cut Kamei loose once he challenged the new prime minister suggests that repaying the Yakuza was low on the DPJ's list of priorities when it came to Kamei.

But this case raises the larger question asked in the title of this post: what does the Yakuza explain anyway? What political outcome over the past half-century or so of Japanese politics is different because of the influence of the Yakuza in Japanese politics?

The most obvious answer is that the pervasive influence of the Yakuza explains the impunity with which gangsters have been able to act since the end of the war (which makes the 1992 anti-organized crime law mentioned by Adelstein a puzzle worth explaining).

But what about bigger questions? The durability of LDP rule? The rise and fall of prime ministers? Foreign policy and relations with the U.S.? What is different because of the Yakuza's power? What can the Yakuza explain that other theories cannot? I suspect not much. It's possible that gangsters may have influenced the outcome of LDP leadership elections during the former ruling party's heyday, given the shady pasts of some leading LDP politicians and the wholly opaque manner in which the LDP selected its leaders for much of its history. If it were possible to identify prime ministers who came to power only because of Yakuza support, it would perhaps be possible to identify indirect consequences of Yakuza influence, but as Adelstein's own career shows, becoming a Yakuza expert requires time, energy, and no small risk to one's person — all for exploring what may be nothing more than an auxiliary explanation.

That's not to say that the Yakuza are of no interest to political scientists who study Japan. One question worth addressing is why the Yakuza are so pervasive in the first place, at which point attention naturally turns to Italy, that other Axis power occupied by and then allied with the United States (which failed to purge and in fact developed links with far-right elements) and governed by a hegemonic conservative party for the duration of the cold war. Additionally, it may be fruitful to study the Yakuza in comparison with other interest groups that had long supported the LDP only to watch their fortunes wane during the lost decade(s). After all, Yakuza groups are interest groups, of a sort: interested in the regulation of organized crime. Like other interest groups, they had to adjust their political strategies in response to uncertain political and economic environments.

As such, while the Yakuza are an unlikely explanation for major political outcomes in Japan, they are a part of the landscape and observers should be cognizant of their role. For that we are lucky that Adelstein is working so hard to expose the inner workings of Japanese organized crime.

Hatoyama stays above the fray, but his government resists Kamei

In his first two weeks as prime minister, Hatoyama Yukio ought to have learned an important lesson about governing: if you do not set the agenda, someone else will. With the LDP focused on electing a new leader, the policy agenda was clearly set by Kamei Shizuka, trying to make the best of the poor hand dealt to him by the new government. While the government's agenda is packed, the question of a moratorium on loan repayments for small- and medium-sized enterprises is clearly at the top of the list.

Speaking at a press conference following the first meeting of the government's Basic Policy Cabinet Committee — comprised of Kamei, Consumer Affairs minister Fukushima Mizuho, and Deputy Prime Minister Kan Naoto — Kamei insisted that he has Hatoyama's backing when it comes to implementing a moratorium plan. He also insisted that the plan is not simply his own, but rather that it is based on the governing parties' tripartite agreement concluded before the formation of the Hatoyama cabinet. Hatoyama denied that the DPJ, SDPJ, and PNP included this proposal in this agreement, but he did not deny that his government will grapple with the problem of financing for small- and medium-sized enterprises and may mandate a law that, unlike Kamei's plan, would impose a moratorium on repaying principal, instead of interest and principal. Ikeda Nobuo links to a video on Youtube of Hatoyama's voicing his support for a proposal along these lines made by Kawauchi Hiroshi, DPJ representative from Kagaoshima's first district. (Jiji reports on Hatoyama's campaign trail comments too.)

But at the same time Hatoyama said the matter ought to be debated "robustly." In other words, the problem isn't that Hatoyama is on Kamei's side and is pushing hard for a moratorium. The problem is that Hatoyama is not leading at all. The prime minister appears to be working hard to stay above the fray.

Perhaps this is what a government led by a prime minister who is first among equals looks like. Rather than issue marching orders to his ministers, Hatoyama is letting them hammer out a policy themselves. For now the moratorium is in the hands of Ootsuka Kohei, the vice minister of financial services, who is leading a council to investigate countermeasures to overcome reluctance to lend and the withdrawal of credit by financial institutions. Ootsuka, a former Bank of Japan official, wants to make it easier for SMEs to delay payments but does not want to obligate banks to accept a blanket moratorium. An outline of the council's bill will be ready by 9 October. Kamei was not pleased to hear Ootsuka's position — indeed, Kamei insisted that as a vice minister Ootsuka does not have the power to say what he said about a possible moratorium.

Kamei's remarks sound rather defensive, as if he just got completely outmaneuvered. He will undoubtedly continue to talk, but with Ootsuka's team working on a draft bill, Kamei will not get all the attention on the issue. The government appears to be fighting back against Kamei procedurally, as I suspected.

We may yet see why it is crucial that the government has empowered parliamentary vice ministers — and why it is crucial that Ootsuka and Furukawa Motohisa were placed at the center of the government as vice ministers for the cabinet office, where they will be in a position to coordinate the work of other ministries. Having economics and finance experts at the working level will strengthen the government immeasurably.

Kamei will continue to fight, and sooner or later Hatoyama will have to make his position known, but for now the Hatoyama government appears to have taken the first step to reclaiming its agenda from Kamei.

An important week for the Hatoyama government

Prime Minister Hatoyama Yukio has returned to Japan after what appears to have been a successful introduction to the world in New York and Pittsburgh last week. The visit to the US may not have accomplished much in practical terms, but it did have symbolic importance, showing that the Hatoyama government will not shy away from speaking out on pressing international issues but that the government can also be trusted to manage Japan's relationships, most notably the US-Japan relationship.

Now the new government's work will begin in earnest. The DPJ-led government is, after all, less than two weeks old and its policymaking system has yet to make the transition from a set of orders and outlines to a working policymaking process.

At the same time, the government also faces urgent policy questions, especially the matter of what to do about Japan Airlines.

For now, the most immediate task for the prime minister is dealing with Kamei Shizuka, the People's New Party leader and minister for postal reform and financial services. In Hatoyama's absence Kamei continued to press for a law that will provide a debt repayment moratorium for small- and medium-sized enterprises — and continued to assert that despite his nominally minor position within the cabinet, he alone is responsible for ensuring that this proposal becomes law, even after Chief Cabinet Secretary Hirano Hirofumi said that Kamei was speaking for himself and not for the cabinet as a whole. Kamei seems to think that each minister has clearly delineated turf over which he or she has undisputed power, a vision of policymaking that directly conflicts with the DPJ's plans for cabinet committees that will hammer out government policies.

Appearing on TV Asahi Sunday, Kamei issued a direct challenge to the prime minister, saying that if Hatoyama is opposed to his proposal, then the prime minister ought to dismiss him.

Hatoyama cannot delay any further in resolving the Kamei problem. I am still convinced that Kamei's antics stem from a desire to enhance his position in the cabinet given the ambiguities of his post, and that Kamei can be managed. The way to manage him is, of course, through the cabinet committees. The prime minister should ignore Kamei's demand that the prime minister dismiss him (he didn't say he would resign, after all), and convene a financial sector cabinet committee with Kamei, Fujii, and METI minister Naoshima Masayuki. The prime minister needs to stress that policy will be made through this system, not through an individual minister using the media as an outlet to announce his personal policy preferences. The same must go for the Basic Policy cabinet committee, comprised of Kamei, Deputy Prime Minister Kan Naoto, and Fukushima Mizuho, SDPJ leader, which is scheduled to meet for the first time Monday afternoon. It is unclear what role this committee will play in the government, but arguably Kan's task should be to marginalize it as a policymaking outfit, limiting its pronouncements to broad principles rather than specific guidelines for other cabinet ministers. Hopefully Kan and the DPJ can rely on Fukushima to isolate Kamei in the committee.

The fact that cabinet committees are only forming now shows that it is too early to panic about the workings of the Hatoyama government. The government still has not set to work in earnest. Indeed, also meeting for the first time Monday will be a committee headed by Kan to review the compilation of next year's budget, the most important task facing the new budget.

The task then for this week is to establish how the government will make its policies. As much of a nuisance as Kamei has been since the government took power, the damage has been limited and he can be bested simply by quickly getting cabinet committees in place to begin work on the government's legislative agenda for the forthcoming extraordinary Diet session — and reiterating that Kamei does not speak for the government.

At the same time, Ozawa Ichiro, fresh from a trip to Britain, where he studied parliamentary administration, will have to pressure Kamei from another direction. The PNP caucuses with the DPJ in the House of Councillors, presumably giving Ozawa power over the PNP's five upper house members. If the DPJ can rely on the PNP's support in the upper house even if the government does not do as Kamei wants, Kamei will have a much harder time defying Hatoyama.

One way or another, we should know more about how the DPJ-led government will work after this week.

Containing Kamei

While Okada Katsuya was securing his position as the undisputed leader in foreign policy making, Kamei Shizuka has made immediately clear that he was going to be a source of trouble for the Hatoyama government as minister of postal reform and financial services.

I already noted Friday that Kamei had used a press conference following a cabinet meeting to warn Haraguchi Kazuhiro, the minister for internal affairs and communciations, to stay off his turf, namely halting the privatization of the postal system. At the same time, Kamei, using his perch as director-general of the Financial Services Agency, has called for a three-year moratorium on the repayment of loans by small-and-medium-sized enterprises, which would naturally be devastating for banks, which, after all, not too long ago were laboring under the burden of bad debt to the point that they eventually required the infusion of public funds. Naturally markets have not taken kindly to Kamei's remarks. (Sasayama Tatsuo has more on radical financial regulations proposed by the People's New Party.)

Kamei also attacked Kan Naoto and the national strategy bureau as being intended to undermine the basic policy cabinet committee composed of Kamei, the SDPJ's Fukushima Mizuho, and Kan as the DPJ representative.

Finance Minister Fujii Hirohisa tried to calm worries, noting that while there is a precedence for this action — in 1927, in the midst of Japan's depression — the situation is not nearly so bad as that. But Kamei reiterated on NHK Sunday that implementing this program is his responsibility (although he said he would be "borrowing" the wisdom of the finance minister).

While Kamei's remarks are irresponsible, I do not think that they are indicative of anything more than Kamei's insecure position within the cabinet. Having no real authority of his own, of course he is going to throw elbows and try to find an area in which he can take the lead. It is unlikely that he will lead on either postal reform or this moratorium scheme — and it is unlikely that the cabinet will simply sign off on the moratorium scheme as floated by Kamei. Little wonder that he also attacked the NSB as undermining the one area in which he is sure to have some influence, the cabinet committee to coordinate among the government parties.

Fujii needs to speak that much more decisively on Kamei's irrelevancy on this matter. Perhaps he can sit on a cabinet committee, in which his views would be reliably drowned out by Fujii and whoever else they found to round out the group. All of which goes to suggest that investors and commentators should not overreact to Kamei's freelancing — he still has to convince his colleagues in the cabinet that his ideas are sensible.

However, refereeing turf battles is one role that Hatoyama Yukio should be playing. He should not be leaving his team of rivals to resolve their own disputes. Hatoyama as prime minister should be issuing orders to ministers and establishing boundaries. How many more days is he going to let Kamei make extravagant claims to the media about the powers of his portfolio?

Of course, there is also a media relations story here too. If Hatoyama were to appoint a press secretary to coordinate media affairs, he might not be able to keep Kamei from putting himself in front of cameras, but the media could then go to the press secretary who would stress that Kamei has no authority to speak on behalf of the cabinet as a whole and that policy X has not yet been submitted to a cabinet meeting for a decision. The government needs to control its image and it needs to control its message. For the moment, it seems to be having a hard time when it comes to dealing with Kamei.

But it is still early in the government's tenure, which is the final point. The policymaking process is still nothing more than a framework. It is still unclear which ministers will emerge as the leaders who make the cabinet work. It is far too early to say that Kamei, a minor minister on the basis of his portfolio if not on the basis of his party position, will wreck the government. But some cabinet ministers and the prime minister are going to have to find a way to manage the obstreperous leader of one of the DPJ's tiny coalition partners.

The Hatoyama government fills more positions and gets to work

On Friday the Hatoyama cabinet met and continued its work of reforming Japan's policymaking system.

The cabinet decided to create the national strategy office under the leadership of Kan Naoto, pending legislation to elevate the office to a full bureau attached to the cabinet. Another cabinet decision created the Administrative Renovation Council (ARC), which will nominally be headed by Prime Minister Hatoyama Yukio but will be managed by Sengoku Yoshito, a cabinet-level minister. Discussing the NSO, Kan stressed its role in economic planning and fiscal policy, and said the office's role would be controlling the "planning, drafting, and synthesis of the cabinet's important policies." The ARC's role is less clear, having some as-yet-undefined role in the budgeting process.

Another important but relatively unheralded institutional reform was announced on Thursday. As stressed by Kan in his July Chuo Koron essay — seriously, read it if you haven't read it yet, it's essential to understanding the DPJ's thinking as it reorganizes the government (I discussed it here) — essential to making the cabinet more dynamic is conducting its work in cabinet committees dealing with specific issue areas. Most significantly, the government announced that among the first cabinet committees would be a budget committee, an institutional feature of the Westminster system singled out for praise by Kan. The budget committee's members will be Kan, Fujii Hirohisa, the finance minister, Sengoku, and Chief Cabinet Secretary Hirano Hirofumi. The government will also create an environment committee composed of Hirano, Foreign Minister Okada Katsuya, METI Minister Naoshima Masayuki, and Environment Minister Ozawa Sakihito. It is unclear precisely how these cabinet committees will interact with the cabinet as a whole, but they should help streamline the policymaking process.

Naturally creating the budget committee — in addition to setting up the NSO, of course — is essential as the Hatoyama government prepares to redraw the budget. On Thursday Fujii stressed that the government would be taking a scalpel to "hothouses of LDP interests." Fujii introduced another approach the government would take to raising revenue in addition to cutting waste: it would investigate the efficiency of the special measures law on taxation. Fujii said the government would draft a law calling for an investigation by the Diet and the Board of Audit into the law, with an eye towards rationalizing it and possibly widening the tax base by closing tax loopholes that have favored certain corporations. As Sankei notes, closing loopholes would not only secure new sources of revenue for the government, it would also shed light on the relationship among politicians, bureaucrats, and interest groups under LDP rule (politically convenient in advance of next year's upper house election).

In Friday's cabinet meeting, meanwhile, the government issued a cabinet decision officially suspending a portion of the Aso government's stimulus package. The goal is to redirect roughly 3 trillion yen to next year's budget to pay for DPJ programs included in the manifesto.

The government has also announced its twenty-two parliamentary vice ministers, as well as the vice minister serving under Kan at the NSO. In this last position the cabinet named Furukawa Motohisa, a former finance ministry official and one of the DPJ's rising stars. Furukawa's appointment to the NSO reinforces the idea that its primary task will be taking control of the budgeting process. Joining Furukawa at the cabinet office will be Oshima Atsushi, a four-term lower-house member from Saitama, and Ootsuka Kohei, a two-term upper house member from Aichi who previously worked for the Bank of Japan, has written extensively on the Japanese economy, and has earned respect in the Diet for his expertise. It bears noting that these three appointees have spent their entire careers as DPJ members.

The same applies to the ministry of internal affairs and communications, the vice ministers of which will be Watanabe Shu, a five-term lower house member from Shizuoka, and Naito Masamitsu, a two-term upper house member from Tokyo; the justice ministry, where Kato Koichi, a four-term lower house member from Tokyo and former shadow vice justice minister, has been appointed vice minister; the foreign ministry, where Takemasa Koichi, a four-term lower house member from Saitama who is close to Noda Yoshihiko (also from Saitama), and Fukuyama Tetsuro, a two-term upper house member from Kyoto in the Maehara group (Maehara is also from Kyoto), will be the vice ministers; the environment ministry, whose vice minister will be Tajima Issei, a three-term lower house member; and the defense ministry, the vice minister of which will be two-term upper house member from Shizuoka Shinba Kazuya.

The remaining ministries are more mixed. Neither vice minister of finance — Noda and Minezaki Naoki — began his career in the DPJ (Noda in the Japan New Party, Minezaki in the Socialist Party). In the education ministry, former shadow finance minister Nakagawa Masaharu began his career as a New Frontier Party member but has been in the DPJ since its second creation in 1998 — and he is joined by Tokyo upper house member Suzuki Kan, who has belonged only to the DPJ. In the health, labor, and welfare ministry, neither Hosokawa Ritsuo nor Nagahama Hiroyuki began their careers in the DPJ (Socialist Party and Japan New Party respectively). In the agriculture ministry, Yamada Masahiko, who began his career in Ozawa Ichiro's Japan Renewal Party is balanced by DPJ-only upper house member Gunji Akira. Neither vice minister at METI is DPJ-only: Matsushita Tadahiro is a PNP member and was first elected as an LDP member in the auspicious election of 1993, Mashiko Teruhiko won two lower house terms as an LDP member in the early 1990s, defected, and eventually wound up in the DPJ and is now an upper house member from Fukushima. The vice ministerships at the land ministry are split between SDPJ member Tsujimoto Kiyomi and career DPJ member Mabuchi Sumio.

The point of investigating the backgrounds of the vice ministers is to show that even if the ministers picked their own vice ministers — as the DPJ said — the ministers may have been picking from a subset of potential appointees and may have had some restrictions. In ministries with two vice ministers, the two posts are split between members of the two houses — and in all but one case the upper house member last won reelection in 2007 and will therefore not have to worry about campaigning for the 2010 upper house election. Meanwhile, the point of identifying sub-cabinet members who have spent their entire careers in the DPJ is simply to show that the DPJ has been cultivating young talent and is not simply composed of outcasts from other parties. In the cases of Furukawa, Watanabe, Nakagawa, and a few others, these are rising DPJ members expected to vie for the party leadership in the future. (Richard Samuels and Patrick Boyd included both Nakagawa and Watanabe on a short list of DPJ future leaders in their article "Prosperity's Children.")

As this expanding Hatoyama government sets to work, it can for the time being count on the support of the public. Asahi's first public opinion poll found 71% approval for the new government. Moreover, 52% of respondents said they approved of the cabinet lineup, compared with only 14% who disapproved. When it came to policy, respondents approved of child allowances 60% to 30%; disapproved of lifting tolls on public highways 67% to 24% (little surprise that Maehara Seiji pledged prudence on this matter); supported the DPJ's plan to unify the pensions system and establish a 70,000 yen monthly minimum for pensions by 75% to 16%; and approved of lifting the gasoline surcharge 56% to 30%. Asked whether the DPJ could cut waste, 61% said yes, 26% said no. Respondents were slightly in favor of Ozawa's serving as secretary general, and overwhelmingly approved of the statement that the government should take the PNP's and SDPJ's opinions into consideration whenever possible, 61% to 31%.

Mainichi found similar support: 77% approval for the new cabinet, second only to Koizumi Junichiro's first cabinet. 68% were hopeful regarding Hatoyama's cabinet picks. Yomiuri recorded 75% approval, also second only to the first Koizumi cabinet's. (Yomiuri's poll also found 69% of respondents unconvinced by Hatoyama's explanation of his campaign finance problem.)

Even the DPJ's most intractable opponent within the bureaucracy is coming around. Ichide Michio, the administrative vice minister of agriculture, forestry, and fisheries, no doubt fearing for his job, said that he accepts the leadership of Akamatsu Hirotaka, the new minister, who chastized Ichide for his past remarks critical of the DPJ's plans.

I call attention to these data points not because they guarantee the Hatoyama government's success, but because they show that in the early going everything is working in the new government's favor. The Hatoyama government has set itself up to succeed; the prime minister chose wisely in picking his cabinet ministers. But now the question is how the cabinet will proceed and whether it will be able to hold itself together as it moves an agenda through the Diet. There is already at least one hint of trouble (aside from the Ozawa question): Kamei Shizuka, whose portfolio includes the "postal issue," declared at a press conference following the cabinet meeting Friday that responsibility for the issue was his, not Haraguchi Kazuhiro's, the minister of internal affairs and communications.

Apologies to Ikeda Nobuo, as it took less than three days for Kamei to start trouble in the cabinet. Giving Kamei a portfolio but no administrative role for postal privatization was clearly going to be a source of conflict. It is not beyond managing — how about a cabinet committee? — but resolving this turf battle will be Hatoyama's first act of arbitration as the committee chairman prime minister. Clearly the downside of a team of rivals is that rivals fight from time to time, requiring management by the man in charge.

As Japan heads into Silver Week, the Hatoyama government's standing could not be better. But now it will have to sort out the budget and have its legislation ready for the Diet session scheduled to open in late October.

Hatoyama delivers an impressive cabinet

The votes are being counted in the House of Representatives, after which the House of Councillors will vote for the new prime minister. Hatoyama Yukio's election as the next prime minister is assured.

On the eve of his election by the Diet, Hatoyama decided the presumptive lineup of his cabinet — but he did not share it with the press Tuesday, warning that if appointments "are leaked, they will be changed." (Hatoyama actually deserves credit for his handling of the press regarding cabinet appointments during the past two weeks: he said he would hold off on making announcements, and he has stuck to it, offering little to the press when questioned. Undoubtedly he has made few friends among the media as a result.)

But the list itself, now public, is impressive. In addition to already-known appointments of Kan Naoto (deputy prime minister and head of the national strategy bureau), Okada Katsuya (foreign minister), Fujii Hirohisa (finance minister), and Hirano Hirofumi (chief cabinet secretary), the Hatoyama cabinet includes as host of senior DPJ politicians balanced among the party's different groups. The balance led Yomiuri to refer to it as a "safe driving" cabinet, as if safe driving is a bad thing after Aso Taro's reckless driving (how else to refer to his appointment of Nakagawa Shoichi as finance minister during a severe global financial crisis, after all?). Appointing ministers from across the party is a good way of ensuring that there will be lively debates in the cabinet and that there will be few senior politicians left in the party to cause trouble for Ozawa Ichiro and the cabinet. (Noda Yoshihiko, an "anti-mainstream" leader, was denied a cabinet post and has reportedly complained about it, but he has relatively little company.)

In addition to the aforementioned names, the cabinet will tentatively include the following:

Haraguchi Kazuhiro, a five-term member from Saga prefecture, will serve as minister of internal affairs and communications. Haraguchi is exceptional in that he actually held the same portfolio in the DPJ's shadow cabinet. In fact, he has held the postal reform portfolio in previous shadow cabinets, suggesting not inconsiderable familiarity with his brief. At fifty years old, he will be the third youngest member of the cabinet.

The justice minister will be Chiba Keiko, an upper-house member from Kanagawa who is unusual in that she is one of a tiny number of DPJ members who did not leave the Social Democratic Party of Japan (SDPJ) until well after the party's ill-fated coalition with the LDP. Chiba is liberal on history and social issues, and has served as the shadow justice minister and the shadow minister for gender equality and human rights under various party leaders (including Maehara).

Kawabata Tatsuo, one of the party's vice presidents and an eight-term Diet member (first elected from the Democratic Socialist Party), will take the lengthy title of minister of education, culture, sports, science, and technology. Befitting his long service, Kawabata has held a number of party leadership positions, including chairman of the party's board of governors.

In a somewhat surprising move, Nagatsuma Akira, "Mister Nenkin," scourge of the Social Insurance Agency, will be Masuzoe Yoichi's successor as minister of health, labor, and welfare. At forty-nine he will be the second-youngest cabinet member. I think giving Nagatsuma a proper ministry is a brilliant stroke, ensuring that a problematic ministry will get an energetic minister strongly committed to the party's administrative reform program (and reforming social security) at its head, and giving Nagatsuma experience that will raise his national profile further. His popularity will no doubt be a boost for the cabinet.

The ministry of agriculture, forestry, and fisheries — perhaps the most problematic ministry — will go to Akamatsu Hirotaka, a seven-term Diet member who began his career in the Socialist Party and has been in the DPJ since its first iteration. He will have his work cut out for him.

Naoshima Masayuki and Maehara Seiji (at forty-seven the youngest cabinet member) received the economy, trade, and industry, and land, infrastructure, transport, and tourism portfolios respectively. Maehara will also hold portfolios for disaster relief, and Okinawan and Northern Territories affairs. (Perhaps the latter briefs are a way to give Maehara a voice in foreign policy discussions through the back door? Presumably any cabinet committee discussion of either issue will include Maehara.)

The environment ministry goes to Ozawa Sakihito, along with Hirano Hirofumi a close ally of Hatoyama's. A member of Sakigake and an original member of the DPJ, Ozawa's appointment may reflect the prime minister's interest in emissions controls.

After worries that the defense ministry would go to the PNP's Kamei Shizuka, the post will go to Kitazawa Toshimi, along with Maehara and Kawabata a party vice president. Kitazawa is also one of four upper house members in the cabinet. Coming from Nagano, it is not surprising that Kitazawa has long been close to former Prime Minister Hata Tsutomu, once Ozawa's co-conspirator in splitting from the LDP in 1993 and one of the participants in the creation of the new DPJ in 1998. He recently served as chair of the upper house foreign and defense policy committee.

Nakai Hitoshi, who first joined the DPJ in 2003 in the merger with the Liberal Party, will serve as head of the Public Safety Commission, and Ozawa critic Sengoku Yoshito will head the new Administrative Renovation council.

Also joining the cabinet will be SDPJ head Fukushima Mizuho, whose portfolio will include consumer affairs and the aging society problem, and PNP head Kamei Shizuka, whose portfolio will include the Financial Services Agency (FSA) and the postal issue. Kamei is pleased to have received this post, describing the appointment as "perfect." It is not clear, however, what role Kamei will play in dealing with Japan Post, as the ministry of internal affairs will continue to take the lead in managing postal affairs. The portfolio may simply assure Kamei a seat at the table without any attendant administrative responsibilities. Mainichi reports some unease from investors regarding Kamei's position as head of the FSA due to his opposition to "structural reform," although Kamei will likely have little independence regarding finance and investment. (And, incidentally, it was Kamei who reassured the Obama administration that Nakagawa Masaharu's remarks about Japan's buying only Samurai bonds under the DPJ was not an official statement.)

Ikeda Nobuo sees Kamei's participation in the cabinet as an ill omen for the Hatoyama government, citing shady dealings of Kamei's from the 1980s. I cannot speak to these rumors, but Ikeda makes one claim regarding Kamei's participation in the cabinet that I disagree with: Ikeda argues that Hatoyama will have a difficult time controlling Kamei and suggests that he could become a "bomb that destroys Japan's economy." I think that both Kamei and Fukushima will end up being marginal figures in the new government. Neither has an important portfolio, and with the DPJ aiming to move away from unanimous decision making in the cabinet, they will have little power to stop cabinet decisions. Their parties obviously have the ability to stop legislation in the upper house, but if they are included in the decision-making process from the beginning it should simplify management of the upper house. As MTC argues, the DPJ may need the two small parties beyond July 2010, and it makes good sense to include both leaders in the cabinet to streamline the policymaking process. Undoubtedly Kamei and Fukushima are simply happy to be in the cabinet. The DPJ has given up very little to secure their participation. I think worries about the two are, for now, overblown.

I think that Hatoyama did an extraordinary job picking his cabinet, for which he deserves credit. He has shown that he has no problem delegating authority to politicians who may have more policy expertise than him or independent standing within the DPJ. Few politicians in the cabinet are dependent on Hatoyama for his patronage. He will be surrounded by ministers who will have no problem disagreeing with the prime minister. But he also chosen talented ministers who by and large have been in the DPJ for most if not all of its existence, are committed to its policy programs (especially administrative reform), and are independent from Ozawa Ichiro. As I told Yuka Hayashi of the Wall Street Journal, Hatoyama as prime minister will be "more of a committee chairman than a president." He will have to manage debates among his ministers, intervening when appropriate, closing debates, and setting the policy agenda. But he will not be in a position to dictate policies to his cabinet and demand that the ministers follow along.

When it comes to cabinet personnel, Hatoyama has put his government in a position to succeed.

The Hatoyama system takes shape

The coalition with the SDPJ and the PNP cemented, the DPJ is getting to work filling in the rest of the cabinet.

One question is what posts the SDPJ's Fukushima Mizuho and PNP's Kamei Shizuka will fill. The SDPJ has requested either the ministry of health, labor, and welfare or, it seems, the environment portfolio. Despite an earlier report that suggested Kamei would enter the cabinet as a minister without portfolio, it seems that the PNP now wants the ministry of internal affairs and communications, not surprisingly given that the PNP's issue is reversing postal privatization. It is unlikely that the DPJ will give the post to Kamei.

Hatoyama Yukio has set 15 September, the day before the Diet will elect the new prime minister, as the target for finalizing cabinet appointments. Nothing, it seems, will be decided before then.

But the names of likely cabinet ministers are emerging. In addition to Fukushima and Kamei — and before them Okada Katsuya, Hirano Hirofumi, Fujii Hirohisa, and Kan Naoto — DPJ members under consideration are Nagatsuma Akira ("Mr. Nenkin"), Maehara Seiji, Sengoku Yoshito, and Naoshima Masayuki. Maehara, despite (or because of) his reputation as a hawkish defense specialist, is rumored to be under consideration for the ministry of land, infrastructure, transport, and tourism. Sengoku is being considered for the justice and health, labor, and welfare, while Naoshima, currently the DPJ's policy affairs research council chairman, may end up as the METI minister.

That leaves at least seven more names to be included in the new cabinet, which could be more depending on how many "special mission" posts the Hatoyama cabinet decides to create.

What seems clear, however, is that with Maehara and Sengoku likely to receive important posts in the cabinet, it will be difficult to speak of the Hatoyama cabinet as an "Ohato" cabinet. It is possible that Ozawa's favorites could fill out the remainder of the cabinet, but with Sengoku and Maehara — Sengoku was close to running against Ozawa last year, and both were against Ozawa's continuing as party leader as the Nishimatsu scandal unfolded — in the cabinet, the idea that Hatoyama's cabinet will simply be under Ozawa's thumb is unlikely.

Indeed, it is possible that the DPJ has solved its Ozawa dilemma. Ozawa will still wield tremendous power, but his power will be more directed at the party's now numerous backbenchers. He could use those backbenchers against the cabinet, but that assumes that their loyalty to Ozawa is so strong as to lead them to rebel against their party's leadership in cabinet. I will believe in the existence of an Ozawa faction when I see some evidence for it beyond speculation rooted in Ozawa's past as a lieutenant of Tanaka Kakuei linked to his work on behalf of DPJ candidates across Japan.

Walter Bagehot provides an appropriate metaphor for thinking about Ozawa's role in the new government: "A cabinet is a combining committee, — a hyphen which joins, a buckle which fastens, the legislative part of the state to the executive part of the state. In its origin it belongs to the one, in its functions it belongs to the other." In the case of the Hatoyama government, Ozawa will be the hyphen that joins the DPJ-led cabinet to the DPJ's parliamentary majority. His voice will carry weight — I have a hard time seeing him stay completely quiet on policy affairs — but his influence on policymaking may be less than feared.

Indeed, in this role Ozawa could be indispensable to moving Japan away from LDP's cumbersome policymaking process into an era in which politicians in cabinet are capable of making decisions, enacting policies, and leading. Ozawa has long lamented the role that bureaucrats (and the United States) have played in limiting the ability of Japan's political leaders to direct the country. The question now is whether Ozawa can accept other political leaders' directing the country. With enough Ozawa skeptics in the cabinet, he may have no choice but to accept their lead.

Assembling the new coalition government

The DPJ has been in intense negotiations with the Social Democratic Party of Japan (SDPJ) and the People's New Party (PNP) to finalize the terms of their coalition government.

The DPJ's goal in negotiations is naturally to minimize the disruptiveness from having two parties (and their internal politics) interfere with the DPJ's plans for a streamlined policymaking process in which the cabinet will control the ruling party, and through its control of the ruling party, the Diet. In order to ensure that the same process works for the upper house, the cabinet will have to represent the will of the ruling parties — Hatoyama, in a conversation with SDPJ leader Fukushima Mizuho, stressed the importance of the government's policies reflecting the SDPJ's positions. Naturally the best way to have the ruling parties represented is by having their leaders take up positions in the cabinet. Indeed, the three parties — with Kan, the likely minister responsible for the national strategy bureau sitting in for Hatoyama, representing the DPJ — will form a committee within the cabinet to coordinate policies, the "Basic Policy Cabinet Committee," perhaps the first instance of a DPJ commitment to form a cabinet committee. (In his report on the British system of government and his article in Chuo Koron, Kan was particularly impressed by Britain's cabinet committees as a means of overcoming unanimous decision-making and stovepiping within the government, but until now it has been unclear just how the DPJ will use cabinet committees, if at all.)

As of Tuesday, the parties had agreed that leaders would join the cabinet, but were still negotiating joint positions in foreign policy, not surprisingly the area not included in the joint manifesto produced by the three parties during the campaign (which this Sankei editorial called "irresponsible"). The sticking point appears to be text related to the coalition's position on how to deal with opposition to the bilateral agreement on realignment as it pertains to a Futenma replacement facility: the DPJ and PNP have accepted a statement that stresses a bilateral solution without identifying the particular grievances (i.e., actually naming Futenma), while the SDPJ wants the statement to include specific details. The SDPJ also wants a commitment to involve only the Coast Guard in anti-piracy activities off the Horn of Africa.

Nevertheless, the parties are still trying to reach an agreement Wednesday. There appear to be few difficulties with the PNP: PNP leader Kamei Shizuka will join the cabinet as a minister without portfolio. The problem for the DPJ is, will probably continue to be, the SDPJ. The SDPJ wants to take a harder line than the DPJ is prepared to take, and given that its votes are needed in the upper house, it has power far disproportionate to its seven lower house and five upper house members. The difference is not necessarily a matter of policy preferences, but of tactics and emphasis. The DPJ appears to recognize that it can only push the US so far before it causes real damage to the alliance. I hope the Obama administration recognizes the difference between the DPJ and the SDPJ when it comes to the bilateral issues the new government wants to address — and that Washington finds some consolation prize to help the DPJ save face in lieu of full-blown renegotiation.

Managing the DPJ's relationship with the SDPJ will be much more troublesome than managing the left wing of the party, not least because the DPJ — with some credit going to Ozawa Ichiro — has forged a working consensus on foreign policy that is probably more acceptable to the left of the party than the right. (Revealingly, Yokomichi Takahiro, the unofficial leader of the party's left and an Ozawa ally, has been tapped to serve as the speaker of the House of Representatives after serving for four years as deputy speaker.)

Accordingly, even as the three parties were negotiating the terms of the coalition, Ozawa was meeting with Rengo, the labor organization, to ask for its support in next year's upper house election — stressing that the DPJ "must win a majority in next year's upper house election by any means necessary."

UPDATE: The three parties have finalized their agreement, which reportedly reflects the DPJ's softer line. Jiji's report adds that the DPJ can now accelerate the process of filling in the remainder of the cabinet.

The DPJ rattles markets

How much longer can the US count on Japan to buy Treasuries?

Nakagawa Masaharu, since 2007 shadow finance minster in the DPJ's Next Cabinet, has raised the specter of DPJ government's forgoing US government bonds (at least those dominated in dollars instead of yen). In a story that originated with the BBC, according to Jiji, Nakagawa said, "We propose that we would buy [the US bonds], but it's yen, not dollar." (The fact that the article gets the name of the party that has governed for Japan for a half century wrong — and that Jiji is the only Japanese media outlet carrying this story — makes me a bit reluctant to link to it, but the markets apparently took the report seriously.)

The BBC writes off the possibility that the DPJ could take power this year, but obviously I think it is a mistake to dismiss the DPJ out of hand: Ozawa's troubles notwithstanding, the outcome of the general election is still open. Which is why Nakagawa's remarks should be taken seriously. As Brad Setser reminded readers recently, creditors prefer to lend in their own currency. He was referring to China, but his analysis applies equally to Japan. The DPJ — less constrained than the LDP thanks to its status as an opposition party (and an opposition party interested in distancing Japan from the US) — is free to say what LDP members and bureaucrats may think but are constrained from saying openly.

That said, Yosano Kaoru, finance minister-economy minister-FSA chief did allude to the internationalization of the yen at the recent ASEAN + 3 finance ministerial meeting in Bali, when he pledged up to 6 trillion yen in emergency loans to Southeast Asian countries that would be financed out of Japan's foreign reserves. In other words, Japan would sell some of its dollar holdings to convert into yen, which it would then lend in the region. Whether Japan could sell that quantity is doubtful, but Nakagawa and Yosano's remarks suggest that the Japanese establishment is concerned about Japan's dollar reserves — and is surely watching China's activities warily.

As the two largest holders of US government bonds, Japan and China are locked in a standoff. Neither wants to be the second to liquidate their holdings. Both governments are trapped by their holdings, in that the economic consequences of unloading their Treasuries could damage the US recovery and harm their own economies, but they also don't want to pay for US profligacy by holding Treasuries while the US inflates its way out of debt (or defaults entirely). Given the future outlook for the US government's balance sheet, they have good reason to worry.

So to return to Nakagawa's threat, it is worth asking whether it is a credible threat. Could a DPJ-led government act less restrained in its financial relationship than the Chinese government? I think there is reason to doubt Nakagawa, not least because the DPJ is running to a certain extent on the basis of a populist nationalism with the US as a major target. If the DPJ takes power, it may find it hard to deliver on all of its campaign promises. Moreover, it is unclear whether Nakagawa was voicing his own opinion or speaking for the DPJ as a whole. If the former, it may be irrelevant what he thinks a DPJ government should do about Treasury holdings.

Nevertheless, the DPJ may be playing a dangerous game, not just with the United States but with China, which has every reason to be concerned that Tokyo might try to beat it in a race for the exits.

This should serve as a reminder that the LDP's conservatives do not have a monopoly on nationalism — and a reminder that Japanese nationalism takes many forms. Is Nakagawa Masaharu's argument about the "internationalization" of the yen any less nationalistic than Nakagawa Shoichi's persistent calls for a Japanese nuclear arsenal?

UPDATE: Kamei Shizuka, head of Kokumin Shintō, a prospective DPJ coalition partner, reassured Jeffrey Bader, senior director for Asia on the National Security Council, that a DPJ-led government would continue to purchase US bonds. Kamei probably does not have the authority to speak for a government that does not exist yet and may never exist, but it does diminish the authoritativeness of Nakagawa's remarks.