Monday, August 8, 2005

Koizumi loses "confidence vote"

Well, not exactly. The upper house of Japan's Diet voted down, 125 to 108, a reform bill pushed by Prime Minister Junichiro Koizumi that would have split up and privatized the country's postal system and the large financial system it runs (its banking arm's holdings total about US$2 trillion while its insurance arm holds about US$1 trillion).

Proponents of the bill have said that Japan Post represents the bloated bureaucracy that is stifling the economy, and Koizumi has argued the money needs to be opened to more efficient investment in order to stimulate the world's second-largest economy.

While this loss for Koizumi might seem terribly boring, it is significant because the postal bill was a major piece of aggressive reform legislation being pushed by Koizumi, and Koizumi himself had said he would see failure of the bill to pass as a vote of no confidence.

Twenty-two members of his own Liberal Democratic Party (which is conservative, go figure) sided with the opposition, while eight were absent or abstained. Now Koizumi seems poised to make good on his threat to dissolve the lower house and call an election for September 11. According to Kyodo, the LDP's leadership said that Diet members who voted against the bill would not be allowed to run on the LDP ticket.

Fallout for LDP may come from the postal workers' union, which CNN says has long been supportive of the LDP, and from rural voters, who saw the privatization bill as hurting their interests.

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