Top Risk No. 5: Japan
By Ian Bremmer and David Gordon What happens when the ruling party loses power in a one-party state? You get a zero-party state. That has effectively happened in Japan, and it’s hard to overstate the importance of the sweeping political change — indeed it’s unprecedented for a major industrial democracy. The new Democratic Party of Japan’s ...
By Ian Bremmer and David Gordon
By Ian Bremmer and David Gordon
What happens when the ruling party loses power in a one-party state? You get a zero-party state. That has effectively happened in Japan, and it’s hard to overstate the importance of the sweeping political change — indeed it’s unprecedented for a major industrial democracy. The new Democratic Party of Japan’s (DPJ) efforts to limit the influence of bureaucrats and industrialists are creating higher policy risk, especially after upper house elections in the summer.
Currently Prime Minister Yukio Hatoyama is holding back on that agenda given coalition and electoral constraints. But indications are that the DPJ would stick with its electoral mandate and not continue its present more cautious policy positions if it gains control of the upper house. Given Japan’s extraordinary fiscal constraints, that’s going to be tough to pull off, particularly since the sidelining of senior technocrats makes it much more difficult to put flesh on the bones of DPJ policy goals.
The real power in the DPJ regime is long-time party boss Ichiro Ozawa, who, himself tainted by scandal, remains outside the cabinet and so behind the formal policy scene. It’s quite possible that Hatoyama won’t last the year. He’s not a skillful campaigner nor an effective decision maker, and has a scandal of his own around his neck. Insiders are already looking to someone like Deputy Prime Minister Naoto Kan or even the more youthful and policy-savvy Kazuhiro Haraguchi to take Hatoyama’s place — even before the upper house elections.
If so, regardless of the merits of the actual successor, the DPJ will appear to be simply a continuation of the post-koizumi era succession of weak governments, but this time without the benefit of a strong unified bureaucracy to guide policy and with a much more worrisome economic situation. Meanwhile, uncertainty over how 2010 will play out for the DPJ and the party’s less favorable disposition toward the business community is likely to harm financial confidence, deepening economic woes.
Some pundits worry that the United States will replicate Japan’s lost decade. For 2010, the greater risk is that Japan might be starting another one.
Next up: The battle over climate change.
Ian Bremmer is president of Eurasia Group, and David Gordon is the firm’s head of research.
Ian Bremmer is the president of Eurasia Group and GZERO Media. He is also the host of the television show GZERO World With Ian Bremmer. Twitter: @ianbremmer
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