Despite Defections, Noda’s Coalition Maintains Majority

Fifty lawmakers led by former ruling party president Ichirō Ozawa defected from Prime Minister Yoshihiko Noda’s coalition.

The powerful former president of the ruling Democratic Party of Japan, Ichirō Ozawa, resigned from the party on Monday, along with 49 of his followers, in protest to the consumption tax hike that was passed in the lower house of the Diet last week.

The defections seemingly deal a blow to Prime Minister Yoshihiko Noda’s hold on power but in fact they may allow him to get further economic reforms through parliament because the Ozawa coalition turns out to be weaker than expected.

Ozawa earned the nickname “the destroyer” from his history of orchestrating party resignations over policy disagreements and power plays. There is evidence that the Japanese public and the policymakers in his coalition have grown tired of his tantrums however.

In a poll taken by Kyodo News last week, after the consumption tax bill was passed, nearly 80 percent of respondents said that they do not have high expectations of any party that Ozawa forms if he splits from the DPJ. 60 percent did not understand why Ozawa and his followers chose to rebel in the first place.

Surveying the immediate post revolt parliament, the defections did not result in the DPJ losing its ruling majority. In the lower house, the party remains in a coalition with the conservative Kokumin Shinto (People’s New Party). In the upper house, the DPJ is still in the majority.

Moreover, after looking at the defections more closely, they show more evidence of Ozawa’s fading influence. Thirty-eight of the defections came from the lower house and twelve from the upper house, making up only about half of the Ozawa loyalists in the party. To lower house members who originally resigned changed their mind, saying that they could be more effective influencing tax policy within the ruling party.

This does not mitigate the threat ahead to Noda and the DPJ majority. The same Kyodo poll showed only 30 percent approval of the Noda government. The possibility that the government collapses is still real if there are additional resignations. Noda could try to govern more from the center in order to appeal to a broader coalition but in so doing he needs to be mindful of not alienating the remaining Ozawa supporters.

If the government can survive this turmoil and buck the trend of revolving door prime ministers since 2006, Japan will have a chance to enact must needed economic and quite possibly political reforms.

Noda has argued that Japan must enact legislation to face up to its rising financial problems and avoid a crisis. Its debt to gross domestic product ratio is the highest in the developed world at around 200 percent. Japan’s credit rating was recently downgraded two notches to A+ from AA by Fitch.

The passing of the sales tax bill was meant as a first serious step toward addressing Japan’s fiscal woes. Polling indicates that the Japanese public agrees, just not now. Amid a global economic crisis, the East Asian country is still struggling to recover from last year’s devastating earthquake and tsunami. Regardless, Noda is wagering his political future on the bill with the possibility of additional reforms coming later.

The stakes are high. Assuming that there are no other defections, Noda’s DPJ and the opposition will have the opportunity to pass game changing reforms that could reinvigorate Japan’s paralyzed political system and economy.