WILL Japan’s leadership vacuum never end? Prime Minister Naoto Kan, who took office in June as the country’s fifth leader in three years, may have survived a leadership challenge last month, but he still lacks sufficient support to pass laws in Parliament.

As a result, reforms to address the country’s huge national debt and revive the economy remain unlikely. Japan is struggling with deflation, a rising yen, slowing exports and a heavy social welfare burden.

When the left-leaning Democratic Party of Japan (DPJ) took power last year, ending decades of conservative rule under the Liberal Democratic Party (LDP), many observers believed it was just what the country needed. Surely, a new party would be able to sweep away the vested interests that had blocked market opening reforms that Japan needed in order to jump-start its stalled economy.

The DPJ won power promising to cut bureaucratic waste and focus spending on consumers rather than the big construction contractors. But after a brief honeymoon with voters, indecisive leadership and broken election promises over the relocation of a controversial US air base in Okinawa have left the government in no better position than its predecessor.

Matters improved for the DPJ in June with the election of Mr Kan as party leader. But his subsequent suggestion that the government raise the sales tax from 5 to 10 per cent was poorly received. The DPJ subsequently lost control of the Upper House in July.

Earlier this month, the DPJ was faced with fresh distractions. On Oct 4, a judicial review panel ruled that influential party leader Ichiro Ozawa should face criminal charges over a financial scandal. The case is a sensitive one within the DPJ because Mr Ozawa organised an attempt last month to unseat Mr Kan.

The panel’s decision means that the authorities have little choice but to appoint lawyers to prosecute Mr Ozawa, who will face legal action for the first time in his political career. Mr Ozawa played an important role in the DPJ’s historic rise to power last year. But he is unpopular with voters and is widely seen as an old-style, backroom wheeler-dealer.

A recent Kyodo News opinion poll shows that 54.3 per cent of respondents believed Mr Ozawa should resign from Parliament, while 63.8 per cent said he should leave the party. But Mr Ozawa’s influence within the DPJ is so strong that any attempt to remove him could trigger even more political instability. On Oct 15, Mr Ozawa announced that he was suing the government, seeking to nullify the judicial panel’s decision to indict him.

All this politicking has left the reform drive in limbo. Last month, the Nippon Keidanren, the nation’s top business lobby, urged the government to carry out sweeping tax, fiscal and social security reforms, including that controversial sales tax increase. Just how Prime Minister Kan can do this, given his problems with Mr Ozawa and the recent setback in the Upper House elections, is anyone’s guess.

Mr Kan’s supporters argue that his strength lies in the fact that, unlike most Japanese politicians, he does not come from a family of politicians. The son of a businessman, he was a civic activist before being elected to Parliament in the 1980s. His strong debating skills and policy pragmatism have also set him apart from other politicians in the DPJ.

And he is going to need all this and more if his government is to survive the coming months. Lacking both an Upper House majority and the two-thirds Lower House majority to overcome Upper House intransigence, Mr Kan may have difficulty getting the budget passed before March 2011, when the current fiscal year ends.

Popular support for Mr Kan’s government has also been falling over the way Tokyo handled its recent territorial dispute with Beijing in the East China Sea. The point was underlined on Sunday, when the ruling party lost a Lower House by-election in Hokkaido.

The only good news for the DJP is that if Mr Ozawa had won last month’s leadership vote it would almost certainly have faced worse problems. Apart from Upper House obstruction, Mr Ozawa would have faced persistent questions about his role in the financial scandal. His unpopularity with voters would have also made it difficult to form the sort of grand coalition the country so desperately needs in order to overcome the current parliamentary logjam.

That said, the government remains in a difficult position. “Japan is stuck in a dense fog,” commented Mr Takayoshi Shibata, a politics professor at Tokyo’s Keizai University. He was speaking in July, soon after the Upper House election results were announced. Nothing has happened since to encourage observers to change that assessment. Strong leadership in Tokyo remains a long way off.

Copyright © 2010 Singapore Press Holdings Ltd