Japan Unveils a Tame Reform Plan

TOKYO —  To a chorus of criticism and yawns, Prime Minister Ryutaro Hashimoto’s blue-ribbon committee Wednesday unveiled its long-awaited plan to streamline Japan’s unwieldy government bureaucracy.

The Japanese have been talking for at least a decade about the need for such reform--precisely the kind of structural change seen as essential to retool Japan and other Asian nations for the new century.

But critics doubted that the plan released Wednesday would produce a leaner, more efficient or easier to understand Japanese government.

“Hashimoto’s reform has flunked,” declared political analyst Taro Yayama, calling the package a “Band-Aid” and not the surgery that is required. Others complained that the prime minister’s once-ambitious reform plan had been defeated by the very bureaucrats, lobbyists and civil servants it was meant to discipline.

The proposal, which parliament must approve, calls for reducing the number of government ministries and agencies from 22 to 13, including a large Cabinet agency that would enhance the firepower of the prime minister’s weak office.

But “it seems like they’re just reshuffling the numbers of ministry and agencies,” said Hiroshi Kamae of Hitotsubashi University in Tokyo. “I don’t think it’s based on a clear vision to downsize government.”

What was stunning about Wednesday’s proposal is that nobody expects it to produce real political change, even though Hashimoto has staked his reputation on it and the “reform” mantra has been chanted by nearly every major leader in Japan as this nation has lurched through five prime ministers in the past six years.

Elite bureaucrats, the cream of Japan’s educational and social system, have long wielded much of the real power in the country.

But the once-revered administrators have recently come under attack for inefficiency, arrogance, destructive rivalries, interference in the private sector and corruption.

Some blame their bungling for worsening Japan’s economic woes.

Still, scandal-plagued politicians, who purportedly rule them, depend on the bureaucrats heavily because elected leaders often lack the legal skills to write laws or the administrative experience to run government agencies.

With a financial crisis pummeling stocks and the yen, savers and investors are interested not in reform but in a financial stabilization package that the government is to release next Wednesday.

Merrill Lynch economist Ronald Bevacqua predicted that meaningful reform--or lack of it--is “unlikely to affect the market in one month, six months or one year’s time.”

The latest effort to streamline Japan’s government encountered fierce opposition from postal workers and other civil servants who are important supporters of the ruling Liberal Democratic Party.

An earlier proposal to privatize the massive postal insurance system was dropped from Wednesday’s final report.

And the LDP and its two smaller allies agreed to put off until next year a decision on whether to strip some authority from the mighty Ministry of Finance. Though the ministry is under fire for its handling of Japan’s massive bad-debt problem, the committee said it should not be distracted from its task of defusing the financial crisis.

Another powerful ministry that comes out on top in the reform reshuffle is the Ministry of Trade and Industry, which won a bureaucratic battle to snatch jurisdiction over information and telecommunications away from the Ministry of Posts and Telecommunications.

But Western sources said the bureaucrats in the posts section who regulate telecommunications have already made a deal to move to the Trade Ministry en masse--and said the move would probably succeed in boosting regulatory efficiency in this crucial sector.

The new reform will do nothing to clean up the mess in Japan’s foreign aid, which is handled by 19 squabbling agencies and ministries. According to Kyodo News Service, a plan to integrate these functions was killed off by bureaucrats defending their vested interests.

Critics said the zoku-giin, or lawmakers who act as lobbyists for powerful interests that are known here as “tribes,” had gutted Hashimoto’s reform effort this fall. Hashimoto has been weakened by political missteps and now lacks both the support within his party and the public popularity needed to shove through major changes.

A Yomiuri newspaper poll last week found that 43.4% of Japanese surveyed approve of Hashimoto--but 43.6% disapprove.

“By any measure, Hashimoto is on the ropes,” said John F. Neuffer, author of a newsletter on Japanese politics. “The economy stinks. He must now sell taxpayers on the necessity of using their money for the [troubled] banks. The zoku-giin have watered down his big plans to restructure the bureaucracy.”

If opinion polls are to be believed, a cynical Japanese public is disgusted by zoku-giin, who are seen as obstructing badly needed reforms. A survey released Tuesday found that 68% thought that these lawmakers were harmful; 72% described themselves as “a little” or “very” dissatisfied with the state of Japanese politics.

But even if the political status quo prevails, market forces will change Japan, many analysts predict.

“There’s a clearer vision for reform led by markets than for reform led by politicians and bureaucrats,” said Norihiko Narita, a professor at Surugadai University in Saitama prefecture. “As long as the government doesn’t interfere with the market recovery, it doesn’t matter how many ministries they have.”

Chiaki Kitada of The Times’ Tokyo Bureau contributed to this report.