Less than a year after its historic rise to power, the Democratic Party of Japan is facing a fierce backlash over the prime minister's erratic leadership and the party strongman's financial irregularities. Far from taking sole control of the upper house as it vowed to do, the DPJ will be lucky to hold onto a majority with the help of its parliamentary allies.

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It was scarcely eight months ago that the Democratic Party of Japan swept triumphantly to power after toppling the once invulnerable Liberal Democratic Party in the general election of August 2009. Now the cabinet of Yukio Hatoyama is watching its approval ratings slip perilously close to the 20 percent mark, while the covers of the weekly newsmagazines crow about "The Self-Destructing DPJ" and forecast "Hatoyama's Resignation at the End of May."

As the prime minister's situation goes from bad to worse, the glassy, inscrutable stare and odd behavior and speech that earned him the nickname "alien" seem to grow more pronounced by the day. By contrast, Hatoyama's ally Secretary General Ichiro Ozawa widely regarded as the power behind the throne, appears undaunted, confidently predicting a DPJ victory in the July House of Councillors election despite plummeting poll numbers.

Panel Prepared to Force Ozawa's Indictment

In fact, the administration's current woes have a great deal to do with Ozawa himself. On the morning of April 28, the nationwide newspapers gave front-page treatment to the harshly worded conclusion of a citizens' inquest panel recommending Ozawa's indictment in connection with violations of political funding laws. While Ozawa brushed aside suggestions that he resign as DPJ secretary general, insisting that he had "nothing to be ashamed of," the LDP and other opposition parties unanimously demanded that the DPJ kingpin appear before the Diet to testify on his role in the scandal, all but guaranteeing a standoff in the legislature.

To recap, on February 4, the Tokyo District Public Prosecutors Office indicted three former Ozawa aides, including DPJ Diet member Tomohiro Ishikawa (who subsequently quit the party), on charges of violating the Political Funds Control Law in connection with a land purchase by Ozawa's financial-management organization, the Rikuzankai. The prosecutors stopped short of indicting Ozawa himself, however, maintaining that the evidence was insufficient to prove Ozawa guilty in a court of law. Ozawa triumphantly declared that the prosecutors' "fair investigation" had proven him innocent of all wrongdoing and dismissed opposition demands that he submit to a grilling in the Diet.

But on February 12, a citizens' group challenged the prosecutors' decision in a complaint filed with the Tokyo No. 5 Committee for the Inquest of Prosecution. After two and a half months of deliberation, the 11-member citizens' panel announced its conclusion on April 27: Ozawa merits indictment.

The conclusion came as no surprise in political circles, but the content and wording of the decision were harsher than expected. In its unanimous decision, the panel called the alleged infractions "inexcusable from a citizen's perspective," attacked Ozawa's explanation as "extremely illogical, unnatural, and untrustworthy," and argued that it should be possible to convict Ozawa as a co-conspirator in the falsification of his political funding reports.

In a press conference on the evening of April 27, Ozawa was defiant, saying, "I'm astonished by this unexpected outcome. I'm confident that in the end the prosecutors will make the right decision." He denied all wrongdoing and made it clear that he had no intention of resigning as secretary general. But the public's reaction has been skeptical. The report ignited a new firestorm of Ozawa bashing in the media, and partly as a result a sizable element of the public now believes Ozawa should step down from his party position and perhaps resign from the Diet as well.

Members of the anti-Ozawa faction within the DPJ have also begun lobbying for the secretary general's resignation, a sign that the underlying split within the party is widening. Ironically, the intra-party sniping has had the effect of alienating voters and threatens to further erode public support for the cabinet and the DPJ. It is as if the party is mired in quicksand; the more it struggles, the quicker it sinks. "It's a vicious circle," laments a junior DPJ politician.

Now the ball is once again in the public prosecutors' court. If the Tokyo District Public Prosecutors Office again decides not to indict, or if it fails to reach a decision on the matter within three months, the citizens' panel will take up the matter once more, and if it again concludes that Ozawa merits indictment, the prosecutors will have no choice but to abide by that decision. Given the procedural timetable, an indictment could well come on the very eve of the upper house election. For the Hatoyama cabinet, the whole affair is a ticking time bomb.

Is Futenma Hatoyama's Waterloo?

Hatoyama's Futenma time bomb is set to go off even sooner. The prime minister went far out on a political limb near the outset of his administration by sticking with his campaign commitment to renegotiate the Japan-US agreement on relocation of the Marine Corps Air Station Futenma in Okinawa Prefecture. Despite the obvious displeasure of US officials, Hatoyama remained adamant about moving the locally unpopular base out of the prefecture (where most US bases in Japan are concentrated), if not out of the country.
"Trust me," he said to a skeptical Barack Obama during the US president's visit last November. He promised to resolve the issue quickly, eventually settling on the end of May as the deadline for an agreement. Since then, according to a Foreign Ministry official, "it has just been one misstep after another."

The Obama administration, which regards the previously agreed plan as the only practical one, is showing clear signs of impatience. During the April 12–13 nuclear summit in Washington, DC, the only one-on-one audience that Hatoyama was able to secure with Obama was a 10-minute informal chat, prompting a Washington Post columnist to comment that "the biggest loser . . . was the hapless and (in the opinion of some Obama administration officials) increasingly loopy Japanese Prime Minister Yukio Hatoyama" (April 14). With barely a month remaining until Hatoyama's self-imposed deadline, one Japanese government official declared that it would "take a miracle to settle the issue by then," and even the prime minister's own staff seemed inclined to agree.

The prime minister himself continued to maintain that he would keep his promise. He abandoned his plans for overseas travel during the spring holidays to dedicate himself to the task. On the morning of April 28, just before the start of the holiday break, he visited the Tokyo residence of Torao Tokuda, a retired lawmaker from Tokunoshima island in Kagoshima Prefecture, to win the local magnate's support for a plan that would transfer a helicopter squadron of around 1,000 Marines to Tokunoshima. This was the most specific explanation yet of a vague "idea" to which Hatoyama had alluded in the past, and on which he has staked a great deal. Unfortunately for Hatoyoama, Tokuda summarily rejected the proposal, arguing that the government should "respect the will the people of Tokunoshima" (i.e., not to transfer any part of the base there).

Clearly, the prime minister had set himself an impossible task. The United States was standing by the original plan. The mayors of both potential relocation sites—Nago in Okinawa and Tokunoshima in Kagoshima—had declared their unqualified opposition. The DPJ's coalition partner, the Social Democratic Party, wanted the bases moved out of the country. Under the circumstances, the chances of Hatoyama fulfilling his pledge to reach "an agreement with the local communities and within the coalition" by the end of May were virtually nil. Most observers now agree that the prime minister will be left with an unpleasant choice: Admit that negotiations have stalled and extend the self-imposed deadline, or superficially honor the deadline by adopting a plan that neither the United States, the SDP, nor the local communities will approve.

On May 4, visiting Okinawa Prefecture for the first time since he became prime minister, Hatoyama finally acknowledged that he would be unable to keep his longstanding promise to Okinawa residents to transfer the base out of the prefecture. The backlash from locals and voters across the nation can only spell more trouble for Hatoyama and the DPJ.

No Time to Start Over

Former vice-speaker of the House of Representatives Kozo Watanabe, a plain-speaking veteran known as the conscience of the DPJ, was among the first to suggest that the Futenma issue might bring down the Hatoyama government. "If Hatoyama fails to reach a resolution, it will force a change in leadership," said Watanabe, "and Naoto Kan will be up next." A number of rank-and-file DPJ lawmakers seem anxious for that to happen soon, convinced that the prime minister's own missteps and misstatements are the reason for the party's plummeting popularity. "If the priority is winning the upper house election," says one junior DPJ Diet member, "the only option is for the cabinet to resign en masse." Others in the party favor a less drastic approach, hoping to keep Hatoyama afloat by reshuffling the cabinet and party officers immediately beneath him. But any change in Ozawa's standing would upset the entire balance of power in the DPJ. As one senior DPJ member put it, "Once you start tampering with the leadership structure, it's going to cause a major upheaval in the party, and ultimately the resignation of both the secretary general and the prime minister will be unavoidable."

Unfortunately for the DPJ, it is probably too late to wipe the slate clean before the upper house election, set to take place on July 11 (or July 25 in the event that the current Diet session is extended to conclude legislative business). If Hatoyama and Ozawa announce their resignation as early as the end of May, as has been suggested, the party's legislative agenda goes out the window. The prime minister's resignation would necessitate a party election to choose a new leader for the DPJ, followed by a Diet vote to elect a new prime minister. Meanwhile, the prime minister is facing a heavy diplomatic schedule, including a trip to China scheduled for June 12 and the G8 and G20 summits in Canada near the end of June. "Any major shakeup just before the election would be next to impossible, both political and procedurally," asserts a source in the Cabinet Secretariat. In any case, the efficacy of such a move at this stage is doubtful. "The public would view it as a cynical ploy to defuse criticism," says one LDP leader. Last but not least, it seems highly improbable that Ozawa would meekly exit at this point; as mastermind and director of the DPJ's national election strategy, his reaction to dire predictions for the party have been dismissive. ("The pre-election polls are hardly ever right.")

In view of the above, it seems almost certain that the DPJ is headed toward an internal standoff over the party's leadership structure, and that nothing much will change before the July election. "We probably have no choice but to shut our eyes and plunge into the election under the current leadership," agrees a senior DPJ official.

How Bad Will It Be?

What outcome can the DPJ expect under these circumstances? Needless to say, the situation is still in flux, but we do know that in recent opinion polls the percentage of voters indicating their intent to vote for the DPJ has just about halved since last summer's general election.

The July election will decide 121 upper house seats, half of the chamber's total. Of these, 73 are filled by the top vote-getting candidates in each prefectural constituency, while 48 are allocated to the parties by nationwide proportional representation (see below). The DPJ's only major rival, the LDP, remains deeply unpopular. The ranks of independent voters have swollen dramatically, and small spin-off parties have proliferated. All of these wild cards make the election a kind of free-for-all. Still, if we were to hazard a prediction based on past elections and recent trends, it would probably be something like this: In the proportional representation race, DPJ 14, LDP 11, Your Party 7, New Komeito 6, Japanese Communist Party 3, SDP 2, People's New Party 1, and others 4; in the local constituency races, DPJ 33, LDP 32, PNP 4, New Komeito 2, and others 2. This would give 47 of the contested seats to the DPJ and 43 to the LDP, making it impossible for either party to claim victory. Adding in the 62 DPJ seats that are not up for reelection this year, we arrive at an upper house total of barely over a 100 seats—far short of the DPJ's "single biggest goal" of an absolute majority (122 seats). Not only that, this outcome would leave the three-party coalition that the DPJ forged last September with the SDP and PNP short of a majority as well, with a combined strength of only 117 seats. Of course, if the government somehow manages to settle the Futenma matter satisfactorily by the end of May, and Ozawa accepts his responsibility to explain himself to the Diet, the DPJ's approval rating could rebound, creating a completely different situation. But the chances of that happening are slim indeed.

Long-Term Outlook: Gridlock and Realignment?

If the scenario outlined above comes to pass, the result will be a hung (divided) Diet, very similar to that which produced protracted legislative gridlock before the general election of August 2009, but with the parties' roles reversed. Unless the DPJ can secure the cooperation of the opposition, it will be unable to get any legislation past the opposition-controlled upper house. And while the lower house can override the upper house with a two-thirds majority, the ruling coalition seems sure to fall short of the 320 votes needed—especially after recruiting its own lower house members to run in the upper house election. In short, the DPJ will be unable to control the Diet unless it can cobble together a new ruling coalition.

If the current coalition does lose its Diet majority under the present leadership, Hatoyama and Ozawa will be under intense pressure to resign. "It's assumed in such a situation that the prime minister should resign, since the cabinet has lost the public's confidence, and the secretary general should resign, since he was in charge of the election strategy," says a junior DPJ politician. In that case, the DPJ would need to hold party elections to choose a new leader, after which an extraordinary Diet session would be convened to designate that leader prime minister. Then the new prime minister and the DPJ leadership would begin talks with potential coalition partners, and a new cabinet would be selected and inaugurated after a coalition agreement was reached. This is "the accepted procedure under our system of constitutional government," as an LDP elder put it. But no one can rule another, more dramatic scenario: that a full-scale conflict will break out between the Ozawa and anti-Ozawa factions and engulf the new parties and elements of the LDP, leading ultimately to another major realignment of political forces.

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