December 31, 2007 Update

You could have been forgiven for mistaking the country you were in had you been reading the Japanese papers over the last few months: a government on the nose with voters; a leader under pressure from his peers; and a resurgent center-left opposition talking of its plans for power.

n the end, Japan's governing coalition was trounced in the July29 elections for its upper house. For the first time in 50 years, the Liberal Democratic Party (LDP) is not the largest party in the upper house. It also falls short of a working majority, even in coalition.

The result does not lead to an immediate change in government; the election was held for the upper house of its bicameral parliament, and Japan, like Australia, is governed by the party with a majority in the lower house.

Still, it is already having profound political effects, particularly on Japanese security policy. The opposition has signaled it will use its majority in the upper house to vote down the extension of a law enabling Japanese support for US and other countries' forces operating in the Indian Ocean. Although the bill can be entered into law if passed once again by the government's super majority in the lower house, this hardly amounts to a strategy for managing parliament. Failure to renew the law, on the other hand, will force Japan to withdraw its forces.

The electoral rout has three main causes. As is often the case in Japan, scandal played a role. Hapless Prime Minister Shinzo Abe managed to burn through five ministers during his short tenure, with no less than three agricultural ministers forced out because of financial irregularities. The first, Toshikatsu Matsuoka, committed suicide while under investigation, while his successor, Norihiko Akagi, became embroiled in a funding scandal during the election campaign. Indeed, there are suggestions that Abe's own delayed decision to step down was precipitated by a money scandal that was about to be revealed in the press.

Voters also probably held the government responsible for a bureaucratic scandal. In the run up to the election it was reported that the Social Insurance Agency had lost the records of some 50 million people who had been paying into Japan's public pension system. In Japan's ageing society this was electoral poison.

A second cause was the canny electoral strategy of the major opposition Democratic Party of Japan (DPJ). It decided early to target constituencies with only one sitting member (many constituencies have two or more) and its leaders visited them often. This strategy maximised their chances of securing a swing against the government, and it worked brilliantly.

The DPJ won 17 of these seats, with the LDP successful in just six. Further, many of these victories were in rural constituencies, vindicating their strategy of targeting policies at groups that have traditionally supported the LDP, such as in agriculture. Finally, Abe's ineptitude was surely important. As the anointed successor of star politico Junichiro Koizumi, the youthful Abe was expected to lead the party to new heights. Unfortunately, he bombed.

This was due in no small part to his policy platform. It centred on the rather wishy-washy rallying cry of transforming Japan into a "Beautiful Country", and emphasised big themes of national identity rather than issues that voters cared about. Despite prodding from his colleagues he stubbornly stuck to this narrative and failed as a result.

Abe has now been replaced by Yasuo Fukuda. Fukuda is unlikely to prove as inept as his predecessor. It remains to been seen, however, whether he faces the same fate in the general election.

There are good reasons for not counting him out yet. First, Fukuda has a huge majority in the lower house thanks to former prime minister Koizumi's resounding victory of 2005. This means the opposition will be hard pressed to make up the necessary ground in one electoral cycle.

Second, Japanese voters have always been willing to punish the government more harshly in the upper house, suggesting the result may not be repeated when people are voting for government. In both 1989 and 1998, for example, the opposition took control of the upper house through the ballot box, yet in both cases the government survived. The LDP's only loss in the lower house, on the other hand, came about because of a split in the party, rather than a shift in voter sentiment.

Finally, Fukuda does not have to call an election until 2009. This gives him time to remake his party's stodgy image and improve its numbers. Indeed, opinion polls taken after his election as leader have already given him a small boost.

Still, Fukuda will require all his political nous and famed acerbic wit if he is to succeed. He faces a resurgent opposition that is promising to take a confrontational line using its new power. In doing so, it hopes to force an early general election and double the government's misery.

Fukuda faces a choice. To deal with his weakened ability to pass laws through the upper house he can either attempt to get opposition members to cross the floor and join the government, a strategy that has worked before. Alternatively, he can try to persuade the opposition to cooperate in drawing up legislation.

For now it appears he has chosen the second strategy. His party has already proposed to cooperate with the opposition parties in drawing up legislation. Yet the opposition are wary of these conciliatory moves, and rightly so.

In the past LDP leaders have shown themselves to be adroit at cooperating with other parties while simultaneously sucking the life out of them. The Socialists, for example, who were the major opposition party for most of the postwar period, were virtually destroyed after trading principle for power by joining with the LDP in the 1990s.

It is this fear that motivates the response of the DPJ to Fukuda's overtures; they have replied that they look forward to debating policy with the government openly in parliament, rather than behind closed doors.

Still, the confrontational parliamentary approach the DPJ are promising has risks of its own. The DPJ has never held power, and they could turn voters off if they are too obstructionist. Their leader, Ichiro Ozawa, although a powerful political figure and policy expert, can also be taciturn, which may not endear him to voters.

Fukuda has already changed his government's style in response to the new circumstances. He has signaled that he will jettison his predecessor's ideological bent, shutting down a committee established to implement Abe's vision of a "Beautiful Japan". But he is likely to find it difficult managing the legacy of Abe and Koizumi in this new era of divided government.

His most immediate problem comes in dealing with national security. The opposition DPJ opposes a renewal of the law enabling Japanese logistical support for military forces of the US and other countries operating in the Indian Ocean. The US government has publicly pressured Japan to continue with these operations, yet the DPJ has not yielded, arguing they are unconstitutional under Japan's peace constitution.

The DPJ has been criticized as opportunistic by conservative Japanese broadsheets, and pundits in the United States and other countries, for taking this position. Yet these accusations are misplaced. The opposition is simply following through on its long-stated disagreement to participation in military activities that do not have a clear mandate from the United Nations.

Indeed, the DPJ does not oppose Japan taking a role in international security affairs. Party President Ozawa is the dominant voice on security matters within the party, and has long advocated a broader role for Japanese forces in UN-mandated operations. He argues Japan can undertake a wider range of peacekeeping activities under existing constitutional constraints, including in Afghanistan, but that joint operations with the United States that are not directly linked to the defence of Japan remain out of bounds. This insistence on keeping Japanese military activities firmly within constitutional boundaries is informed by his understanding of the tragic slide into war, rather than any desire for political point scoring.

On a deeper level, the election result has brought into relief an ongoing debate within Japan on how it should manage its security affairs in the wake of the end of the Cold War, including with its alliance partner the United States.

Driven partly by pressure from its US ally, Japan has been gradually expanding the range and type of military activities it can participate in under its famed peace constitution. Ironically, it was Ozawa himself who pioneered this shift to realign Japan as a "normal nation" in security affairs.

During the first Gulf War he was a major figure in government, and was embarrassed by Japan's inability to contribute militarily despite international support for ousting Iraqi forces from Kuwait. He later responded by pushing legislation enabling Japanese participation in UN peacekeeping operations. This led to Japanese participation in UN operations in Cambodia in 1992, the first significant shift away from Japan's long-standing reticence on security affairs.

There is no doubt that the two major parties see an alliance with the US as in Japan's national interest. Yet beyond this positions differ. At one end of the spectrum lies Abe, and his predecessor Koizumi, who advocate an expansive view of Japanese participation in security activities led by the US. Indeed, both were willing to push the boundaries of what is legally permissible under Japan's peace constitution in responding to the exigencies of the post-September 11 world. In contrast, the DPJ is more circumspect in its approach to the question of how much Japan should go along with its alliance partner.

The election victory of the opposition means this debate is now occurring in the public realm. This is surely a healthy thing; during the Cold War disagreements over how to manage national security occurred within government, while the major opposition Socialists remained pure, but irrelevant, by advocating unarmed neutrality. Yet the change does mean that we are likely to see greater disagreement, and therefore less forward movement, on questions of national security.