Can We Expect Some Substantial Shifts in Japan and the Asian region?

Can we expect some change in Japan after a sweeping victory by its opposition Democratic Party? How would Japan’s new leadership affect the Asia’s economic and geopolitical landscapes?

The liberal opposition Democratic Party of Japan defeated the conservative party that had ruled for almost all of the past half-century, or the entire postwar period.

Their victory seems to be driven by rising public discontent over many economic and social issues including rising unemployment, public debt, and a rapidly aging population. The leader of the opposition Democratic Party, Yukio Hatoyama who is poised to become new Prime Minister has pledged to respond to the needs of ordinary people, stressing social values and wealth redistribution.

It is intriguing to see how a political shift in Japan such as a change of government in Japan and incoming leader’s pledges resonate the political situation and promises delivered by the Kim Dae-jung who won a narrow victory in the Korea’s presidential election in late 1997.

Can this bring some major shifts not only in political landscape but in economic situation in Japan?

Hatoyama seems to be up for a comprehensive overhaul of Japan’s political systems, as he wrote in his essay "Resolving our fiscal problems is impossible without comprehensively rebuilding Japan’s political systems."

Hatoyama pledged to rescue the Japanese economy from 20-years of ongoing recession by introducing some measures such as provisional acquisition taxes.

He argued for breaking ties between the Japanese government and big businesses, pledging to put the interests of the people before those of corporate Japan. For instance, his promises included banning political contributions from large corporations. The DPJ only received one-thirtieth of about 300 million USD donated to the LDP from Japan’s top business lobby Nippon Keidanren.

It would be interesting to see how he would put his pledges into practice. I wouldn’t hold my breath though; Korea’s Kim Dae-jung administration neither changed the political landscape that much nor fixed structural economic problems.

Furthermore, he is proposing the creation of an East Asian community including regional currency union, similar to EU, strengthening bonds with Asian neighbors such as China and South Korea.

He claims the demise of US-led globalism, as he said “As a result of the failure of the Iraq war and the financial crisis, the era of the US-led globalism is coming to an end and…we are moving away from a unipolar world led by the US towards an era of multipolarity.”

The 1997 Asian financial crisis taught Asian countries several lessons. China started to form a serious economic tie with the U.S., exporting their goods to the U.S. and buying U.S. treasuries. Japan wanted to launch Asian-led rescue initiative during the 1997 Asian crisis, but it didn’t happen.

With the U.S. economy deteriorating, although the status of USD as the world reserve currency and the U.S. military power remaining, will we see some real shifts in regional ties? Will there be substantial changes in dynamics of economic and security alliances?