YAMAGUCHI ELECTION FAILS TO SHAKE FUKUDA'S RESOLVE

C O N F I D E N T I A L SECTION 01 OF 02 TOKYO 001197 SIPDIS SIPDIS E.O. 12958: DECL: 04/30/2018 TAGS: PGOV ECON EFIN JA SUBJECT: YAMAGUCHI ELECTION FAILS TO SHAKE FUKUDA'S RESOLVE REF: A. FUKUOKA 0077 ¶B. TOKYO 1148 ¶C. TOKYO 1076 Classified By: Ambassador J. Thomas Schieffer, reasons 1.4(b)(d). ¶1. (C) Summary. The April 27 Lower House by-election to fill a vacant seat in the Yamaguchi 2 district, once widely touted as a bellwether for the future of the Fukuda administration, has failed to live up to its advance billing. With so much of the campaigning focused on national issues, such as the provisional gasoline tax, pensions, and health care, the results were widely expected to give the winning side something of a mandate. In reality, very little has changed over the last three days. No one expected the Prime Minister to take any drastic steps, win or lose, but PM Fukuda appears to have emerged unfazed by the electoral loss. In the four days since the election, he has fulfilled his pledge to use his majority in the Lower House to re-instate the provisional gasoline and other road-related taxes and stated his intention to do so again on May 12 or 13 with reference to a bill to restore construction earmarks for certain road-related tax revenue. End Summary. ¶2. (C) Some Embassy contacts and media commentators had predicted that a loss for the ruling Liberal Democratic Party (LDP)-Komeito coalition in Yamaguchi would force Fukuda to reconsider his strategy for passing key tax-related legislation through the Diet by using a two-thirds majority re-vote in the Lower House. Instead, he has apologized profusely to the public for the additional tax burden during a time of rising prices and patiently explained the economics behind his decision to proceed with the second vote. He has benefited in this from the prominent media coverage given to prefectural governments' expressions of gratitude for the restoration of needed revenues. He is fortunate, too, that the election and the Lower House re-vote have both taken place during Japan's traditional "Golden Week" holiday, when much of the country is on vacation. One Consulate Fukuoka contact noted that the LDP had never expected to win in Yamaguchi, perhaps cushioning the blow. Seemingly empowered by the lack of any particular pressure to change his tactics or step down, and the knowledge that there is no legal procedure to force him to do either, Fukuda has publicly reaffirmed his intention to keep his administration intact through the July G-8 Summit. ¶3. (C) Others had argued that a win would embolden the main opposition Democratic Party of Japan (DPJ) to pass a censure motion in the Upper House, a non-binding and untested measure intended to increase the pressure on Fukuda to step down. Instead, the DPJ has backed down from its original plan to use the censure motion after the gasoline tax vote, and is reportedly growing more reluctant to use it in response to a Lower House override vote on the bill governing earmarks later this month either. This would mark at least the fifth time that the DPJ has failed to follow through on a threatened censure motion since becoming the party with the most seats in the Upper House in July 2007. The DPJ has gained little ground by criticizing Fukuda for using "heavy-handed" tactics in pushing the reinstatement of the provisional gasoline and other road-related taxes. They have also suffered from their inability to gain consensus within their own party over the measure, or to come up with a viable counterproposal after the Prime Minister met them halfway by agreeing to end earmarks for road construction by FY2009. ¶4. (C) For many political observers, the significance of the Yamaguchi by-election, the first national-level election contested under Fukuda's leadership, spoke more to the view that the electorate may be increasingly swayed by issues rather than ideological or party differences. What weighed most heavily during the campaign was not party loyalty but national issues, such as re-imposition of the gasoline and other road-related taxes, pension problems, and healthcare, including the unfortunately-timed increase in pension deductions to fund medical insurance for those over 75. The DPJ has stridently opposed the LDP on these issues, but has TOKYO 00001197 002 OF 002 offered little in the way of a policy response. Exit polls, not surprisingly, showed a majority of respondents opposed re-instating the gasoline tax, without regard to the lack of a DPJ plan for making up the lost revenue at the local level. ¶5. (C) More importantly for the next general election, however, over 70 percent of unaffiliated voters chose the DPJ's Hiraoka, sealing his victory. Hiraoka also garnered almost a quarter of LDP votes, in addition to nearly 95 percent of his own DPJ supporters, beating Yamamoto by a score of 116,348 votes to 94,404. Another significant factor was the decision by the Japan Communist Party (JCP) to forego a candidate, a policy that they expect to follow in the next general election as well for districts where they have traditionally received fewer than eight percent of the vote. "The JCP vote did us in. There was no way for Yamamoto to win," the LDP's Seishiro Eto told the Embassy on May 1. Close to 85 percent of JCP supporters voted for the DPJ candidate in the Yamaguchi race, a worrying trend for the LDP and Komeito, and a good reason for them to keep Fukuda in place, despite his steadily falling cabinet support rate, for as long as possible. SCHIEFFER