Japan's Post Offices: Full-Service Political Battlefields - NYTimes

The New York Times
Japan's Post Offices: Full-Service Political Battlefields
By NORIMITSU ONISHI
Published: August 30, 2005

(Photo) Ko Sasaki for The New York Times
Naoya Shinpo, right, a post office employee in Maki, near Japan's west coast, handling a life insurance transaction for Sanei Hirata.

JOETSU, Japan - Koichi Nakashima is the fourth generation of his family to own and run the post office in Maki, a village deep in the mountains near here on Japan's rural west coast and a battleground in the general election in September.

(Photo)Ko Sasaki for The New York Times
Makie Miyakoshi, 75, of Niigata Prefecture, said post office workers had visited a housebound neighbor of hers to help wrap packages.

As his forefathers did, Mr. Nakashima, 59, handles the villagers' mail and savings. His workers will even collect money and packages if villagers are too busy to visit the post office. "We know each other and they trust us," Mr. Nakashima said.

Japan's post offices, which have deep roots throughout the country, have grown into the world's largest financial institution, Japan Post, with $3 trillion in assets. But they have also played another, little understood role here, serving as the bedrock of Japan's postwar political structure and the long-governing Liberal Democratic Party's machine.

Another indicator of that role played itself out early in August when Prime Minister Junichiro Koizumi abruptly dissolved Parliament after rebellious members of his own party rejected his bill to privatize the postal services. Calling an election for Sept. 11, a year ahead of schedule, Mr. Koizumi compared opponents of privatization to reactionaries who insist that the Earth revolves around the Sun.

"Even after Galileo was found guilty of heresy, he still said, 'The Earth moves,' " Mr. Koizumi said.

Whether Mr. Koizumi will be remembered as the Galileo of Japanese politics remains to be seen. But what is clear is that the election in September - as much a referendum on the future of the 134-year-old postal system as on Mr. Koizumi's leadership - will present voters with two different visions of government in Japan.

Mr. Koizumi said the "privatization of the post office is the first step toward the reconstruction of Japan's politics and economy."

It is also an attempt to wean his party from its core support in rural areas, which have declined in population and are less politically significant than before, and make it relevant to urban voters who have been gravitating to the main opposition Democratic Party.

But to opponents, the postal system has sustained Japan's cherished egalitarianism over an American-style, market-driven economy.

The approaching election has already set off a feud in the Liberal Democratic Party, which has held a grip on power for all but 10 months in the last half-century. Rebellious party members have felt the wrath of Mr. Koizumi, who has been sending high-profile challengers - called "assassins" - into their constituencies to unseat them.

Under Mr. Koizumi's privatization plan, Japan Post would be split into four companies in 2007, and its savings and life insurance services would be privatized in 2017. Mr. Koizumi has often cited Japan Post as an example of bloat, pointing out that it has more employees, 262,000, than Japan's military, which has 239,000. Of the nation's 24,700 post offices, 19,000 are owned and operated by so-called special postmasters, often as family businesses handed down from father to son.

"If I have to run this office based on market principles, I'd have to close it down," said Toshio Hinode, 55, a special postmaster who owns the Tanihama branch in Joetsu, in Niigata Prefecture. "It wouldn't be viable."

In the Maki branch, which was owned by the Kondo family for four generations before the Nakashimas took it over, the 10 employees provide more than just postal services. The workers respond to villagers' requests to break a 10,000-yen bill, about $90. They deliver pensions in cash and may even drop by with loan money, though such transactions usually have to be carried out at the post office.

"If the depositor is bedridden," Mr. Nakashima said, "we'd do that for the person and make sure everything is all right."

With those and other services, Japan Post is actually providing a form of welfare, especially in rural areas with aging populations.

In Itakura, in Niigata, Makie Miyakoshi, 75, who works a small plot of farmland, tells of a housebound neighbor living far from the local post office. "Since her legs are weak," Mrs. Miyakoshi said, "the post office workers come to her house and pack up the stuff she wants to send."

Postal savings accounts have also earned the trust of Japanese, with 85 percent of households holding such deposits. The assets allowed Japan's leaders to finance national projects, from the war effort before 1945 to the country's postwar high growth.

It was Kakuei Tanaka, postwar Japan's most powerful prime minister and a native of Niigata, who put the money held by the post office to use as a huge slush fund for the Liberal Democrats, said Kent Calder, a professor at the Johns Hopkins School of Advanced International Studies in Washington. First as postal minister in the 1950's and then as prime minister in the 1970's, Mr. Calder said, Mr. Tanaka protected postal services from oversight from other ministries, so the Liberal Democrats could freely use the assets to reward their backers.

Small businesses that pledged to back the Liberal Democrats were given loans with no collateral and low interest rates from postal services - as long as they had the endorsement of their member of Parliament. Japanese could also take loans up to 90 percent of their deposits at low rates. Special postmasters, as influential members of their communities, played a crucial role by acting as vote-gatherers for the Liberal Democrats.

Hirokuni Tanaka, 76, chairman of the national Retired Special Postmasters Association, said each branch of the association had a formal relationship, including financial support, with the local chapter of the Liberal Democratic Party.

His association recently announced that it would no longer support the Liberal Democrats, though it would give local chapters the freedom to decide.

Mr. Calder said of the former prime minister, Mr. Tanaka: "This was Tanaka's heritage. It is akin to Socialism. Japan is the only Socialist country that worked, it's sometimes said. But Koizumi says it's no longer working and that's why he's serious about privatizing it."

The defenders of the system say it fostered egalitarianism by giving small businesses and individuals in areas like this one access to capital. To them, Mr. Koizumi's reforms and implicit vision of a new Japan are unsettling.

"American efficiency has its merits," said Mr. Hinode, the special postmaster. "But I wonder if it is necessary to introduce it to such an extent that we'll end up losing our Japanese culture.'"