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• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP85T00310R000100170004-4
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 11
• Document Creation Date: January 12, 2017
• Document Release Date: September 7, 2010
• Sequence Number: 4
• Publication Date: June 1, 1984
• Content Type: REPORT

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Directorate of Secret'
Intelligence
the November Election
Japan: Nakasone, the
Summer Diet Session, and
An Intelligence Assessment
Secret
EA 84-10126
June 1984
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Intelligence
the November Election
Japan: Nakasone, the
Summer Diet Session, and
This paper was prepared byl 25X1
Office of East Asian Analysis. 25X1
Comments and queries are welcome and may be
Secret
EA 84-10 / 26
June 1984
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Japan: Nakasone, the
Summer Diet Session, and
the November Election
Key Judgments Prime Minister Nakasone's political actions and decisions in the coming
Information available months will be made with an eye to the Liberal Democratic Party (LDP)
as of 15 June 1984 presidential election in November. Based on his record, he now appears
was used in this report.
likely to become the first Japanese prime minister in a decade to succeed
himself:
? He continues to have the support of former Prime Minister Tanaka, the
kingmaker whose backing has been essential throughout Nakasone's
tenure.
? Infighting within the LDP remains under control, partly because of
Nakasone's skill in co-opting or isolating major rivals.
? The conservative LDP-New Liberal Club coalition in the Diet is holding.
? Several foreign policy successes this year, including a well-publicized trip
to China in March, the visit of Vice President Bush in May, and
Nakasone's role at the Economic Summit in London, have added to his
standing.
The summer Diet session will offer numerous opportunities for Nakasone
to stumble in the crucial period before the election, however. He will have
to deal with tough economic issues, including several controversial bills
that probably will dominate a busy legislative agenda:
? Nakasone already has earned criticism for capitulating to some foreign
demands to open Japan's markets, but, with a record current account
surplus expected again this year, he will face continued pressure from
Japan's foreign trading partners.
? A bill to reform the national health program by instituting participant
fees in the health insurance system is highly contentious.
? Debate on some 30 other government reform bills probably will be long
and sometimes bitter.
Although Nakasone is most vulnerable on foreign and domestic economic
issues, he still has room to maneuver:
? He may be able to persuade at least the moderate opposition to go along
with his legislative program by promising wage increases for public
corporation employees.
? The Prime Minister also can threaten to dissolve the Diet if the
opposition parties try to block his parliamentary agenda.
If Nakasone can use these tactics to win passage of some of the key bills in
his program-without appearing to steamroll the opposition-he should be
in good shape for November.
Secret
EA 84-10126
June 1984
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Japan: Nakasone, the
Summer Diet Session, and
the November Election F_
The cease-fire in factional infighting within the LDP
that followed the party's setback in the December
national elections continues to hold, but maneuvering
will pick up as the party presidential election in
November approaches. Prime Minister Nakasone can
maintain an edge over his rivals, however, as long as
he retains the support of former Prime Minister
Tanaka, who heads the largest faction in the party.
Nakasone took a major step toward ensuring Tana-
ka's support in April, when he named senior Tanaka
faction lieutenant Susumu Nikaido LDP vice presi-
dent. Nakasone had hesitated to fill the post, partly
because he expected strong opposition from the Fu-
kuda and Komoto factions. Both could have charged
that Nakasone had broken the promise he made late
last year to reduce Tanaka's influence in the party.
The Prime Minister's gamble that retaining Tanaka's
good will was more important than avoiding criticism
from Fukuda and Komoto seems to have paid off:
Secre
t
Diet
Strength
Likely Candidate in
LDP Presidential
Election
Mainstream factions
Tanaka
Suzuki
77
Miyazawa
Nakasone
67
Nakasone
Antimainstream factions
Fukuda
67
Abc
Komoto
36
Komoto
Nakagawa/Ishihara
Nonaligned
Independents
Thus far, none of Nakasone's rivals has left the
? The Komoto and Fukuda factions made only pro Cabinet, giving them little room to criticize him.
forma protests over the appointment.
? In mid-May, Nikaido told journalists he would
support Nakasone's reelection. His endorsement fol-
lowed similar public statements from other faction
leaders-deputy faction leader Masumi Esaki, LDP
Executive Council Chairman Shin Kanemaru, and
Tanaka himself.
Nakasone's success in co-opting, neutralizing, or iso-
lating major contenders to succeed him also enhances
his position. He named three potential rivals-Ko-
moto, Abe, and Takeshita-to the Cabinet last De-
cember. At the same time, he denied another-Kiichi
Miyazawa-the post of party secretary general,
which Miyazawa badly needed to round out his
credentials for the prime-ministership.
Furthermore, unless he stumbles badly in the months
ahead, they may not be able to mount a serious
challenge to him this fall:
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Although Nakasone's rivals may enter the LDP presi-
dential race to establish their credentials as future
contenders, they may make carefully timed withdraw-
als to avoid a primary, which must be held if more
than three candidates run.
Although public opinion polls do not make or break an
LDP president, high ratings for Nakasone's perform-
ance as Prime Minister this year have deprived his
opponents of an easy target for criticism. According to
the Embassy, Nakasone's appropriately "sober" and
"self-reflective" mood after the voters handed the
LDP a setback in December has won him the respect
of even some major critics within the party. Public
opinion polls taken in March show support for the
Nakasone government at an alltime high, and polls in
April and May continue this strong trend. The polls
indicate that the public is impressed with Nakasone's
straightforward political style, and the press has
praised his skillful performance during Diet debate.
The coalition he set up in December with the small
New Liberal Club in order to increase conservative
strength in the Diet has held throughout this session,
and polls suggest the public has given Nakasone's
government good marks because of the continuing
stability in the political situation under the LDP-NLC
coalition.
Nakasone's high-profile, Western political style has
served him well in the international arena, which
should add to his scorecard as the election approaches.
He took some criticism last year for failing to spend
adequate time on domestic affairs, and consequently
his foreign schedule has been lighter than in 1983. At
the same time, however, he has managed to consoli-
date and build on some of the initiatives he took
during his first year in office.
Like his predecessors, Nakasone has concentrated
first on the US-Japanese relationship. After an ex-
change of visits with President Reagan last year, he
assumed final responsibility for following up on diffi-
cult bilateral economic issues.
Nakasone has prided himself on his close
personal relationship with President Reagan. While
recognizing that more must be done to mollify Wash-
ington on economic issues, he probably hopes that the
Vice President's visit in early May is seen-in Japan
at least-as a successful conclusion to the followup
process and a demonstration of his ability to manage
Japan's most important foreign relationship.
One of Nakasone's major foreign policy goals has
been to move Japan toward closer ties to the Western
Alliance, and he used the London Economic Summit
to pursue that objective. As he did at Williamsburg
last year, he emphasized Japan's identification with
the West. With the November election in mind, he no
doubt also hopes to take some credit for summit
country attention to Third World and disarmament
issues.
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While looking to the West, Nakasone also has as-
signed a high priority to Japan's relations with Asia
and has used his skill in personal diplomacy to
strengthen ties to South Korea, China, and Southeast
Asia. Well aware of the value the Japanese public
attaches to good relations in the region, he has
commented that he will make it his "election district."
Shortly after he took office in late 1982, Nakasone
traveled to South Korea, settling stalled aid negotia-
tions that had strained relations for over a year, and
he hopes to build on the subsequent improvement in
ties by hosting a visit from President Chun this fall. In
March Nakasone reciprocated the visit last year of
Chinese Communist Party chief Hu Yaobang. The
Prime Minister's trip to China received widespread
and favorable media coverage in Japan, and Chinese
diplomats in Tokyo have commented that Beijing
viewed the visit as a success. Early in his tenure
Nakasone called up Southeast Asian heads of govern-
ment, and he has continued these contacts. The
telephone calls, along with his ASEAN trip in May
1983, have allowed him to allay concern over the
growth in Japanese defense spending and his reputa-
tion as a hawk.
Nakasone expanded his Asian "electorate" in May
when he traveled to India and Pakistan-the first visit
by a Japanese prime minister in 23 years. He also had
hoped to visit Australia and New Zealand in July, but
the press of Diet business probably will prevent that
trip. Domestic responsibilities forced him to cancel
planned stops in France, West Germany, and Italy
after the Summit.
Economic issues-where Nakasone always has been
most vulnerable to criticism-offer the challenges
that could block what might otherwise be a clear path
to reelection. One article in a respected Japanese
newspaper referred to Nakasone's "economic tone
deafness," and polls indicate that those who disap-
prove of the Nakasone government are concerned
about his economic policy.
Nakasone already has earned some ill will over his
management of international economic issues. His
attempts to solve f4_reign trade problems have forced
concessions that have angered some important domes-
tic interest groups, mainly in the agriculture sector.
The current account surplus is running at record
levels again this year, however. We expect it to reach
$25-30 billion compared with $24 billion last fiscal
year. Although Tokyo probably looks forward to a lull
in US-Japanese trade friction as a result of the
conclusion of a series of negotiations this spring, it is
facing increasing complaints from EC members about
Japan's surplus. The EC has criticized Japan's April
trade package, and Nakasone's cancellation of his
June European tour denied him an opportunity to try
to smooth over remaining differences.
Nakasone faces problems over the domestic economy
as well, although the return to more rapid expansion
this year after three years of slow growth could ease
the pressure somewhat. Mainly on the strength of
domestic demand, GNP growth should top 4 percent.
The official growth target for the JFY 1984, which
began 1 April, was set at 4.1 percent, and we agree
with most forecasters that the Japanese will reach this
goal. Indeed, most major private forecasters are even
more optimistic than the government.
Like his immediate predecessors, Nakasone has pur-
sued a tight fiscal policy in an effort to contain
persistent central government budget deficits, cur-
rently exceeding 5 percent of GNP. The Ministry of
Finance has berated Nakasone for not going far
enough to control the deficit, but the Prime Minister
faces criticism from other quarters for not pushing the
economy more vigorously
Nakasone's critics point out that Japan's recovery is
lagging behind other industrialized nations. EPA Di-
rector General Komoto has called for more expansion-
ary policies, including a further tax cut for business.
According to a press report, his goal is a 5- to 6-
percent growth rate. The Ministry of International
Trade and Industry, too, favors a higher growth
target.
The opposition parties-with the Socialists in the
lead-also have criticized Nakasone for not aiming
for more rapid growth. They were particularly dissat-
isfied with this year's budget, which offers little
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stimulus and in fact shows the slowest growth in 30
years. The opposition parties called for lower defense
spending, increased expenditures for social welfare
programs, and a larger tax cut. Their stalling tactics
delayed budget passage, forcing brief implementation
of a provisional budget for the first time in seven
years, and postponement of debate on other major
economic legislation. In order to deal with the backlog
of pending bills, the LDP has pushed through an
unusually long, 77-day extension of the Diet session
which was to have ended on 23 May.
A strong record of legislative successes will be espe-
cially important to Nakasone as he prepares for the
November election. Having suffered a small defeat to
opposition maneuvering in the budget hearings this
spring, he seems genuinely concerned whether other
important legislation can be passed, as demonstrated
by his decision to cancel several foreign trips this
summer. The sharpest debate probably will be over a
bill to reform the national health system.
The health system bill would require national health
care recipients to shoulder 10 percent of costs begin-
ning 1 July and 20 percent in 1985. The Finance
Ministry drafted the current budget on the assump-
tion that the bill would be passed by 1 July. Accord-
ing to Ministry estimates, if it fails to pass this
summer, the government could face a revenue short-
fall in JFY 1984 of up to $1.9 billion. Extensive
revision of the budget would be necessary, clearly a
blow to Nakasone.
As a result, passage of the bill will be the major test
this summer of Nakasone's political ability. All of the
opposition parties oppose the revision, as do the
powerful medical, dental, and pharmacists associa-
tions. An opposition walkout has already forced the
LDP to scrap a plan to speed up debate on the bill.
the Komoto
Other bills, including 30 related to administrative
reform and aimed at cutting government spending
and streamlining the bureaucracy, also will threaten
Nakasone's position this summer. The secretary gen-
eral of the Japan Socialist Party has announced that
his party will lead the opposition against three bills
related to the return of Nippon Telegraph and Tele-
phone to the private sector. Some labor groups oppose
the proposed breakup of Japan National Railways,
and, as the possible effects on local service become
clearer, other opposition is likely. Also part of admin-
istrative reform will be cuts in government funding for
a long list of government organizations, including
several specialized public finance corporations for
areas such as agriculture, forestry and fisheries, and
for small business. All have their constituencies that
will be disturbed by the cuts. Nakasone also will press
forward with his commitment to educational reform
by calling for approval of a bill to create an education
affairs deliberation council. He could overestimate the
pace at which the consensus will allow him to move on
this intensely emotional subject, however, and run
into trouble with this bill as well.
Despite the Diet extension to 8 August, the time
available to handle these contentious issues is short.
Nakasone may extend the session again or carry over
some bills to an extraordinary session in the fall, but
he clearly wants to avoid difficult Diet debate imme-
diately before the November election
Beyond the controversy raised by the bills under
consideration, the fact of the Diet's remaining in
session could endanger Nakasone's position by provid-
ing an open forum for criticism of government policy.
If economic growth should begin to slow, for example,
Nakasone could be faced with noisy criticism of his
economic management. The weakest area of the
domestic economy this year has been consumer de-
mand, which accounts for nearly half of GNP. Con-
tinued modest gains in real wages and salaries will
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keep the rate of growth of private consumption ex-
penditures slow. Because of the deficit, Nakasone
would find it nearly impossible to stimulate the
economy using fiscal policy measures, but such LDP
rivals as EPA Director General Komoto would be sure
to use the opportunity to attack Nakasone for failing
to pursue expansionary policies.
The extension of the Diet session also will complicate
work on the budget for 1985, posing additional prob-
lems for Nakasone this summer. Spending ceilings for
the ministries are usually announced in June. During
the spring, Finance Ministry bureaucrats had decided
to postpone the announcement until late July, assum-
ing the Diet session would have concluded by then.
The Ministry hoped to avoid Diet opposition to a
proposed third year of cuts in social programs and
public works and moderate increases in defense
spending. Now that the session has been extended into
early August, the government must decide whether to
go ahead with the announcement and face criticism
from the floor of the proposed ceilings. The alterna-
tive-delaying again-would upset the entire budget
cycle.
Defense policy also will be a probable target for the
opposition during the Diet session. Nakasone has not
stressed defense as much this year as he did during his
first year in office. For example, the Embassy reports
that during the budget hearings he made a visible
effort to avoid taking controversial personal positions
Throughout the spring, Nakasone and other senior
LDP leaders used public statements to set the stage
for a breach in the 1-percent limit, and an LDP
committee is now meeting to discuss revising the
ceiling. Editorials in several prominent newspapers
also have called for a break in the spending ceiling.
Despite this extensive preparation, the opposition
probably will try to use the issue to bring Diet
deliberation on key bills to a halt. The change could
come in midsummer, if the Finance Ministry sets a
JFY 1985 budget limit on the Japan Defense Agency
above the 1-percent cap. The change also could come
in August, when the National Personnel Authority is
expected to make decisions on wage hikes for govern-
ment employees that will raise defense spending for
this year beyond the ceiling.
Nakasone does have some factors in his favor as he
faces the challenges ahead. Both he and other LDP
leaders have publicly indicated a willingness to com-
promise on several issues during the Diet session,
which may allow them to strike a deal with the
moderate opposition to win passage of key legislation.
According to Embassy sources, Nakasone's main bar-
gaining chips are wage increases for public corpora-
tion employees and a proposal to create a supraparti-
san political ethics committee in each house. This
should help quiet those who have attacked money
politics in the LDP in the wake of the Lockheed
scandal and Tanaka's conviction in the case last fall.
on defense.
Defense issues have traditionally provided the opposi-
tion parties a major platform for taking the govern-
ment and the LDP to task, however, and, despite
Nakasone's low-key approach this year, the opposition
has several issues it could exploit this summer. Im-
pending US deployment of Tomahawk missiles on
ships in the Pacific Fleet is one. They will attack the
government if, as expected, defense spending breaks
the ceiling of 1-percent of GNP, in place since 1976.
The contrast between sharp cuts in social services and
increases in defense will provide an attractive rallying
The opposition is
unlikely to want to pay for another campaign so soon
after December-and to risk losing the gains made
then. In addition, contacts in the opposition party
camp have told the Embassy they recognize the health
point.
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program must be reformed. As a result, the opposition
may choose to embarrass Nakasone, as they did with
the budget, but not to block completely this legisla-
tion.
Finally, with Nikaido as
party vice president, Nakasone has the aid of a widely
respected politician known for his ability to work well
with leaders of both the LDP and opposition parties in
managing Diet affairs-the major item on Naka-
sone's agenda over the next several months.
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