A bit melodramatic, perhaps, but the Sept. 11 vote, in which all 480 seats of the Diet's lower house are up for grabs, is the climax of a longstanding power struggle between Koizumi and rebellious lawmakers deeply entrenched within his own Liberal Democratic Party (LDP). After his project to reform Japan Post—which among other things is the world's largest savings bank—was voted down on Aug. 8, Koizumi dissolved parliament and called a snap election. That put his career, his legacy, his party and Japan's economic and political future in the hands of voters. Koizumi has framed the election as a referendum on postal reform, but it is about much more than that. It is no less than a national plebiscite on whether the Japanese want to cling to their semi-socialist, big-government roots, or to press ahead with the often painful reforms ultimately designed to produce a more modern, competitive economy. As Robert Feldman, Morgan Stanley's chief economist in Tokyo, says: "This is a hugely important moment for Japan."
There is no doubt that this particular warlord went looking for a fight. Although Koizumi swept to power in 2001 promising to rein in the country's sclerotic bureaucracy, end back-scratching between politics and industry and revitalize the economy, his reform record has been mixed, largely due to resistance from old-guard LDP members whose constituencies have long benefited from the wasteful pork-barrel programs Koizumi said he was targeting. But even in the face of frequent setbacks, Koizumi has consistently maintained that the privatization of Japan's bloated and economically inefficient postal savings system would be among his last and greatest achievements.
It certainly would be one of the biggest reform projects of all time. Japan Post's savings-bank unit holds nearly $2 trillion in deposits, one-third of the nation's total personal savings. But instead of lending to consumers and private businesses, as a normal bank would, Japan Post's deposits have for decades been tapped by the government to fund an endless parade of economically questionable yet politically popular public-works projects. Koizumi and his supporters insist that privatizing the post office, as they propose, would energize the economy by unlocking all that money, allowing market forces to allocate it more efficiently. But many LDP members vigorously oppose the postal-reform plan, in part because the 270,000 full-time Post employees are a huge constituency in their own right and because the system props up a host of other vested interests, like the construction, agriculture and financial industries.
After four years of political wrangling, six postal-privatization bills aimed at splitting Japan Post into four fully private companies by 2017 made it to the floor of the Diet this summer. Although 37 LDP lower-house members defied party orders and voted against the bills, they narrowly passed that chamber in July. But LDP resistance within the upper house stiffened, and on Aug. 8 that body voted the bills down by an unexpectedly large margin. That afternoon, Koizumi acted on a promise many thought was a bluff. He dissolved the lower house (in Japan, the Prime Minister does not have the power to dismiss the upper house) and called for a nationwide election.
Koizumi has said this election is an opportunity for the country to endorse or veto his structural-reform initiatives, and he has vowed that he will step down if the LDP and its coalition partner, the New Komeito party, cannot maintain a majority. Heizo Takenaka, Koizumi's Economics Minister and chief architect of the postal-reform plan, told TIME: "The question being put to voters is whether Japan should establish a smaller government or a big government." That may be, but the dissolution is also a political maneuver aimed at achieving another long-term goal of Koizumi's: to ideologically purify and unify the LDP and bring it under more centralized control. "I'm firmly resolved to shatter the old framework of the LDP and instead form a new framework for the party," Koizumi said.