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Cablegate: Goj Backtracks On Postal Privatization, Change Of

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UNCLAS SECTION 01 OF 02 TOKYO 002432

SENSITIVE
SIPDIS

STATE FOR E, EEB AND EAP/J
NSC FOR LOI, RUSSELL
USTR FOR AUSTR CUTLER, BEEMAN, LEE, AND HOLLOWAY

E.O. 12958: N/A
TAGS: ECON EFIN PGOV JA
SUBJECT: GOJ BACKTRACKS ON POSTAL PRIVATIZATION, CHANGE OF
LEADERSHIP AT JAPAN POST

REF: A. TOKYO 2246
B. TOKYO 1329
C. TOKYO 1106

SENSITIVE BUT UNCLASSIFIED. CONTAINS BUSINESS SENSITIVE
INFORMATION.

1. (SBU) SUMMARY: The GOJ announced plans to halt postal
privatization and undo reforms undertaken by the Koizumi
administration in 2007, following an October 20 cabinet
decision. Notably, the GOJ intends to introduce legislation
in the regular Diet session scheduled for January 2010 to
abolish the current law on postal privatization and to
legally guarantee universal basic postal savings and postal
life insurance services. The cabinet decision led to the
expected resignation of Japan Post Holdings Co. President
Yoshifumi Nishikawa, who will be replaced by former Ministry
of Finance Administrative Vice Minister Jiro Saito. END
SUMMARY.

DOING WHAT THEY SAID THEY WOULD DO
----------------------------------

2. (SBU) The coalition Cabinet of PM Hatoyama announced a
basic policy to reform Japan's postal service October 20,
three days ahead of schedule. Under the policy the
government will make basic postal, postal savings, and postal
life insurance services available throughout the country by
means of the nationwide network of post offices; utilize the
network of post offices as the base for one-stop
administrative services; legally guarantee universal basic
postal savings and postal life insurance services; review the
current four-company system under a holding company and
reorganize the business model while keeping the reorganized
entity a joint-stock company in order to ensure flexible
management; obligate the reorganized Japan Post Group to
disclose more information and strengthen its accountability;
and abolish the current law on postal privatization. One
press report said that enacting all of these changes will
require amendments to hundreds of laws and could take nearly
two years to complete.

3. (SBU) An insurance industry representative told Econoff
the Democratic Party of Japan (DPJ) is "doing what they said
they would do." He characterized the changes as close to the
hearts of DPJ policy makers, but he did think the DPJ
leadership was letting People's New Party leader and Minister
for Financial Affairs and Postal Reform Shizuka Kamei go a
little further and faster than what had been expected.
Industry representatives do not view the Cabinet announcement
as all bad news. The legislation will come early next year
and will include an overall review of postal privatization.
One representative said this will be a key time to drive home
the point that a level playing field is required between
Japan Post Insurance and the private sector.

JAPAN POST GROUP LEADERSHIP CHANGE
----------------------------------

4. (SBU) After the Cabinet decision and as expected,
Yoshifumi Nishikawa (71), President of Japan Post Holdings
Company, announced he will resign his position October 28.
Nishikawa's leadership became increasingly tenuous after he
came under attack for the proposed sale of Japan Post's
resort network early this year (Refs A-C). Both Hatoyama and
Kamei repeatedly called for Nishikawa's resignation after the
DPJ took power. In his press conference, Nishikawa, who had
been appointed by former PM Koizumi, said he was resigning
because of the "wide gap" between the company's business
strategy as he had designed it and the new government's plans.


TOKYO 00002432 002 OF 002


5. (SBU) On October 21, the government announced that former
Ministry of Finance (MOF) Administrative Vice Minister Jiro
Saito (73) will replace Nishikawa. Saito is said to be close
to DPJ Secretary-General Ichiro Ozawa. Press reports say
during Saito's term at MOF he devised a way to finance public
works projects via the sale of government-owned Nippon
Telegraph and Telephone Corporation shares. This background
would be consistent with Kamei's reported intention to use
income from banking and insurance services to support rural
regions and small and medium-sized businesses. The
opposition Liberal Democratic Party (LDP) and some in the
press have said Saito's appointment is hypocritical since the
DPJ opposed the appointment of another former MOF official as
a Bank of Japan governor last year when it was the minority
party. Also noteworthy, Kamei reportedly said Saito would be
good at developing new business for the companies in the
group.

COMMENT
-------

6. (SBU) While the Cabinet's decision is consistent with
prior statements, the breadth of the proposed changes
regarding postal privatization comes as a surprise. The
Koizumi privatization reforms, including the promise of
moving large amounts of resources from the public sector to
the private sector, are dead. The new DPJ-led government
clearly believes that the Koizumi reforms were neither good
for the people, nor what the people wanted. As we have
consistently said, this is a choice for Japan to make, and
the USG neither favors nor opposes privatization. During the
review period, we must continue to emphasize the importance
of a level playing field between Japan Post group companies
and the private sector. We must also remain vigilant
regarding the approval of any new products during this
tumultuous period.
ROOS

© Scoop Media

 
 
 
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