- The Washington Times - Thursday, September 8, 2005

Eisuke Sakakibara worked at Japan’s Finance Ministry for more than 30 years, rising to vice minister of finance for international affairs, where he was nicknamed “Mr. Yen” by foreign counterparts. He is now a professor and director of the Global Security Research Center at Keio University in Tokyo. He spoke with Washington Times reporter Takehiko Kambayashi about Prime Minister Junichiro Koizumi’s plan to reform Japan’s postal system.

Question: What do you make of Mr. Koizumi’s postal privatization bills?

Answer: First of all, he cannot privatize the postal businesses with the bills. Why? Mr. Koizumi says he will maintain the current network of post offices as it is, but maintaining post offices in remote islands and sparsely populated areas will certainly show a deficit. To cover it, the government will pump two trillion yen ($18 billion) in public funds into a newly established company. … Where in the world is there a private company into which public funds are injected from the start?

Moreover, initially the government owns 100 percent of this postal company’s shares and at the end it will own one-third. That means the government will be the biggest shareholder and control the company. So this will result in the creation of a bloated state-run business, and we will see money flow from the private sector to the government.

Q: Is it possible to privatize Japan’s postal service?

A: This is extremely difficult. … Of Japan’s 6,852 islands, about 300 are quite remote. In addition, there are 200-plus out-of-the-way places in the mountains. So, if you privatize the postal businesses, you have to downsize about 500 unprofitable post offices.

The question is whether you can do that. After thorough discussion, we reached the conclusion that Japan’s postal system cannot be privatized.

Furthermore, if Japan’s postal businesses — the world’s largest financial institution with … $3 trillion in assets — is privatized, the impact will be enormous, especially in prefectures where many post offices are scattered around. That huge company will compete with local cooperative banks and credit associations.

Imagine if Citibank could gain government support and have 20,000 branches throughout Japan. They could easily win more and more customers, pushing one local financial institution after another into bankruptcy.

That is why the government-sponsored bills themselves prevent the postal system from being privatized. That’s the reality. Mr. Koizumi, however, calls them “postal service privatization bills.” It’s a trick. You should not call something that is not privatization “privatization.”

Then, in order to ask the public whether they agree with postal service privatization, Mr. Koizumi dissolved the lower house [of parliament] for a general election. It is inexcusable.

Q: What are Japan’s foremost financial tasks?

A: They are the reconstruction of government finances and reforms of the social security framework, including the pension system and medical care. On the foreign-policy front, it is Japan’s relationship with Asian countries.

If we continue failing to balance the budget, Japan will be driven into state bankruptcy in five to 10 years. So far, its public debt has grown to about 800 trillion yen ($7.1 trillion), which is still within 1,400 trillion yen in personal financial assets. However, while such personal assets shrink, the debt continues to rise. When it surpasses the assets at some point, Japan will be bankrupt.

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