Postal power swings Japan's election debate

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The Independent Online

Like others in his profession, he considers what he does more of a calling than a job. "I feel a very strong sense of responsibility to the people around here."

Japanese towns don't get much more one-horse than Hanbara, a dying hamlet of 350 households, a shrine, noodle restaurant and a couple of struggling businesses surrounded by mountainous pine forests 60 miles west of Tokyo. Yet, somehow this post office and 24,700 others are part of a big political and economic story; their fate hinging on Japan's most bitterly fought election in decades.

Prime Minister Junichiro Koizumi called a snap general election for 11 September and expelled 37 members of his Liberal Democratic Party (LDP) after they voted against his plan to privatise Japan Post.

His main opposition, the Democratic Party of Japan, says pensions and the health service are more important than postal reform.

For more than 50 years, as Japan has grown into the world's second richest economy, post office branches such as Hanbara have accepted deposits, and today they sit on the largest single pool of capital in the world - $3trn, larger than Britain's GDP.

The money is owned by the 85 per cent of Japanese households that hold a post-office account, and has been used to build roads, dams and bridges.

But it has also been, in effect, a giant slush fund ladled out to political backers of the ruling LDP. The post office provided construction firms, dentists and other small businesses with non-collateral loans, brokered by men such as Mr Tokuoka, who harvested in return millions of votes for the LPD.

For better or worse, this was one of the bedrocks of Japan's economic miracle, a core element of the country's "welfare capitalism" with roots so deep that Shizuka Kamei, the former LDP policy chief who was among the 37 rebels expelled, calls it part of the country's DNA. For reformers, led by Mr Koizumi, that DNA has been deformed by inefficiencies and corruption.

One of Mr Koizumi's advisers recently said the money was "a cancer" eating away at Japan's economic vitality. Mr Koizumi will find few backers for such views here. "We're totally opposed to privatisation," says Mr Tokuoka. "It will destroy a culture of mutual help built up over years."

There is a feeling here of betrayal by a Prime Minister intent on importing an ideology that is alien and un-Japanese.

At post offices like this, time seems to stand still. Customers and staff treat each other with an old-world courtesy, bowing deeply under a grim portrait of Hisoka Maejima, who founded Japan Post in 1887.

The branches pay virtually zero interest on deposits and staff have a job for life.

In return, they perform tasks unthinkable in other parts of the world, hand-delivering pensions to bedridden customers and providing small loans.

"What will happen to us if privatisation goes ahead," asks Mr Tokuoka. "They may close us down. That will cause terrible problems to the people around here who cannot travel. I can never accept this plan."