Seventeen members of the Socialist Party, the biggest party in the coalition, crossed the floor to vote with the opposition against the reform proposals. At a press conference after the defeat, Mr Hosokawa said the unexpectedly large defection was 'quite regrettable'. However he said he would not resign or dissolve parliament for new elections, and promised to continue trying to pass some type of reform measures.
The vote took the financial markets by surprise: the bills had been expected to pass, and the news of the no-vote forced the dollar down sharply against the yen. Dealers fear the political turmoil will delay the government's introduction of economic stimulus measures.
When he became prime minister in August last year, Mr Hosokawa said his priority was to introduce counter measures to the system of money politics which has paralysed political decision-making and thrown up a stream of bribery scandals involving prime ministers and cabinet members. In his inaugural press conference, the Prime Minister asserted he would take 'full responsibility' - a euphemism for resigning - if he did not get the reform measures passed by the end of the year.
Mr Hosokawa extended his self- imposed deadline to 29 January, when the current session of the Diet (parliament) is to be dissolved. But yesterday's vote effectively left his plans for political reform dead in the water. His only way out is to find a compromise with the opposition Liberal Democratic Party (LDP) and push through a watered- down version of the reform bills.
Under Mr Hosokawa's proposed bills half the seats in the Diet would be elected from new single-seat constituencies, and the rest from a nationwide system of proportional representation. Political donations to individuals would be banned, and companies would only be allowed to give electoral funds to political parties.
These measures were bitterly opposed by the LDP, who benefited enormously from the old system and did not want to see their local fiefdoms broken up. The LDP has proposed a compromise reform plan, which reduces the role of proportional representation and lifts the ban on donations to individual politicians.
This goes against the spirit of Mr Hosokawa's plan to change Japanese politics, but he may have to accept the LDP's proposals as the price of keeping his job. Despite his pledges to rejuvenate the country through his Japan New Party, Mr Hosokawa appears to have come to enjoy the trappings of power, and plans to visit government heads in the United States, Europe and even China. He indicated yesterday that he would consider compromising with the LDP next week.
The LDP was gloating over the failure of the bills in the Diet. 'Mr Hosokawa said he would pass the bills before the end of last year, and he failed. He is now about to fail to pass the bills by the end of this Diet session,' said the LDP president, Yohei Kono. He even bragged that the 'important' decision by the Upper House 'represents the will of the nation'.
This, however, might be a serious misreading of public opinion. Polls show that the majority of the public are disgusted with the corruption and bribery endemic in politics, and keenly support change.
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