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On 70th anniversary, top business lobby looks at what distance to keep from politics

Keidanren Chairman Sadayuki Sakakibara speaks to reporters on May 26, 2017, in Tokyo's Chiyoda Ward. (Mainichi)

Japan's largest business lobby, the Japan Business Federation, commonly known as Keidanren, held a ceremony on May 31 marking the 70th anniversary of its foundation in the aftermath of World War II, looking back on its history of assisting the war-torn country's economic recovery and struggling to discern the best distance to keep between administrations and the organization itself.

With its membership mostly comprising large companies, Keidanren has lobbied the government and ruling parties to achieve policy measures sought after by the country's economic circles, capitalizing at times on their abundant political donations. The monetary contributions, however, also sparked criticism that corporations are "buying policy measures."

After the country went through post-war reconstruction and rapid economic growth, Keidanren in recent years has pursued a growth strategy in conjunction with Prime Minister Shinzo Abe's administration toward the goal of bailing the nation out of prolonged deflation.

The history of Keidanren dates back to August 1946, when it was inaugurated as a "comprehensive economic group representing the consensus of economic circles." The group recognized political donations as "the cost of maintaining democracy," and lobbied political circles to realize trade liberalization and deregulation as well as corporate tax cuts, enjoying a honeymoon period with administrations led by the Liberal Democratic Party (LDP).

However, after the bursting of the bubble economy, the LDP was driven into opposition in 1993 with the revelation of massive bribery scandals involving general contractors, handing the helm of government to a coalition led by Prime Minister Morihiro Hosokawa. Then Keidanren Chairman Gaishi Hiraiwa suspended the business group's mediation of political donations, saying, "Donations should be made at the discretion of each company and organization." Smaller monetary contributions, however, also meant a waning influence for Keidanren. In 2004, then Chairman Hiroshi Okuda resumed Keidanren's mediating of political donations, saying, "We contribute money to politics, but we will also have a say," and called for political donations by member companies.

After the country persevered through the 2008 global economic crisis triggered by the collapse of Lehman Brothers, then Keidanren Chairman Fujio Mitarai once again suspended the group's involvement in political donations in 2010, the year after the government changed hands to one led by the Democratic Party of Japan (DPJ). The donation halt came in response to the DPJ's policy banning monetary contributions by companies and other organizations.

Mitarai's successor, Hiromasa Yonekura, criticized the DPJ government over its handling of the Fukushima No. 1 Nuclear Power Plant disaster, triggered by the March 2011 Great East Japan Earthquake and tsunami. Keidanren also developed a strained relationship with Shinzo Abe, who made a comeback to the premiership after a five-year hiatus. Around this time, Keidanren became estranged from the government and saw its power on the decline, according to a source close to the organization.

Current Chairman Sadayuki Sakakibara resumed Keidanren's commitment to political donations in 2014 under the policy, "It is the responsibility of corporations to pay the cost of maintaining democratic politics," and managed to patch up relations with the Abe administration.

In addition to pressing the government and ruling parties to realize policy measures, Keidanren is also expected to play a role of offering frank advice to government leaders from a broader perspective. In 2004 and 2005, then Keidanren Chairman Hiroshi Okuda advised then Prime Minister Junichiro Koizumi to refrain from visiting Yasukuni Shrine, which enshrines war criminals alongside the war dead. But Koizumi dared to pay his respects to the shrine -- to the detriment of Japan-China relations. Okuda subsequently visited China as a special envoy.

When Prime Minister Abe announced the further postponement of a consumption tax hike in June 2016, Sakakibara showed understanding toward the decision, while fellow economic groups such as the Japan Chamber of Commerce and Industry and the Japan Association of Corporate Executives (Keizai Doyukai) were critical of the move. In response to Abe's calls for companies to raise wages, Keidanren managed to achieve pay hikes among member companies for four consecutive years up to 2017.

Nobuteru Kikuchi, associate professor at Tsuru University who is versed in the financial community, commented, "Keidanren may have become too close to the government for it to have a say. The group should review the way it stands on the occasion of the 70th anniversary of its foundation."

Former Keidanren Chairman Takashi Imai also noted, "It is essential for Keidanren to keep a certain distance from politics and maintain its pride and spirit to present candid advice to the government at times."

As of now, Keidanren's membership includes 1,340 corporations -- mainly those listed on the First Section of the Tokyo Stock Exchange -- as well as 156 industry organizations. After the 2002 merger with Nikkeiren (Japan Federation of Employers' Associations), which used to be called "the labor service unit of financial circles," Keidanren also began to play a role in labor-management negotiations.

Keidanren is among the country's three major financial community organizations alongside the Japan Chamber of Commerce and Industry, whose membership mainly comprises small- and medium-sized companies, and the Japan Association of Corporate Executives, which is joined by individual business operators.

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