OSAKA — Much has been made of the massive defeat Prime Minister Shinzo Abe's Liberal Democratic Party suffered in the July 29 Upper House elections. But as the smoke from the vote dissipates, it has become clear that the real victor is neither the leading opposition Democratic Party of Japan (DPJ) nor the electorate. Instead, it is Japan's bureaucrats who are celebrating.

The aim of these entrenched mandarins is to block Abe's plans for extensive civil-service reforms intended to inhibit them from parachuting into lucrative post-retirement jobs in the public corporations and private firms that they once regulated. They also want to stop Abe from dismantling and privatizing one of their central fiefdoms, the Social Security Agency.

In this struggle, the mandarins are aligning themselves with the DPJ, at least to the general public's eye, because it has proposed merging the Social Security Agency with the National Tax Agency, a move that would ensure government jobs for the former's employees.

The LDP's declining vote is attributable largely to Abe's mishandling of pension fund issues, particularly his late admission of knowledge last December that about 50 million pension files were not identified. This followed other minor scandals concerning the misuse of political funds, which had led to two resignations and the suicide of one of Abe's Cabinet ministers.

But a close look reveals the hands of the mandarins behind these debacles. Abe and his ministers were simply not provided with critical facts by the bureaucrats who are supposed to serve them.

Indeed, a DPJ member of the Diet was able to pose pointed questions to Abe and his ministers because he had obtained detailed information from an unidentified Social Security Agency official. This constant stream of leaks from the bureaucrats has seriously shaken popular confidence in the Abe administration as well as the ruling LDP. The mandarins are now counting on an Upper House controlled by the DPJ to wreck Abe's civil-service reforms.

Former Prime Minister Junichiro Koizumi handpicked Abe as his successor to continue his administration's central policies: divorcing the LDP from pork-barrel politics and consolidating the huge nonperforming loans in the private sector that accumulated after Japan's property market bubble burst in the early 1990s. By revitalizing and modernizing Japan's financial system, and by getting politicians out of the game, Koizumi intended to reinvigorate the Japanese economy.

Koizumi had real successes in these reform efforts, which significantly transformed a malfunctioning Japanese state that was in the grip of pork-barrel LDP politicians, bureaucrats and big business elites. Koizumi had relied on the bureaucrats to implement his reforms, but he did so at the price of postponing an overhaul of the civil service, which became a poisoned chalice that he passed on to Abe.

Moreover, Abe's lack of Koizumi's star quality and outsider charisma has made him rely more heavily than his predecessor on the LDP's existing leadership. These leaders are less concerned with the reform agenda than with promoting patriotism among Japanese youth, upgrading the Defense Agency to a ministry, and enacting a law to permit a referendum to revise the pacifist constitution. These are all important matters, but they are not among the electorate's priorities.

Koizumi's approach was to defy the LDP's leaders by appealing over their heads directly to the electorate. He successfully portrayed himself as a rebel resisting the LDP's old guard, actually purging some of them, in defense of ordinary Japanese.

But Koizumi's reforms seemed to abandon not only rent-seekers but also the disadvantaged who had relied on the state's protectionist measures. Abe is now confronting the legacy of this strategy: domestic polarization between highly educated and unskilled labor, between competitive and declining sectors, and between urban and rural areas. And, to protect their jobs, Japan's bureaucrats are now aligning their interests with those who see themselves as having lost out in the Koizumi years.

The DPJ, now temporarily aligned with low-profile bureaucrats behind the scene, can now either obstruct any bill in the Upper House that is sponsored by Abe's administration, thereby cornering him into dissolving the Lower House, or they can engage in meticulous deliberations in the Diet in the hope of demonstrating to the electorate their fitness to govern. The DPJ's leader, Ichiro Ozawa, seems to be opting for the obstructionist approach favored by the bureaucrats, which will seek to bring not only a populist reversal of Koizumi's economic and political reforms, but the shelving of Abe's civil-service reforms as well.

Japan will now likely face a hung Diet for a year or two. But, in the end, it will have to decide if it wants to be governed by the LDP, which at least offers the possibility of addressing Japan's problems, or a DPJ in complete thrall to the bureaucracy and the past. Until Koizumi, the electorate was never faced with such clear-cut choices and his administration taught the Japanese to like them.

In the meantime, Japan will drift, unable to take any significant foreign policy decision at a time when Asia's security landscape is changing rapidly.