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Japan's Premier Is A Survivor, But Is He A Real Reformer?

International Outlook

Japan's Premier Is a Survivor, but Is He a Real Reformer?

When mild-mannered Keizo Obuchi became Prime Minister in July, opponents derided him as an ineffectual Liberal Democratic Party hack. Few thought he would last out the year in office. Initially, Obuchi, 61, confounded them. His administration coaxed financial reforms and a $500 billion bank bailout through the Diet. That enabled him to place debt-laden Nippon Credit Bank under state control. He also cobbled together a $200 billion package to prop up the faltering economy with new public spending and funds to soften the credit crunch on small businesses. Now, he is pushing $90 billion in corporate and income tax cuts for fiscal 1999.

But his big achievements may already be behind him. Skepticism still abounds about Obuchi's ability to push through drastic reforms, such as sweeping deregulation of finance and telecommunications, corporate restructuring, and job-retraining programs, that Japan badly needs to escape its dire economic straits (page 56). Most analysts figure he still lacks both the guts and political power to do so.DARK AGES? Obuchi clearly faces an uphill battle selling reform inside the LDP. To most party barons, Obuchi's main job is to delay a general election as long as possible and shore up the "iron triangle"--the corrupt links between the LDP, big business, and bureaucrats--that forms the backbone of the economy. "The LDP will never carry out the type of reforms Japan needs," says centrist political columnist Minoru Morita. Indeed, he worries that with another LDP win, "Japan will enter the Dark Ages."

In fact, Obuchi isn't fully his own man. He's part of the LDP's "ruling troika" in which Former Prime Minister Noboru Takeshita calls the shots, along with one of his closest lieutenants, Hiromu Nonaka, the chief Cabinet Secretary. Nonaka lined up support for the bank bailout, for instance. The two would certainly ditch Obuchi if he were to break ranks. "Obuchi's role is not to drive policy, but to listen to Takeshita and Nonaka," says John Neuffer, a political analyst with Tokyo's Mitsui Marine Research Institute.

Indeed, it was Nonaka--with Takeshita's blessing--who first approached former LDP bigwig Ichiro Ozawa, now head of the opposition Liberal Party, with the idea of negotiating a ruling coalition of the two conservative parties. Such a grouping would be a voting juggernaut, controlling two-thirds of the Lower House and nearly half of the Upper House. Potentially, it could be used to ram major reforms through the Diet. But it's far from clear that Obuchi, who is aiming to seal a deal with Ozawa in mid-January, would use it that way. He had Ozawa drop his demands to suspend Japan's consumption tax--which reformers want--as a precondition for any coalition, for example.

Besides, Obuchi will be hard pressed, despite backing from Takeshita and Nonaka, to drum up support in his own party for any pact with the Liberals. Many LDP heavy hitters still see Ozawa as a renegade. They never forgave him for mounting a coup that split the LDP and contributed to its shocking 1993 election defeat. The opponents are attempting to hobble alliance talks by opposing reforms that Ozawa wants, such as allowing Japan's Self-Defense Forces to take part in U.N. military missions and reducing the size of the 752-seat diet.

Meanwhile, the main voice for radical reform, the opposition Democratic Party of Japan, is muted. Its leader, Naoto Kan, is struggling to restore his popularity, dented by allegations--which he denies--of his involvement in a sex scandal. With Kan sidelined, Obuchi is under far less pressure to enact reform. So while the Prime Minister may continue to surprise by his political survival tactics, promises he has made to lead Japan out of its dark days are already ringing hollow.EDITED BY JOHN TEMPLEMANReturn to top

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