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Will Japan's New Premier Slam The Brakes On Reform?

International Outlook

Will Japan's New Premier Slam the Brakes on Reform?

Politics is often a cruel game. On Apr. 2, Japanese Prime Minister Keizo Obuchi fell into a stroke-induced coma. It's a sad end to Obuchi's career. But his illness may prove to be the break that Obuchi's party, the ruling Liberal Democratic Party, desperately needs to revive its sagging fortunes.

In the past few weeks, the pressure mounted steadily on the LDP. The poll ratings for its ruling coalition were drooping below 50%, with voter dismay at the party's partisan moves on the rise. The economy's continued woes hurt, too. Worse, the LDP had to call general elections before October. Party elders started to worry that the election results would seriously erode the LDP's power in the lower house of the Diet. But then came Obuchi's stroke--and the appointment of a new Prime Minister, LDP Secretary General Yoshiro Mori.

Now, Mori has a much better chance of cruising to victory than did Obuchi: He may call an election as soon as next month, before Japan hosts a Group of Eight meeting in July. Mori has none of the baggage that Obuchi accumulated during his time as Prime Minister. For all his amiable qualities, Obuchi will go down as one of the most unpopular Premiers in postwar Japan. Record 4.9% joblessness, a botched handling of a nuclear accident, scandalous behavior by the nation's police agency and one of his staffers: All these conspired against Obuchi. Mori won't carry that baggage and will have other advantages as well.SYMPATHY VOTE. An experienced LDP insider, Mori is expected to keep most of the current Cabinet, including Finance Minister Kiichi Miyazawa and Foreign Minister Yohei Kono, in place. Even so, his government "will probably be able to portray a fresh image" that distances itself from Obuchi, while at the same time benefiting from an expected sympathy vote, says Yasunori Sone, a Keio University political scientist. The energetic 62-year-old Mori isn't well known to the general public. With the opposition Democratic Party of Japan still relatively weak, the LDP-led coalition, which already controls 70% of the 500-seat lower house, likely will expand its control.

Mori can be expected to play his political cards carefully. The LDP'S coalition partner, the New Komei Party, is deeply resented by more independent-minded voters in Tokyo and Osaka, who question the party's links to the well-heeled but controversial Soka Gakkai Buddhist group. But the Komei operatives know how to turn out the party's faithful in an election, and it could make the difference in the campaign, provided the LDP gets out the vote in the rural areas it controls. The only threat is if enough urban voters head to the polls to vent their anger at the LDP. But Obuchi is no longer a target for these voters' ire, so that outcome is much less likely.

On the economic front, the LDP also has some good news. Growth spurted at an estimated annual rate of 5% to 6% in the first quarter, thanks to the record $170 billion spending package pushed through the Diet by Obuchi last fall. Since the lion's share has gone into public works outside of urban Japan, the LDP's power base in rural areas looks as strong as ever.

The big victim in this scenario could be economic reform. Known as a reform skeptic, Mori could face his first test this summer, when the impact of current spending packages and loan guarantees runs dry. He might well interpret a big victory as a mandate to continue profligate outlays or to strong-arm the Bank of Japan to underwrite Japanese government bonds. Given Japan's massive budget deficit and the fact that the BOJ regularly snubbed Obuchi, that will be tough. "I'm worried about the second half," concedes Takashi Ito, the Finance Ministry's deputy vice-minister for international affairs. Mori may soon find that life at the top in Japan can be very trying.By Brian Bremner in Tokyo; Edited by Rose BradyReturn to top

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