A Bailout Raises Eyebrows And Ozawa's Popularity

He says Hashimoto's housing loan rescue is a taxpayer rip-off

Japan's political arena is turning ever more bizarre. In the latest twist, opposition Diet members staged a marathon sit-in, blocking the doors to the Diet's budget committee room. By barring Prime Minister Ryutaro Hashimoto, the protesters grabbed the lead spot on the evening television news.

The spectacle of the Prime Minister being thwarted by a human blockade was orchestrated by Ichiro Ozawa, the wily leader of the opposition New Frontier Party. Ozawa is expected to be Hashimoto's challenger in the next general election to be held either this year or next. Hashimoto has handed Ozawa a marvelous gift by backing a plan to spend $6.5 billion to bail out mob-linked companies that borrowed from the jusen, or housing-loan corporations. Because the jusenhad been big financiers of Hashimoto's Liberal Democratic Party, it has been easy for Ozawa to portray the bailout as an outrageous rip-off of the taxpayers.

The campaign against the bailout is doing wonders for Ozawa's political fortunes. Long a behind-the-scenes operator, he is now a regular on Sunday morning talk shows and recently led a protest march through central Tokyo. The strategy is inflicting damage on the LDP. Not long ago, Hashimoto was one of Japan's most popular politicians, but his approval rating has plummeted from 61% to 36% in the two months since taking office. The LDP has been badly split by recriminations over the bailout scheme.

CUT A DEAL? There are serious issues behind all the political kabuki, of course. The contretemps raises questions about whether it is politically possible to spend public money to shore up the shaky Japanese banking system, which is struggling under an estimated $800 billion in bad debts. In addition, the standoff is jeopardizing Japan's fragile recovery by delaying passage of the fiscal 1996 budget, which includes a big public-works spending package. Not surprisingly, the Nikkei index has gone back into retreat, and the premium that Tokyo bankers must pay to borrow dollars in world markets is once again on the rise.

With such pressures building, Ozawa may well be calculating that it is now time to cut a deal. One possibility might be to let the bailout go forward if Hashimoto takes a big political hit and turns over his close ally, LDP Secretary General Koichi Kato, for an investigation. Kato denies allegations that he took $100,000 from a jusen-linked company, but a former associate says he saw him accept the money. There are also rumors that Ozawa is offering to back off in exchange for an early parliamentary election date when he could cash in on the scandal.

Hashimoto doesn't seem to have any good options. Almost anything he does is likely to cost him prestige. Still, no one is counting him out at this point. He has a lot more brains and political stature than some of his recent predecessors, but so far, those qualities haven't helped him.

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