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Web-only Exclusives
November 30, 2000

From Our Correspondent: Hirohito and the War
A conversation with biographer Herbert Bix

From Our Correspondent: A Rough Road Ahead
Bad news for the Philippines - and some others

From Our Correspondent: Making Enemies
Indonesia needs friends. So why is it picking fights?

Asiaweek Time Asia Now Asiaweek editorial

SEPTEMBER 24, 1999 VOL. 25 NO. 38

Now, the Political Hurdles
Obuchi's leadership, better than expected, isn't good enough


Just as the moribund Japanese economy is starting to show signs of life, two events that could shape Japan's government and its stewardship of the economy are about to take place. On Sept. 21, Prime Minister Obuchi Keizo must fight to retain the presidency of the ruling Liberal Democratic Party. Two party heavyweights are challenging him for the post that, due to the LDP's dominant position in parliament, carries with it government leadership. In a rare coincidence, the Democratic Party of Japan, the largest opposition party, will choose its president on Sept. 25. That race pits incumbent Kan Naoto, who has often led polls as the public's top choice for future prime minister, against rivals from the DPJ's right and left wings in a battle for the party's soul. Together, the two elections could set the direction for Japan's political economy for years to come - in other words, nowhere.

In the immediate future, that does not matter. Prime Minister Obuchi is almost certain to be a shoo-in because the economy is looking better. Japan's gross domestic product recorded a suprise: two consecutive quarters of growth, increasing 0.2% in April-to-June over the previous quarter, which itself rose a remarkable 2% quarter-on-quarter. International investors are showing increased confidence in Japan by buying stocks and bidding up the yen, which recently hit a 40-month high against the dollar. The way ahead is still tricky. The strong yen is creating a headache for exporters, one of the few bright spots of the economy. Unemployment remains high, and will increase as companies restructure. Consumer and corporate sentiment, while improving, remains cautious overall, so that the Bank of Japan says there are still no clear signs of a self-sustaining recovery based on private demand.

In this context, Obuchi's re-election and the expected retention of his economic team, including Finance Minister Miyazawa Kiichi and bank reform chief Yanagisawa Hakuo, should underpin confidence that this recovery has legs. The prime minister has so far outstripped all expectations. When he took office in July last year, Obuchi was derided as uncharismatic, lacking in vision, ignorant about economics, and likely to last only a few months. In fact, his faults proved to be assets as Obuchi retreated, compromised, adopted opposition demands, and generally backed his way into bank reform and public spending packages that finally stopped the erosion in Japan's financial sector and put some traction under the wheels of the economy. With his pragmatic approach of doing whatever needs to be done, Obuchi, together with his team, seems to be the best man among the current candidates to steer the economy out of the mire.

After that, though, things get even trickier, and more will be needed from Japan's leaders than Obuchi has so far provided. To pay for the giant spending packages needed to boost its economy, Japan has piled up $5.4 trillion in public debt. That's 120% of GDP, the highest level among industrialized nations. At the same time, the rapid graying of Japan's population means the number of workers (and taxpayers) will shrink while demands on health and pension systems will grow. The government/corporate nexus that once powered the economy is breaking down, and both workers and executives need to learn how to cope with greater uncertainty, competition and individual choice. On the international stage, the emerging strength of China, the growing eccentricity of North Korea, and the mounting regional irritation with West-imposed economic priorities are eroding the sand under Japan's diplomatic feet. In the not too distant future Japan will need leaders who can help its citizens make tougher choices regarding economic and social policy than the nation has made in decades, and who can speak in a clear and credible voice on the international stage.

In this context, the LDP leadership poll is rather discouraging. As usual, the race is a factional numbers game in which policy differences play only a minor part. Obuchi's two rivals are running chiefly to raise their profiles for future leadership bids. The main issue is the wisdom of Obuchi's plan to bring a controversial third party - one backed by an aggressive Buddhist group - into the ruling coalition. Visions of the future are limited to thin rhetorical veneers.

The other election gives no grounds for optimism either. The three-man race, with Kan caught between candidates from the party's left and right wings, is threatening to pull the DPJ apart at the seams, which would sink any hopes for a viable opposition to the LDP for years. This is a pity. The Japanese people deserve better. Asia does as well. While Asia is getting what it needs most from Tokyo right now - an improving Japanese GDP- more credible leadership may be able to really open up the Japanese economy, internationalize the yen, and actually pull off the Asian monetary fund proposed at the start of the recent Crisis.

Change will come. Recently enacted freedom of information laws, though limited, will increase public scrutiny of government. Rules requiring ministers to answer questions on their own in parliament, instead of relying on bureaucratic underlings, will require senior politicians to take more responsibility for policies. Global competition will force not only corporations but also economic policymaking to restructure. But change will be slow - far slower than if Japan had better leadership.


This edition's table of contents | Asiaweek home

AsiaNow


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