No. 2 — January 19, 1996


Weekly Review

--- by Barbara Wanner

As expected, former minister of international trade and industry Ryutaro Hashimoto easily won election to become prime minister January 11, reclaiming for the Liberal Democratic Party Japan's top leadership position two and a half years after a group of reformist parties broke the LDP's 38-year lock on power. Most experts concur that Mr. Hashimoto, who was elected to lead the LDP last fall, will bring to the premiership considerable political savvy and a more assertive leadership style than his predecessor, Tomiichi Murayama. Analysts generally agree that Mr. Murayama performed very tentatively during his 18 months at the helm of the tripartite ruling coalition comprised of his Social Democratic Party of Japan, the LDP and the New Sakigake Party. Some Japanese news organizations maintain that Mr. Hashimoto's 60 percent public approval rating means that the Japanese people apparently welcome what they expect will be his firmer hand in dealing with a host of economic problems and foreign policy issues.

Despite the new prime minister's pledge to "create something new rather than simply [aim] for reform," various analysts doubt that Mr. Hashimoto will break new substantive ground. In addition to appointing a relatively inexperienced cabinet that is unlikely to come forward with policy innovations, the new prime minister's past statements suggest that he is averse to departing dramatically from the status quo, particularly on economic reform. Political observers also note that the continued presence of the pacifist, left-leaning SDPJ and NSP in the unwieldy but politically opportune triparty government necessarily will force Mr. Hashimoto to moderate to some extent his conservative economic policy prescriptions and nationalistic approach to diplomacy.

Although Mr. Murayama stunned the Japanese political world with his abrupt announcement January 5 that he would step down (see JEI Report No. 1B, January 12, 1996), no one doubted that the LDP chief would succeed the beleaguered prime minister. Not only is the LDP the largest party in the Diet, but the three ruling parties together hold a comfortable majority in the powerful lower house (see Table 1), which, among other powers, has the authority to select the prime minister. Mr. Hashimoto collected 288 of the 489 votes cast in the 511-seat lower chamber, 43 more than a simple majority of those casting ballots. Shinshinto, the largest opposition party, fielded its leader, Ichiro Ozawa, who earned 167 votes, a number that implies that not all Shinshinto members voted for him. Japan Communist Party chief Tetsuo Fuwa received 15. Japan's parliamentary government system allows for a change in leadership without dissolving the Diet for national elections, although Shinshinto has attempted to portray the intracoalition transfer of power from Mr. Murayama to Mr. Hashimoto as flying in the face of representational democracy. The last lower house election — which precipitated the Japanese political roller coaster ride that has resulted in five prime ministers in three years — was held in July 1993; the next poll for the lower chamber must be held by the end of July 1997.

In selecting his cabinet Mr. Hashimoto held to the formula developed under the Murayama regime for allocating positions based on party strength. The lone exception was nonpolitician Ritsuko Nagao — a 21-year veteran of the Ministry of Health and Welfare who was appointed minister of justice; she also is the Hashimoto cabinet's only female member. Of the remaining 21 cabinet posts 12 went to LDP legislators, seven to Socialist party members and two to NSP lawmakers (see Table 2). Political experts note that only four of the appointees previously have held cabinet-level positions. In view of the tough issues facing the Hashimoto government both domestically and on the foreign policy front such inexperience is somewhat unsettling to many observers.

Heading the list of difficult problems facing the Hashimoto government is a controversial plan to bail out troubled housing loan companies (jusen). The plan, endorsed by Mr. Murayama's cabinet in mid-December (see JEI Report No. 47B, December 22, 1995), calls for using some ¥685 billion ($6.9 billion at ¥100=$1.00) in public funds during FY 1996. In addition, the new government must contend with growing domestic opposition to the U.S. military presence in Japan, particularly on Okinawa, where a Japanese schoolgirl allegedly was raped by three U.S. servicemen last fall. More broadly, Mr. Hashimoto also must ensure that the two FY 1995 supplementary budgets that were enacted last year have the desired effect of stimulating more sustained economic activity (see JEI Report No. 25B, July 7, 1995, and No. 36B, September 29, 1995). He also must shepherd through the Diet before April 1 the FY 1996 budget, which includes additional provisions aimed at sparking an economic upturn as well as funding for the jusen rescue plan (see JEI Report No. 1B, January 12, 1996).

Given the severity of the problems confronting Japan's financial system and the public outcry at using taxpayers' monies to bail out financially plagued jusen — as well as the related, continued frustration among the Japanese people who long to see a light at the end of the economic tunnel — few glimmers of hope were struck by Mr. Hashimoto's decision to tap Wataru Kubo to head the powerful Ministry of Finance. Although the position of finance minister generally is regarded as the most prestigious of cabinet posts, one of the jokes circulating in Japanese political circles evidently was that Mr. Hashimoto could not give this job away. Mr. Kubo, who is SDPJ secretary general and not known for possessing a breadth of economic and financial expertise, was a last resort-appointment, insiders contend. Apparently, the Liberal Democratic lawmakers most qualified to serve as finance minister withdrew themselves from contention for fear of being destroyed politically by the jusen crisis. According to John Neuffer of Tokyo-based Mitsui Marine Research Institute, Mr. Hashimoto needed "a useful and expendable human shield" against the political opposition's anticipated onslaught regarding the housing loan company rescue plan; Mr. Kubo apparently filled the bill.

Since Mr. Kubo has been the Socialist party's leading instigator of change, moreover, Mr. Murayama may have pushed for him to be named to the position as a way to keep the SDPJ secretary general preoccupied and unable to interfere with Mr. Murayama's efforts to reinvent the SDPJ. The former prime minister, who handily was reelected SDPJ chairman January 16, envisions a less radically changed party than that apparently sought by Mr. Kubo (see JEI Report No. 1B, January 12, 1996).

Mr. Hashimoto may not be able to foist entirely onto Mr. Kubo the political fallout from the jusen mess, however. The current problems faced by the seven housing loan companies have several roots in the early 1990s when Mr. Hashimoto was serving as finance minister in the government of then Prime Minister Kiichi Miyazawa. MOF's decision at that time to exempt these lending institutions from restrictions on real estate-related loans — a decision that allowed the jusen to engage in reckless lending and rack up trillions of yen in bad debts — occurred on Mr. Hashimoto's watch. Thus, depending on how effectively Shinshinto wages its "war" with the new prime minister, Mr. Hashimoto himself may end up tarred by the jusen rescue plan.

Another purely political appointment that could backfire on the new prime minister, longtime Japan watchers suggest, was his selection of Shumpei Tsukahara as minister of international trade and industry. Mr. Hashimoto knows the political advantages of the MITI post. It has become common in the Japanese press to attribute the LDP chief's increased popularity to his ability last year to drive a hard bargain with U.S. Trade Representative Mickey Kantor during the automotive trade talks (see JEI Report No. 24B, June 30, 1995). Even though Mr. Tsukahara is from the LDP, his maiden press conference as trade minister may have left Mr. Hashimoto wondering about the wisdom of the appointment. Mr. Tsukahara initially announced that he would be serving as labor minister and then reportedly stumbled in answering a question concerning the Asia Pacific Economic Cooperation forum because he did not know what the APEC acronym stood for. In view of Mr. Tsukahara's apparently substantive weakness Mr. Hashimoto may involve himself more directly in trade policy matters than is customary for a prime minister in order to ensure continuity in Tokyo's negotiating stance. That, of course, may have been his goal. Some observers are skeptical, though, whether the new prime minister can juggle the demands of a fractious trade agenda with the United States and other countries as well as ensure enactment of the jusen rescue plan and handle the other economic, political and security issues demanding his attention.

One of the experienced appointees — Yukihiko Ikeda as foreign minister — appears highly qualified to handle the Okinawa base controversy as well as the preparations for President Clinton's mid-April trip to Japan. Both countries are expected to use the occasion of Mr. Clinton's visit to reaffirm the importance of U.S.-Japan security ties. Mr. Ikeda, a former Japan Defense Agency director general and ex-Finance Ministry official, has played a leading role in Tokyo's negotiations with Okinawa concerning the possible reallocation of American troops to other parts of Japan (see JEI Report No. 37B, October 6, 1995).

In view of the unease in some Asian quarters concerning the new prime minister, Mr. Hashimoto deliberately may have chosen a seasoned professional as the highest-ranking diplomat, a number of observers suggest. The new prime minister — who until recently served as chairman of the Japan War Bereaved Families Association, a veterans group — is known for his highly nationalistic, unapologetic view of Japan's behavior in Asia before and during World War II (see JEI Report No. 25A, July 7, 1995). Particularly in Japan's relations with the People's Republic of China and South Korea, two countries that suffered the most from Tokyo's pre-1945 military aggression and colonial conquests, Mr. Ikeda's skill as a negotiator and bridge-builder may be taxed to the limit, these analysts speculate.

Perhaps the clearest indication that Mr. Hashimoto will maintain an iron grip on his tripartite administration was his decision to appoint Seiroku Kajiyama as his chief spokesperson. Both Messrs. Hashimoto and Kajiyama learned their political lessons under the tutelage of LDP kingmakers and former prime ministers, such as Kakuei Tanaka and Noboru Takeshita; these two politicians, in particular, were master strategists. In fact, some commentators speculate that Mr. Hashimoto deliberately appointed an inexperienced cabinet to ensure that both he and Mr. Kajiyama can maintain an unchallenged authority and avoid the paralysis and indecision that plagued the Murayama administration.

Mr. Kajiyama's appointment to chief cabinet secretary also indicates that the new prime minister probably intends to pursue a no-holds-barred approach in dealing with Shinshinto. Since Mr. Ozawa also learned the political ropes from Messrs. Tanaka and Takeshita, the new chief cabinet secretary — who achieved notoriety in the United States five years ago when he compared African Americans to prostitutes whose presence in a neighborhood decreases property values — is said to possess an intimate knowledge of Mr. Ozawa's renowned cutthroat political tactics. Some analysts anticipate that Mr. Kajiyama in the coming weeks may try to exploit Shinshinto's internal problems as a means of fending off the largest opposition party's attacks concerning the jusen crisis. Although Mr. Ozawa was the undisputed victor in Shinshinto's December election (see JEI Report No. 1B, January 12, 1996), he apparently has yet to repair ties with opposition lawmakers who backed ex-Prime Minister Tsutomu Hata. The residual antipathy of this group within Shinshinto toward Mr. Ozawa remains so strong that some commentators speculate that Mr. Hata and his supporters, who include former Prime Minister Morihiro Hosokawa, may split from the largest opposition party in the coming months, possibly to rejoin the LDP. Mr. Kajiyama undoubtedly will set out to woo these disaffected, anti-Ozawa opposition party members.

Although the public may have hoped for an end to the muddle and the maneuvering that has characterized Japanese politics for the past two and a half years, it is unlikely that Mr. Hashimoto can bring about a more ordered political backdrop and fresh policy vision. His clear and direct style of communicating may appeal to a body politic frustrated by the Murayama government's stale rhetoric and do-little record. Similarly, Mr. Hashimoto's support for the U.S.-Japan security alliance and his interest in elevating Japan's diplomatic profile have cheered American officials who often were frustrated by the lackluster, pacifist tilt of the 18-month-old Murayama regime. However, few political experts are placing bets on whether Mr. Hashimoto's elevation to premier will result in another extended period of LDP rule. The longevity of the new government probably will depend on how well Mr. Hashimoto can ride out the jusen storm and whether Mr. Ozawa can mend fences in his own camp.

The views expressed in this report are those of the author
and do not necessarily represent those of the Japan Economic Institute

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