Real change in Japan will be slow in coming

July 19, 1993|By James Sterngold | James Sterngold,New York Times News Service

TOKYO -- When President Clinton came here two weeks ago, he sensed a historic opportunity and pressed more aggressively than any of his predecessors for a breakup of the collusive forces that have made Japan such a frustrating market for U.S. companies.

Yesterday's election did shatter the old political order, which was dominated by the conservative Liberal Democratic Party, but there was little immediate prospect that the economy would be thrown open to the same bracing jolt of change, or that Japan's trade surpluses would begin to shrink any time soon.

It could take years for U.S. companies to reap economic benefits from the upheaval because no party won a clear majority, and thus the prospect is for unstable coalitions and more frequent elections.

Yesterday's election had been cast as a battle waged on numerous fronts, a conflict between the old generation and the new, a struggle to shed institutions designed for the cold war, an attempt to purge the governing Liberal Democratic Party of endemic corruption. Some even characterized it as a battle between the old tilt toward producers, which was based on the powerful alignment of interests between government and business, and a new emphasis on consumers' interests.

The idea that consumers ought to be given the benefit of open markets and inexpensive imports was at the heart of Mr. Clinton's pitch, as when he told a group of university students here, "You have a common cause with the people of America." Change, he insisted, "would benefit both of us."

One fact the election results have borne out is that the old leftist opposition forces are near collapse; the real struggle for influence is within an expanding, if fragmented, conservative movement.

Though three new conservative parties emerged in the past year, each trying to distinguish its policies, they share certain assumptions with the Liberal Democrats about the basic strengths of the economy and why change has to be slow and careful.

"The outcome of the election this time will not affect trade relations in any meaningful way," said Takashi Inoguchi, a professor of politics at Tokyo University. "It will take some time. Any change is likely to be piecemeal."

For instance, the most powerful new party is the Japan Renewal Party, led by a former finance minister, Tsutomu Hata, who has called in vague terms for economic deregulation and decentralization.

But when he was asked directly last week if he thought the time had come to break the "iron triangle" that bound politicians, business and government in a collusive embrace and that left consumers paying some of the highest prices in the world, he commented, "Producers are consumers, too, and we cannot forget their interests."

In some respects, the election results could draw the United States and Japan closer. On security issues, the government has supported American policy for decades, but it has had to tread carefully for fear of inflaming the pacifist passions of the leftists in Parliament. Now, all the leading parties are conservative, generally favoring a strong security relationship with the United States and an active role for Japan in international affairs.

Thus, whether the Liberal Democrats remain in power as part of a coalition or not, the loudest opposition voices will be largely pro-American on security issues.

But Mr. Clinton has stressed repeatedly that economic issues have replaced security and political concerns as the basis of the relationship, and so the new government's trade policies are likely to be scrutinized with the greatest care by Washington.

The problem will be the pace of change. Japanese politicians and government officials generally accept the fact that the trade surpluses are too large and that the regulatory regime that discriminated against outsiders has to change. The new conservative parties have pressed these themes with more energy than the Liberal Democrats did.

But the economy is stuck in a recession. With companies already vulnerable and profits plummeting, the government is unlikely to open markets to fresh competition that could worsen the situation and risk Japanese jobs.

In addition, the bitter political struggles for power that are expected could leave the next several governments weak, making it even more difficult for politicians to override the overwhelmingly nationalistic instincts of the bureaucracy, the engineers and keepers of Japan's unusual economic system.

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