Old problems await Japan's new year

January 02, 1994|By Thomas Easton | Thomas Easton,Tokyo Bureau

TOKYO -- Japan's year of change has ended in gridlock.

Political reform, economic reform and whatever other reform that was euphorically predicted last summer are confronting the intransigent reality of Japanese politics and Japanese society.

The only real movement comes from the punishing impact of the higher yen on Japan's export-driven economy.

"I frankly apologize to the people," Prime Minister Morihiro Hosokawa said in a televised address Christmas Eve, as he acknowledged failing to pass a political reform bill by the end of the year as promised.

Officials in the Clinton administration have emphasized that 1994 is the year for the United States to negotiate a new framework of economic ties with Japan.

But the ability of Japan to reach any significant internal or external agreement in the near future is questionable.

"The pressure on the Hosokawa administration will be immense in the next month," said Keith Henry, an adviser to the Shinseito Party, a critical member of the ruling coalition that took power in August.

"It has one more chance to get political reform through," Mr. Henry said. "If it doesn't, there will be new elections."

The reform, which involves strict limits on political donations and complicated shifts in electoral districts, was intended to free the government from a system of politics tied to expensive campaigns and graft.

Over the objections of a strong and increasingly obstructionist opposition, the 1993 session of Japan's parliament, the Diet, was extended through January.

The purpose was to permit additional time for political reform to be fought in the upper house, where approval had been widely expected to be perfunctory.

The bill passed the critical lower house in November, prematurely raising expectations that the Hosokawa administration would achieve change.

A locked parliament has impeded actions to reinvigorate Japan's shrinking economy.

Last year's surge in the yen damaged exports, undermining the profitability of major Japanese companies in the short term and prompting many to move factories abroad. It also raised fears of more severe problems to come.

To trigger growth, one emergency budget package after another has drifted though the government. Some of these have never emerged; others have produced too little money too late, in part because revelations of illicit dealings between politicians and construction firms have derailed public works contracts.

More disconcertingly, it is possible that what ails Japan's business -- a declining work ethic, over-reliance on mature industries, the limits of mercantilism and embedded high costs -- cannot be resolved by government spending but only through time, effort and pain.

"The economy," summarized the Yomiuri Shimbun, Japan's largest- circulation newspaper, "is now in an extreme state of exhaustion." And, it added, "the political system has collapsed."

Mr. Hosokawa's personal popularity remains high, but it has fallen from record levels earlier this fall. The troubled economy and inability to pass political reform has tarnished the glowing treatment he has received in the press.

Within the coalition itself, fundamental issues concerning tax cuts, defense and the inevitable but painful decision to open the domestic rice market have diminished support and raised the prospect of various segments breaking off to form new alliances.

Japan remains deeply divided about its role in the world.

Questions include whether it should change its constitution to permit military forces abroad; whether it should sacrifice less efficient industries and thereby ease trade tensions and benefit consumers, at the risk of increasing unemployment; whether it should reduce its extensive control over numerous industries and thus risk the unproductive chaos that often comes with innovation.

Even the victories that the coalition has achieved are striking because their significance has been so much more symbolic than real.

Foreign rice will soon enter Japan -- a little -- but the far more important American share of the Japanese computer chip market is once again falling.

Upon taking office, Mr. Hosokawa vowed to shift control to elected politicians from the powerful ministries staffed by civil servants that have played a large role in administering Japan for a century.

A major squabble in the past week between the politically appointed minister in charge of the Ministry of Trade and Industry (MITI) and a senior MITI official underscored how difficult it will be for Japan's elected government to grab authority from what, in fact, has been its perpetual government.

The minister, Hiroshi Kumagai, is a former MITI civil servant himself.

He successfully pressured an official to resign but was accused of meddling and overstepping -- accusations underscoring a generally held perception that ministers are irrelevant to their ministries.

At a Christmas party for the small group of Japanese reporters covering his office, the prime minister was quoted as saying his administration was designed to eradicate the economic, political, and administrative "impurities" that built up during the postwar period.

The extent of the task now seems to be coming clear.

"At the start, I braced for a tremendous amount of hardships ahead but I never anticipated a terrible situation like this," Mr. Hosokawa said.

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