THE DAILY YOMIURI - August 6, 1998

A Constructive Agenda for Obuchi

by Steven C. Clemons

Sir Francis Bacon once said, "In civil business; what first? boldness; what second and third? boldness; and yet boldness is a child of ignorance and baseness." Political pundits around the world, issuing instructions to newly installed Prime Minister Keizo Obuchi and his team, are calling for such boldness. They want to see determination, big steps, a sweaty brow, and great theater.

This is not the time for theater, however. In reality, missteps by those managing Japan's economy could set in motion events that could trigger a second economic meltdown in the Asia-Pacific region, and perhaps a global collapse of demand--by any other definition, a global depression.

The yearning is palpable in Japan, and around the world, for a Japanese chief executive who matters and who has power. Anyone with the vaguest notion of the architecture of Japanese government, however, realizes that, in its current form, true political power remains in the shadows while others perform their roles in the light. Ascribing to Obuchi and his team the kind of executive authority enjoyed by U.S. presidents is mistaken mirror-imaging, so evident in Japan watchers' endless bleating for bold leadership rather than for credible policy steps that are achievable within the existing political framework.

To understand what Obuchi will do, one must appreciate his record. Contrary to the recent New York Times editorial assertion that the new leader has distinguished himself with nothing other than a career of political timidity, Obuchi has, in fact, been an integral player in Japanese power politics, particularly during the last 15 years. His consistent behind-the-scenes successes reflect the confidence and power of a potentially capable leader, rather than the weakness of a political maladroit who has been quickly discounted by pundits resorting to bumper-sticker phrases such as "cold pizza."

In 1984, when LDP Secretary General Shin Kanemaru was orchestrating the ascension of Noboru Takeshita and planning the overthrow of his long-term political mentor and overlord, former Prime Minister Kakuei Tanaka, Keizo Obuchi--along with some other loyal retainers, such as factional siblings Ryutaro Hashimoto and Ichiro Ozawa--did Kanemaru's bidding. Obuchi was then one of eight deputy secretaries general of the LDP. Other deputies at that time included the powerful and now deceased former Foreign Minister Michio Watanabe as well as former Prime Minister Toshiki Kaifu and the colorful former yakuza member Koichi Hamada.

As a guest observer of internal LDP affairs at the time, I noted Obuchi's ability to thrive in the complicated web of power and intrigue within the Tanaka faction. I also observed how Kanemaru and his lieutenant, Obuchi, massaged the opposition parties into virtual cooperation with the LDP, despite the facade of political divergence and conflict.

Although Takeshita clearly remains the reigning shadow shogun of Japanese politics, Obuchi is not as weak within the LDP as most of his predecessors were. He may fail to forestall the economic deterioration that is robbing Japan of its future, but it is not because he is not the right person at the helm. His proven ability to calm the waters and to pull together consensus may be just what is needed to deliver the required votes for pending legislation on banking and economic stimulus.

Some analysts make a compelling case that Japan's bad debt problem is around 1.5 trillion dollars, more than twice the official Finance Ministry estimates, and that Japan needs 12.5 percent of its gross domestic product to flush these nonperforming loans away. In contrast, the United States spent 2.5 percent of its GDP to overcome its savings-and-loan crisis.

Japan's economic problems, therefore, may be too big for any prime minister, weak or strong, to resolve in the near term. Yet there are few alternatives. Despite high ratings in the polls, Naoto Kan, the political opposition's rising star, hardly looks like a compelling choice, given that his party, Minshuto (Democratic Party of Japan), has tied together a tensely fragile coalition of renegade LDP members and former Social Democratic Party members who have difficulty moving along the same path. What is clear is that Obuchi and his team need to avoid the pretense of boldness and instead credibly pursue real policies that further Japanese economic interests and the public's call for more responsive democracy.

What then is to be done? First and foremost, Obuchi needs to connect with the Japanese public and candidly explain, in layman's terms, the dilemma that Japan is facing, while also providing his government's action plan for correcting structural problems in the economy. He might take note of the recent remarkable performance of Chinese President Jiang Zemin and U.S. President Bill Clinton, when they publicly debated each other and engaged the Chinese public in unscripted dialogue. Such an effort in Japan would not only be historic, but also may be necessary to the process of restoring Japanese public confidence in its system.

Secondly, the new administration has had much of its legislative burden lightened by the last-minute work of the former Hashimoto government. Obuchi would earn instant gold stars if he stopped government foot-dragging and passed the pending bank reform and economic stimulus legislation during this next month.

Thirdly, Obuchi should rethink the taxcut issue. This is complicated, but the cutting of income taxes in Japan may end up generating more savings and relatively less consumption, the opposite of what is now needed. Although protests may come from Takeshita and the Finance Ministry, who worked for years to implement the consumption tax, the current government should at least consider the positive benefits of simply rolling back the consumption tax, thereby giving relief to Japanese consumers across the economic spectrum and also dealing a major blow to the restrictive fiscal policy measures that have kept Japan floundering for seven years.

Another important action item on Obuchi's list might be to establish a mechanism to transform the Japanese political process at its core. One of the key fundamentals to understanding political outcomes in Japan is the overwhelming power of the bureaucracy in getting what it wants. Currently, bureaucrats control information and draft the legislation that goes to the Diet. Although Diet members were recently granted an extra staff member to work on policy rather than to secure votes from the local constituency, that is not enough.

Obuchi should secure some budget to establish a "legislative counsel service" for Diet members, much like the one that serves members of the U.S. Congress. Legislative Counsel attorneys in the United States do nothing but draft legislation for politicians. They are not allowed to divulge the nature of the legislation to anyone on the outside, and no one in the U.S. bureaucracy is able to direct these Legislative Counsel members or to control their careers. They work exclusively for "individual" members of Congress, not for parties and not for factions. Such a system could be established in the Diet. Enabling Diet members from all parties to compete on the basis of ideas and substantive legislative proposals would help enrich the policy process and help create more responsive democracy in Japan.

The Obuchi agenda could also hit other popular chords. Japan could take a leadership role in helping to support Indonesia, the worst-hit nation in the Asia-Pacific crisis. One opportunity would be to work with the United States and other nations in a "Jakarta Airlift," much like the Berlin Airlift 50 years ago, to transport excess rice from Japan to impoverished and hungry Indonesian citizens. After all, Japan has 4 million metric tons of excess rice, whereas the Berlin Airlift moved just 2.5 million tons of food. Japan's strategic rice reserve is bulging beyond capacity and costs more than 400 million dollars each year to store. Much of that rice will rot, but it could be alleviating malnutrition and starvation in Indonesia. Such a gesture would be appropriate to Japan's continued leadership in world affairs and might also serve to lift morale and confidence among the Japanese public.

Finally, in a case in which boldness may matter, Obuchi could take yet another step to improve the circumstances of the Japanese nation, and also see his popularity ratings soar, if he were to ask the United States to do more to rationalize its force structure in Japan. He might suggest to Clinton in September that the United States reduce by half the 42 military installations in Okinawa, and encourage the United States possibly to focus on, and even strengthen, the air and naval portions of its force structure, while withdrawing the ground troops, for whom there are fewer likely contingencies where they could be appropriately and effectively used in the region.

Such an action plan will require not boldness, but small, credible steps in the direction of Japan's national interests. If Obuchi keeps moving forward, producing more results and less entertainment, he will be remembered as a prime minister who made a difference.