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Thursday, Aug. 9, 2001

Koizumi: a sheep in wolf's clothing


LONDON -- "I am resigned to not seeing a visible economic recovery for two or three years," said Japanese Prime Minister Junichiro Koizumi last month. He had just won a resounding election victory despite his tough-love talk about the need for economic pain to pull the country out of its long slump.

His plans scare the conservative leaders of his own Liberal Democratic Party half to death. He scares foreigners, too. "The present prosperity of Japan is built on the sacrifice of those who died in war," he said shortly after his surprise choice as LDP leader last April.

Not only is that historically untrue, but it is rhetoric that the rest of Asia links with the rightwing Japanese nationalists whose only regret about World War II is that they lost it.

Despite the outrage abroad, Koizumi is holding to his promise to visit Yasukuni Shrine for Japan's war dead Aug. 15, the anniversary of the end of World War II. He will be the first Japanese prime minister to do so in 15 years. So is he a reformer (good), a nationalist (bad) -- or maybe just a flash in the pan?

Koizumi burst onto the national political scene last spring like Godzilla with a perm, trampling the LDP factions that traditionally choose the party leader and sparking adulation in the Japanese public. His off-the-cuff frankness was as novel for a Japanese politician as his perfectly coiffed long gray hair, and within a month his popularity rating reached 90 percent (compared to 10 percent for his disgraced predecessor, Yoshiro Mori).

But Koizumi's claim to be a radical new force in Japanese politics belies the fact that he spent a quarter century as a loyal LDP soldier on the back benches of Parliament, as his father and indeed his grandfather did before him. His promise of sweeping economic reform rarely ventures into specifics.

His wish to change the system seems genuine; but it is widely suspected that the major LDP faction leaders let Koizumi take over the leadership from the stupid and incompetent Mori, the eighth LDP prime minister in eight years, because at that moment the leadership was a poisoned chalice -- and because they wanted to set the reformers in the LDP up for a fall.

If so, then their strategy failed in the short run. Koizumi's unforeseen popularity helped the LDP strengthen its majority in the Upper House of Parliament last month. But once he starts to implement painful reforms, his popularity could drain away fast. At that point the party bosses would try to dump him and take back the government -- for their power cannot survive if his reforms take hold.

That may be why Koizumi feels the need to play the nationalist card, but it is not an especially ugly card. Extreme rightwingers in Japan have made Yasukuni Shrine a symbol of their ambitions, but it is no fascist monstrosity celebrating national strength and pride.

It's just a modest memorial for the millions of Japanese who died in the war, and if Koizumi can fortify his position by a visit and then go on to rescue the world's second-biggest economy, nobody will hold it against him for long. The question is: Can he?

Japan's economic miracle in 1950-90 was based on a highly competitive export sector that inundated the world with cars, electronics and so on, while the domestic economy was sheltered and cosseted like nowhere else. Farmers got huge subsidies, the Byzantine retail distribution system kept every small shop in business and excluded foreign goods, and a huge construction sector fed by public money built useless roads, dams and bridges.

All the beneficiaries voted for the LDP, which kept it permanently in power. But the yen doubled in value against the dollar in the 1980s, undermining the export sector, while the domestic economy remained hopelessly inefficient. For a decade Japan has been stumbling along the edge of a recession, with hardly any growth and steadily rising unemployment (now higher than the United States). But fundamental reform was impossible because it would attack the LDP's power base.

Koizumi is talking of reform on every front at once: forcing the crippled Japanese banks to write off their huge burden of bad loans (which will drive some banks and many other businesses into bankruptcy); ending pork-barrel construction projects; privatizing much of the government; and deregulating the whole economy.

From Koizumi's point of view it all needs to be done at once -- before his enemies get him.

It's questionable, though, whether this "big bang" approach is wise when the rest of the world is sliding toward recession and Japan is probably already in one. "There is a debate in Japan about whether we're coming in for a hard or a soft landing . . . or with no landing gear," said economist Andrew Shipley of WestLB Panmure recently.

In which case Koizumi is toast, the LDP old guard regains power (at least for a while), and Japan drags the rest of Asia, if not the entire world, into a very deep recession indeed. There's a lot riding on his (quite untested) ability to manage large-scale change.

Gwynne Dyer is a London-based independent journalist and historian whose columns appear in 45 countries.


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