Tokyo Must Forge Ahead

Keizo Obuchi’s devastating illness has added political turmoil to Japan’s gloomy economy. That’s the last thing Tokyo needs as it tries to dig out of a recession, a recovery that will take more time and bolder reforms. The country cannot afford to remain in a political limbo for long.

Obuchi’s successor as prime minister is Yoshiro Mori, 62, secretary-general of the Liberal Democratic Party, a longtime associate of Obuchi and a skilled back-room politician but no visionary leader. Elected in a parliamentary vote today, he will preside over a caretaker government until the next parliamentary election, which must take place before Oct. 19. His lame-duck government will be further weakened by last weekend’s split of several Liberal Party delegates from the governing coalition and by sniping from the LDP’s conservative wing, which opposes reforms.

When the self-effacing Obuchi took office in July 1998 not much was expected of him. He defied those expectations. A consummate LDP operative, Obuchi embarked on economic modernizations of which none of his predecessors in the 1990s had been capable. He launched reform of the heavily indebted banking sector, opened Japan to foreign investment and stabilized the economy through massive and repeated injections of government spending.

He won praise in Washington for pushing through parliament new guidelines designed to strengthen the U.S.-Japan security alliance, to have Japan play a more active role in regional defense. In a bold move toward China, he took the politically risky step of inviting President Jiang Zemin to this July’s summit of the world’s seven biggest economies and Russia, the G-8 group, at Okinawa. Jiang embarrassed him by declining.

The pace of reforms has slowed lately, partly because of the upcoming general election and because reforms have begun to take their toll among the LDP’s traditional friends in industry--small banks, credit unions and farmers. The government’s popularity among voters plummeted as growing unemployment and the loss of job security among many workers heightened uncertainty. Still, with his job only half done, Obuchi had earned the credentials of a reformer.

Mori hasn’t the strength to push very far in the face of a resistant bureaucracy, but he must stand firm against the LDP old guard’s desire to backslide on reforms. As recovery begins to take hold, grass-roots support for Obuchi’s reformist policies will rise. The public’s attitude toward the old, discredited model--an economy run by industrial conglomerates and sheltered by bureaucrats--is changing. But Japan’s transformation is not over. A successful completion depends on political stability and a quick transition to a new government.