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Hosokawa Keeps Japan's Political Tug-of-War in Balance

POLITICS in Japan used to be a crashing bore. Not any more.

If Prime Minister Morihiro Hosokawa looks a bit breathless as he arrives in Washington today, it's because he has taken the Japanese public for a roller coaster ride during the past two weeks, with no one sure precisely what the destination was and whether the prime minister would still be around at the end of the ride.

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Actually, he's done quite well. He got political reform, built around an overhaul of the electoral system, through an obstreperous Diet. He has put together a 15 trillion yen (US$140 billion) economic stimulus package featuring a 20 percent income tax cut and a massive public-works program, which he's bringing to Washington as an earnest of Japan's pledge to do its share for the world economy. He has kept his shaky, eight-party coalition, including the left-leaning Socialists and the right-leaning Japan Renewal Party, together.

But disaster loomed several times during the past fortnight. The prime minister's standing in the polls slipped as the prospects for political reform rose and fell, and as recession deepened without effective government measures. Particularly damaging was Mr. Hosokawa's flip-flop on an income tax cut last week, when at first he coupled it with an increase in the consumption (sales) tax, only to reverse it when the Socialists threatened to walk out of the coalition. In the end, the coalition agreed on a one-time 20-percent tax cut and to come up with a fundamental tax-reform plan before the end of the year. This dispute and others are guaranteed to keep the political pot boiling for months to come.

Hosokawa is an aristocrat to his fingertips, the descendant of a 16th-century courtier who turned warrior and received the fief of Kumamoto in southern Japan. He has been in regional and national politics for nearly 30 years, but he has managed to keep an air of detachment, as if becoming prime minister were not the be-all and end-all of life.

The media call him ``Tono,'' the Japanese equivalent of ``His Grace,'' and when he comes up with an ill-considered decision that must later be reversed, he uses the time-honored phrase used to excuse the idiosyncratic behavior of exalted persons - ``Tono go-rashin'' (``His Grace is out of his mind''). The media had a field day with this expression during last week's reversal on the income tax cut.

Japanese politics perked up after last July's election when the 38-year reign of the safe, dull Liberal Democratic Party (LDP) ended and a coalition of anti-Liberal Democrats chose Hosokawa as its leader. The LDP, still the largest party, has been plagued by bribery scandals and seems disoriented by its loss of patronage powers. In the ruling coalition, there has been a perpetual battle between the controlled-economy, pacifist views of the Socialists, and the free-market, deregulatory policies of the others.

In December, the Socialists nearly left the government over Hosokawa's decision to bow to foreign pressure and open Japan's market to foreign rice. When the political-reform bill came to a vote, 17 Socialists deserted their party and cast their ballots against it. In a closely divided House of Councilors, the margin was sufficient to defeat the bill - which was revised at the last minute to a form acceptable to the LDP, then passed by an overwhelming majority.

And then there's another perennial tug-of-war between Tokyo and Washington over Japan's huge trade surplus with the United States. Hosokawa has brought a package of concessions with him, but whether it will be sufficient to appease the US government and Congress and avert a trade war remains to be seen. Washington insists that Japan adopt numerical targets in category after category to increase purchases of US goods, but Tokyo officials remain adamantly opposed.

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On this point, Hosokawa supports his officials, though not because they have brainwashed him. Rather, it is because from the start of his administration deregulation has been his major goal - a goal steadfastly resisted by the Japanese bureaucracy. Numerical import targets for American goods would strengthen managed trade and the power of the bureaucracy, whereas deregulation would weaken it and would have a much more positive long-term effect on American goods coming into Japan.

It hasn't been easy to persuade Washington of this. Is there enough personal chemistry between Hosokawa and President Clinton to downplay numerical targets and shift Washington's attention to deregulation? The success or failure of Hosokawa's visit depends largely on the answer.

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