FEBRUARY 21, 2000 VOL. 155 NO. 7

Getting Away With It
Obuchi's survival skills rescue him yet again. Too bad they can't do that for the economy
By TIM LARIMER Tokyo

Kazuhiro Nogi/AFP

So much for political upheaval. By rights, Keizo Obuchi's government should be in jeopardy. The Prime Minister's embrace of the controversial New Komei Party, backed by a Buddhist organization some Japanese regard as a cult, alarms many citizens. His penchant for Keynesian pump-priming worries economists, who warn of a debt crisis in the country's future. His unwillingness to enact tough reforms disappoints Japanese who yearn for a bold leader. No matter--he's a natural-born survivor. He may not know how to fix Japan's economy, but he sure knows how to stay in power. "All the undesirable issues are put off," says Jiro Yamaguchi, a politics professor at Hokkaido University. "His leadership reminds me of Ronald Reagan. He is a feel-good prime minister."

After Japan's latest political drama, Obuchi has come out looking more like Bill Clinton--down for the count, but inexplicably able to rebound. Earlier this month, as the Diet prepared to debate next year's budget, opposition parties suddenly announced a boycott. The Democratic, Communist and Social Democratic parties, which together hold 186 of 752 seats in the combined legislature, appeared to be taking the high road, protesting the way the ruling coalition had muscled through legislation to cut the number of seats in the Diet's lower house. And they were acting in rare unison, a sign that they might finally pose a reasonable challenge to the Obuchi juggernaut. The legislators walked out and stayed out for two weeks, setting up a shadow parliament in a hotel ballroom.

Yet Obuchi and his team marched merrily ahead, ignoring the boycott, making no overtures or compromises to the opposition and ramming through even more legislation. The spectacle played horribly on TV: the Premier, whose popularity ratings had dipped late last year, addressing a half-empty Diet chamber. His major policy speech was mostly ignored. Obuchi, who dearly wants to stay in power long enough to host this summer's G-7 summit of major industrial nations in Okinawa, suddenly looked vulnerable.

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Appearances were deceiving. With an ironclad majority, Obuchi and company knew they could force their opponents to make an unpleasant choice: participate in meaningless debates they were bound to lose, or walk out. In the end, the Prime Minister's opponents came off like petty politicians playing hooky, while Obuchi bravely grappled with the grave economic and social issues facing Japan. Most voters couldn't understand why the matter of eliminating some Diet seats should spark a political crisis. Fewer politicians? Sounds good to most folks.

In Osaka, a governor's election was held up as a mandate on the Obuchi government. The city has suffered horribly during Japan's decade-long slump, and voters there are famously fickle and independent-minded. The ruling coalition in Tokyo put up its own candidate, in defiance of Osaka party hacks. An upset might have forced a weakened Obuchi to call elections this spring. But in the end, his candidate, a 48-year-old career bureaucrat from Tokyo, Fusae Ota, won handily, becoming Japan's first female governor. Failing to unhinge the Obuchi machine, the opposition had little choice but to slink back into the Diet. Obuchi didn't have to throw them much of a bone, just a face-saving agreement to debate more.

It was another stroke of Obuchi magic, only the latest in a series of unlikely victories. In August, he earned official recognition for the national anthem, controversial because many interpret it as honoring the emperor. Soon after that, he pushed through legislation giving police intrusive investigative powers. Late last year he persuaded Okinawa's governor to approve the long-stalled relocation of a U.S. air base on the island. And this month he slashed those 20 seats in the Diet. Previous prime ministers could not even mention those issues without courting controversy.

It's not readily apparent how Obuchi pulls off these coups, given his self-deprecating manner and unpolished style. But that's his secret: people underrate him. He rarely states his own opinion, but rather engages in a protracted exercise of listening to everyone else's ideas. He has appointed so many committees and commissions ("I may even establish 1,000 or 10,000 more panels," he said last month) that a local political commentator urged Obuchi to spend more time alone, thinking. "Nobody can criticize him because he never takes a position on anything," says Mutsuko Katsura, a 31-year-old city councilwoman in Ibaraki, an Osaka suburb.

Obuchi has applied that Teflon strategy to his efforts to revive and reform the economy. His solution is familiar and unthreatening: spend, spend, spend. He has committed $410 billion to pump-priming projects since taking office in July 1998, keeping a pipeline of jobs and fat contracts open to his Liberal Democratic Party's key backer, the construction industry. "To keep the economy above water, he has been spending like crazy," says Clyde Prestowitz, president of the Washington-based Economic Strategy Institute. "But the money has been going to the old constituencies. To make Japan healthy, the Liberal Democrats have to attack their base. But that would be suicide, and they don't want to commit suicide."

Obuchi's strategy may be dooming the country to a slow, painful demise. What good have the billions of dollars of red ink done? The economy grew just 1% in 1999, and officials revealed last week that it is sliding back into recession, as the last two quarters will show negative growth. The Nikkei stock index has rocketed more than 50% during Obuchi's tenure. But that has much to do with foreign money looking for new places to invest and restructuring among Japanese companies--and little to do with the government's actions.

Obuchi does deserve considerable credit for stabilizing the country through its lowest point in 1998, when many economists feared Japan was headed for a meltdown that could have triggered a global crisis. But as usual, the tough measures the government really needs to take have been delayed. Health care reform, corporate tax reform, a scheme to speed up banking reform by limiting insured depositors: they've all been stalled or weakened. And the bills for the pork-barrel projects are piling up. The national debt, now 1.3 times GDP, is reaching heights previously unscaled in developed countries. "It's back to the era when vested interests were safely protected," says Katsuya Okada, the Democratic Party's chief economic official.

What Obuchi has figured out is whose bread he needs to keep buttered. Nay-saying from economists about the ballooning national debt doesn't cost him votes. Motohisa Furukawa, a Democratic member of the Diet's lower house, argues that Obuchi's Keynesian agenda "reminds me of Goya's painting of parents eating their children." But such criticism has little effect. The Prime Minister can actually get away with saying things like, "I am the king of the biggest debt in the world!" as he boasted to a crowd in Matsuyama in southwestern Japan late last year.

Even his most embarrassing public flubs fail to weaken him. Last fall, he faced the first barrage of questioning ever directed at a premier by members of parliament. (Previously, only bureaucrats faced such grilling.) It was shortly after the nuclear accident at Tokaimura, and a Communist Party parliamentarian asked a softball question: What is the name of the agency that regulates nuclear energy in Japan? Obuchi couldn't respond. There was an embarrassingly long pause until an aide slipped him a note with the answer. "No cheating!" shouted an opposition member. Such a fiasco, shown on television, would have made an ordinary politician look foolish. But not Obuchi. It barely scratched his armor, since most people assume he is none too bright anyway.

In that sense, Japanese may have themselves partly to blame for Obuchi's resilience. In Ibaraki, Terumasa Tsuji should be eager to the throw the bums out of office. Every day, the 34-year-old merchant watches his middle-class lifestyle slip away. One by one, his friends are being "restructured," a polite euphemism for fired. So many customers have stopped coming to buy eyeglasses from Tsuji's shop that sales are down 50% from two years ago. "And I thought business was lousy then," he says. A big discount chain is opening a store a few blocks away next year. "They have five counters for glasses," he says. "I don't know how to compete, and the local government isn't doing anything to help small businesses like mine."

So where was Tsuji on election day? At home. "I always vote," he says, "but this time there wasn't much of a choice." Besides, he adds, "It's not really the politicians' fault. We enjoyed the good times, so now we have to endure the bad times." Japan may be full of scared, disgruntled, and even angry people like Terumasa Tsuji. But the Prime Minister can sleep well tonight. They're not blaming him for their troubles.

With reporting by Donald Macintyre, Sachiko Sakamaki and Hiroko Tashiro/Tokyo

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