APRIL 17, 2000 VOL. 155 NO. 15

Katsumi Kasahara/AP The new Prime Minister is welcomed by lawmakers in Japan's Diet (parliament).

Mori Takes the Helm
With Obuchi felled by a stroke, a rugby-loving stalwart of the ruling party suddenly becomes Prime Minister. Can he shed his bland image and lead the nation back to prosperity?
By TIM LARIMER /Tokyo

One of Yoshiro Mori's first acts as Japan's new Prime Minister was to have himself photographed last week among the cherry blossoms at a Tokyo garden. The pictures, distributed to the nation's press, were meant to convey optimism--in Japanese tradition, the delicate pink flower represents a new beginning. But Mori will have to accomplish more than symbolic posturing to convince skeptical countrymen that his sudden accession to power is an auspicious event. Speaking to journalists last week, the 62-year-old ruling party stalwart had little to say about his vision for the nation, promising only that, "Nothing will change."

There's something to be said, perhaps, for low expectations. Mori's predecessor Keizo Obuchi came to power 20 months ago amid similarly limited popular enthusiasm. Before he was incapacitated last week by a stroke that left him in a coma, Obuchi had managed to prove skeptics wrong. He didn't bring Japan's economy roaring back, or solve some of the nation's other intractable problems, but Obuchi allowed a measure of financial liberalization that may have prepared the country for a rebound. Now it's up to Mori, a former journalist who is practically unknown outside political circles, to emerge from his own Liberal Democratic Party straitjacket and try to lead a nation into prosperity.

There is little doubt that Japan needs change on a massive scale. The country has yet to pull out of its decade-old funk; its economy is stuck in low gear. Lavish public spending programs have failed to prime the pump, and consumers are so nervous about the future that they're reluctant to spend. A higher percentage of people are out of work now than at any time since the end of World War II. And there are troubling new concerns, including police corruption scandals, the unraveling of the three-party ruling coalition, mishaps in the country's nuclear energy program and a North Korea that swings between diplomatic initiatives and missile launches over Japanese territory. Mother Nature has weighed in, too: a volcanic eruption in Hokkaido late last month turned thousands of villagers into refugees, presenting Tokyo with yet another crisis, and yet another bill.

ALSO IN TIME COVER: Moving On Twenty-five years after communist troops entered Saigon and reunified the war-torn country, its people are eager to forget the past and catch up with the rest of the world • Lives After Death: The war left a deep imprint on many • Saigon, Mon Amour: A Time correspondent returns to the city he had to leave behind a quarter-century before JAPAN: No News Is Bad News After keeping the country in the dark about former Prime Minister Keizo Obuchi's stroke, Japan's powerbrokers turn to a status quo figure to nurse the country back to health • Mr. Simplicity: Obuchi's secret was to lower expectations • Mr. Fix-It: Mori is a safe, if uninspired, choice CULTURE:Books E.L. Doctorow's enthralling City of God examines religious faith at the end of a bloody century • Looking Back A sweeping new work asks yesterday's philosophers for today's answers

Mori faces many of the same problems Obuchi did when he took office: a rigid bureaucracy, bloated public debt, an absence of transparency in government and the lack of political will to take tough measures to reform political and financial institutions. There is also a growing national disdain for politicians. In a recent survey, Japanese students identified politics as the least desirable profession--even the much-maligned bureaucracy fared better. Mori's first task will be to restore some semblance of confidence in the government and its ability to solve problems. That won't be easy. When confronted with crises, whether it was the Kobe earthquake in 1995, the Tokaimura nuclear accident last fall or Obuchi's illness last week, the government has seemed consistently flat-footed. And worse, it has often lied to the public about what is really going on.

The government is particularly prone to dishonesty regarding its leaders' health. In 1980, Prime Minister Masayoshi Ohira died after a heart attack. But the public had been told he was suffering from mild angina. In 1992, Vice Prime Minister Michio Watanabe's pancreatic cancer diagnosis was covered up; he was said to have gall stones. Following the accident at Tokaimura last fall, officials delayed informing residents about the dangerous levels of radiation to which they were being exposed. Obuchi took some heat again in March for blithely sitting down for a haircut shortly after two commuter trains collided, causing Japan's first subway accident fatalities.

Perhaps with that earlier criticism in mind, Obuchi's administration was determined not to let the Hokkaido volcano catch the government unprepared. Obuchi personally monitored the situation at his office and residence and sent top aides to the scene. He canceled a trip to Osaka as thousands of people were evacuated and set up in temporary shelters. But the strain soon took its toll on the Prime Minister. On April 1, he had an emotional meeting with longtime political friend Ichiro Ozawa, who was finally making good on threats to defect from the ruling coalition and take his Liberal Party with him. That night, Obuchi skipped a popular singer's wedding, where he was supposed to toast the couple. At 1 a.m. on April 2, his personal physician drove him to Tokyo's Juntendo University Hospital. (No government driver was available, according to Akitaka Saiki, an Obuchi aide. Nor was an ambulance called; Obuchi's aides say his condition didn't seem serious enough to merit one. Other politicians speculated last week that Obuchi's team was afraid word of his condition might reach the press .)

What happened from that point onward is unclear. None of Obuchi's doctors has issued a statement or answered questions about his illness. The Juntendo University Hospital has a reputation for zealously guarding patients' privacy, which is why politicians favor it. Obuchi's top aide, Mikio Aoki, finally briefed reporters about the hospitalization late on the night of April 2, nearly 24 hours after the Prime Minister had been admitted--and even then, Aoki claimed Obuchi was suffering from exhaustion. The next morning, however, he announced that Obuchi had fallen into a coma the night before, contradicting his earlier statement. Two hours before losing consciousness, Aoki said, Obuchi had asked him to take charge of the government temporarily. But Japanese newspapers reported that ldp leaders had convened Sunday morning and picked Aoki to be the stand-in; Japan has no automatic succession procedure when a leader dies or becomes incapacitated. Mori was immediately put on a short list of three candidates, according to press reports, and was picked after several meetings on Sunday, within 24 hours of Obuchi's hospitalization.

The Defense Agency takes its orders from the Prime Minister and would be unable to react if there were nobody to replace an incapacitated leader. Yet an agency official told Time that most people in his department found out about Obuchi's condition the same way everyone else did: by watching television. "An appalling lack of crisis management was exposed to the world," says Manabu Hasegawa, a journalist who wrote a book in 1993 about the cover-up of politicians' illnesses. Says Obuchi's spokesman, Akitaka Saiki: "This has never happened before. We don't have manuals to cope with this situation."

Yoshiro Mori could probably use a manual on government about now. Like most other Japanese politicians, he has spent much of his career grabbing power as an end in itself, not as a means for some greater purpose. "He doesn't seem to have his own clear policies," says political commentator Eiji Tominomori. Those are nearly the same words that had been used to describe Keizo Obuchi when he took office. Keith Henry, a political analyst with the Massachusetts Institute of Technology's Japan Program in Tokyo, says Mori's ruling principle is the same as Obuchi's: "Show me where you're going, and I'll lead you there."

It's not an inspiring philosophy, but to his credit, Obuchi did slow Japan's economic decline, using a traditional government-spending binge and a not-so-traditional package of banking reforms. He pushed through a $500 billion plan to recapitalize some of the country's weaker banks and shore up a deposit-insurance scheme. Those steps kept banks from collapsing and gave depositors confidence that they wouldn't lose their funds. As a result, "Japanese are much more optimistic now than when he first took over," says Brian Rose, senior economist at Warburg Dillon Read in Tokyo. (In an ironic twist to his economic legacy, the Tokyo stock market on April 3 climbed to its highest level in years.)

Obuchi's economic package was also accompanied by revolutionary changes in Japan's corporate sector. There have been banking mergers, foreign acquisitions, restructuring of blue-chip companies and layoffs--all of which would have been impossible in the recent past. Obuchi didn't make those things happen, of course. But he didn't stand in their way, either. "He could have screwed things up and he didn't," says Russell Jones, an economist at Lehman Brothers in Tokyo.

Will Mori screw things up? Like Obuchi, he is not considered a reformer; even his advisers can say little about his economic thinking other than that his policies will be "like Obuchi's." In the short term, Mori isn't likely to do much. This year's budget has already been passed, and things can pretty much run on auto-pilot. "Analysts have derided Japan for being slow in putting policy together and getting it out the door," says m.i.t.'s Henry. "They ain't seen nothing yet in terms of paralysis." But the day of reckoning is not far away. All the planned government spending to revive the economy--more than $960 billion--is adding to a ballooning national debt now estimated at 125% of the country's gdp and equivalent to half of all public savings. "What they are doing is completely unsustainable," says Rose. "They are paying for everything with debt, and they can't continue that much longer." One of Obuchi's top economic advisers, Ichizo Ohara, concedes as much. "Supporting the economy by expanding spending has reached a limit," he says. "It's extremely distorted and abnormal to use half of savings to support debt."

But Mori might find it hard to give up old habits. Although there have been signs of a recovery--the stock market is booming, companies are restructuring and dotcom fever is catching on--the economy slid back into recession last year and unemployment, once unheard of, is climbing ever higher. What's more, Mori's job will be on the line: elections to the Diet must be scheduled some time in the next six months. Don't expect the Prime Minister to stick his neck out for economic reform.

The Lower House has to be dissolved and an election held by October, but the ldp is split on the exact timing. One faction wants to hold a snap poll to take advantage of the sympathy generated by Obuchi's illness and to gain a new mandate before July's G-8 summit of industrial nations in Okinawa. Another group wants to wait until after the summit, calculating that Japanese voters will warm to Mori after they have seen him rubbing shoulders with world leaders like Bill Clinton and Tony Blair. The opposition parties are in disarray: they never figured out how to deal with Obuchi and will likely have a hard time defeating the ldp if it can make an effective talisman of its comatose leader. Mori himself invoked Obuchi's name in every answer during a 45-minute press conference last week. "I feel like I can hear the voice of Prime Minister Obuchi from his bed, saying, 'I trust you, so do it well,'" he intoned.

But Mori shouldn't get too comfortable in the Prime Minister's residence. Obuchi's administration was losing steam and its popularity was declining. Plus, Mori has to manage divisions within the lpd, and the ruling coalition needs a party unpopular with many Japanese, Komeito, in order to stay in power. He may seem on top of the world right now. But those cherry blossoms that provided such a pretty photo-op last only a few days. If Mori isn't careful, his tenure at the top of Japan's political heap could be similarly short.

With reporting by DONALD MACINTYRE, SACHIKO SAKAMAKI, HIROKO TASHIRO and TAKASHI YOKOTA/Tokyo

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