Nakasone's fortunes go down when the yen goes up. Japanese leader's woes fuel power struggle within his party

By , Special to The Christian Science Monitor

At the moment, the political fortunes of Japanese Prime Minister Yasuhiro Nakasone can be easily charted -- they fall when the value of the yen rises. When the yen rose quickly at the close of last week's Tokyo summit, Mr. Nakasone came under sharp attack for failing to convince his fellow summiteers, particularly President Reagan, of the need to halt its climb. His opponents in the ruling Liberal Democratic Party (LDP) moved quickly to block his plans to call an early election for the lower house of the Diet (parliament). Such elections are thought to be essential for Nakasone to hold on to power past the end of his term as party president in October.

Throughout the past week, Nakasone has clearly been on the defensive in the Diet, promising to take steps to aid businesses suffering from the high value of the yen, which makes Japanese exports more expensive. The prime minister's falling fortunes encouraged his potential successors as party leader and prime minister to declare their intentions openly. Foreign Minister Shintaro Abe, for one, told a meeting of party faithful that the ``time of Mr. Nakasone has passed.''

Nakasone, however, is a seasoned veteran of political combat and shows no sign of relinquishing power easily. When the dollar rebounded yesterday following remarks made by US Treasury Secretary James Baker indicating satisfaction with the current value, Nakasone grabbed the credit: ``I believe [my] individual talks [with President Reagan at the summit] are having an effect on the foreign-exchange markets,'' he told reporters.

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But foreign observers, having a difficult time understanding why Nakasone is on the defensive, are asking questions:

Why is the yen's rise so controversial when Japan still enjoys a huge, and growing, trade surplus and enviable conditions of low inflation and unemployment and continued growth?

Why should Nakasone be in trouble when he enjoys very high personal popularity in opinion polls?

The impact of the strong yen is only beginning to be felt here. Its effect on Japan's overall trade balance has so far been offset by the impact of cheaper oil and other raw materials and by the fact that the value of the majority of Japanese exports has risen in dollar terms (though not in yen terms).

But economic growth has already begun to slow, and fears of a recession are widespread. Domestic growth has not yet compensated for a slowing of exports, particularly of those goods made by smaller firms which do not have the profit margins to absorb the exchange loss. According to one recent private survey, there have been 114 bankruptcies of such firms due to the yen rise since October, 42 of them in April alone.

This poses special problems for the conservative LDP, dependent as it is on businesses for the funding of day-to-day operations and election campaigns. LDP members of parliament report that businessmen are reducing their contributions.

Many of the hardest-hit firms are located in smaller cities and semirural areas, which are the LDP's traditional strongholds. The postwar allocation of parliamentary seats gives disproportionate weight to votes in such areas over urban centers, an arrangement that has strongly favored the LDP.

It is possible that the LDP would still fare well in an election held shortly. Nakasone is counting on such an outcome to strengthen his bid to overcome a party rule allowing only two consecutive two-year terms as party president. While some LDP leaders genuinely fear a setback in next month's upper-house election, others are more concerned that Nakasone could win a third term.

It is precisely because of Nakasone's personal popularity that LDP leaders have been hoping to block his plans for an early lower-house election. His challengers for the party's top post and thus the premiership want their chance, and the popular Nakasone is their only potential competition. Because the LDP has been in power virtually without interruption since the end of World War II, the traditionally weak opposition poses little challenge, so the only real power struggles go on within the ruling party itself.

The jockeying goes on among five major, organized parliamentary factions within the LDP which fiercely compete for a share of power in the government. Nakasone's bid for longevity in office, his Western style of strong individual leadership, and his reputed arrogant disregard for rule through ``consensus'' all fuel the political fires of his challengers -- the so-called ``new leaders'' waiting in line.

The LDP leaders now on deck are: former Foreign Minister Kiichi Miyazawa, who has gained political ground through his criticism of Nakasone's economic policies; Finance Minister Noboru Takeshita, a prot'eg'e of political strongman Kakuei Tanaka; and Foreign Minister Abe, considered a slight favorite by political analysts here.

Nakasone's opponents' first key move after the summit was to try to block a plan to hold simultaneous elections for the upper and lower houses of the Diet in late June. A required election of half the upper house seats is scheduled for June 22, but the lower house's term does not expire until next fall. A double election would increase the voter turnout, which usually favors the LDP.

The anti-Nakasone forces used the resolution of a disputed law to redistribute the lower-house seat allocation called for by the Supreme Court last year to frustrate plans for a double election. Two days after the summit ended, lower house Speaker Michita Sakata unveiled a surprise plan that would require 30 days for the voters to familiarize themselves with the reallocation of seats before any election could be called. It will probably be passed May 22, the last day of the current Diet session, which would make Nakasone's plan for double elections impossible.

The plan was immediately understood as a serious political defeat for Nakasone. The pro-Nakasone daily, the Yomiuri Shimbun, ran an editorial attacking the plan entitled ``Sakata's betrayal.'' Nakasone, however, has not given up. He can still technically observe the law and hold double elections by extending the term of the Diet session (thus changing the election date), a move which will be strongly opposed within the LDP and by the opposition parties.

Nakasone, according to a well-informed source, is ``desperately searching for an excuse'' to force the Diet into overtime. His tactic, the source says, is to introduce emergency legislation to help firms that have been hurt by the yen's rise, a move that opponents might find difficult to oppose.

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