Japan's Ruling Party Buys Breathing Room. TAKESHITA SUCCESSOR SOUGHT

THE dramatic resignation of Japanese Prime Minister Noboru Takeshita is likely to gain the ruling Liberal Democratic Party breathing room in its desperate battle to weather the seemingly unending revelations of the ``Recruit scandal.'' The hope is that a new Cabinet will be able to limit the damage expected in elections for the upper house of parliament scheduled for later this summer. More importantly, the Liberal Democratic Party (LDP) wants to avoid a full-scale general election which it fears it could lose.

But analysts believe the relief could be short term. The deep-seated hostility to the ruling party is unlikely to be satiated. And the essentially caretaker administration that will be formed is likely to be a weak government, unable to deal effectively with growing domestic and foreign policy problems.

Prime Minister Takeshita resigned Tuesday in a bid to, as he put it, ``regain public trust in politics.'' The veteran conservative leader acknowledged that ``the rising political distrust that started when the Recruit scandal broke is an extremely serious crisis for Japan's parliamentary democracy.'' The revelations began last June when it was unveiled that the Recruit Company had offered stocks to a long list of Japan's elite before the stocks were offered to the public at large. Once on the public market, the value of the shares increased sharply. The Recruit Company has also made contributions to politicians in an alleged attempt to gain favors.

The premier said Tuesday that he would leave office after the passage of the budget early next month. In the interests of ``continuity of Japan's diplomacy,'' he said he would go ahead with plans to visit Southeast Asian nations starting Saturday.

The LDP has begun steps to choose a successor to Takeshita. Virtually all of the current party leaders are tainted by having received funds from the Recruit Company. Speculation about a new premier now centers on Masayoshi Ito, a party elder statesman with an image of honesty. Mr. Ito is, however, ailing and has repeatedly said he did not want the job, opening the possibility of an unexpected choice.

Takeshita's resignation meanwhile has been hailed by business leaders, including Takashi Ishihara, chairman of the Japan Committee for Economic Development, whose criticism of the premier last Friday was a key factor in feeding a sense of political crisis.

Socialist Party leader Takako Doi called the resignation ``the first step for the victory of public opinion.'' The next steps she demanded were dissolution of the Parliament to hold elections and a thorough investigation of the scandal, including summoning former Prime Minister Yasuhiro Nakasone, a key figure in the affair, as a sworn witness.

The opposition parties have been demanding Mr. Nakasone's testimony as a condition for resuming consideration of the budget. But following Takeshita's announcement, the opposition decided to resume deliberations, although it will still press for Nakasone to appear. The budget could pass the lower house this week.

The selection of the new prime minister, predicts political commentator Shigezo Hayasaka, will take place in mid-May. The LDP will then attempt a ``rollback'' policy, he says, taking steps such as income-tax reduction and political reforms aimed at avoiding defeat in the summer elections.

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