Who's next at Japanese helm will determine economic tack in recession

Like many Western nations, Japan faces a choice of whether to spend or save its way out of a recession.

The choice will be made in finding a successor to resigning Prime Minister Zenko Suzuki.

Among the top two candidates, economic planning chief Toshio Komoto favors strong reflation - increased public works spending, for example - even if this ultimately means more taxes or bond issues. The business world supports him.

An opposite economic tack is advocated by Yasuhiro Nakasone, former international trade head and now director general of the Administrative Management Agency. Mr. Nakasone is a fiscal conservative and is expected to balance the budget and eliminate bond issues through a spending cap, even at the risk of prolonging the recession.

He is supported by Mr. Suzuki and the strongest faction of the ruling Liberal Democratic Party (LDP), led by former Prime Minister Kakuei Tanaka.

Fearing the economic ill effects of a stalemate, business leaders are urging the LDP to close ranks and choose a new leader by consensus as soon as possible. And once chosen, they say, he should be allowed to get on with the job of hauling the battered economy out of trouble with full backing of all sections of the party.

At all costs they want to avoid fresh internecine strife which seems certain to occur if the LDP goes ahead with its scheduled biennial presidential election Nov. 25.

This was certainly in Mr. Suzuki's mind when he decided as long ago as August not to seek reelection. In departing early he is also believed to be seeking to retain some influence to name his own successor.

Reportedly, he seeks approval of his key lieutenant, Mr. Nakasone, who is an advocate of a militarily strong Japan. There is a strong likelihood his candidacy would win support of the LDP's biggest faction, which is controlled by former Prime Minister Kakuei Tanaka. Having quit because of his arrest in the Lockheed bribes case, Mr. Tanaka is no longer a member of the party. His trial should end shortly.

Any suggestion, however, of Tanaka continuing to influence the choice of party leader is bitterly opposed by other factions, particularly those led by former Prime Minister Takeo Fukuda, Economic Planning Agency head Toshio Komoto, and Science and Technology Agency director general Inchiro Nakagawa - all of whom want Suzuki's job.

Tanaka and Fukuda have been rivals for years, with their acrimonious feud periodically surfacing to threaten party unity.

Two years ago, after the death of Prime Minister Masayoshi Ohira, a Tanaka protege, the two men were at each other's throats again.

To avoid a split that could have threatened the party's virtual unbroken postwar hold on power, Suzuki was unexpectedly elevated to a post he had never actively sought.

But in seeking to avoid factional confrontation, Suzuki postponed decisions on one important issue after another. The ship of state drifted aimlessly, eventually foundering on an accumulation of failures to provide solutions to a wide range of economic and diplomatic problems. Public support began to slump badly.

''Fresh leadership'' is now the catchphrase. But it won't be that easy to find, nor will harmony.

Whoever takes the helm will find it hard to steer a steady course. The world's third largest economy is struggling, upsetting the general postwar trend of export-led growth, government austerity, and fiscal conservatism.

The yen is weak, and exports are likely to fall below last year's level, the first such decline in seven years. As LDP politicians have squabbled over the spoils of office this past decade - there have been five prime ministers in the period - the budgetary deficit has ballooned, requiring increased issues of government bonds. By the end of this year outstanding bond issues will total almost $379 billion.

There will be a tax revenue shortfall of $23 billion due to depressed business conditions, leading to either more government austerity, and probably prolongation of the recession, or a further increase in public debt.

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