Recession Finally May Stir Japanese

Sunday's election could drive pace of economic reform and affect ruling party.

Just when it seemed that Japanese politics were too boring even to interest the Japanese, voters here seem to be perking up.

Elsewhere around the globe, investors and government officials are already waiting to see whether parliamentary elections on Sunday will affect Japan's ability or inclination to grapple with its stagnant economy.

Prime Minister Ryutaro Hashimoto seems to have noticed all the attention, resorting this week to the oldest strategy in the playbook: a promise to cut taxes.

That gambit is one part political (it may help his party), one part economic (it may give some cash to consumers), and one part geopolitical (it may mollify the ever-influential US government, which has been pressuring him to revive the economy).

Mr. Hashimoto's ruling Liberal Democratic Party seemed poised a few weeks ago to regain absolute power in elections for half of the 126 seats in Japan's upper house of parliament. The LDP needs to win 61 seats to maintain its current standing and 69 to regain a majority.

According to several newspaper polls released this week, the voter turnout rate will likely spike upward after years of decline, with voters turning away from the LDP in an expression of frustration over the economy. Polls being polls, many analysts remain glum about the prospects for a stunning outcome. "This election will not bring about any critical result," says Takeshi Sasaki, a political scientist at Tokyo University. "Maybe no party will gain a remarkable number of seats."

Professor Sasaki describes current Japanese politics with just one word: luxurious. By that he means that the ruling party has not been forced to address the difficult question of what to do about this country's economy, which has been flat or shrinking for nearly a decade and threatens to drag down the rest of Asia and beyond.

But the economy has seemed worse from outside than from inside, so until now there has been no real popular agitation for bold action. There has also been little pressure on the LDP from opposition politicians, a disorganized and unintimidating lot.

The LDP is accustomed to power, having run the country from 1955 to 1993, when defections and scandals resulted in the loss of its majority in the powerful lower house of parliament. By making shrewd alliances, the party became part of a coalition government after 10 months in opposition, and has since regained its lower house majority. This Sunday presents an opportunity to recoup its ruling position in the upper house as well.

Seizaburo Sato, a political scientist at the Institute for International Policy Studies in Tokyo, says one-party dominance will indeed return to Japan.

The impact of the LDP's re-emergence on the economy is unclear, since absolute power could enhance the party's complacency and disinclination to act boldly. Or, it might give the LDP the confidence to undertake the big changes that analysts say are necessary for Japan to revive itself.

The promise of a permanent tax cut is one such step, but it is also unclear just how sincere Mr. Hashimoto is. He and other party leaders have recently made contradictory statements on the subject, and market analysts have been unconvinced he will turn words into action. Opposition leaders say the prime minister is acting on fears that the LDP will do badly on Sunday.

Polls indicate that Japan's Communist Party may do well because of its criticism of LDP policies, along with the Democratic and Clean Government parties.

Looking down the road, Professor Sato adds, "there is a really good chance the LDP will get too big" and split up.

In the postwar era, the party's factions stayed together in order to stay in power; now they have opportunities to team up with like-minded former LDP politicians who are in opposition and still trying to get their acts together.

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