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The U.S. May Be Wasting Its Breath On Japan


International Business

THE U.S. MAY BE WASTING ITS BREATH ON JAPAN

It was hardly the kind of talk expected from two "global partners." In a conversation on Apr. 14 in London, U. S. Treasury Secretary Nicholas F. Brady confronted Japan's Finance Minister Ryutaro Hashimoto about coming up $1.2 billion short in his country's $9 billion pledge for the Persian Gulf war effort, U. S. officials say. Hashimoto stood firm. He said the money had already been transferred: $7.8 billion to the U. S., $700 million to other countries, and $500 million lost in currency conversion. Hashimoto and other mighty Japanese ministers are stepping up confrontation with U. S. officials on everything from aid to trade. They are hanging tough now that Prime Minister Toshiki Kaifu is looking very much like a lame duck. With the abrupt resignation of Kaifu's top adviser, Ichiro Ozawa, Japan's bureaucrats aren't even sure Kaifu will finish out the last six months of his term. But without prodding from a strong leader willing to champion outside interests, Japan's ministries are likely to resist making concessions to the U. S.

In a surprise move, Japan's Finance Ministry dealt a blow to the global partnership Bush had offered Kaifu just one year ago. The idea was to combine U. S. political power with Japan's deep pockets. But in mid-April, the Finance Ministry lashed out at a U. S. debt-forgiveness plan and refused to offer loans promised to Poland and Egypt. The U. S. wanted to reward Warsaw for its radical economic reforms and Cairo for its backing in the gulf. The Finance Ministry argued that the deal only encourages other debtor nations to squander loans.

Sparks are also flying between David C. Mulford, the Treasury's Under Secretary for international affairs, and his Japanese counterpart, Makoto Utsumi, at the Finance Ministry. They have sparred for years, but "the personal chemistry is the worst I've ever seen it," says a U. S. official. The Ministry resents Mulford's harangues over the pace of liberalizing Japan's financial markets.

An Administration official claims that even the traditionally sympathetic Ministry of Foreign Affairs is standing firm on economic issues: "Their thinking is: 'If we're not violating any international agreement or bilateral accord, forget it.' " Despite denials from Japanese diplomats, U. S. officials say the Foreign Ministry is refusing to go to bat for Washington at the Construction Ministry. The U. S. is considering retaliatory measures if Tokyo fails to give foreign bidders easier access to Japan's $3 trillion infrastructure program.

Though Bush and Kaifu were all smiles when they met in California on Apr. 4, the Administration now considers Kaifu "one of the weakest Prime Ministers Japan has ever had," says a top official. Kaifu was badly hurt on Apr. 8, when Ozawa quit as secretary general of the ruling Liberal Democratic Party to atone for backing the losing candidate for governor of Tokyo. Only through Ozawa's clout did Kaifu get Japan's reluctant Diet to give $9 billion to the gulf effort.

Big-time politicians--including former Prime Minister Noboru Takeshita and former Finance Minister Kiichi Miyazawa--already are jockeying to replace Kaifu. They may even force him out before the election in October. Privately, U. S. officials hope Takeshita will prevail because of his track record as a dealmaker who can manage the bureaucrats. Until Kaifu's successor emerges, Bush's Japanese partner will be a phantom.Ted Holden in Tokyo and Amy Borrus in Washington, with Joyce Barnathan in New York


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