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The Man Who Must Jolt Japan


International Business

THE MAN WHO MUST JOLT JAPAN

Hiroshi Mitsuzuka's favorite antidote for stress is to pick up the wooden kendo sword resting in a corner of his Tokyo office and to rip it through the air at imaginary foes. It's coming in handy these days as pressure mounts on Mitsuzuka to concoct a cure for Japan's ailing economy.

Chairman since December of the Liberal Democratic Party's elite Policy Affairs Research Council, the 65-year-old Mitsuzuka is the ruling party's top policy aide and its third-most-powerful politician behind Prime Minister Kiichi Miyazawa and LDP Secretary-General Seiroku Kajiyama. He is also the ruling party's architect of a plan to jolt Japan out of its worst recession since the 1970s. In a rare interview in his spacious wood-paneled office, Mitsuzuka hints that his recovery package, to be unveiled next month and enacted in time for July's Group of Seven economic summit in Tokyo, will exceed the $91 billion stimulus package Miyazawa unveiled last fall.

If, as many analysts expect, it delivers a one-two punch of business tax breaks and public-works spending over 18 months, Mitsuzuka's plan may raise gross domestic product growth to a 4%-a-year clip by late 1994. "We have promised America we will sustain average annual growth of 3.5%," he says, puffing a Virginia Slims. "It's with that in mind that I took this job."

SMITTEN. Few seem better suited for the task. Born in a farming community in the northern prefecture of Miyagi, Mitsuzuka studied veterinary medicine before switching to law at Tokyo's Waseda University. That's where he was smitten by politics. He joined the debating club that launched the careers of Prime Ministers Noboru Takeshita and Toshiki Kaifu and, after graduating, went to work as secretary to an LDP Diet member. He won election to the Lower House in 1972.

Now in his eighth consecutive term, Mitsuzuka earns respect as one of Japan's most cunning and pragmatic politicians. A mastery of pork-barrel spending has helped: Mitsuzuka brought a subway to Sendai, his district's main city. But he is also the only eight-termer to have headed three major min-istries--International Trade & Industry, Foreign Affairs, and Transportation--and serve twice as Policy Affairs chief.

Mitsuzuka showed his determination in a tough, five-year push that privatized Japan National Railways in 1987. Now, he's attacking the slumping economy with equal grit. Although it's considered impolitic to start official discussions of a supplemental budget until the Diet's Upper House has passed the government's primary spending plan for the coming fiscal year, Mitsuzuka is lofting trial balloons (table). These include the first $17 billion of a $280 billion national fiber-optic communications grid, as well as tax breaks and subsidies to encourage midsize and small businesses to enter the environmental protection and robotics industries.

The economy clearly could use help. Miyazawa's 1992 fiscal stimulus package has failed to stir consumer confidence. And mounting Japanese trade surpluses are drawing howls of protest around the world. Nonetheless, Finance Ministry bureaucrats, ideologically against deficit spending and already grappling with declining tax revenues, are fighting a big spending boost. They're likely to lose. In recent weeks, Mitsuzuka has quietly leaned on finance and tax officials to begin priming Japan's pump. "He's good at manipulating bureaucrats," acknowledges Takao Toshikawa, editor of Tokyo Insideline, a leading political tipsheet.

BAD PRESS. Despite Mitsuzuka's political skills, observers still hold that he lacks the heft to become Prime Minister someday. Also handicapping Mitsuzuka is the whiff of scandal that many sources say surrounds him. Mitsuzuka has been the subject of numerous newspaper stories alleging illegal political financing and intimidation. He filed several libel suits in response, dropping some of them and, after authorities raised questions, admitting submitting one erroneous campaign contribution report. He filed an amended report, and he denies any improprieties.

Rather than seek the Prime Minister's job, many observers believe Mitsuzuka will next go after the LDP's No.2 post, secretary-general. That would give him full access to the party's levers of control. Is he interested? "I just want to do the jobs that are given to me," he insists. With Japan's economy tottering, that's more than enough for this veteran politician to handle.A NEW RECOVERY

PACKAGE FOR JAPAN

TOTAL COST

--More than $91 billion

THE KEY ELEMENTS

--Big increase in public-works spending

--Tax breaks to spur home buying

--Tax incentives for small business

--More government bond sales

--Increased borrowing from postal savings and social security plans

DATA: BUSINESS WEEK

Robert Neff in Tokyo


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