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Will Hashimoto Lead The Ldp Back To The Good Old Days?


International Outlook

WILL HASHIMOTO LEAD THE LDP BACK TO THE GOOD OLD DAYS?

Japanese politicians call Ryutaro Hashimoto "Mr. Pomado" because of his fondness for thick hair gel. The Prime Minister has certainly turned in a slick performance since taking office in January. He has managed to shrug off the fallout from an unpopular thrift bailout to emerge as potentially the most powerful Prime Minister of the decade.

Hashimoto, 59, is getting a lift from Japan's strong economic recovery after four years of recession. He has also won praise for defusing tensions with South Korea over Japan's wartime transgressions and for cooling off trade friction with Washington without making big concessions.

EASING TENSIONS. With his clout growing, Hashimoto seems closer to his aim of uncontested power for the Liberal Democratic Party, which now governs through a cynical alliance with the leftist Social-Democrats. Although he is not required to face voters until mid-1997, many think Hashimoto is now confident enough to call a snap election for the 500-member Diet. "I'd bet it's this year," possibly November, former LDP Prime Minister Kiichi Miyazawa predicts.

Hashimoto and President Clinton are acting like buddies, downplaying bilateral tensions during the political season. But once Hashimoto secures his power base, he could become more assertive. For example, he is pushing for China to get speedy admission to the World Trade Organization--something Washington opposes. A triumphant LDP is also most unlikely to enact the sort of sweeping deregulation the U.S. has long urged. And as the LDP reasserts power, the cozy old ways of money politics could come roaring back.

Hashimoto's surprising strength owes much to the nearcollapse of the opposition New Frontier Party, an alliance forged by former LDP kingpin Ichiro Ozawa. Back in 1993, Ozawa helped lead a mass defection of LDP members that brought down Miyazawa's government, ending a 38-year party reign. But Ozawa's quest to reform Japan's grubby money politics and create a viable two-party system has failed miserably.

The Achilles' heel of Ozawa and his comrades has always been their own tainted backgrounds. Before casting himself as a crusading rebel, Ozawa was a legendary LDP power broker and fund-raiser. So it has been difficult for him to convincingly claim the moral high ground. His effort last winter to embarrass the LDP over its support of a $6 billion bailout of corrupt thrifts failed when New Frontier members as well as LDP luminaries were shown to have taken loans from these institutions.

Ozawa's high-handed leadership has also alienated two key allies, former Premiers Tsutomu Hata and Morihiro Hosokawa. A New Frontier insider concedes that Hata and his roughly 70 followers have been listening to overtures to rejoin the LDP. Ozawa seems to have scotched that possibility, at least for the moment, through a round of meetings with Hata and Hosokawa in early July. But the public is disgusted with the so-called reformers. New Frontier's approval rating is down to a slim 10%. It's even possible that Ozawa will have to slink back to the LDP to save his career.

None of this is to say that Hashimoto won't face further obstacles. His own 40% rating is nothing to brag about. The banking crisis is still a potential minefield. And he needs to keep the recovery going. To stoke the economic engine, he is likely to cook up a $30 billion-plus supplementary budget in the fall. Much of that money will go to public works spending, pleasing the LDP's backers in the construction industry.

Such handouts will fan worries about a growing budget deficit, but Hashimoto seems to hold most of the cards. After a series of revolving-door prime ministers, he could have a long run in power.EDITED BY STANLEY REED By Brian Bremner in TokyoReturn to top

KREMLIN POWER GAMES

President Boris Yeltsin's shaky health has heated up the battle to shape the postelection regime. Jockeying for power are Prime Minister Viktor Chernomyrdin and security czar Alexander Lebed. Although Yeltsin has retreated to a sanatorium outside Moscow, his political instincts still appear sharp enough to play the two rivals against each other.

On July 15, Yeltsin strengthened Chernomyrdin's hand when he made the Prime Minister's ally, Anatoly B. Chubais, presidential chief of staff. It was Chubais who masterminded Yeltsin's election campaign and many of the reforms of the past four years. Chubais will now control access to the president.

But Yeltsin also boosted Lebed by going along with his candidate, Igor Rodionov, for the key post of Defense Minister. Chernomyrdin had wanted to exclude Lebed from the cabinet selection process.

So far, the postelection moves have been a plus for business. During his talks with visiting Vice-President Al Gore, Chernomyrdin agreed to cut taxes paid by foreign oil ventures. Executives are also pleased to see Chubais replace the hawkish Nikolai Yegorov, who was allied with anti-market figures.

American investment banker Boris Jordan, a kingpin in Russian finance, has already benefited from the change. He had been denied a visa, apparently because of his efforts to get rid of old-style managers at a steel plant. But his visa came through a few days after the election.EDITED BY STANLEY REED By Patricia Kranz in MoscowReturn to top


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