News Analysis: Japan's New PM Faces Host of Challenges

Japan's New PM

Elected helmsman of the world's second largest economy on Wednesday, new Japanese Prime Minister Yoshiro Mori is treading down a rough path. He is faced with a series of challenges, including promoting Japan's economic recovery and securing a victory in the coming general election for his party, which will determine how long he will stay at his new post.

Hours after being picked as chief of the ruling Liberal Democratic Party (LDP), Mori was elected prime minister on Wednesday afternoon by parliament to succeed the incapacitated Keizo Obuchi, who has been in a coma since Sunday after suffering a mass stroke.

Of the various challenges, the most difficult one for Mori would be to maintain the current momentum of economic recovery, which came after a 10-year-long slump thanks to his predecessor's aggressive fiscal policies.

Well aware of the importance in entrenching the economic recovery, Mori has vowed to adhere to Obuchi's economic policies and listed economic rejuvenation as his top priority. In a rare move taken by a new Japanese premier, Mori retained all the 18 members of the Obuchi cabinet at a meeting on Wednesday night.

The move showed that there will be no visible change in policies of the former government, analysts said, adding that consistency in economic policies also reflects the strong aspiration of the country's economic circle.

With Japan's economy beginning to show signs of regaining strength, the only option for Mori's administration seems to execute the national budget for fiscal 2000, which started April 1, analysts said.

However, Mori will face the task of containing Japan's mounting fiscal debts, which increased rapidly after Obuchi adopted an aggressive fiscal policy to bridle the country's recession-bound economy.

The combined long-term debts of Japan's central and local governments are expected to reach 645 trillion yen (6.14 trillion U.S. dollars) at the end of fiscal 2000, equivalent to 129.3 percent of the country's gross domestic product.

Another challenge Mori have to face is whether he can secure a victory for the LDP in the coming general election to guarantee the continued control of the lower house of parliament by the LDP and its coalition allies, analysts say. A majority in the lower house is vital for the government to pursue its policies to rejuvenate the economy.

Mori also has to decide whether to dissolve the lower house for an early election.

The general election must be held by October 19, when the term for the incumbent lower house expires. But the LDP is now divided over the timing of a new parliamentary poll.

After the election of Mori, a growing number of LDP members called for an early dissolution of the lower house for a snap parliamentary poll in the hope of taking advantage of public sympathy currently mounting for ailing Obuchi.

Before Obuchi fell ill, a lower house election had been widely expected to be held after the July Okinawa summit of the Group of Eight (G-8) most industrialized nations in the wake of a series of scandals involving police, the Self-Defense Forces and a former senior government official.

Many LDP members now, however, prefer an early election, probably because they believe that Mori will not be strong enough to lead the party to an easy victory if an election is held after the G-8 summit when the voters' sympathy with Obuchi fades away, said a LDP lawmaker.

Despite the pressure, Mori on Wednesday night ruled out an early general election, citing many remaining problems to deal with. However, he failed to mention the timing of the election. The new Japanese prime minister is also expected to face tests on the diplomatic front. Mori, who has served the education, international trade and industry, and construction portfolios, is not known as an experienced hand at international affairs.

Imminent challenges for Mori include an informal visit to Russia later this month at the invitation of Russian president- elect Vladimir Putin, and the hosting of the prestigious G-8 summit in July.

Japan and Russia have not yet concluded a bilateral peace treaty due to long-standing disputes over four Russian-held islets off Japan's northernmost prefecture of Hokkaido. Many Japanese prime ministers had striven to resolve the territorial issue since they took office, but none succeeded. Mori, as his predecessors, faces an uncertain future on this issue.

Despite all the daunting tasks ahead, Mori is believed to be the right person, at least at this stage, to maintain economic and political stability in Japan.

His role as LDP coordinator with coalition partners has put him in a better position to work with the Komei Party and Conservative Party, the LDP's new partner.

Mori held talks with leaders of both parties immediately after his election as prime minister to secure a new three-party ruling coalition, which ensures majority of the LDP-led bloc in both houses of parliament.

One of the LDP's important coalition partners, the Liberal Party, broke away ahead of Obuchi's hospitalization.