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The Man in Charge

Koizumi tamed his party and gave Japan's economy new life.  If he falters now, there will no one to blame but himself.

Japanese have a saying about angling for mudfish.  "You may catch one under a willow tree," it holds, "but not a second at the same spot."  Prime Minister Junichiro Koizumi characteristically ignored that folk wisdom last week--and hauled in a second catch every bit as tasty as the first.  On Saturday he repeated the risky one-day trip to Pyongyang staged in 2002 to free five Japanese citizens abducted in the 1970s, returning this time with five of their children in a deal that could improve ties with Kim Jong Il's isolated regime and bolster Koizumi's already impressive job-approval ratings.  " I came here to change hostility into friendship and opposition into cooperation," he declared during a press conference in Pyongyang. 

Critics say he went there to change the subject.  The trip was suspiciously well timed to divert attention from a troubling pension-funding scandal that has forced his chief cabinet secretary to step down.  Even the prime minister's allies acknowledge that, in part, the visit was staged to pump up his numbers ahead of parliamentary elections this summer.  And why not?  Koizumi's audacity only underscored how Japan's silver-maned leader now stands head and shoulders above any real challenger--and why his Liberal Democratic Party-led coalition is set to triumph at the ballot box in July.  "Koizumi is not a man of deep thoughts," says respected political commentator Takashi Tachibana.  "But he has a strong will and he is good at making snap decisions.  Whenever there is a poll, those who support him say they do so 'because there is nobody else'."

With two years left in his term, Koizumi finds himself in an unprecedented position.  His can-do style has inspired near hero-worship (most notably among his huge consistuency of middle-aged housewives).  Japan's GDP has expanded by about 6 percent over the past six months--fruits of his "no-pain, no-gain" reform efforts, he claims--impressing even the international-ratings agencies.  The emerging pension scandal has claimed two of his most prominent rivals, even as Koizumi has mended factional divisions within the LDP.  The prime minister has achieved a degree of control over the Japanese p0litical system that would have been unthinkable just a few years ago.  His challenge now is to craft a legacy for himself as the architect of Japan's resurgence^^both economically and as a key U.S. ally in East Asia. 

Koizumi has in effect become the most "presidential" of Japan's modern leaders.  He's made himself indispensable in the electorate's eyes by wrestling policymaking away from the bureaucrats and into his own office.  To fix his Pyongyang trip, for example, he called upon an old LDP ally, Taku Yamasaki, to broker a deal with North Korean counterparts in China.  Reportedly, Yamasaki hinted that his boss would seek to normalize diplomatic relations with Pyongyang before his term ends.  To the North, that timetable promises an expected $10 billion in reparations for Japan's colonial occupation of the Korean Peninsula.  Left out of the loop, the Foreign Ministry bristled: one unnamed diplomat told the Asahi Shimbun newspaper that Koizumi's trip "leapfrogs the scenario of events we had envisioned."

Similarly, Koizumi has arrogated much more economic decision making to his office than his predecessors.  Legislation once followed in the opposite direction in Japan: ministries and powerful LDP committees hammered out bills, then presented them for lawmakers and the prime minister to rubber-stamp.  That made the P.M. expendable even in a culture averse to radical change.  Koizumi doesn't handle every detail of complex issues--few of which he understands, say colleagues--like reforming debt-laden banks and failing state corporations.  But he has deputized hard-charging ministers and protected them from LDP stalwarts accustomed to cabinets stacked with yes men.  The best example: chief bank regulator Heizo Takenaka, who has pushed Japan's megabanks to clean up their books with stringent new accounting rules.  The LDP's old guard has lobbied for two years to oust hm, but no avail.  "The credit [for Koizumi's economic successes] goes to the fact that he lets the 'brains' work and does not change their policies," says Takahide Kiuchi, a senior economist at Nomura Securities. 

The strategy is dangerous:  Koizumi has no one else to blame if things go wrong.  But it seems to be working.  The Nikkei index is up roughly 50 percent since hitting historic lows in March 2003, largely because of his government's efforts to shore up Japan's wobbly financial system.  Exports are expected to post double-digit growth this year, mostly to China.  Companies like NEC and Toshiba have begun to invest in Japan again, building huge factories to produce high-end technology for the home market.  For the first time in five years analysts are forecasting an end to deflation in Japan, along with a modest rise in interest rates now pegged at zero.  Even consumers have started spending again, which suggests widespread optimism and promises strong GDP growth into 2005. 

(From NEWSWEEK-ASIA May 31, 2004)

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