The Art of Survival

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TIM LARIMER TokyoAnyone who thinks Japan will never reform should consider what took place in Tokyo last week. got rid of the powerful and imperious Ministry of Finance. How? He changed the name. Now it's the Ministry of Treasury. That's reform, Japan-style, and it illustrates both the talents and the drawbacks of a likable but uninspiring career politician who took charge of an ailing country last summer. The move, following years of demands for housecleaning at the ministry, shows how Obuchi skillfully skirts delicate issues while at the same time riding out difficult times.

Call him the great survivor. Obuchi heads the world's second-largest economy, which in a decade has gone from dynamo to dud and shows little sign of revival. Joblessness is at a record high, with 3 million Japanese--most of whom probably thought they would be employed for life--now on the dole. The once-admired keiretsu system of spider-webbed business alliances is sagging under the weight of a bloated, non-competitive, inefficient corporate welfare structure. Blue-chip companies, it turns out, are in the red, and some are on the auction block to foreign bidders. Banks are collapsing under the weight of an estimated $600 billion in bad loans. Japan's public debt is piling up and now totals a staggering 111% of GDP, second only to Italy among the world's largest economies.

That's not all. The nearly fanatical strain of pacifism that has gripped Japan since the end of World War II is giving way to a more outspoken nationalism, as the country gets jittery over trash talk in a neighborhood that includes a powerful China flexing its global muscles and a paranoid and isolated North Korea lobbing missiles over the island nation. A predictable and paralytic political system is exasperating voters, who are starting to choose populist outsiders and nationalistic hate-mongers. Obuchi's own choice for governor of Tokyo finished an embarrassing fourth in this month's election; opposition parties didn't fare much better.

Adding to the malaise is a sinking feeling that the country's glory days as a global pacesetter are over. Japan Inc. is going bankrupt--corporations are taking advice from Americans, for heaven's sake, who used to bow at the feet of a management system credited with beating the pants off U.S. competitors. A dearth of creativity in software development means the country hasn't logged on to the sizzling e-commerce linked to the very computer industry Japan once figured to dominate. An education system that outsiders used to envy is now a shambles. Educators are starting to ask, Why can't little Taro read? A sad indicator: some job recruiters are starting to demand proof of college graduates' fluency--in Japanese. Even Japan's red-hot baseball exports are suffering. Hideo Nomo, a sensation in Los Angeles four years ago, has been relegated to the Iowa cornfields.

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So why is Keizo Obuchi smiling? The simple answer: because he's still around. As he prepares for a second summit with U.S. President Bill Clinton on May 3, Obuchi can draw satisfaction from recalling that, only months ago, few observers expected him to be in office this long. The 61-year-old former Foreign Minister was a compromise choice for Prime Minister last July, after the long dominant Liberal Democratic Party suffered humiliating results during elections to Parliament's upper house, forcing Prime Minister Ryutaro Hashimoto to resign. Obuchi's major attribute was that he didn't offend anyone--not exactly the talent required to jump-start a depressed society.

No one gave this accidental Prime Minister much chance of lasting in the post more than a few months. Party big shots with their own eyes on the top political prize more or less served him up as a sacrificial lamb at a time of great crisis. Japanese prime ministers last about as long as April's cherry blossoms in normal times, and there was nothing in Obuchi's workmanlike portfolio to suggest he would fare any better during a tumultuous period.

So the more complex explanation to Obuchi's incongruous grin: he's getting the last laugh on everybody who dismissed him as an empty suit. Cold pizza, was the colorful description attached to him last year by John Neuffer, an American political analyst in Tokyo. Revealingly, Obuchi didn't bristle at the put-down. Instead, he had pizzas delivered to the press corps. One of his greatest satisfactions, Obuchi said in an interview with Time, is that the man who said that recently came to see me and told me I'm not a cold pizza anymore. It does appear Obuchi has warmed up his political temperature in the past nine months. Of course, it helped that he started with an approval rating of 24.5%, the lowest of any prime minister since 1993. Today, the number has improved to 38.7%. This is hardly a Clintonian level of public support, but it represents a noteworthy improvement, given the difficult economic climate in which Obuchi has to work.

The Obuchi style is to defang his opposition by directing the hardest hits at himself. He's fond of describing how his first name, Keizo, means three blessings, and that he has succeeded in large part due to dumb luck. He may look unsophisticated, says Shintaro Ishihara, the newly elected governor of Tokyo. But he has a strong backbone. Self-deprecation seems to be the samurai sword of his political armory. After a commentator coined the phrase bokyahin, to describe his poor vocabulary and lackluster speaking ability, Obuchi appropriated the phrase and made it his moniker. He's like the king piece in the game of shogi, using smaller pieces to fight and hide, film director Takeshi Kitano observes in Shincho 45 magazine this month. When he wins, he simply says, 'Oh we've won.' He's quite clever. 'Who is he,' you wonder and flip the other side of the king piece and it's blank. Mr. Obuchi may be so. Faint praise, yes--but it honors, rather than damns, the man.

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Obuchi can use his simpleton's image to wriggle out of tight spots. When Parliament's budget committee debated a proposal to repeal Japan's consumption tax in December, Obuchi found himself sandwiched between two coalition partners with conflicting views. Ichiro Ozawa is an LDP refugee who defected to form the Liberal Party that is now part of Obuchi's coalition; he is opposed to any sales tax. Noboru Takeshita is the influential power broker behind Obuchi's LDP faction and the Prime Minister's mentor; he favors the current 5% tax. Diet member Tetsundo Iwakuni tried to make Obuchi choose between the two by telling a story of a constituent who couldn't decide whether to buy new furniture now--or wait until later when the sales tax would be abolished. How will Obuchi answer? Iwakuni wondered. He can't disagree with his mentors in the LDP. And he can't disagree with his new coalition partner. Obuchi did neither. He stood up and with a straight face said it wouldn't be appropriate for him to give stock tips. Huh? The word for furniture in Japanese is kagu, the word for stock market, kabu. He simply pretended to misunderstand. His cleverness created that stupid response, Iwakuni said later. He made everyone laugh at his stupidity, and the laughing made the problem disappear.

This dumb puppy act serves Obuchi well. He has skirted potential scandals and let the buck stop somewhere else during his nine-month tenure. After a military procurement scandal last year, he let his Defense Minister take the fall. The perception that he lacks capability is saving him, says Iwakuni. Nobody believes Obuchi handles anything because nobody thinks he can.

This perception is no accident. Obuchi for years has cultivated the image of an empathetic politician who lacks the refinement of the University of Tokyo set that has long dominated the bureaucracy and Parliament. But the image is a fabrication. He has worked his way up the ranks of the dominant political party by knowing how to play the game, and he comes by his acumen honestly. His father, who died when Obuchi was a student at Waseda University, was a politician. He likes to describe himself as a ramen-noodle shop, dwarfed by two skyscrapers, for his native Gunma prefecture is also home to two former prime ministers, Yasuhiro Nakasone and Takeo Fukuda. Obuchi was never anything special, but those two were always told they were geniuses from the time they were young, says Kenji Goto, a veteran political writer for the Kyodo News Service. They were the cream of Japanese society, the brains. To fight against his inferiority, Obuchi had to have his own image.

That image was very much in evidence on a recent visit by Obuchi to Gunma. At a public meeting in the prefectural capital, Nakasone spoke to the Prime Minister as if addressing a pupil. You're doing well, he said. I was first concerned that your speed was slow, but you picked up the pace and now you're cruising at a stable speed.

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It was as a pupil that Obuchi first honed his political skills. Masamichi Sato, director of a hospital in Gunma, was an elementary school classmate of Obuchi's. They have remained friends. Even as a schoolboy, recalls Sato, Obuchi was sharp and good at organizing everybody. But he wasn't bossy. He was low-key at school, not quite noticeable, not talkative. Obuchi invited his old Gunma friends to his birthday parties, even after moving to Tokyo when he was in junior high school. Ten years ago, when Sato was hospitalized for several weeks in Tokyo, Obuchi visited frequently. He's really devoted, Sato says.

During Obuchi's recent visit, the Gunma landscape was covered with snow that had fallen the day before. Along the road, people were holding up pictures of Obuchi's face with the message celebrate. They were also waving the hinomaru, the red sun on a white background that, while commonly displayed, is not officially Japan's flag. It's image is controversial because to many people in Japan and Asia it conjures up unpleasant associations with past military incursions. Obuchi proposed making the flag official (it is already widely used, of course, at events like the Olympics) after the suicide of a Hiroshima high school principal who had to mediate a dispute over using the flag at a graduation ceremony. Gunma chose a normal way in Japan, he told a crowd of 2,000, a reference to the absence of controversy over the flag there. With an emerging sentiment of nationalism in Japan, Obuchi's move is another example of how attuned he is to public sentiment.

The Prime Minister, his aides report, is a slave to the telephone. He makes at least six or seven calls every day to people outside his cabinet and political circles, including journalists or ordinary people he reads about in the newpapers. He has used the phone this way since he was a young politician, a strategy that one aide says is aimed at winning support, one person at a time. It's the technique of someone who feels inferior to his rivals, so he works harder to defeat them.

Obuchi carries it a step further. He relishes confronting, in a genial manner, his harshest critics. A cartoonist who lampooned him received an unexpected call from the Prime Minister thanking him for his caricature. Shinichi Kitaoka, a University of Tokyo political scientist, was Obuchi-ed this way after writing a magazine article that, among other things, criticized the cynical political formula the Prime Minister used to assemble his cabinet. Kitaoka was out of town when the call came, but he returned to hear Obuchi's voice on his answering machine, thanking him for writing about the cabinet. Makoto Sataka, a prominent political journalist, who has written articles critical of Obuchi, has been Obuchi-ed, too. At a reception, the Prime Minister saw Sataka, greeted him warmly and said, We need someone like you who criticizes us.

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But while Obuchi soaks up his critics' blows, he leaves it to his political henchmen to deliver his punches. In a magazine article, Sataka wrote: In my hometown in Yamagata, the pronunciation of Obuchi means obutsu [dirt]. The least adequate person has become the Prime Minister. Now Japan is covered with dirt. Sataka's editors received a strongly worded rebuke from an LDP official demanding a letter of apology. When film director Kitano, who is also a comedian, accidentally dropped a photograph of Obuchi on the floor during a TV show, the studio audience reacted so enthusiastically that he dropped it again. Another call from the LDP came, demanding an apology for making Obuchi look like a fool. And last January, the LDP started using 2,000 volunteers to keep track of what it considers unfair media coverage. In at least three cases, Obuchi's staff has sent letters to newspapers threatening legal action over unflattering coverage.

Staying in power is not an unusual motivation for any politician, of course. But in Obuchi's case, it isn't always easy to see what exactly he hopes to accomplish--other than simply to survive. He makes his own principles obscure by wrapping them with candy floss, says Kiyomi Tsujimoto, a Social Democrat in the lower house of the Diet. All he cares about is staying on as Prime Minister. As long as he can stay, he would do anything. Ultimately more important is what he can do for Japan. The battered economy is far from a recovery, despite some positive signs: the benchmark Nikkei stock index had rebounded from about 13,000 in January to 16,851 by the end of last week. Obuchi impressed economists by pushing through a $500 billion banking reform scheme and a $125 billion package of public works projects to stimulate the economy. But many analysts believe the recovery isn't self-sustaining, that it can be extended only through further injections of public spending--which a Prime Minister bent on survival will surely be tempted to make. And that could reignite a destructive cycle of stopgap economic measures. The economy is kind of on a ledge, says Russell Jones, an economist at Lehman Brothers in Tokyo. When the fiscal spending is exhausted, it falls off the ledge and rolls downhill. Real reform would entail wholesale restructuring, but that would also cause further layoffs that would hit Obuchi's party constituents, banks and construction companies.

The coming months are critical: Obuchi needs to face re-election as president of his party later this year. There needs to be a clear game plan for the economy, says Cameron Umetsu, an economist at Warburg Dillon Read in Japan. But policy is being driven by the short-term need to win the next election. Speaking to Time, Obuchi said his cabinet would continue working to resuscitate the economy. We need to see restructuring go ahead but also try to minimize the rise in unemployment, he said. We need to overcome these hurdles in a Japanese way. It's that last caveat that worries some economists, who fear that further financial troubles at home will spread to Asia and beyond.

Still, Obuchi carries on, smiling. He has experienced the depths of unpopularity. He has endured potshots about his oratory skills and his dumb luck. In a sense, he knows personally what it's like for Japan to be the object of derision. The attacks on the country--how it does business, how it manages its finances, how it educates its children--are magnified versions of the personal slams directed at him. Obuchi is still hanging in there. Maybe he smiles because his own tenacity gives him confidence that Japan can survive too.

With reporting by Donald Macintyre and Hiroko Tashiro/Tokyo and Sachiko Sakamaki/Gunma

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