Bush to urge faster reform of Japan's ailing economy

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The Independent Online

George Bush will appeal to the Japanese Prime Minister today to speed the introduction of promised reforms to help the country's faltering economy and try to prevent further global recession.

In what will have to be a careful balancing act, President Bush intends to praise publicly Junichiro Koizumi's reform plan while at the same time privately prodding him to deliver it more speedily.

He will also thank Japan for its support in America's campaign against terror.

"We're obviously concerned about out friend's economy," said President Bush, who arrived in a damp and drizzly Tokyo last night as part of a seven-day Asian visit during which he will engage leaders in Japan, South Korea and China on a number of issues.

Japan's economy, the world's second biggest, is beset by deep-running problems. It has suffered from years of recession, billions of dollars lost in bad loans, a falling stock market and record levels of corporate bankruptcy and unemployment.

The United States – whose Treasury Secretary, Paul O'Neill, was in Tokyo last month to air frustrations at the slow pace of reform – is concerned that unless the problems are dealt with promptly, they could spill over into the already ailing global economy. America is particularly concerned that this could aggravate the position of its domestic economy.

Naoko Munakata, a former Japanese economic official, said: "The message is very clear, that the US expects more aggressive economic restructuring. And it is blunt – get it straight right now."

Mr Bush wants to avoid seeming to lecture Mr Koizumi, however, and he will not want to undermine the Prime Minister's political support. Before he left Washington, he told Asian journalists: "[The] Japanese economy must restructure and must deal with her loans, her bad loans. And I am more than confident that the Prime Minister understands this and is willing to make difficult decisions."

Mr Bush's visit to China – coinciding with the 30th anniversary of President Richard Nixon trip to the country – will see him discuss the opening of Chinese markets to American goods and farming produce. He is also likely to discuss the proposed American missile defence system.

The most dramatic part of the President's tour is likely to be a visit to the border between South Korea and North Korea – a country he recently included in an "axis of evil" with Iraq and Iran. "I will visit South Korea and travel to the Demilitarised Zone – one of the most dangerous places on Earth, where barbed wire marks a dividing line between freedom and oppression," Mr Bush said in a radio address before departing.

He said he supported South Korea's efforts at dialogue with its neighbour, but added: "I will remind the world that America will not allow North Korea and other dangerous regimes to threaten freedom and weapons of mass destruction."

Mr Bush, accompanied by his wife, Laura, stopped on route for Japan at Elmendorf air force base in Alaska, where he told cheering servicemen that America "will not blink" in the fight against terror.

He said he would tell other world leaders: "Either you're with us or you're against us. Either you stand for freedom or you stand for tyranny. And the good news is that many nations have heard that message."