The Naples Summit: Japanese PM to 'smile and say nothing'

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The Independent Online
WHEN Japan's new Socialist Prime Minister, Tomiichi Murayama, takes his place at the summit today, he will have one advantage over his six counterparts: no one expects him to make any decisions, offer any concessions, or outline any major policy- shifts.

Indeed, in a cynical off-the- record briefing of foreign journalists in Tokyo, a Japanese Foreign Ministry official said Mr Murayama's brief for the trip consisted of three instructions: say nothing, smile whenever cameras are present, and under no circumstances miss the plane back home.

Such is the sorry, confused state of Japanese politics, where a life-long Socialist has joined in coalition with his former enemies, the conservative Liberal Democratic Party, in a much-lampooned political marriage of convenience. The Naples summit may be dedicated to global economic growth and an attack on widespread unemployment, but the world's second-largest economy will barely participate. Well- heeled Japanese diplomats will whisper a few reassuring messages to their foreign colleagues on the fringes of the main meetings, but hopes of strong Japanese leadership to accelerate world economic recovery will be frustrated.

The Socialists and the LDP disagree on most things, except in their joint determination to roll back the reform movement initiated by the last government. So, Mr Murayama will present an anodyne, watered-down series of proposals on how Japan will try to further stimulate its economy, continue deregulation and market liberalisation, and at the same time he will call for stability in the currency markets.

Already, the new government's anti-reform, anti-deregulation stance is becoming clear. On Wednesday the Socialists and the LDP together defeated moves to reduce subsidies to Japan's rice-farmers, against the opposition of the Agriculture Ministry.

The politicians, looking forward to the next elections, promised to maintain the high rice price for next year, despite Japan's commitment to liberalise its rice market under last December's Gatt agreement.

The main plank of Tokyo's domestic economic stimulation package will be an extension of income-tax cuts beyond this year. But squabbling with the Ministry of Finance over how to fund these tax-cuts - which were worth 6 trillion yen this year - means Mr Murayama will not be able to say how much, nor for how long these tax- cuts will continue. Japan's trading partners have urged a substantial cut in tax rates to stimulate domestic demand, and increase the market for imported goods.

Tokyo will also offer a list of deregulation measures, which was first released at the end of last month. The list of 279 measures includes proposals to loosen up imports of building materials, telecommunications equipment, food, pharmaceuticals, cosmetics, petrol and cars. But the proposed measures, which were drawn up by bureaucrats while the politicians were preoccupied in parliamentary battles, are all vague, will require further study, and could be postponed indefinitely unless a new political will to accelerate deregulation is found.

Most urgent, from Tokyo's perspective, is some level of agreement or reassurance on the level of the yen against the dollar. Japan's exporters have looked with horror at the yen rising above 100 to the dollar, a level at which very few can export at a profit. Mr Murayama is expected to call for a joint commitment to stabilise currency rates, or risk choking off Japan's slow recovery from recession. But he will have little to offer in return.

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