PM's retreat on graft leaves Japanese cold

THE best-selling political book in Japan at the moment is not a breezy, optimistic manifesto for change by the Prime Minister, Morihiro Hosokawa, or any of his reform- minded colleagues. It is The Nine Politicians that Ruined Japan by Koichi Hamada, an outspoken former politician whose biting criticisms of corrupt political leaders have perfectly captured the public mood towards the ruling class.

The compromise over political reform agreed upon by the government and the opposition Liberal Democratic Party (LDP) over the weekend, although touted as a great step forward by the Prime Minister's aides, will have done little to dispel the public's cynicism. It did, however, cheer the stock market, with the Nikkei index closing sharply up at 20,229, a 7.8 per cent jump over Friday's close.

But traders said the reason for the market's optimism had nothing to do with the substance of the new laws - it was sheer relief that weeks of political bickering were over, and the government was now free to turn its mind to the economy. Mr Hosokawa was quick to announce that an economic stimulus package - which may be as large as Y15 trillion ( pounds 88bn) - will be announced this week, probably on Thursday.

It is not that the Japanese public do not want their corrupt political system thoroughly cleansed and modernised. Opinion polls repeatedly put support for political reform at more than 70 per cent of the population, and the fact that even some reform measures have been accepted will be welcomed. Nor is there any doubt that Japan is undergoing serious changes in its economic structure and social attitudes. But few voters will have been convinced that the new laws announced on Saturday will radically alter the money politics which has plagued the country for so long.

Mr Hamada's book has only been on sale for two months, but it has already sold 1,230,000 copies - twice as many as A Plan to Remodel Japan, the programme for political change written last summer by Ichiro Ozawa, the main force behind the current government. Ironically Mr Ozawa, formerly one of the main fund-raisers for the LDP, is one of the 'infamous nine' accused of ruining Japan by institutionalising corruption, along with three former prime ministers involved in bribery scandals and other political leaders.

After the government's political reform package was unexpectedly voted down in the Diet (parliament) the week before, Mr Hosokawa was forced to accept a watered- down set of 'reform laws' drawn up by the LDP to suit their own interests. Otherwise he would have lost his job, since he had vowed to step down if he could not get a reform package passed in the Diet session.

The most blatant difference between the two plans was Mr Hosokawa's proposal to ban all corporate donations to individual politicians, which Mr Hamada pin pointed in his book as one of the main starting points for political corruption and bribery. In Saturday's compromise the LDP forced the Prime Minister to drop this ban, so that the pork-barrelling will continue. The LDP also forced him to accept a less radical reform of the electoral system than had been proposed, so that their regional vote-gathering machines will retain at least some of their effectiveness.

The way the compromise was agreed upon also harked back to the old political custom - four men sitting in a private room making an agreement in secret to suit their own interests on a matter that should have been of vital concern to the entire Diet and the voters who elected them.

Mr Hosokawa, accompanied by Mr Ozawa - both men are former LDP members who defected to form the new government - sat down with Yohei Kono and Yoshiro Mori, the president and secretary-general respectively of the LDP. It was just like the old days of inter-factional squabbling within the LDP governments.

But Mr Hosokawa emerges a weaker leader from the process. The LDP now knows it can bully him to achieve what it wants. Mr Hosokawa's coalition government looks more shaky than ever, with a large faction within the Socialist Party in more or less open revolt.