Japanese Bureaucrrats Resist Plan to Overhaul Economy

Japanese bureaucrats are backtracking on Prime Minister Yasuhiro Nakasone’s promise to implement a report calling for transformation of Japan’s export-oriented economy, reduction of its “crisis-level” current account surplus and encouragement of imports, especially of manufactured goods.

“We can do it, and we intend to do it,” Nakasone said in referring to the report before leaving for a visit to Washington earlier this month.

But Foreign Ministry spokesman Yoshio Hatano said Thursday that while it is Nakasone’s “intention to implement this report . . . when and how it is to be implemented is not decided as yet.”

Hatano said he does not think that Nakasone has committed the Japanese government to any of the report’s recommendations and added that “I really do not think he has made a personal commitment to implement this.”

Increase in Yen’s Value

Such backpedaling parallels widespread criticism of the prime minister within his own party for the sudden increase in the value of the yen. Observers here said it is bound to have repercussions during the May 4-6 Tokyo economic summit at which Nakasone will be host to President Reagan and the leaders of Britain, Canada, France, West German and Italy.

The report, prepared at Nakasone’s request by a blue-chip committee headed by Haruo Maekawa, former president of the Bank of Japan, was welcomed in Washington during Nakasone’s visit.

Calling for a “historical transformation in traditional policies on economic management and the nation’s life style,” the report echoes longstanding American requests for changes in the Japanese economy to create better market access for foreign manufactured products.

One Western official suggested that Nakasone had come up with it especially for the summit to enable him to show Reagan and the other leaders that Japan understands its problems.

However, the official said that the report had met with stiff resistance within the Japanese bureaucracy and that in many ministries the attitude is, “It is an excellent report, but it has nothing to do with us.”

Nakasone Criticized at Home

A week after returning from Washington, Nakasone was criticized by both opposition and ruling party politicians for having made an “international promise” without consulting the party or Parliament. Nakasone argued in response that he had simply explained the proposed reforms in Washington and that his declarations while there did not constitute a pledge.

Hatano’s remarks Thursday were made during a pre-summit briefing at the Foreign Ministry. At the same briefing, another Foreign Ministry official said: “The U.S. budget deficit and the trade deficit are structural problems of the U.S. economy.”

That official also cast doubt on any implementation of the report’s recommendations at any time in the near future. “There are many things which government cannot implement right away,” he said.

Nakasone also found himself in hot water earlier this week for the sudden climb of the yen. He was blamed for having yielded to U.S. and European pressure to revalue the yen last September. The dollar closed Thursday in Tokyo at 167.85 yen, more than 44% below its value on Sept. 22, 1985, just before the currency agreement.