Parliament Stalemate May Be Broken : Takeshita’s Plan to Quit Brings Relief

With its promise of breaking a two-month stalemate in Parliament, Prime Minister Noboru Takeshita’s declaration that he will resign brought a sense of relief to both politics and economics in Japan on Tuesday, even though the choice of a successor remained unclear.

Prices rose for the third-largest gain this year on the Tokyo Stock Exchange, and the yen’s value climbed slightly on the Tokyo Foreign Exchange Market.

The ruling Liberal Democratic Party dropped its defensive posture toward an opposition boycott of Parliament by resuming deliberations unilaterally on the fiscal 1989 budget. In his resignation announcement, Takeshita made passage of the budget a condition for stepping down.

Deliberations had been halted Feb. 28 as opposition parties refused to proceed unless former Prime Minister Yasuhiro Nakasone, also of the ruling party, was forced to testify about his involvement in the spreading influence-buying scandal that eventually brought down Takeshita, his successor.

Japanese in the streets expressed relief, repeating, as if in unison, “It’s only natural,” when asked about Takeshita’s surprise announcement in a televised news conference.

Apologizes to People

Announcing his intention to resign, the 65-year-old prime minister apologized to the people for a scandal involving political contributions and questionable stock dealings that has enveloped him, Nakasone and dozens of other politicians, bureaucrats and leading businessmen.

The scandal centered on the widespread influence-buying activities of Recruit Co., a conglomerate with employment agencies, information, computer and real estate interests.

Speculation on a successor focused on Masayoshi Ito, 75, chairman of the ruling party’s executive board. Ito, who is reported to suffer from diabetes, declared that a younger leader should be chosen. But when asked if he would accept a draft, he said he would “not reply to a hypothetical question.”

Ito, who is one of the few ruling party leaders whose name has not been linked to the scandal, has a reputation for independence and integrity. Known as a “progressive bureaucrat” in the Agriculture Ministry before turning to politics, Ito served as foreign minister under former Prime Minister Zenko Suzuki until he resigned in 1981.

Also mentioned as a possible successor is Masaharu Gotoda, chairman of a ruling party committee on political reform. He served as chief Cabinet secretary under Nakasone. Gotoda, too, is untainted by Recruit’s money.

An investigation of the Recruit scandal by prosecutors is continuing and may not end before the Liberal Democrats select a new party president.

By virtue of its commanding majority in the lower house, which elects the prime minister, the ruling party is ensured of making its president Japan’s next leader.

“Anything could happen in this kind of crisis situation,” said Takashi Inoguchi, a professor of political science at Tokyo University.

With an election for the upper house of Parliament to be held this summer, a leader capable of convincing voters of his determination to clear up the Recruit scandal and carry out reform is considered essential.

Inoguchi said Takeshita’s resignation and the ensuing confusion in political leadership will “slightly weaken the government’s position in international issues for the time being.” But the change may not be that noticeable, he said.

“Our bureaucracy has been working on a routine basis,” he said. “We don’t have to worry too much about the repercussions. It’s not like the American system, where the politicians reign supreme.”

The feeling of relief swept the floor of the Tokyo Stock Exchange, traders said. The market rallied for a gain of 438.86 points on the Nikkei stock index to close at 33,244.78.

NTT Among the Gainers

Conspicuous among the gainers was Nippon Telegraph & Telephone Corp., the telecommunications giant whose top executives were implicated in the Recruit affair. NTT closed at 1.56 million yen ($12,000) a share, a 9% increase in the share price.

Takeshita’s announcement was a spark for the rally, said David Wood, an analyst for Tokyo Securities Co. “There are obviously lingering doubts,” evidenced by a thin trading volume Tuesday, “but I think this is a pretty good indication that some of the pressure has been relieved,” he said.

Foreign exchange dealers also were heartened by the prospects for the resumption of Parliament business. The yen rose in value against the dollar by 0.21 yen to close at 131.17.

Freed by Takeshita’s announcement to proceed with the budget process, ruling party leaders threatened to pass the budget in the lower house unilaterally, if necessary, before the prime minister leaves Saturday for a nine-day tour of nations belonging to the Assn. of Southeast Nations.

Such a unlateral move would ensure final enactment by the end of May. Japan’s constitution specifies that the budget be enacted if the upper house fails to vote within 30 days of approval by the lower house.

Lack of an official budget has stalled both public works spending and approval of new overseas aid projects.

Opposition parties, however, warned that the ruling party would face serious consequences if it rammed the budget through Parliament, as it did with controversial tax reform legislation amid a Christmas Eve filibuster.

“If they cut off deliberations and railroad through the budget, they will face the condemnation of the people and have no choice but to dissolve the lower house,” said Ichiro Watanabe, a lower house member of the moderate Komeito, or Clean Government Party.

Osamu Yatabe, a lawmaker who heads the Socialist Party’s committee on the Recruit affair, said there is no room for compromise on an opposition demand for testimony by Nakasone that sparked the boycott.

“It would be too late for Nakasone to testify after the budget passes,” Yatabe said. “If it comes down to the ruling party railroading the budget through, the opposition parties are going to have to resort to joint action, and there will be political trouble.”

The Recruit affair first came to public notice last summer in news reports. By December, Takeshita’s support in opinion polls had started to plummet. But he withstood mounting calls from the opposition to resign, largely because both of his potential rivals--Shintaro Abe, the ruling party’s secretary general, and Kiichi Miyazawa, former finance minister--also had been tainted in the scandal and forced to resign. In an attempt to revive support, Takeshita declared that he would carry out reforms to end Japan’s “money politics.”

But early this month, new revelations showed that the prime minister had received far larger benevolence from Recruit than reported earlier.

On April 11, he had delivered in Parliament what he billed as a full explanation of his ties with Recruit. He admitted that he and his aides had received a total of $1.15 million in political contributions and stock profits from Recruit.

JAPAN SHAKE-UP--TRADE TIES--Takeshita’s resignation shouldn’t affect Japan’s economic relations with U.S. Business, Page 1

RECRUIT CO.--Firm’s behavior shows ties between government and business in Japan. Business, Page 1