POLITICS / THE MAYOR FROM MERRILL LYNCH : Japan’s New York-Trained Maverick

Tetsundo Iwakuni, 54, two years ago was offered a new job for about a fifth of the $500,000 he was making as a senior vice president at Merrill Lynch Capital Markets in New York City.

He took it.

From the world of high finance and a luxurious condominium in New York, Iwakuni moved to the world of low-level countryside politics.

As mayor of this city of 83,000 people, he is in charge of implementing an annual budget that, he says, amounts to “about half as much as we handled at Merrill Lynch in 3 1/2 minutes.” Yet, he has gained greater prominence than he ever had before.

Iwakuni exercised influence only within the financial circles in which he moved for the first 30 years of his adult life--21 of them in New York, London and Paris. Now, he has become a national hero--a man who forsook riches and international prestige to repay a debt to the community that sent him off on scholarships to elitist Tokyo University from an impoverished childhood. Hardly a week passes in which he isn’t featured in Japanese or foreign media talking about the closed nature of Japanese society, his concerns that U.S.-Japan economic frictions are worsening, the more active role he wants Japan to play in the world and the need he sees for reform in Japanese politics and government administration.

THE OLD PROBLEMS: Under Japan’s centralized form of government, Izumo, like other non-metropolitan cities, suffers from a lack of sufficient revenue. Nearly two-thirds of the budget comes from national and prefectural government subsidies--which means that the city needs to beg to carry out any innovation that costs money.

“It took 11 years to get approval to elevate the railway (that splits the city), and it will take 10 years to carry out that construction. One project--20 years!” lamented Hideo Fukuma, president of the Chamber of Commerce.

“We are used to that, but Iwakuni isn’t,” Fukuma added.

“The system of concentrating everything on Tokyo is very strong. . . . Iwakuni is trying to break that system,” said Yoshio Kamata, a city councilman whose Socialist Party, as well as two other opposition groups, joined the ruling Liberal Democratic Party in urging Iwakuni to run for mayor in an election in March, 1989.

His first act as mayor was to tell the city’s bureaucrats--like most civil servants in Japan, a haughty crowd--that “administrative service should be the largest service industry.”

THE NEW STYLE: Criticizing corruption and “money politics,” Iwakuni declared that he would not attend weddings or funerals or give gifts to constituents. He stressed environment by employing the first municipal tree doctors in Japan. He boosted city subsidies to nurseries--”even in our city, there is a shortage of women workers,” he said--and named more women to city advisory boards.

“Previous mayors were bosses of Izumo and were chosen by bosses linked by blood relationships and school ties. Politics was carried out in closed rooms. Policies emerged not from the 80,000 citizens but from a handful of political bosses,” said Kamata, whose Socialist Party holds only three of the 30 city council seats. Iwakuni said he found Izumo no less provincial than when he left it more than 30 years ago, despite a four-year-old sister-city arrangement with Santa Clara, Calif. True, more people are studying English, and “half of my (high school) classmates have been to foreign countries. Thirty years ago, the number was zero,” he said.

“But are the people very open-minded? No. If you look at (former Prime Minister Noboru) Takeshita (a native of Izumo), you’ll see the typical conservative politician in Japan,” Iwakuni said.

As a taxpayer in New York City, a visiting professor at the University of Virginia, a recipient “every Monday by express mail” of Merrill Lynch research reports and as a father of two daughters who live in the United States, Iwakuni’s U.S. ties remain strong.

Although it was Iwakuni’s move from New York to Izumo that astonished Japan, his most revolutionary decision came in 1977 when he resigned from a promising career with Nikko Securities to join Morgan Stanley. He switched to Merrill Lynch in l984 and served as president and chairman of Merrill Lynch Japan--winning the first seat held by a foreign firm on the Tokyo Stock Exchange--before going to New York in l987.

“Separating from Nikko Securities meant separating from Japan society. . . . Leaving a company? It’s almost like saying goodby to God, for a Japanese,” Iwakuni said.