NEWS ANALYSIS : Door Opened to Liberalizing of Trade, Reforms

Japan’s most important election in four decades won’t usher in sweeping change, but it opens the door for new conservative reformist forces to clean up the nation’s corrupt politics, liberalize its restricted markets and promote greater activism in global peacekeeping operations.

In the most significant recasting of the political landscape since World War II, Japanese voters Sunday crippled leftist forces by denying the Socialists half of the seats in the lower house of Parliament that they won in 1990. In their place, they installed 103 members of the Renewal Party, Japan New Party and New Party Harbinger to act as a neoconservative opposition force to the entrenched Liberal Democratic Party.

The Socialists’ debacle underscores that their public support was far more shallow than their numbers in Parliament indicated and could spell the beginning of their political demise.

The party, which regards the Self-Defense Forces as unconstitutional, opposes nuclear power and has close ties to Communist North Korea, is out of step with most Japanese voters but until now was the most viable alternative to the Liberal Democrats. Their replacement by neoconservative forces, whom voters see as more acceptable leaders, sets the stage for a genuine two-party system.

“This is historic,” declared Minoru Morita, a political commentator. “We are now at the entrance of reform.”

Whether the three parties will cooperate and forge an anti-LDP reformist alliance remains unknown--particularly since Japan New Party leader Morihiro Hosokawa and Renewal Party top strategist Ichiro Ozawa are known political enemies. But should opposition leaders lay aside their personal rivalries for the rare chance to oust the Liberal Democrats from political dominance, the potential changes could be broad.

All three parties, for instance, favor banning corporate donations and increasing public financing of political campaigns to reduce endemic corruption. Other reforms promoted by some or all of the parties include breaking open Japan’s markets, possibly including the rice market; a constitutional review to ensure a greater role for the nation’s Self-Defense Forces in global peacekeeping operations, and a shift of power away from the central government.

All of which would nudge Japan to wield greater political leadership, instead of just economic power, and begin to transform the economy into one that favors consumers over producers and urban dwellers over farmers.

Such policies are similar to what the United States has been seeking from Japan in hopes of lessening the friction between the two nations. In Tokyo for the recent economic summit, President Clinton himself made it a point to meet with opposition leaders and openly state that he welcomes change.

But until the shape of the still murky political landscape becomes clear, Japan will probably be plagued by a period of uncertainty and policy paralysis that could, in the short term, exacerbate tensions with the United States.

And despite the potential for change, the reality is that the LDP still has the upper hand. Disgruntled voters switched from the Socialists to the new conservatives, but most of the Liberal Democrats’ supporters stayed supporters. Voters seemed to be saying that they aren’t terribly dissatisfied with the party that shepherded the nation from postwar ruin to the world’s second-richest economy.

Nor did the Liberal Democrats’ supporters appear prepared to break longtime ties of loyalty simply because of a string of political scandals.

Voters did reject Takao Fujinami, former Prime Minister Yasuhiro Nakasone’s former chief Cabinet secretary who is now standing trial in the Recruit Co. influence-peddling scandal. But they ushered in many other candidates tainted by scandal.

Among them: former Prime Minister Noboru Takeshita, who was implicated in a 1987 scandal in which the yakuza , or Japanese mob, was used to silence right-wing opposition; Shomei Yokouchi, who has inherited the well-oiled big business network of toppled kingmaker Shin Kanemaru, and Makiko Tanaka, the daughter of former Prime Minister Kakuei Tanaka, who was convicted of taking bribes from U.S. airplane manufacturer Lockheed and is considered the godfather of the LDP’s so-called money politics.

“The local people and voters showed their feeling of solidarity, the strength and warmth of their human bonds with my father,” Tanaka said after her election.

Japan’s patronage politics was not the only system left intact. So was the so-called iron triangle among politicians, bureaucrats and industry that runs Japan.

To many reformists, the triangle is the biggest obstacle to true democracy because it gives enormous power to unaccountable bureaucrats and prevents newcomers from breaking into the cozy relationships. Big business contributes to Liberal Democrat politicians, who hand them pork-barrel projects. The bureaucrats, in turn, use their vast regulatory power to keep outsiders out and give favors to Liberal Democrat backers. Business returns the favor to the bureaucrats by giving them cushy jobs when they retire.

“Japanese politics reflects Japanese society--the unwritten rules, the leaning on each other, the dependence, the bid-rigging--and the triangle reflects both these negative and positive aspects,” said Shigezo Hayasaka, a political commentator and former secretary to Tanaka. “But it works pretty well, so I don’t think it will easily collapse.”

Reform may be possible in the future: The Renewal Party has openly pressed for a diminished role for bureaucrats and open political debate on everything from budget priorities to foreign policy. The Japan New Party, meanwhile, has called for a massive shift in power from the central bureaucracy to local governments.

But until such parties can gain greater power, a process that could take several years if it can be accomplished at all, the current instability is likely to strengthen bureaucratic power and, at least in the short term, exacerbate tensions with the United States.

The Clinton Administration has been aggressively pushing Japan to favor consumers over producers by opening markets, introducing more competition and thereby expanding choice and lowering prices.

But bureaucrats, who inherently favor the status quo, will probably resist such changes--and now they will have the excuse of political instability to justify inaction.

But the election results could help push Japan into a more active role in U.N. peacekeeping efforts, as the United States has long requested. That’s because of the heavy losses by the major brake on such efforts, the Socialist Party. Its lost seats now have been filled by new parties more willing to dispatch the nation’s self-defense troops to global hot spots.