Premier’s Abrupt Resignation Leaves Japan in Shock : Asia: Morihiro Hosokawa’s move sets off a scramble for a successor. Foreign Minister Tsutomu Hata and former Foreign Minister Michio Watanabe are top contenders.

Japan’s political world reeled Friday from Prime Minister Morihiro Hosokawa’s bombshell announcement that he is resigning amid mounting questions about a suspect stock deal, a loan from a gangster-linked trucking company and possible illegalities over the management of his personal finances.

But even as supporters expressed shock that the man they lionized as the symbol of a new era of clean and open politics himself was felled by scandal, they say the political revolution Hosokawa started cannot be turned back.

As the fragile, eight-party coalition scrambled to find a successor and debated whether the unwieldy alliance itself could last, people ranging from executives to homemakers made one thing clear in interviews: They do not want a return to the closed network of shady deals and back-room politics symbolized by the Liberal Democratic Party’s 38-year iron rule.

“Once big change starts, no one can stop it, like a rolling stone,” said Yoshiko Hayakawa, a writer and political activist who has been working to break open the old boys’ network. “The fresh breeze brought by the coalition has to keep blowing--at least, I really hope it does.”

So stunned, however, were the Japanese that politicians, pundits and analysts were slow to speculate who might succeed Hosokawa, who resigned abruptly early Friday, beleaguered by persistent controversies over his personal finances.

The most attention seemed to focus on Foreign Minister Tsutomu Hata of the Renewal Party; there also was a growing buzz about former Foreign Minister Michio Watanabe of the LDP. Both would-be candidates, however, have their own political liabilities; Watanabe, for example, would have to bolt his current party to possibly become prime minister.

It was unclear exactly how long the intricate process for picking Japan’s next political leader might take.

Possible Successors

A recent poll by the Nihon Keizai newspaper showed that 42% of respondents would still vote for a coalition candidate in an election held today, compared to 22% for the LDP.

Foreign Minister Hata was most often supported as the next prime minister in the poll, and his name still heads the list of most likely successors to Hosokawa.

Hata, the boyish-faced leader of the Renewal Party, is a close ally of Ichiro Ozawa, the brilliant policy strategist whom many view as Japan’s most dynamic political leader. Hata would be likely to espouse many of Ozawa’s proposals, which range from a 10% consumption tax and an income tax increase to stimulate the economy to greater participation of Japan’s Self-Defense Forces in international peacekeeping operations.

But rumors are mounting that Watanabe, the former foreign minister, might bolt the Liberal Democrats to join the coalition with his followers--possibly even heading it as prime minister. Watanabe, blunt and colorful, would not be expected to espouse radical reform as an entrenched LDP insider but would bring the experience the coalition badly lacks.

Whether the eclectic, increasingly unwieldy coalition, which ranges from leftist Socialists to conservative former LDP heavyweights, itself can last was much debated Friday.

Socialist Chairman Tomiichi Murayama urged that the coalition remain intact and select a new leader. But Koshiro Ishida of the Buddhist-backed Clean Government Party said partners must first agree on policies--a remark that indicated a willingness to recast the coalition, perhaps to accommodate Watanabe and his group.

But the choice of Hosokawa’s successor may shatter the coalition. The Socialists, Renewal Party and Democratic Socialists oppose the choice of Hata. Some believe that the coalition may simply appoint a caretaker prime minister and call an election after the 1994 budget is passed to seek the voters’ will.

A successor may be named early next week, but it could take as long as a few months. Once a successor is decided, the entire Cabinet would resign and a new prime minister would be elected by the lower house of Parliament.

Hosokawa, Reform

The LDP rule was shattered last summer after the arrest of its kingpin, Shin Kanemaru, on tax evasion charges. His arrest threw the party into chaos, led to renewed public disgust over corruption and thrust into power Hosokawa, a former governor and political aristocrat from the southern island of Kyushu. Hosokawa pledged sweeping political reforms and a new populism to bring government closer to the people.

Despite his dynamic start, Hosokawa fumbled badly in the last two months, showing a marked inability to effectively deal with problems--trade relations, especially with the United States; a stubborn economic recession across Japan, and the growing conflicts within his shaky coalition.

Critics faulted his relative inexperience; supporters claimed that the fault belonged to the coalition itself, whose excessive policy differences paralyzed government.

Hosokawa is now likely to be relegated to the sidelines of Japan’s political world. No postwar prime minister has ever resumed office after resigning, and his Japan New Party is too small to merit significant political clout.

He is not in danger of arrest, since the statute of limitations has passed for all of the incidents in question, including a suspect stock purchase of Nippon Telegraph & Telephone shares in 1986 and a $952,000 loan from the shady Sagawa Kyubin Co. that opponents argue might have been an illegal political donation.

Hosokawa also said in his news conference Friday that new revelations of possible illegalities regarding his personal finances had surfaced, but the incidents in question occurred several years ago.

Although Hosokawa declined to provide details pending completion of the investigation by his office, the Japanese press reported that money he lent to a friend might have been used in illegal loan-shark operations without his knowledge.

A Political Legacy

If Hosokawa’s image as a clean and idealistic reformer is forever tarnished, however, his legacy as a symbol and catalyst for change is likely to last, people here say.

Already, the populist politics he represented is starting to take on a life of its own. As more people take an active interest in politics, they are tuning into political debate shows such as the popular “Sunday Project,” whose ratings have increased more than 10% in the last several months.

They also are snapping up political books such as Ozawa’s “Blueprint for a New Japan,” making heavyweight policy tomes a surprising publishing trend.

In the scramble to define their policies and images in the new era of personal politics, several politicians are now writing books with a bemusing variety of slogans:

* Ozawa’s “normal nation,” meaning a Japan that can properly assert its own national interests.

* New Party Harbinger leader Masayoshi Takemura’s “a small but sparkling nation,” meaning one that plays a more modest global role.

* Former Finance Minister Ryutaro Hashimoto’s somewhat obtuse “a nation proportionate to its height.”

“Before, if you became the head of the top LDP faction you could become the prime minister, so there wasn’t much need to appeal to the public directly,” said Shigenobu Tamura, chief aide to Hashimoto, who says he now spends half his time on “media tactics” to get his boss’s message out to the public. “Now you must be able to articulate policy . . . and those who can appeal to the public are the ones who become top leaders, such as (LDP President Yohei) Kono,” Tamura said.

To establish better contact with common voters, the once-lofty LDP is going to such lengths as opening fax lines to solicit public opinion and even holding matchmaking parties to lure young people.

Populist politics made their first appearance in a symbolic gubernatorial election last week in conservative Ishikawa prefecture, a coastal area known for lacquerware, industrial equipment and, until now, rock-solid support for the Liberal Democrats.

In a close contest, voters rejected the LDP candidate and elected a deputy governor backed by the Hosokawa government after the coalition sponsored the area’s first-ever town hall meeting--giving citizens a chance to air their views--and participated in a local television debate.

Some fear that the recently passed political reform bill will squelch the fledgling populism by centralizing power in the hands of party bosses. But others say the public’s expectations of a more open and responsive political system raised by Hosokawa will not change.

“I think it’s unfortunate that Mr. Hosokawa is resigning, because he’s the best person in Japan to bring about the new wave of politics,” said Minoru Omukai, a lacquerware seller in the wind-swept town of Wajima, who supported the coalition candidate in the Ishikawa governor’s race. “But the wave of change is advancing, and whoever succeeds him will have to follow it because this is what the people want.”

Toshio Kanekura, 52, an executive with a plastics firm in Kawasaki near Tokyo, lamented Hosokawa’s intent to resign. He said the LDP had no politician with the potential to change the system as Hosokawa did--particularly to liberate business from the shackles of regulation that Kanekura believes are destroying Japan’s competitive strength. Deregulation was one of Hosokawa’s major pledges and political mantras.

“The LDP was involved in the iron triangle with industry and corrupt political donations,” Kanekura said. “But Japan is now in an era of change. As long as there are voters, we will not go back to the old LDP ways.”

LDP President Kono admitted as much Friday. “Support for the Liberal Democrats has been lower than support for the Hosokawa coalition,” he said, acknowledging there was no public clamor for the party to return to power even though it successfully forced Hosokawa’s resignation by relentlessly pressing him on his financial problems.

Meanwhile, Hosokawa--a man said to be obsessed with his own political legacy--will undoubtedly leave a significant mark on history despite his brief, eight-month tenure, said Mitsuru Uchida, a Waseda University professor.

Although his last two months were a study in policy paralysis, Hosokawa ushered in the coalition government, oversaw the passage of a landmark political reform bill, presided over the opening of the rice market and issued the boldest apology yet for Japan’s wartime aggression.

Times staff writer Sam Jameson contributed to this report.