Reform Advocate to Head Japan’s Economic Agency

Prime Minister Tomiichi Murayama tapped one of Japan’s most respected economists Tuesday to play a leading role in a new Cabinet that the Socialist leader said will “revitalize the economy and create jobs.”

But the move, which he hopes will boost his fragile coalition government, came after 16 days of haggling that raised new questions about the stability of the Socialist-Liberal Democratic alliance supporting Murayama.

Even as the prime minister replaced all but four of his 20 Cabinet ministers in the wake of a setback in the July 23 election for the upper house of Parliament, a battle erupted between dovish Foreign Minister Yohei Kono and Ryutaro Hashimoto, the hawkish minister of international trade and industry. Both agreed to remain in the Cabinet but made it clear that they will battle for the presidency of the Liberal Democratic Party when Kono’s two-year term in that post expires next month.

Kono has been Murayama’s strongest supporter, and his defeat could undermine the prime minister’s hold on his job.

Murayama’s selection of Isamu Miyazaki, 71, head of the Daiwa Institute of Research, to be director of the Economic Planning Agency added credibility to pledges the prime minister made to revive an economy that is in its fourth year of virtually no growth.

Miyazaki, a former bureaucrat who spent his career from 1947 to 1981 in the planning agency, has a reputation as one of Japan’s strongest advocates of reform.

A member of a 1986 commission that first urged Japan to drop its reliance on exports and seek growth from domestic demand, Miyazaki also has spoken out for opening Japan’s markets, streamlining government administration, abolishing bureaucratic controls and restructuring the economy. “I want to emphasize an economy in harmony with the world that will contribute to a better living for the people,” he said.

Heading the list of economic issues to be tackled this fall are fashioning a planned second supplementary budget for 1995, compiling the 1996 budget and hammering out government measures to deal with an estimated $555 billion in bad loans held by Japan’s banks.

Murayama’s other Cabinet appointments were politics as usual, analysts said. Thirteen positions went to Liberal Democrats, five went to the Socialists, and one was allotted to the New Party Harbinger. The New Party Harbinger’s leader, Masayoshi Takemura, retained the finance minister’s job.