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A Loud Message in Japan

Democracy Japanese-style has always defied Western conventions with its one-party governments. But voters turned out in heavy numbers Sunday to deliver a stunning rebuke to the architect of the political structure, the ruling Liberal Democratic Party. Fed up with the regime’s failure to lead the country out of recession, voters rejected enough LDP candidates in the upper house to cause Prime Minister Ryutaro Hashimoto sufficient political embarrassment to resign.

Now the question is whether the LDP gets the message sent by voters. The party still controls the more powerful lower house of the Diet, Japan’s parliament, and is consumed by an internal struggle to find a conciliator, a man with the acumen and political presence to put the house of cards together again. Whoever it is will have to work with fragmented opposition groups that include the Democratic and Communist parties.

The process is likely to be dominated by the usual back-room politics, and surely the struggle won’t be pretty. But the result must be as clear and decisive as the outcome of a sumo wrestling match.

Business should be anything but usual for the LDP, whose traditional reactive politics led the party and the nation into the current mess. The regime’s stalling and sputtering on crucial economic initiatives--its apparent inability to lead an economic recovery in Asia--is partly responsible for the collapse into recession of the world’s second-largest economy.

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Some targets are clear. The government must follow through on its professed plan to clean up the faltering banking sector, which refuses to deal with billions in bad loans. Cutting taxes and opening avenues to Japanese markets are actions that Tokyo must take, whatever the political consequences, if the nation is to continue to be a powerful player in the world economy.

The changes are needed not just to placate Japanese voters and consumers. Japan’s growth is vital to the economic recovery of other Asian nations. Tokyo’s leadership in the region is important politically as well. Japan, for example, is a crucial partner of South Korea and the United States in the financing of the Korean Energy Development Organization to supply North Korea with two light-water nuclear reactors. Success on this front could ease the dangerously troubled situation in North Korea.

Japanese voters were believed to be a complacent lot until this election. The polls said the LDP would lose no seats in the election and perhaps gain some. That was then.

For a nation of nuance and subtlety, the firm “no” that voters delivered on the LDP’s lack of new policies was an uncharacteristic display of assertiveness and open displeasure. The voters--small businessmen, farmers, merchants, office workers and others--have had it. They want a government of action. The LDP disappointed them, and will continue to do so only at its peril.

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Yen’s Woes

How many Japanese yen a dollar will buy, monthly closes and latest:

Monday close: 142.42 yen

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Source: Bloomberg News, wires


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