Clinton, Obuchi Aim to Stave Off Global Slump

Tuesday’s summit between President Clinton and Prime Minister Keizo Obuchi--a meeting of two politically wounded leaders discussing a crippled Japanese economy--represents a bid to forge a beachhead against global recession.

The United States is now one of the only economic bright spots in a shaky world financial system, and halting the slide in the Japanese economy, the world’s second largest, is essential to stemming the threat of contagion.

Obuchi enters the meeting, to be held in a former Rockefeller mansion in Tarrytown, N.Y., north of New York City, with several cards in hand. Japan has cut taxes and interest rates, pumped billions into stimulating its economy and on Friday secured a long-awaited political deal to fix its banking crisis.

Washington pushed hard for the banking bill, which analysts hope signals the end of Japan’s denial stage and the beginning of a concerted effort to tackle its $650 billion to $1 trillion in bad bank debt, which has chilled confidence from the sushi shops of Tokyo to the sake bars of Osaka.

“We believe that in the recent legislation, Japan has taken an important first step,” Secretary of State Madeleine Albright said Sunday at a news conference in New York after meeting with senior Japanese officials. “Obviously, what will be important is how it’s implemented.”

Implementation is the watchword, amid signs today that the deal is already starting to unravel.

For Clinton, the planned four-hour break from his ongoing travails is likely to be a welcome relief and a reminder that there remains more to the U.S. presidency than tabloids and tapes. For Obuchi, it’s a chance to leave behind his low and declining domestic popularity ratings, now around 21%, amid accusations he gave too much to political opponents in forging Friday’s bank bailout deal.

Clinton is likely to query Obuchi on prospects for speeding up Japan’s recovery process. The U.S. administration has repeatedly outlined a three-step program of fiscal stimulus, financial reform and deregulation to ease Japan’s ills.

But Clinton won’t be too tough, analysts say. Both leaders need friends right now, and, having let his lieutenants keep up pressure on Japan in recent weeks, these observers continue, Clinton can now play nice guy and openly support the Asian nation’s efforts and its new prime minister.

Any support from Clinton will help Obuchi back home. This is his first summit since he became prime minister in July and is a chance to counter his domestic reputation as a dull, gray Liberal Democratic Party politician.

The personal chemistry between the two will be closely watched in Japan, a country where these things are carefully detailed and discussed. Clinton and Obuchi are scheduled to fly in by separate helicopters, meet around 10 on Tuesday morning, share a working lunch and walk together through the estate’s gardens.

Their styles appear quite different, however, and few Japanese pundits expect an endearing rapport to develop. Obuchi “is the kind of person who always smiles and never gets angry, no matter how many insults he gets,” says Yasuhisa Miyake, an independent commentator who’s known the prime minister for 30 years. “Obuchi may not hit it off with Clinton.”

The two will also discuss their respective roles in attempting to ease the global economic crisis, which includes problems in Russia, Latin America and Asia. Tokyo, for example, has been criticized for not doing enough for Asia. “Japan needs to deregulate its domestic rules and open up its domestic markets to stimulate [Asian] imports,” said Hua Sing Lim, professor at the Asia-Pacific Research Institute of Japan’s Waseda University.

Obuchi’s aides, however, say getting Japan’s own house in order is a necessary first step. They add that they’ve spent $43 billion helping Asia, “whereas the U.S., with no budget deficit, has done nothing that compares to what we’re doing,” said Koji Tsuruoka, the Foreign Ministry’s North American director. “I don’t think there’s a need to be told how important Asia is to us.”

The third major item on the summit agenda will be security issues, an area put into sharp relief by North Korea’s failed Aug. 31 rocket launch of a small satellite over Japan.

On Sunday, Japan and the United States reaffirmed support for a multibillion-dollar nuclear energy project with North Korea under which the reclusive Communist dictatorship earlier agreed to halt nuclear weapons research in return for fuel oil and help in building two light-water nuclear reactors.

The North Korean launch also gave a boost to Japanese efforts to pass revised U.S.-Japan defense guidelines in its parliament, an initiative begun in 1996 to outline and strengthen Japan’s support of any U.S. action in a conflict in the “area surrounding Japan.”

Washington and Tokyo have been studiously ambiguous about the geography of this area and whether it includes the Taiwan Strait.

“It’s never, ever said . . . but Beijing’s been screaming, rightfully so, about this being a bulwark [against] China,” said John Neuffer, senior research fellow with the Mitsui Marine Research Institute.

Both countries share concerns about China’s military. They also fear a possible devaluation of the Chinese currency, the yuan. Obuchi will want to hear about what Clinton promised China on his recent trip to Beijing and about the current U.S. position with regard to Taiwan.

The North Korean satellite launch has also renewed Japan’s interest in participating in--and therefore helping pay for--a system to defend against incoming missiles, a development the Pentagon and U.S. defense contractors welcome. In fact, a statement issued by the two countries after the New York meeting Sunday said they “will proceed with further work in the direction of conducting cooperative research.”