Japan's new prime minister, Yoshiro Mori, has a huge credibility problem. His Cabinet is plagued by financial scandals, his "Japanese renaissance" plan--aimed at boosting the information technology sector--fell flat in the parliament and public approval of his policies is plummeting. Mori must come up with genuine reforms and sever his Liberal Democratic Party's cozy ties with business if he wants to gain public support.
According to the latest polls, nearly 60% of Japanese disapprove of Mori's performance. Most of those say they don't trust him, don't believe he has the leadership qualities to spark economic growth or both. Outsiders take a similarly dim view.
Mori--gaffe-prone and not particularly likable personally--took a hit last weekend when one of his key financial appointees, Kimitaka Kuze, chairman of the Financial Reconstruction Commission, resigned in a scandal about improper payments. Mori, who had made the appointment even though he knew Kuze had received illegal donations from a private bank and a real estate developer, offered the routine apologies. But that did little to improve public faith in his administration. On Wednesday, Chief Cabinet Secretary Hidenao Nakagawa admitted he too had received illegal donations from supporters. Meanwhile, prosecutors are looking into possible financial improprieties at the Construction Ministry, exposing Mori to perhaps even greater embarrassment.
The prime minister may survive the financial scandals besetting his administration, but he will not restore public confidence in the political establishment until he overhauls his party and breaks its ties to big business. The LDP's coalition partner, New Komeito, took the lead on the corruption issue, proposing to penalize legislators for peddling political influence. Mori gave the measure only a tepid endorsement and did not commit the LDP to the change.
For years, Tokyo has been propping up Japan's moribund economy with stimulus packages benefiting the private sector. The economy has responded with a little growth, but in the process the government has accumulated enormous public debt. Worries over repayments prompted one international credit rating agency to downgrade Japan, and another is expected to follow suit. But, according to the Cabinet's budget guidelines for the next fiscal year, pork-barrel spending on public projects will continue unabated. Mori's only other plan, the "renaissance" package he inherited from his predecessor, calls for major spending on the high-tech industry. Devoid of detail or direction, the plan is widely seen as yet another empty blueprint for pumping taxpayers' money into the private sector.
A healthy Japan is a key to a healthy Asia and would be a growing market for U.S. exporters. Mori inspires little confidence that he will lead his nation to prosperity.