Now Japan faces a significant Oct. 20 election to the all-important lower house of its Diet. New apportionment rules put much more emphasis on single-member districts. They reduce the overrepresentation of conservative agricultural areas. They are considered to endanger the very existence of the Socialist Party.
Japan also faces defaults among its financial institutions that are nearly four times as severe proportionately as was our now-resolved savings and loan crisis. A population half the size of ours will have to handle bad debts estimated around $750 billion vs. our $450 billion.
What does all this mean to Hawaii? I talked to two leaders of the Hawaii-based private think tank, Pacific Forum/CSIS: James A. Kelly, president, and Torkel Patterson, a senior associate who focuses on Japan. Both dealt earlier with Asia/Pacific matters by serving in the National Security Council under Republican presidents. Both generally agree with the Asia/Pacific policy of the Clinton administration, which continues to keep Japan at the top of our agenda.
They see Prime Minister Ryutaro Hashimoto most likely continuing in office after the election but with a probable need to adjust policy to pull together a ruling coalition from three of the four key parties. The fourth, the Communists, won't join coalitions. Kelly and Patterson expect Japan's bureaucrats will keep power regardless of who rules and despite talk by all parties of curbing them.
They expect the financial drag to be a major shaper of events to come. An early result may be increased liquidation of holdings in Hawaii, a number of which already have been sold at fire-sale prices.
They think the government will fail in its effort to contain the crisis inside the financial community by spreading its resolution out over a long period. They think the Diet will have to shift much of the burden to taxpayers, as the U.S. Congress did. But they note that even a tiny $6 billion step in this direction provoked protest demonstrations.
They think the future yen-dollar relationship will be important to our tourist flow, and see this as a part of much vaster U.S.-Japan trade tussles and cooperation. The Hawaii investment splurge began in 1987 when the dollar, which had cost 250 yen in 1985, dropped to 140. The dollar got even cheaper later - down as low as 80 yen. It's around 112 now.
Any sharp future changes probably will affect travel. Japanese consumers also face a sales tax hike next April from 3 percent to 5. Kelly and Patterson believe it is in Hawaii's interest to more actively promote investment and travel from other Asian areas such as Korea, Taiwan and Southeast Asia, including Hong Kong. They say Hong Kong could be a source of 200,000 visitors a year if there were better air connections.
THEY expect U.S.-Japan defense cooperation to continue strong. China's test missile firings near Taiwan last March increased Japan's anxiety about its own China relationships and heightened desires to keep close to the U.S. Twenty-five of 26 Okinawa base issues have been resolved for the near term, they say, and our promised relocation of a C-130 and helicopter base will settle the 26th.
Right wingers aren't helping Japan's China relationship. They got a law through the Diet requiring Japan to put islands with lighthouses on its navigation maps. Then they erected a lighthouse on an island near Taiwan that is also claimed by China. Taiwan and Hong Kong public opinion reacted critically and China's government responded strongly but Kelly and Patterson think both governments want to keep the issue on simmer for now.