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Editorials
Wednesday, August 23, 2000Banker is a casualty
of the weak economyThe issue: Lawrence Johnson, chairman and chief executive officer of the parent company of Bank of Hawaii, has resigned.
THE resignation of Lawrence Johnson, chairman and chief executive officer of Pacific Century Financial Corp., the parent company of Bank of Hawaii, is a jolting reminder of the stagnant economy the state experienced for much of the last decade and is only now beginning to emerge from.
The bursting of Japan's "bubble economy" froze and then reversed the wave of Japanese investment that was a major factor in Hawaii's prosperity in the 1980s. The Gulf War depressed visitor arrivals and the Japanese recession blocked a recovery. The closure of all but a few plantations put an end to the sugar era. The collapse of construction activity reflected the halt in investment in the visitor industry and the loss of effective demand for new housing.
Tens of thousands of Hawaii residents lost their jobs during that period, many moving to the mainland in search of employment. Most of them left unnoticed, except for family and friends. But when a community leader such as Johnson becomes a casualty, people can't help but notice.
As Hawaii's largest financial institution, Bank of Hawaii could not avoid the effects of the state's economic slowdown, particularly on its loans. The bank's lackluster performance contrasted with the big profits of mainland banks enjoying the boom economy, and its stock price fell to a five-year low.
Other factors included the Asian financial crisis of 1997 and the recent coup in Fiji, where the bank is represented.
Johnson responded by trying to cut costs with a restructuring program that has entailed the loss of some 1,500 jobs, but investors weren't impressed with the financial results. In the end, stockholder dissatisfaction forced him to step down to make way for new leadership. That is often the way it works in the business world.
Johnson began his career with the bank as a teller 42 years ago and worked his way up to chairman, achieving that position in 1994 -- just in time to grapple with Hawaii's worst economic slump since statehood.
Although the economy is showing strong signs of recovery, the improvement didn't come in time to save Johnson's job. His successor will face the task of improving the bank's profitability, but more favorable economic conditions should help.
Israeli leader faces
opposition at home
THE failure to conclude a peace agreement with the Palestinians' Yasser Arafat at the recent Camp David summit despite his offer of concessions on the status of Jerusalem left Israeli Prime Minister Ehud Barak politically vulnerable.
Although he survived a no-confidence vote in the Israeli parliament, Barak finds himself increasingly isolated. This could cripple him as a credible negotiator in future talks.
As a consequence of offering greater concessions to the Palestinians than conservative parties would support, Barak's ruling coalition has disintegrated. Barely 40 of the 120 members of the legislature still back him.
In addition, his foreign minister and the director of the prime minister's office -- the latter one of the former general's old army friends -- have resigned.
Last weekend Barak stunned his supporters by announcing that he planned to introduce a reform program that would strip the Jewish religious establishment of some of its privileges and powers.
Barak said he would introduce a new constitution that would guarantee greater equality between Jews and non-Jews. He promised to dismantle the Religious Affairs Ministry and introduce a bill allowing for civil marriages that would be beyond the control of the rabbinate.
He proposed a national service program that would require all young Israelis, including members of ultra-Orthodox groups now exempted from military service, to sign up for two years of nonmilitary work.
Accounts of the meeting said that it broke up in disarray, with some of Barak's closest allies expressing doubts about his proposals, others vigorous opposition.
What prompted Barak to embark on such a quest immediately became the foremost subject of speculation. Newspaper commentators said the changes had no hope of approval by parliament.
Other prime ministers from the secular, liberal wing that Barak represents have tried and failed to achieve some of these reforms before. But none had ever sought to accomplish so much at one time, especially from a weak position like Barak's.
The proposals came with the Palestinians threatening to declare statehood unilaterally by Sept. 13 if a peace settlement is not concluded by then.
By further antagonizing religious conservatives, Barak seems to have given up hope of mustering support for any more concessions to the Palestinians.
What he hopes to gain by advancing a program that seems doomed is a puzzle. He may have made elections inevitable, opening the possibility of a new government that will take a harder line with Arafat and make a settlement impossible.
Published by Liberty Newspapers Limited PartnershipRupert E. Phillips, CEO
John M. Flanagan, Editor & Publisher
David Shapiro, Managing Editor
Diane Yukihiro Chang, Senior Editor & Editorial Page Editor
Frank Bridgewater & Michael Rovner, Assistant Managing Editors
A.A. Smyser, Contributing Editor
