Prime Minister Keizo Obuchi welcomed the New Year by restating his determination to spark positive economic growth in the next fiscal year, calling for smooth Diet passage of the fiscal 1999 budget bill that he says will help achieve that goal.

The immediate task for his administration is to get quick Diet approval of the bill, Obuchi told a press conference marking the New Year.

Toward that end, he said, his Liberal Democratic Party intends to form a stable government in cooperation with the Liberal Party. “I would like to see a firm and stable relationship between the two parties. Therefore, I would like to seek the Liberal Party’s participation in the new Cabinet,” he said.

Obuchi said he would like to closely monitor development of working-level policy talks between the two parties before reshuffling his Cabinet, indicating it may take place after his return from a Jan. 6-13 trip to Europe. “The Liberal Party has proposed some policy issues, and we have already launched five project teams to discuss each of them,” he said. “I need to see how those discussions will go (before reshuffling the Cabinet).”

To seek a common policy ground between the two future coalition partners, two of the project teams held their first meetings Tuesday, one on security and the other on giving lawmakers a more prominent role. Both teams will resume discussions Jan. 6.

But all in all, Obuchi said, full-scale discussions would not take place during “matsunouchi,” or the first seven days of the year.

The remaining three project teams will respectively deal with reducing the number of Lower and Upper House members by 50, administrative reforms, and tax reforms and other economic policies.

The prime minister had earlier expressed his intention to ask Liberal Party leader Ichiro Ozawa to join the new Cabinet. But he declined comment on specifics, only saying he will listen to the opinions of Ozawa and his party members on the issue.

Concerning the possibility of the Self-Defense Forces participating in a wider range of U.N. peacekeeping operations, Obuchi said the two parties have already agreed to deal with the issue based on the principles of the Constitution, which renounces the use of force as a means of settling disputes. “The issue of national security will be further studied by the project team, but I don’t think we have many differences over the issue,” he said.

Despite the prime minister’s remarks, however, the two parties seem to have a long way to go before reaching a consensus on the role of the SDF. While the Liberal Party hopes to expand the SDF’s role, the LDP remains cold to the idea.

Obuchi said the LDP hopes to deepen its discussion with the Liberal Party on the new Japan-U.S. defense cooperation guidelines ahead of Diet deliberations on related bills during its upcoming session. “Before we enter the Diet debate, we will thoroughly discuss the issue to reach a final agreement between our two parties, and we will join forces to get the bills approved by the Diet,” he said.

Obuchi declined comment on whether he will run for the next LDP presidential election slated for this fall. “My greatest task at this moment is to get the fiscal 1999 budget approved by the Diet as quickly as possible. I cannot think of how I will face the next LDP presidential race now,” he said.

On the economy, Obuchi stressed that his administration will make every effort to achieve the 0.5 percent economic growth it promised for fiscal 1999.

Expressing his confidence in the economy, Obuchi said the fiscal 1999 budget and policies included in last year’s first and second pump-priming packages will boost demand in both the public and private sectors.

On the planned 4 trillion yen income tax cuts, Obuchi said taxpayers will receive tax refunds in June, instead of December as originally scheduled.

On the international front, Obuchi noted that Japan’s relations with the world’s major powers have strengthened through his meetings with Russian President Boris Yeltsin, U.S. President Bill Clinton, Chinese President Jiang Zemin and South Korean President Kim Dae Jung.

In addition, Obuchi said he will visit Europe this month to meet with the leaders of France, Germany and Italy, with whom he plans to exchange candid opinions on the new European currency and Japan’s efforts to jump-start its economy.

Obuchi said North Korea is an issue of concern for Japan and Northeast Asia as a whole, noting Japan will closely cooperate with the U.S. and South Korea to exchange information on the nation.

Tensions between Japan and North Korea heightened following Pyongyang’s Aug. 31 launch of a rocket over Japan and into the Pacific. The move came amid lingering suspicion that the nation is building a secret, military-related, underground nuclear facility. “If North Korea dares to launch another ballistic missile, we will closely cooperate with the U.S. and South Korea to take decisive action against the country,” Obuchi said.

He added that Japan is currently not in a position to resume normalization talks with North Korea.

On relations with Russia, Obuchi said the government will continue its efforts toward signing a peace treaty by 2000. “If we make continuous efforts to solve problems one by one and gradually form closer relationships, I believe this long-standing issue between the two nations will certainly be resolved,” he said.

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