The administration of Prime Minister Keizo Obuchi, inaugurated just five months ago, faces in the coming year a real test of its ability to achieve its most urgent goal: lifting the economy out of two years of negative growth. A failure to meet that challenge could further erode public confidence in government.

In trying to meet that commitment and other policy priorities, Mr. Obuchi will have a new ally in Mr. Ichiro Ozawa, head of the Liberal Party. If everything goes well, a coalition government of the Liberal Democratic Party and the LP will come into existence soon.

The question is how effectively this conservative coalition will steer the nation. Another key question is how things will develop within the LDP as it prepares to elect its new president in the autumn. Recent developments have attracted particular interest because the current mathematics in the Lower House mean that an LDP president will certainly take the prime minister’s office again.

Mr. Obuchi, of course, aims to create a more stable — and more responsible — administration under the coalition of two like-minded parties. That will pose new challenges to the opposition, particularly to the Democratic Party of Japan, the largest of the opposition parties. With the LP now on the side of the ruling party, the opposition has an urgent need to rethink its strategy of joint struggle.

The DPJ, setting its sights on an early Lower House election, is poised to take a more confrontational stance against the Obuchi Cabinet. Combined with developing power struggles in the LDP, moves to stake out a position of advantage in the next general election are likely to escalate in the months ahead.

Such political maneuvers, however, should not block efforts to achieve economic recovery. Mr. Obuchi, whose government has already implemented a variety of stimulus measures, is pledged to achieve real growth in fiscal 1999 and put the economy on a solid path to recovery in fiscal 2000.

Nevertheless, confrontation between the ruling and opposition parties seems unavoidable, both in and outside the Diet, which opens this month. During that session, legislators will discuss a host of controversial bills, including those related to the substantial reduction of the number of government ministries and measures needed to implement the new guidelines on Japan-U.S. defense cooperation. In April, a round of local elections will be held.

The LDP-LP coalition will help to expedite parliamentary business. But this is no assurance that key bills will be enacted as scheduled. For one thing, the LDP and the LP combined are still short of a majority in the Upper House, so they will need support from friendly opposition parties, such as New Komeito. The coalition, meanwhile, could find itself in trouble if it stumbles over knotty issues like security and defense.

Factional moves within the LDP could also stand in the way of effective governance. At the moment, however, the party appears more or less united behind Mr. Obuchi, with antileadership factions also throwing their weight behind the coalition plan. But this could change to his disadvantage if the economy does not improve appreciably.

Internal power struggles appear bound to heat up as the party presidential poll approaches. Already new faction leaders, including prospective candidates for LDP president, are testing the waters. But an internal split of the kind that gave birth to a non-LDP governing coalition in 1993 is unlikely. Working together with the LP, the LDP will be stronger than at any time in the past five years. This makes things particularly difficult for the divided opposition, which will have no chance of taking power unless it gets its act together.

The test for the opposition is how effectively it can check the government and enliven parliamentary debate by presenting its own proposals, instead of sticking to a rigid posture of all-or-nothing confrontation. Opposition parties need to take a flexible stance toward the ruling parties by cooperating on selected issues, as they did in the handling of bank-reform bills last year.

In all this, the DPJ, supposedly the champion of the opposition camp, has a decisive role to play. For that, it needs first to reverse its waning popularity under its leader, Mr. Naoto Kan, who is expected to be re-elected at the party convention later this month.

All in all, the Obuchi Cabinet has a bumpy road ahead as it tackles a mountain of problems at home and abroad. Its biggest challenge, of course, is ending the economic crisis. On this hinges not only the fate of Mr. Obuchi’s administration, but also the future of Japan as it moves toward the new century.

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