Judging from the mood at this week’s summit between Japanese Prime Minister Keizo Obuchi and U.S. President Bill Clinton, the bilateral relationship is on its best footing in years. The Japanese economy appears poised for a rebound, and the security alliance has been strengthened. It is a reassuring assessment, and one that Mr. Obuchi will surely capitalize on in his efforts to secure re-election as president of the Liberal Democratic Party. But this may also prove to be a fleeting moment. If the government does not deliver on its promise of a return to economic growth, the tensions in the Japan-U.S. relationship could reassert themselves with more vehemence than before.
Mr. Obuchi has reason to be satisfied. At his last meeting with Mr. Clinton (in September), the prime minister was on the defensive, pledging that Japan would not be the weak link in the global economy. At their meeting this week, Mr. Obuchi reminded the president that he had kept his word, having secured passage of the financial bailout package and the record fiscal-stimulus legislation. Japan, the prime minister said pointedly, is ready for “a major turnaround.” Mr. Clinton played the appreciative host and commended Mr. Obuchi’s policies.
Potential trouble spots remain, however. Sectoral trade issues could spoil the love fest. Mr. Clinton’s reminders to Mr. Obuchi about implementing previous agreements and his specific reference to steel imports suggest that it will not take much for the situation to quickly reverse. To help defuse those worries, the two sides agreed on a package of deregulatory measures to encourage foreign investment in Japan.
The key concern is growth, but recovery is a double-edged sword. Japan has to grow if it is to take some of the burden off the United States as the key source of demand in the world economy. But growth must not slacken the nation’s determination to reform its economy, to deregulate and to open itself to foreign products and investment. Mr. Obuchi has staked his domestic political future on 0.5 percent growth. If he can deliver, he should be able to sustain the momentum in the bilateral relationship into the next century. And if he delivers, Mr. Obuchi will still be at the helm when the 21st century dawns.
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