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Diet debate started Tuesday on the fiscal 2001 government budget. The debate is likely to see head-on confrontation between the ruling and opposition forces. The government and the ruling coalition are hoping to pass the budget before fiscal 2000 ends March 31 in order to prepare for an Upper House election in July.

The ruling alliance, led by Prime Minister Yoshiro Mori and made up of the Liberal Democratic Party, New Komeito and the New Conservative Party, faces a volatile political situation. A change of government could occur anytime.

Political uncertainty has grown since early this year over the KSD scandal and the alleged embezzlement of government funds by a Foreign Ministry official.

The KSD affair stems from huge bribes given by the mutual-aid organization KSD to LDP politicians. In connection with the scandal, Upper House member Takao Koyama was arrested, Fukushiro Nukaga resigned as state minister in charge of economic and fiscal policy and Masakuni Murakami quit as chairman of the LDP members’ assembly in the Upper House.

Murakami was one of five LDP heavyweights who decided in a secret meeting last April to name Mori as prime minister to replace the ailing Keizo Obuchi. It is uncertain how far the scandal will widen following Diet testimony by Nukaga and Murakami, which has been sought by the opposition.

In the other scandal, a Foreign Ministry official who was in charge of making arrangements for overseas visits by high-ranking Japanese officials allegedly dipped into secret government funds for diplomatic purposes and used the money for personal purchases, including the purchase of racehorses. There is growing suspicion that the ministry is responsible for the affair since it failed to supervise the use of the funds in question.

The scandal is taking a toll on Foreign Ministry bureaucrats. Tomoyuki Abe resigned as deputy vice foreign minister when he was hospitalized due to exhaustion from working overtime while overseeing an in-house investigation of the scandal. Against the background of the scandal is the secretiveness of Foreign Ministry operations. There is speculation that Foreign Minister Yohei Kono and Vice Foreign Minister Yutaka Kawashima may be forced to resign to take responsibility for the scandal.

The Mori administration also faces trouble on the economic front. Signs of U.S. economic slowdown since early this year have jolted the world economy. There are growing concerns that U.S. economic uncertainties could trigger a stock-market crash and recession in Japan, which has failed to push structural reform while promoting huge economic-stimulus measures.

The KSD affair is a typical payoff scandal, resulting from collusion between politicians and business executives. The Foreign Ministry scandal stemmed from collusion between politicians and bureaucrats. Meanwhile, government economists remain silent on the prospects of economic recovery after insisting until last year that recovery will start soon.

Mori is showing no signs of tackling the difficult tasks of rooting out corruption and pushing economic recovery. He has failed to take responsibility for the problems. I wonder if he will continue to waste time doing nothing until the Upper House election is held in July.

Several opinion polls conducted in early February show that approval ratings for the Mori Cabinet have plunged below 20 percent and disapproval ratings have topped 80 percent.

The question is, how will the poll results affect Diet debate on the budget? The opposition forces no doubt will step up their attack on the government, and it will be interesting to see if Komeito and the New Conservative Party will remain in the ruling coalition. Furthermore, LDP dissidents could stage a revolt against the Mori administration.

Political upheaval could come in late March, when the Diet is likely to pass the budget, and in mid-April, when the LDP holds a convention. The outcome of the convention should be closely watched.

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