Japan welcome Rubin as U.S. Treasury chief

Japan welcome Rubin as U.S. Treasury chief

TOKYO (Reuter): U.S. economic policy towards Japan is unlikely to shift dramatically after Lloyd Bentsen's resignation as Treasury Secretary, but the hard-headed business sense of his successor, Robert Rubin, will be welcome here, economists and financial experts said yesterday.

"Mr. Rubin has already been in the core of decision-making in the Clinton administration, so that we can expect continuity," said Makoto Utsumi, a former vice-finance minister. "Everyone knows his expertise in financial matters, so the market has deep confidence."

Bentsen, 73, announced on Tuesday that he was resigning effective from Dec. 22 and the White House nominated Rubin, currently presidential economic adviser, to replace him.

Bentsen's departure was seen as a major blow to President Bill Clinton as he prepares to confront a Republican-dominated Congress hostile to many of his programs.

"Secretary Bentsen was a political heavyweight and I think there are many people who regret his loss," Utsumi said.

But Washington will doubtless maintain its pressure on Japan to speed up financial deregulation -- a high priority under bilateral economic framework talks, and a matter in which Bentsen has taken a personal interest, economists said.

"No matter who is in charge, the pressure will be the same," said Takeshi Kondo, chairman of ITOCHU Political and Economic Research Institute.

Bentsen's departure, however, will likely strengthen Japan's perception that Clinton's administration is in disarray. That could well encourage Japanese bureaucrats, already inclined to drag their feet over reforms sought both by Washington and domestic businessmen, to stay tough.

Erotion

"The bottom line is yes, Clinton's power has certainly eroded, and what I'm afraid of is that this will make our bureaucrats more stubborn," said Keikichi Honda, adviser to the Bank of Tokyo.

Bentsen's announcement that he would step down came as officials from the two nations hunkered down in Tokyo for talks on better foreign access to Japan's financial services sector.

A U.S. Treasury official said late on Tuesday that the two sides remained far apart, but added that Washington was still aiming for an agreement by the end of 1994.

"This sort of stuff (financial services talks) is on auto pilot," said one foreign economist.

Rubin's knowledge of both Japan and financial markets, however, will be welcome in Tokyo, economists said.

A multi-millionaire, Rubin was formerly co-chairman of investment banking firm Goldman Sachs and Co, and has won praise for helping guide economic policy in a U.S. administration not known for its organizational skills.

Analysts said Rubin would be cautious about making comments that could jolt currency markets in the way Bentsen occasionally did -- a tendency which sometimes boosted the yen, and privately irritated Japanese monetary authorities.

In late October, for example, Bentsen's comment that the United States had no plans to intervene to support the dollar helped push the U.S. currency to a post-World War Two low.

Currency markets perceived such remarks as reflecting a U.S. strategy of boosting the yen to put pressure on Japan to open its financial and other markets in bilateral trade talks.

"In my opinion, Mr. Bentsen responded too skillfully to journalists' questions, saying he preferred a stronger yen. Had it been Mr. Rubin, I don't think he would have done that," Bank of Tokyo's Honda said.

"In general, Mr. Rubin's appointment should be good news for the stability of foreign exchange markets -- no more politicization of currency," he added.