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.