Fri, 08 Dec 2000

Japan's Miyazawa still indispensable

By Yoko Nishikawa

TOKYO (Reuters): Japan's octogenarian finance minister, Kiichi Miyazawa, was appointed to his sixth cabinet in less than three years on Tuesday, his experience and reputation still vital to a government seeking stability and respectability.

Fluent in English and with nearly five decades of political experience behind him, Miyazawa nevertheless has a checkered past, including policy missteps and political scandals.

And while he garners respect from both the markets and his foreign counterparts, critics say he shares part of the blame for a free-spending fiscal policy that, while helping to lead the battered economy into a tenuous recovery, has saddled Japan with the heaviest debt burden of any industrialized nation.

Miyazawa entered parliament in 1953 -- a year before his U.S. counterpart, Treasury Secretary Lawrence Summers, was born -- and first served as finance minister in the late 1980s, when he oversaw the early stages of a land -- and share -- price bubble that burst several years later with catastrophic effect.

He later apologized for not doing more to avert the bubble, which a decade later still finds Japanese banks, real estate developers, construction companies and retailers saddled with heavy "bubble-era" debts and non-performing assets.

Miyazawa was also one of several politicians tainted by a shares-for-favors scandal, which led to his resignation as finance minister in 1988.

He was eventually rehabilitated, becoming prime minister in 1991, but was forced to resign in 1993 after the Liberal Democratic Party suffered a staggering election defeat and was briefly swept from power by one of the many scandals that have plagued the long-ruling party.

In 1998, he was given another chance in the cabinet when then- Prime Minister Keizo Obuchi appointed him as finance minister, hoping to harness his experience to help nurse Japan's struggling economy back to health.

Despite his internationalist background, Miyazawa responded with typical Japanese humility when he rejoined the cabinet, telling reporters: "I have said repeatedly that I should not take this post, and I could make mistakes of judgment because of my age."

Since then, Miyazawa, known for his Keynesian views, has taken steps to stabilize the fragile financial system and revive the economy with generous budgets and stimulus packages, although he has shown more restraint than some of the LDP's more profligate spending advocates.

Despite his age, government officials and analysts believe Miyazawa is still up to the job, which requires nurturing a recovery in the world's number-two economy while tackling the swelling public debt.

Just a few days before his 81st birthday in October, Miyazawa said he thought he could continue working for a while after hearing that one of his relatives had lived to be 110.

But reviving the Japanese economy will be no easy task.

"No one wants to be finance minister because the problems of the financial system in terms of the bad asset legacy and the constant dodging of the responsibilities involved are very, very large," said Jesper Koll, chief economist at Merrill Lynch.