Japan Liberal Democrats to govern with defector Currency markets hail coalition with archenemy, but deal could split LDP


TOKYO -- Politics took a turn to the usual here yesterday as the governing Liberal Democratic Party opted for political expedience and agreed to form a coalition with its archenemy, Ichiro Ozawa, and his Liberal Party.

The alliance will strengthen the governing party's sway in Parliament, mollify its restive hard-liners and give it sure support in coming budget debates.

"I am happy that we have agreed to work together on various policies with strong cooperation in the parliamentary session and on the 1999 budget discussion," said Prime Minister Keizo Obuchi, who signed the deal with Ozawa after 3 1/2 hours of talks yesterday.

But the agreement falls short of giving the Liberal Democrats a majority in the upper house and may drive a wedge between the conservative and liberal wings of the party.

There was some concern that intra-party bickering might further destabilize the already splintered Liberal Democrats at a time when the country faces the most severe downturn in the economy since World War II.

"I think this will simply complicate the political decision-making process and waste time," said Takeshi Sasaki, a political science professor at Tokyo University.

The currency market, however, took the alliance as a sign that government affairs would move more smoothly. The yen gained against the dollar immediately after the alliance was announced.

For Ozawa, the agreement is a stunning coup. A defector from the governing party, he was threatened with political obscurity after his second attempt to form an opposition party fell apart in December.

But he has maneuvered his way back into the spotlight and into power. "Ozawa is a player once again," said John Neuffer, a senior analyst at the Mitsui Marine Research Center. "The downside is that if you look at other parties that have gotten close to the LDP in recent years, they've not ended up in the best shape."

Naoto Kan, leader of the Democratic Party, Japan's largest opposition party, declared the alliance a mortal blow to the Liberals. "This shows the defeat of the Liberal Party," he said.

But the Liberals had little to lose. Widely expected to lose several seats in the next election, the fractious party will now gain at least one Cabinet seat after the coming special session of Parliament closes in December, and the governing party has agreed to adopt many of its policies, although not its proposal to suspend the unpopular national sales tax.

What the Liberal Democrats win, other than the promise of Liberal support in the session of Parliament scheduled to begin Nov. 27, is less obvious.

The Liberal Democrats have been forced to govern by coalition since Ozawa defected in 1993. They will now be able to count on 12 more votes in the upper house -- although that will still leave them 11 short of a majority -- and an additional 35 votes in the lower house, where they already have a majority with 262 seats.

Pub Date: 11/20/98

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