Budget Victory Bolsters Kaifu

JAPAN'S embattled Prime Minister Toshiki Kaifu cleared a first hurdle in his new term with an end to a budget deadlock in parliament (or Diet). The victory for Mr. Kaifu and the governing Liberal Democratic Party (LDP) improves the chances for passage of bills designed to ease trade friction with the United States, such as a proposed tax break for Japanese companies to import more foreign goods.

The breakup of the Diet log-jam also removes at least one excuse for Kaifu's internal LDP opponents to seek his early removal.

For two weeks, the Diet has been inactive because the main political opposition, the Japan Socialist Party, had threatened to use its dominance in the upper house to block passage of a package of bills, including a $38 billion supplementary budget. The delay had threatened payment of wages for government workers.

A compromise, however, was apparently forged by the intervention of two lesser opposition parties, the Clean Government Party and Democratic Socialist Party, which had sought an honorable display of influence since their loss of seats in a Feb. 18 lower-house election.

Many political analysts had predicted that a legislative standoff over the budget bill might end Kaifu's tenuous grip on power. After being selected last August from a minor faction by LDP barons to help the party overcome a series of scandals, Kaifu has tried to overcome an image of weakness to prolong his tenure.

Last month, he gained popular approval when he rejected party pressures to include corruption-tainted LDP leaders in his Cabinet. Now that a working agreement has been arranged with the opposition, Kaifu's chances of political survival have temporarily improved, Japan's commentators say.

Still, Kaifu's good fortune comes after he was embarrassed last week by the leader of the party's largest faction. Noboru Takeshita announced - without consulting the prime minister - that Finance Minister Ryutaro Hashimoto would visit the US for negotiations.

Analysts are divided over whether former Prime Minister Takeshita - forced to resign last May after exposure of a bribery scandal - wants to use his considerable party influence to keep Kaifu in the top post as a ``puppet'' or to arrange for a succession to another faction leader, Shintaro Abe. Yomiuri newspaper even suggests that Takeshita is plotting a return to power, an unusual maneuver in Japan.

On March 16, Kaifu's weakness was also displayed when he was forced to adjourn a Cabinet meeting after two ministers, in an unusual public spat, argued over whether to repeal a law that protects the nation's small shopkeepers from big stores.

Such discord reveals an urgency in the LDP and the government as trade tension with the US is peaking. Deadlines loom in the next couple of weeks on several trade issues. Kaifu was unable to reveal his promised response to US trade demands on Friday. Party elders may be biding their time to see if he falters in managing the US relationship.

``Deterioration of sentiments toward Japan appears to be spreading nationwide in the US,'' says Foreign Minister Taro Nakayama last week. ``We should recognize this as a matter of crisis control in the Japan-US relationship.''

A 20 percent drop so far this year in the main index of the Tokyo Stock Exchange has been blamed in part on the political situation.