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No. 1 — January 7, 2000

Feature Article

INSIDE THE JAPANESE GOVERNMENT

The Perspectives Of Three Mansfield Fellows

Summary

Every year, the Washington, D.C.-based Mansfield Center for Pacific Affairs — the public policy arm of the Mike and Marie Mansfield Foundation in Missoula, Montana — selects up to 10 federal government employees to participate in its Mansfield Fellowship Program. Now in its fifth year of operation, the program of two-year fellowships is designed to give a select group of American civil servants the opportunity to work in government ministries and agencies in Japan. Through this experience, fellows establish new relationships with Japanese bureaucrats, which, in turn, further MCPA's overall goal of improving understanding and relations between the United States and Japan.

In mid-December, MCPA, the Japan Information and Cultural Center and the Japan Economic Institute cosponsored a roundtable discussion with three recently returned Mansfield fellows, who shared their experiences and insights with Washington's policymaking community. JEI President Arthur J. Alexander served as the moderator. Kazuo Kodama, counselor for public affairs at the Embassy of Japan, provided the perspective of a career civil servant. MCPA Director Gordon Flake offered background on the program and its goals. He also introduced the panelists: Amy Jackson, director of Japan trade policy in the Office of the U.S. Trade Representative; John Hill, senior director for Japan in the Department of Defense's Office of the Under Secretary; and Stewart Chemtob, special counsel for international trade at the Department of Justice.

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Weekly Review

TOKYO CAUTIOUS ABOUT ECONOMY'S PROSPECTS DESPITE RISING OPTIMISM
--- by Douglas Ostrom

Every December, Tokyo issues an economic outlook for the coming fiscal year. Inevitably, the consensus of private-sector forecasters indicates that the government is too optimistic, perhaps because policymakers are trying to boost business confidence. The latest round of this exercise was different, however. For the first time since the "bubble economy" period of the late 1980s, when the government's sunny projections did not quite match private-sector euphoria, Tokyo's view of economic prospects for the fiscal year that begins April 1, 2000 is less optimistic than that of a cross section of business economists.

CABINET CRAFTS RECORD-SETTING BUDGET FOR FY 2000
--- by Jon Choy

Calling it the last push to put the economy back on track, the cabinet of Prime Minister Keizo Obuchi approved the largest-ever initial general account spending plan December 24. At just under ¥85 trillion ($708.3 billion at ¥120=$1.00), the fiscal blueprint for the year beginning April 1, 2000 is 3.8 percent larger than the original one for the current fiscal year. According to insiders, it will ensure that the economy reaches the government's target of 1 percent real growth in the 12 months ending March 31, 2001 (see previous article). Private-sector analysts generally agree that the new budget will help keep the economy expanding, but they also say that Tokyo still is not spending its money in ways that will encourage long-term prosperity. Moreover, worries are growing about the consequences of the government's current and recent spending sprees over the medium to long term.

OBUCHI FACES IMMEDIATE POLITICAL CHALLENGES IN REGULAR DIET SESSION
--- by Barbara Wanner

Prime Minister Keizo Obuchi tried to ring in the new year on an upbeat note, vowing in his January 1 address to the nation to push ahead with an "economic renaissance" policy designed to help realize 1 percent real growth in FY 2000. Seasoned watchers of Nagata-cho (Japan's Capitol Hill) point out, though, that the amiable premier's cheery message belied some serious political problems that he must confront when the Diet convenes January 20 for its 2000 regular session. Depending on how Mr. Obuchi maneuvers through this mine field, he may emerge with a stronger governing coalition or face intense pressure to dissolve the lower house of the Diet for elections considerably sooner than the statutory deadline of October 19, 2000.

TOKYO, WASHINGTON CLASH OVER RESHAPING IMF'S ROLE
--- by Marc Castellano

At the inaugural meeting of the so-called Group of 20 countries, held December 16 in Berlin, Secretary of the Treasury Lawrence Summers presented ideas for changing the global financial role of the International Monetary Fund. The G-20 includes the Group of Seven countries, plus Argentina, Australia, Brazil, the People's Republic of China, India, Indonesia, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey and the country holding the European Union presidency — currently Finland. Not surprisingly, delegates to the new forum, which is designed to foster a dialogue between developing countries and industrialized nations, failed to agree on the outlines of an IMF reform plan. Canadian Finance Minister Paul Martin, who will chair the group for its first two years, said that the U.S. proposals met with "very strong encouragement," but Ministry of Finance officials, along with their counterparts from France and Germany, questioned key elements of Mr. Summers' blueprint for revamping the international lending body.

NOTES

Aid totaling around $520 million over three years was pledged to the devastated territory of East Timor at a donors' conference held in Tokyo December 16 and December 17. Representatives from more than 50 countries and international organizations participated in the meeting, which was cochaired by the World Bank and the United Nations Transitional Administration in East Timor. About $370 million of the promised assistance will go toward reconstruction and development; the other $150 million or so is earmarked for humanitarian aid. Participants agreed to meet regularly to discuss and evaluate progress in East Timor. Portugal will host a midyear review in Lisbon.

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