Hosokawa's

By EDWARD W. DESMOND/TOKYO

EVER SINCE HIS JULY ELECTION, KNOWing oddsmakers had doubted that Morihiro Hosokawa could keep his promise to write corruption out of the unofficial rulebook of Japanese politics. Two Prime Ministers before him, Kiichi Miyazawa and Toshiki Kaifu, lost the job trying to accomplish that feat, and the Diet was full of wily politicians determined that Hosokawa would fare no better. But the doubters underestimated the extent to which the scion of an aristocratic landowning family was a politician of a new stripe. Nor did the skeptics anticipate that Hosokawa's unprecedented popularity would give him the authority he needed to accomplish the heretofore unthinkable.

When push came to shove last week, Hosokawa got his way and Japan got a new political course. For the Prime Minister it was no less an accomplishment than Bill Clinton's NAFTA victory -- and owed at least as much to his own will and assertiveness. After 121 hours of interparty talks, the leader of the three- month-old ruling coalition abandoned traditional consensus politics to force a vote over the opposition's objections on four pieces of legislation that would radically change Japan's electoral system. Liberal Democrats, still fumbling in their role as the largest opposition party, fumed that the government was pushing them toward a decision "at knifepoint." Hosokawa did not shrink from the implication. "I believe that this is the way parliamentary democracy should be," he replied. "We should have as much discussion as possible, but we must in the end go ahead."

, In the end they did, as legislators filed forward to present small blocks of wood to the Diet clerk -- white for yes and green for no. When the tallies were added up, Hosokawa had won by a comfortable majority of 270 to 226, 10 more than the seven-party government's total strength. As Hosokawa watched with satisfaction, 13 Liberal Democratic legislators broke party ranks to vote with his program, and an additional seven braved the stern eye of party leader Yohei Kono to leave the floor and thus abstain from the balloting.

The bills are expected to survive a pending test in the upper house next month, and a dramatic rearrangement of the electoral terrain seems all but assured. As a result of the legislative changes, entrenched political tenure among members of the Liberal Democratic Party (L.D.P), so secure that it was handed on from father to son, is bound to crumble, and the number of political parties in the country will probably shrink from the current nine to two or three. Though corruption will surely not disappear, the current need for politicians to raise huge sums of under-the-table cash for re-election will diminish. Perhaps most important, the new system will help shift power from rural voters and rice-farming interests to city dwellers, who are the vast, underrepresented majority.

The reforms will bear fruit in elections that may be two years away, but the Diet victory will also help Hosokawa in important near-term ways. It should stiffen government resolve on another key promise: to break the collusive ties among the bureaucracy, business and politicians that are the essence of Japan, Inc. That onetime source of Japan's strength is now blamed for paralyzing Tokyo's ability to respond to trade conflicts with the U.S., improve the lives of consumers, or even help lift the still deepening recession. The government has already commissioned reports on economic deregulation and tax reform as its first move against the old order.

Hosokawa was cautious about the implications of his Diet victory. "There is a saying that 99 miles are only halfway for a traveler on a 100-mile journey," he said. "We're not halfway there yet." Political analysts contend, however, that change is irrevocably taking hold. "There is a progressive unraveling of the old system," says Kent Calder, director of the U.S.-Japan program at Princeton University. "I think we are in a reinforcing cycle of change, where one thing leads to another and unlocks new possibilities. It is a building revolution."

Washington is among those most enthusiastic about seeing the reconstruction effort continue. After Hosokawa's election, Clinton, who took the unusual step of endorsing Hosokawa's agenda during the campaign, turned down the heat on U.S.-Japan trade issues and even intervened in international money markets in order to help buy time for the reformist Prime Minister. But as Clinton told Hosokawa at the Asia-Pacific Economic Cooperation summit in Seattle, the U.S. is eager to see results now that the political-reform bill is all but assured. Foremost on Washington's wish list for Tokyo is a Japanese tax cut to revive the economy, now headed for a second consecutive quarter of negative growth. Japan's trade surplus with the U.S. grew in September by $5.32 billion, and that trend will not turn in America's favor until Japan's economy starts growing and importing again.

Hosokawa may have won one battle that will please the U.S. and the rest of the world. Although officials in Tokyo vehemently deny it, the Prime Minister has quietly finalized a plan to end Japan's long-standing ban on foreign rice imports and replace the virtual prohibition with tariffs, as required under the Uruguay Round of the General Agreement on Tariffs and Trade. Hosokawa may unveil the scheme as soon as next month, the deadline for the end of the current GATT talks. Apprehensive Japanese rice farmers last week furiously protested the arrival of the Tanjung Pinang, an Indonesian freighter carrying Thai rice shipments imported under a special one-time arrangement to make up for a bad harvest this summer. The protesters seemed all too aware that the Tanjung Pinang is a harbinger of imports still to come.

Why has Hosokawa taken on the rice farmers, one of the most powerful lobbies in Japan? The answer is shifting power. Unlike the long-ruling L.D.P., Hosokawa and his coalition are not beholden for their Diet seats to the ubiquitous nokyo (agricultural cooperatives). Moreover, under his reforms, the country's shrinking number of rice farmers will exercise still less influence in the future. Says Takeshi Sasaki, a political scientist at the University of Tokyo: "The old consensus was always to put domestic issues like rice first, but now political reform is breaking that consensus down. Also, when you are getting white-collar unemployment, you can't afford to protect rice growers anymore."

Hosokawa faces other tough fights on deregulatory fronts. Two weeks ago, a commission led by Gaishi Hiraiwa, head of Japan's foremost Big Business organization, Keidanren, handed the Prime Minister a detailed report calling for extensive trimming of the more than 11,000 rules that entangle nearly every aspect of the economy. The red-tape Everest is a major reason behind high consumer prices in Japan and an important invisible barrier to imports. The U.S.-based Economic Strategy Institute recently estimated that regulations and other measures bar as much as $200 billion in potential exports to Japan every year.

To start leveling the regulatory mountain, Hosokawa will first have to evict bureaucrats who thrive in its shelter. The bureaucracy has effectively run Japan for the past four decades, and it battens on its power -- not to mention the plum private-sector jobs that go to many senior government officials when they retire. A recent study by Tokyo Shoko Research, for example, discovered that nearly 1 in 5 construction-company board members is a former bureaucrat.

One advantage Hosokawa has as he attacks the entrenched interests, however, is the sudden extinction of the zoku, the clubs of L.D.P. legislators who shielded specific ministries in return for political favors -- a new road here, a juicy contract there. With the L.D.P. out of power, the zoku ceased to exist. That made it easier for Hosokawa to take on the Agriculture Ministry over the rice issue, and helped prosecutors push ahead with the arrests of various businessmen and officials in the construction industry. Says Princeton's Calder: "This is Japan's perestroika. Hosokawa is short- circuiting the nomenklatura of the nokyo, the Construction and Agriculture ministries and the L.D.P." Even perestroika all but foundered in a rough economy, though, and Hosokawa is likely to find extensive deregulation too disruptive a course for an economy mired in tough times.

Political reform, on the other hand, may get into the lawbooks in a matter of weeks. Most important, the legislation will eliminate the multimember districts in which candidates from the same party ran against each other -- a practice that encouraged contests based on issues of patronage rather than substance. In its place the Hosokawa government proposes a system of 274 representatives elected from single-seat constituencies and 226 chosen by proportional representation from a national list. The electoral reforms will also ban corporate donations to individual politicians, offer a government subsidy of $294 million to political parties for electoral purposes, and create an organization to draw up the new districts.

The changes almost certainly mean trouble for smaller parties, which tended to win seats as the fourth- or fifth-place finisher in multimember districts. Some of the weaker parties may win seats on the proportional list, but probably far fewer than in the past. That has already incensed some of the Social Democratic Party members in Hosokawa's own coalition, and five of them voted against the government plan. "It's over for the Social Democrats," said Masao Kunihiro, an upper-house member of the party. "This new system stamps out minority views."

The much larger L.D.P. faces other difficulties. The creation of 274 single- member districts means that a hefty number of incumbent L.D.P. members will have no constituency the next time around. In Gunma prefecture, north of Tokyo, for example, eight Liberal Democrats hold Diet seats, but only five new constituencies are likely to be created in its place. Fear of being turfed from office is provoking talk of splits within the L.D.P. as anxious politicians begin shopping for new homes. Socialists are also looking for new patrons, and no one expects the dust to settle until after the next election. "The July election was a curtain closing," says Shusei Tanaka, a close Hosokawa adviser and a Diet member of the Sakigake, a small liberal party that broke from the L.D.P. to join the ruling coalition. "The next election will be a curtain raising. Right now we are setting the stage."

In the meantime, the political players are working hard on their revised scripts. The major parties are all centrist, but some policy distinctions are becoming clear, even though they cut across current party lines. Within the L.D.P., for example, many endorse the carefully articulated demands of Hosokawa's main strategist and political ally, Ichiro Ozawa, for a more "normal" Japan, meaning a country that can participate readily in military actions mandated by the United Nations or its own allies. Within the Hosokawa coalition, on the other hand, many, including the Prime Minister and chief Cabinet Secretary Masayoshi Takemura, are more at home with Japan's current antimilitary constitution. Predicts Masaharu Gotoda, a senior L.D.P. politician: "Japan will undergo another political reorganization before the next election. All the parties will gradually cluster around two large political forces."

The potentially explosive unknown in the realignment is the Tokyo prosecutor's office. Its expanding investigation into political corruption has netted five local government officials and 24 construction-compa ny executives on graft charges. Insiders say the prosecutors are closing in on national politicians. Rumors are flying about who may end up as a target for interrogation: not the least frequently named is Ozawa, who was fingered by a construction executive as the recipient of a questionable campaign donation. The furious Shinseito chief has denied any wrongdoing.

Loss of the "control tower," as the Japanese press has nicknamed Ozawa, would be a sharp blow for the coalition and for Hosokawa, who depends heavily on Ozawa's intimate knowledge of political hardball in the Diet and elsewhere. "Every pot has its perfectly matched lid," says Tomoaki Iwai, a politics professor at Tokiwa University. "It is heaven's dispensation. They are one system."

That observation underlines both Hosokawa's strength and his weakness: he is still a neophyte, who has come late to the temptations of Nagatacho, Tokyo's political district. "Hosokawa did not seek the office of Prime Minister; his coalition allies asked him to take the job," recalls Kazuo Nukazawa, a managing director at Keidanren. "Unlike all the Prime Ministers before him, he has no debts to pay." Last week he showed he could marshal all the energy of his youth, without overweening rashness or inexperienced disarray. It was only a first step. But it was the step without which there would have been no others. The results should be liberating not only for himself but also for Japan.

With reporting by Kumiko Makihara/Tokyo