No one here likes to admit it, but given Washington's pull with the IMF and markets, having the White House on board has never been more important to Tokyo. And a little outside pressure is actually useful for Koizumi. If change becomes too painful, he can always say foreigners demand it. Claiming some of the pain is imported allows Koizumi to save face.
Yet Bush must be careful about buying into Japan's current drive to fix the economy. The president hasn't had as much experience with the Japanese as his dad, but Bush would be wise to read up on the difference between tatemae and honne, or the officially stated position and the real one.
Koizumi's official position is that he's pulling out all the stops to stabilize the economy and end deflation. The government is acting "boldly and flexibly" to end Japan's decade-plus slump and revitalize its financial system. He also knows he needs to end wasteful public works spending financed with debt.
The real, unspoken, position is that Japan's financial system is too fragile and its companies too unprofitable to tackle aggressively. That's put all the focus on devaluing the yen and fashioning a bank bailout package to hold things together. It also means giving the Japanese public -- and Washington -- the impression that it's on top of the problems.
Bush won't hear much of the reality next week -- just the spin.
Finance Minister Masajuro Shiokawa assured the G7 that Japan is determined to revitalize its economy; Koizumi will offer Bush the same song and dance. Luckily for Koizumi, Bush's trip is less about non-performing loans than the war on terrorism.
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