Japan's economy still is striking sour notes a year into Prime Minister Junichiro Koizumi's term, prompting US officials to feel deeds have not matched the promise of the Japanese leader's reform bid.
Bush administration officials and analysts say hope has faded that the mop-haired Koizumi's pledges to shake the world's number two economy from its lethargy would mean real change.
Worse, the risk of financial crisis in Japan's enfeebled banking system, with implications for US and global economic interests, has only come into sharper relief while the Koizumi government's effort to quell malaise has foundered.
The problem is stated gently by senior administration figures, less so by private-sector analysts who say Koizumi's performance in office has been disappointingly like that of prior administrations that have led the Asian giant to a decade of economic stagnation.
"The Koizumi administration has continued to articulate a reform agenda which President George W. Bush believes is very important for Japan," White House economic adviser Glenn Hubbard told Reuters recently.
"The implementation has not been as timely as the policy announcements."
Commitment under scrutiny
Others were more scathing.
"I think he's accomplished very little," said Ed Lincoln, a senior fellow at the Brookings Institution think-tank in Washington who said he was a skeptic from the start about Koizumi's commitment to breaking from the old money politics of the vested Liberal Democratic Party (LDP).
"I didn't think he had much more to offer than general rhetoric on reform," Lincoln said.
"I think I've been vindicated. His record isn't any better than the people he's accused of being old-guard LDPers."
In fact, Japan's economy seems as mired now as it was throughout the past decade in a quagmire characterized by a shaky financial system in which the top banks are burdened by about US$283 billion of impaired assets.
Complicating matters further, Japan is struggling to counter deflation, or falling prices, through monetary easing measures that essentially pump money into its banking system.
John Taylor, US Treasury under secretary for international affairs, says the year-long bid to boost liquidity has been a change "in the right direction and that is important" but has not yet proven effective because it is caught up in the issue of a mountain of bad bank loans.
"So that's a problem and I think the most likely explanation for why such a large increase in the growth rate of the monetary base hasn't translated into higher growth [in the broader money supply] is in the banking sector [because of] the nonperforming loans issue."
Problems multiply
The bottom line, Taylor said, was that "there really hasn't been much progress on dealing with nonperforming loans" so the banking system is thwarted from performing its job of recycling prolific savers' deposits into new productive enterprises.
Koizumi has paid a price in terms of steeply sliding personal popularity as a perception has grown that his government cannot get a grip on the root causes of its economic woes.
But he still gets credit from Washington for trying.
"Reform is difficult in every society and my sense is that we could have hoped that it could have gone more quickly," Taylor said. "I don't have a sense that he's given up and is not going to persist at it."
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