Bush presses Japan to speed up banking reforms By Richard Wolffe and David Pilling in Tokyo Published: February 17 2002 18:29 | Last Updated: February 17 2002 20:49
http://makeashorterlink.com/?N15422D6
President George W. Bush has set the stage for talks on Monday with Junichiro Koizumi, the Japanese prime minister, with an unexpectedly public attempt to press Japan into stepping up the pace of reforms of its banking system. The president had been expected to confine his administration's concerns to private discussions about delays in implementing the policies sketched out by Mr Koizumi. But Mr Bush told reporters in Washington before his departure for Tokyo that, while he supported Mr Koizumi personally, he wanted to see an effort by his government to press ahead with reforms aimed at cleaning up bad loans in the banking system.
"The Japanese economy must restructure and must deal with her bad loans," he said. "I am more than confident that the prime minister understands this and is willing to make difficult decisions. So there needs to be a focused effort on the government's part to follow through on the reforms that he's outlined."
Mr Koizumi has sought to assure Washington that he was taking full-blooded measures to restructure the banking system, which is saddled with ¥43,000bn (£318bn) worth of non-performing loans, according to official estimates. But several banking advisers to the US administration say the level of bad debts is much higher than admitted and that Japan is dragging its feet for fear of tipping the system into crisis.
The Bush administration took office more than a year ago pledging to abandon the Clinton administration's approach of lecturing Tokyo to redirect its economic policies. But senior US officials appear to have abandoned that position in recent weeks. Paul O'Neill, the Treasury secretary, warned Tokyo last month against setting "goals without policies and timetables".
Those concerns were echoed last week by James Kelly, assistant secretary of state for east Asian affairs, who told a congressional hearing that Japanese banks needed to sell their non- performing loans "in a timely, transparent and substantial manner".
"There is a danger that [Japan's] important leadership role may be undermined if its economy deteriorates further," he said.
Mr Koizumi, whose popularity has fallen sharply in recent weeks, will tell Mr Bush that he will not abandon reform but that his plans for restructuring the economy will take time, say aides.
The president is making a week-long tour of east Asia, including Seoul, where the White House is expected to focus on its war against terrorism and rogue states, including North Korea.