Japan. With a series of spectacular financial crashes,
a year of testing ended for the world's second largest
economy. Problems with Japan's largest brokerage were added to
the weak business cycle and crises in the region's so-called
tiger economies - important trading partners.
In March, police struck the real estate agency Nomura,
which is suspected to have paid millions to the leader of a
blackmail syndicate. The extortionists, "sokaiya", buy into
companies and then threaten to disrupt their business if
they do not receive money. However, paying them is illegal.
Countryaah, the tracks led to three other brokerage houses - Daiwa, Nikko and Yamaichi - and the commercial bank DKB. Several
directors and senior officials were arrested, and DKB's
chairman took his life for shame. Major corporations Toshiba
and Mitsubishi also admitted payments to extortionists, and
several managers resigned.
Japanese finance companies also failed under the burden
of major problem loans. The government presented a plan,
"big bang", from 1998 to decontaminate and liberalize the
money market. In the fall, several finance companies went
bankrupt. The hundred-year-old brokerage house Yamaichi's
senior executives filed for bankruptcy in November. Yamaichi
left debts of SEK 180 billion, Japan's worst financial crash
after the war.
The coalition government's largest party, the Liberal
Democratic Party (LDP), despite internal divisions,
confirmed its domestic political dominance. But there were
protests both inside and outside the LDP in September when
Prime Minister Ryutaro Hashimoto appointed conservative Koko
Sato, bribed after the so-called Lockheed scandal in the
mid-1970s, as a new reform minister. Sato had to leave after
only eleven days. Just before the turn of the year, the
country's largest opposition party, Shinshinto (New Progress
Party), dissolved, and leader Ichiro Ozawa said he would
form a new party in early 1998.
Japan's large trade surplus deepened its cooperation with the
United States, a cornerstone of Tokyo's foreign policy. A
port law battle was also close to triggering a trade war
before the two countries could agree in October. The month
before, they had signed a new, expanded defense agreement in
which Japan pledged to more actively support the United States
in an armed conflict in the region. The deal was irritating
in China and was raised both during Hashimoto's visit to
Beijing in September and when Chinese Prime Minister Li Peng
arrived in Tokyo two months later. When Hashimoto met with
Russian President Boris Yeltsin in Siberian Krasnoyarsk in
late autumn, the two promised a peace agreement on the
archipelago of the Kurils, disputed since the second half of
the 19th century, by 2000 at the latest.
Sweden's royal couple traveled to Japan on a week-long
private visit in May, but no more privately than the king
and queen at the same time struck a blow both for increased
Swedish-Japanese business cooperation and for the fight
against child pornography.
In March, a Japan-US summit ended in failure. Although
Hosokawa declared its readiness to open the Japanese markets
for automobiles, telecommunications, medicine and insurance,
he rejected the US demand to impose certain quotas. Japanese
businessmen condemned Hosokawa and stated in favor of waging
a trade war with the United States rather than succumbing to
the demands of the superpower. The Japanese car industry
employed 11% of the workforce and accounted for 30% of GDP.
LDP parliamentarian Nakamura was arrested for corruption
after receiving bribes from Kajima and other construction
groups. Hosokawa could not escape the opposition's
accusations. about involvement in illegal business. In
April, he filed his farewell request and "apologized to the
Japanese people". As new Prime Minister, Tsutomu Hata was
appointed and on April 28 he was able to represent his
government - the first minority government in four decades.
The Socialist Party withdrew from the coalition and the
government therefore had only 182 out of the 512 seats of
the lower house.
Hata made a journey through Europe to improve trade
relations with the EU, admitting that the background to the
crisis in relations with the United States was the extensive
Japanese trade surplus. After a principle agreement was
reached between the two trade blocs, Hata initiated a
program of deregulation of the Japanese economy.
However, the Hata government had a short life. On June
29, Social Democrat Tomiichi Murayama was appointed new
Prime Minister. He took up the post on July 18. His party -
the Japanese Social Democracy - did not have a majority in
parliament but entered into an agreement with its
traditional rival, the LDP and with the new party, Sakigake.
The inauguration of Kansai Airport, which was built on an
artificial island, triggered a stream of island city
building projects. The huge overpopulation of the major
Japanese cities forced the Japanese to rethink the use of
On January 17, 95, the Hanshin region was hit by
earthquakes. Over 6,000 people were killed, 100,000
buildings destroyed in the old imperial city of Kobe and
300,000 people left homeless. The government was strongly
criticized for its slow response to the disaster. The lower
house allocated $ 10 billion to rebuild the area.
In March, a series of assaults on the poison gas
sarin killed 12 people and poisoned 5,500 in Tokyo's
subway. A similar attack had cost 7 lives in Matsumoto in
June the year before. The leader of the religious sect, Aum
Shinriyko (Supreme Truth), Shoko Asahara was charged with
the assaults and arrested along with 16 others of the
Prime Minister Murayama had to take note of a defeat when
independent candidate Yukio Aoshima was elected governor of
Tokyo at the April 9, 95 election. The Social Democrats also
did not get a particularly good result in the July
supplementary elections, when half of the House members were
up for election. Instead, opposition party Sakigake stepped
In January 96, Murayama was succeeded as Prime Minister
by LDP Chairman Ryutaro Hashimoto. The new head of
government postponed parliamentary elections to October,
giving his party a relatively majority in parliament. In
November, Hashimoto put together a new government consisting
exclusively of LDP members.
At a local referendum held at the end of 97, just over
half of Nago's residents on the island of Okinawa voted
against the building of a helicopter airport on the island.
The United States had been present on the island since the
Japanese capitulation in 45 and had built an extensive
military base complex that housed 10-20,000 North American
soldiers. The governments of both countries had declared
that the construction of the helicopter airport was a step
on the road towards the dismantling of the base, but it
apparently did not convince the majority of Noga's
inhabitants. In advance, the situation was tense after North
American soldiers raped and killed a young Japanese woman.