15Mar2001 JAPAN: LETTERS TO THE EDITOR - Only one suitable candidate to succeed Mori.

Sir, Japan's Liberal Democratic Party will do itself a great disservice if it does not make an immediate break with the past and implement painful reforms by electing an effective successor to Yoshiro Mori ("Search for successor as Japan's prime minister decides to quit", March 12).

The shadowy backroom manoeuvrings that have typified the LDP's modus operandi for decades have propelled Japan towards a fiscal catastrophe that has become exacerbated during the Mori administration. There is only one suitable choice among the three leading candidates listed.

Junichiro Koizumi's plans to effect reform within the LDP are the policy prescription that Japan cannot afford to ignore. His initiative to privatise the postal and savings system is probably the most ambitious plan being promoted to address Japan's massive debt burden.

Japan's balance sheet can ill afford the implementation of another supplementary budget - a scheme that would probably be favoured by Hiromu Nonaka, the old-school candidate. The mantra of "no tax hikes and no new government debt" being espoused by Mr Koizumi may sound like an election year come-on, given the upper house election in July, but at least it begins to address the unacceptable fiscal largesse of LDP administrations past. A reform of the postal and savings system may also be the most realistic way to stimulate final private demand and avert a deflationary spiral.

Ryutaro Hashimoto, another of the current candidates, deserves respect for promoting Japan's "big bang" financial system reforms during his tenure as prime minister, but he is also the one who raised sales tax at an inopportune time.

The political machine of the LDP must be taken to task with a sense of urgency, and change must come from within. The current political limbo that envelops Japan ahead of the fiscal year-end is only exacerbating the problems at large. Instead of effectively legislating policy to address the bad loan situation faced by financial institutions ahead of March 31, for example, the nation remains in a vacuum of power.

Japanese voters and politicians alike can no longer afford to sweep Japan's problems under the rug.