NEW YORK — Seeking a degree of stability in both their political and financial worlds, President Clinton and Japan's new prime minister, Keizo Obuchi, met Tuesday for the first time in talks marked by U.S. pressure on Tokyo to take grander measures to strengthen its economy and repair its troubled banking system.
"I think there is virtually unanimous support in the world for the kind of financial reforms that would restore economic growth in Japan," Clinton said during a break midway through the talks.
Clinton administration officials, reporting on the private meetings, suggested that the president encountered some resistance when he raised the touchy subject of Tokyo's halting--and widely criticized--efforts to reform its banking system.
Obuchi, at a solo news conference later, said he and Clinton had an "extremely useful exchange of views," but he didn't go beyond previous statements about what the Japanese government is prepared to do to turn around the world's second-largest economy.
The Japanese leader cited plans for a "permanent tax cut," an economic stimulus package and continuing reform and market openings. But he declined to specify what other measures the government is considering or to set a timetable for such actions as additional bank closures.
The shaky status of many Japanese banks is considered central to Japan's overall economic decline. In turn, Japan will play a pivotal role in Asia's ability to recover from its current slump, with its global implications.
The informal meeting, held at the Waldorf-Astoria Hotel in midtown Manhattan as both leaders were in New York to attend the opening sessions of the U.N. General Assembly, gave U.S. officials their first real opportunity to assess Obuchi and the measures he has taken to stabilize the Japanese economy. They were to have met in Tarrytown, N.Y., but bad weather forced a change in plans.
Among the most difficult issues facing Obuchi is the extent to which the Japanese treasury will support the troubled banks.
Making clear that Clinton did not receive the degree of commitment he had sought from Obuchi on this matter, Deputy Treasury Secretary Lawrence Summers said that "the president believes the infusion of public money is crucial to an effective solution to the problem." But that approach has encountered political opposition in Japan.
"The prime minister made it clear to the president there were a set of very complex political discussions underway with respect to banking legislation," Summers said.
