TRADE FRICTION THREATENS TO TOPPLE NAKASONE

  Prime Minister Yasuhiro Nakasone may have
  been dealt a fatal political blow by the yen's renewed rapid
  rise and the threat of a trade war with the United States,
  political analysts said.
      Nakasone, already under fire over an unpopular tax reform
  plan, may now be forced to resign before the June economic
  summit of seven industrialised nations if local elections later
  next month go against candidates from his ruling Liberal
  Democratic Party (LDP), they said.
      "The close relationship between Nakasone and President
  Reagan was an important element of Nakasone's power base,"
  Waseda University Political Science Professor Mitsuru Uchida
  told Reuters. "So the emergence of U.S. Criticism damages
  Nakasone."
      Even before the latest trade friction flared, Nakasone was
  encountering criticism not only from opposition parties but
  also within his own LDP over his proposal to levy a sales tax.
      "Many factions within the LDP are distancing themselves from
  Nakasone," Uchida said. "His position within the LDP itself is
  not so strongly established today."
      Nakasone, who has been more popular with the general public
  than with many LDP members, is now seeing his public support
  eroded, the analysts said.
      The yen's rise to record highs and the U.S. Threat on
  Friday to impose tariffs on Japanese electronics goods in
  retaliation for Japan's alleged violation of a microchip trade
  pact are now giving Nakasone's critics fresh ammunition, the
  analysts said.
      "Apparently the special relationship between Reagan and
  Nakasone hasn't worked effectively," Rei Shiratori, director of
  the Institute for Political Studies in Japan, said.
      This is making the Japanese people doubt Nakasone's
  credibility, Shiratori told Reuters.
      The cumulative impact of the sales tax issue, the yen's
  rise and mounting trade friction could mean serious LDP losses
  in the April 11 and 26 local elections, analysts said.
      "If the elections go against the LDP, Nakasone may have to
  resign early," Shiratori said.
      But Nakasone still has a chance to soothe U.S. Tempers
  before or during his week-long Washington visit from April 29,
  some analysts said.
      However, "unless the Japanese political system can move more
  quickly to give Nakasone some nice present to take to
  Washington on smouldering trade issues, he will face a very
  hostile audience," said Merrill Lynch Securities economist
  William Sterling.
      "If the trip is a major disaster, it would seem to put the
  final nail in his coffin," he said.
      Reagan's own weakened domestic position, and growing
  Republican as well as Democratic anger with Japan, argue
  against a quick settlement to the trade dispute, the analysts
  said.
      But a desire on both sides to find some solution, coupled
  with uncertainty at home and abroad over likely successors to
  Nakasone, could still lead to an attempt to paper over the
  differences and aid Nakasone, they said.
      "One factor against a trade war may be that Washington is
  not anxious to push Nakasone into his grave," Sterling said.
  

