After Mr Mori

Japan's Liberal Democratic Party (LDP) was founded in 1955 and for all but one of those 46 years it has been in government

Japan's Liberal Democratic Party (LDP) was founded in 1955 and for all but one of those 46 years it has been in government. Such domination of the political scene has been bad for the country and bad for the party. The LDP, as faction-ridden as ever, is close to breaking up and the Japanese economy, more indebted than ever, is on its knees. Both malaises are closely connected.

The Japanese economy was indisputably the most successful in the world in the latter half of the 20th century. It is also indisputably the economy which fared worst in the world in the last decade of the 20th century; a period widely referred to as "the lost decade". Japan's economic stagnation could have been tackled decisively but successive governments, unprepared to entertain radical reform, tinkered with the problem and, in effect, let it deteriorate further.

Japan now has record unemployment, falling property prices for ten consecutive years, a stock market worth one-third of its 1980s value and the biggest debt burden of any G7 nation, ever. But it remains the second largest economy in the world; it is two and a half times that of the rest of Asia - including China. It is vital for the world economy that Japan's politicians grasp the nettle of substantive reform immediately but the augeries are not good.

Today, parliament is expected to pass the budget for the fiscal year and with that out of the way there is no reason for the Prime Minister, Mr Yoshiro Mori, to remain any longer. His occupancy of the office for just eleven months encompassed incompetence and corruption of great consequence and yet there is considerable doubt that Mr Mori's resignation will change anything. What is critical is the calibre of the person who succeeds him but at the moment there are no candidates of calibre making themselves available.

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Mr Mori himself muddied the picture on Saturday by advising Mr Junichiro Koizumi, the candidate of Mr Mori's faction, not to run for the top job. Yesterday, Mr Koizumi indicated that he would follow the advice. Mr Koizumi is one of the country's most capable and popular politicians and, importantly, he recognises the need for economic reform. If he does withdraw from the leadership contest, Mr Mori's successor is likely to come from the faction headed by former prime minister, Mr Ryutaru Hashimoto. The economic views of that candidate, Mr Hiromu Nonaka, are a complete mystery.

The paucity of candidates may be connected to the fact that Upper House elections will take place in July and more than half of the LDP's seats are being contested. The party, increasingly spurned by urbanites and the young, is standing at only 20 per cent in the polls and is almost certain to get hammered. It will take a politician of some courage to take charge when electoral defeat seems imminent, especially as the party plans a further leadership election in September. But Japan's deeply-entrenched economic problems need the attention not just of a courageous politician but one who has the vision to see through a pro-growth tax and monetary policy along with stiff deregulation and bank restructuring. Otherwise, Japan's long-suffering and worried inhabitants may reconcile themselves to another "lost decade".