- The Washington Times - Tuesday, March 20, 2001

President Bush and Japanese Prime Minister Yoshiro Mori met yesterday at the White House as the leaders struggled to shore up the world's two largest economies, both of which have been faltering.

Mr. Mori, expected to step down as early as next month amid blunders and scandals that have sent his popularity plummeting, urged the United States to take "appropriate macroeconomic policies to deal with a U.S. economy that is slowing down."

Mr. Bush, locked in a battle with Congress over an across-the-board tax cut he says will boost the stagnant U.S. economy, in turn told Mr. Mori the two economies are intertwined. "The stronger we are, the more likely it is there will be prosperity in other parts of the world," he said.

In comments just before their meeting, the president told Mr. Mori his tax-cut plan would give the economy a "second wind."

"I'm very confident about our economy. I know it can beat expectations. I will explain that to him as clearly as I can about when our policies are in place how optimistic I am about economic growth," he said.

In their meeting, Mr. Bush emphasized a need for Japan to enact deep structural reform in its economy, a senior Bush official said. The official said Mr. Bush backed Japan's commitment to reform its banking system, addressing issues of corporate debt and nonperforming loans.

"The president fully supported Japan's commitment in this regard, and we were heartened by the unusually explicit acknowledgment of the nonperforming loan problem, and that Japan intended to take effective steps to address it," he said.

The meeting came a day after Japan's central bank lowered interest rates to zero. Mr. Mori said he was "certain" the move by the Bank of Japan would have a "positive effect on our economy."

Relations between the two countries have become increasingly strained since the Feb. 9 sinking of the Japanese fishing vessel Ehime Maru by the submarine USS Greeneville off the coast of Hawaii. The accident left nine Japanese crew members and passengers dead.

The president, who had already sent a letter of apology over the incident, said: "We've got such a good friendship, and such a strong alliance, that we're able to overcome occasional problems that might arise."

Mr. Bush plans to visit Japan in October.

After the meeting, the two leaders issued a two-page joint communique on their points of agreement, which included trade issues, support of ballistic missile defense measures, U.S. presence in Okinawa and a permanent Japanese seat on the U.N. Security Council.

"The two leaders noted with satisfaction that the United States and Japan are already conducting cooperative research on ballistic missile defense technologies. They agreed on the importance of close consultations on missile defense among allies and with other interested parties," the communique said.

On his trip from Japan, the prime minister told reporters that he would ask Mr. Bush to consider reducing the U.S. military presence in Okinawa, a southern Japanese island that reluctantly hosts two-thirds of the 47,000 American troops stationed in Japan.

But the joint statement said simply "that the U.S. presence remains vital to regional security."

Senior Bush officials said the meeting with the lame-duck prime minister was not pointless.

"This was a discussion, and the points made in the communique are points made by the government of Japan, and we take it as such," one official said.

Mr. Mori, Japan's 10th prime minister in 13 years, last week hinted he will resign next month, saying he wanted to move up the date of his party's leadership election. Mr. Mori's successor as party president also would serve as prime minister because of the party's dominant position in Parliament.

Since taking over as prime minister less than a year ago, Mr. Mori has quickly fallen into disfavor. Mr. Mori's political gaffes, including a jingoist statement that Japan is a "divine nation" and his decision to complete a round of golf after he heard about the Ehime Maru accident, have caused his approval ratings to fall below 10 percent.

During Mr. Mori's visit with Mr. Bush, the two had lunch in the Old Family Dining Room in the White House residence. The menu included saffron pasta with shrimp, lobster and squid broth, roasted veal chops, a salad and spring orange sherbet and ambrosia.

As the pair walked past the sun-drenched Rose Garden to lunch, Mr. Bush said: "It's a beautiful day, Mr. Prime Minister. You brought good weather."

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