Japanese prime minister survives leadership challenge after ruling party re-elects him chief

Tuesday, September 14, 2010

Japanese PM wins party vote, will stay in power

TOKYO — Japanese Prime Minister Naoto Kan was re-elected president of the ruling Democratic Party on Tuesday, surviving a challenge from a veteran powerbroker and sparing Japan another leadership change as it deals with a sluggish economy.

Kan, in office just three months, defeated party heavyweight Ichiro Ozawa by an unexpectedly wide margin, 721-491. Media speculation beforehand was that the vote would be much closer.

The leadership dispute now settled, Kan and his Cabinet can turn their attention to tackling a host of problems confronting Japan, from economic malaise and a surging yen — which Tuesday hit a new 15-year high against the dollar — to an escalating spat with China over a collision near disputed islands.

But Kan, 63, still faces major obstacles in parliament, where the Democrats and their junior coalition partner lost their majority in the upper house in July elections. That’s going to make it tough to get legislation passed.

“The battle is now going to turn to parliament,” said Naoto Nonaka, a political science professor at Gakushuin University in Tokyo.

After the vote, Kan appealed to fellow party members to work together to tackle the nation’s challenges.

“Japan is currently in serious difficulty. We must rebuild Japan to make a healthy Japan again in order to hand it to the next generation, and I will stake my life to do the job and gain support from the people,” he said.

A political fixture for 40 years, Ozawa may have been done in by a political funding scandal hanging over his head. He quit as the party’s No. 2 in June because of it, and could face indictment on allegations of funding irregularities as early as next month. Had Ozawa won, he would’ve been Japan’s third prime minister in a year.

A fiscal disciplinarian who has campaigned for more transparent politics, Kan is far more popular among the general public than Ozawa. Surveys show that voters prefer Kan by a margin of four to one.

The vote results showed that rank-and-file party members also overwhelmingly preferred Kan. Shinichi Nishikawa, political science professor at Meiji University, said that indicated they rejected a move back toward the old, scandal-tainted politics associated with Ozawa and the long-ruling conservative Liberal Democratic Party that the Democrats overthrew in landslide elections a year ago.

But some experts believe that Ozawa may have offered the Japanese economy more of a jolt since he had proposed stimulus spending of as much as 2 trillion yen ($23.8 billion), while Kan’s economic revival proposals so far have been rather timid. But others worried that Ozawa’s increased spending would inflate Japan’s already bulging deficit.

Immediately after the vote, the dollar fell to a new 15-year low of 83.09 yen, based on market assumptions that Kan is less likely to intervene in the currency market to stem the yen’s rise, which hurts Japan’s exporters. Ozawa had suggested he would push for such intervention, although experts say that acting alone without coordination with other central banks would likely be ineffective.

In office for just three months, Kan has not been able to achieve a great deal.

His most noted policy proposal — that Japan needed to seriously consider raising its sales tax — was a disaster, suggested just before July’s upper house elections. He was widely blamed for the Democrats’ heavy losses in that vote, and Ozawa and other party members have expressed unhappiness with his lack of decisive leadership.

Kan also sought to mend any internal division created by the vote and thanked Ozawa for his advice as a senior party member over the years. A master strategist, Ozawa is widely credited with engineering the Democrats’ victory over the LDP last year.

“Now the election is over,” Kan said. “I seek full participation and support from all lawmakers and members of the Democratic Party.”

(This version CORRECTS that Ozawa’s indictment could come as early as next month, not this month.)

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