New Japan PM Noda faces party feud, split parliament

Reuters News
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Posted: Aug 30, 2011 1:31 PM
New Japan PM Noda faces party feud, split parliament

By Linda Sieg and Rie Ishiguro

TOKYO (Reuters) - Japan Finance Minister Yoshihiko Noda was voted in on Tuesday as the country's sixth prime minister in five years amid doubts he can unite his fractious ruling party while tackling myriad economic ills and a nuclear crisis.

Noda, a 54-year-old fiscal hawk who wants to curb Japan's huge public debt, was elected head of the ruling Democratic Party of Japan (DPJ) in a bruising run-off. He had come in second among five candidates in an inconclusive initial round.

The challenges he faces are legion: coping with a strong yen that threatens to undermine exports, forging a new energy policy while ending a crisis at a crippled nuclear plant, rebuilding Japan's tsunami-devastated northeast and finding funds to pay for that and bulging social security costs in the aging society.

Noda repeated his call for "prudent fiscal management" on Tuesday at a final news conference as the finance minister in the outgoing administration of his predecessor Naoto Kan, but he acknowledged that the economy faced risks.

"I am aware of the problems of the strong yen and deflation. But at the same time, we need to maintain fiscal discipline," said Noda, who was later voted in as prime minister by parliament's powerful lower house, where his Democratic Party of Japan (DPJ) has a majority.

He also said he wanted to consult opposition parties, who control parliament's upper house and can block bills, on a bill to double the 5 percent sales tax by mid-decade as well as on funding for reconstruction.

In an apparent nod to Ozawa backers who want the party to stick to campaign promises to put more cash in consumers' hands, Noda added: "Our (party) motto is people's lives come first. Also I emphasized support for the middle class.

"We need not to lose sight (of these principles)."

NOT POPULAR OR POWERFUL

No Japanese premier has lasted much longer than a year since 2006, when the charismatic Junichiro Koizumi ended a rare five-year term.

Noda was not the most popular of the candidates with the public nor did he have the strongest support base inside the party, which remains divided by personal feuds and policy disputes two years after sweeping to power with promises to change how Japan is governed.

But critics of party powerbroker Ichiro Ozawa, whose backing put trade minister Banri Kaieda in first place after the initial party vote, rallied around Noda to vault him to victory.

Some optimists say the low-key Noda may be the best bet for Japan now given all the hurdles to governing.

"In Japanese tradition, the less lustrous politicians have tended to be more effective," said Andrew Horvat, director of the Stanford Japan Center in Kyoto.

Many pundits, however, are already predicting that Noda may well end up the latest of Japan's revolving door leaders.

"The difficult structural problems remain -- a divided party, hostile opposition parties that deprive the government of a majority in the upper house and mountains of difficult and divisive problems facing the country," said Sophia University professor Koichi Nakano.

"These present a very high hurdle for anyone who wants to stay in office. Noda is rather more likeable and less tainted than Kaieda... but how long he will last, I don't know."

Noda's immediate task on Tuesday was to select lawmakers to fill the DPJ's top executive posts, including the key position of secretary-general, the party's second-in-command.

The appointments will signal how conciliatory he means to be to Ozawa backers, many of whom object to tax hikes for fear of putting off voters. Japanese media said he had sounded out Azuma Koshiishi, an upper house lawmaker close to Ozawa.

Whether Noda can unify the fractious party "ultimately depends on how conciliatory he can get in terms of appointments, but if he goes too far, that will antagonize the public," Nakano said. "That is extremely delicate."

It was not clear how soon Noda would form his cabinet and be formally appointed prime minister by Emperor Akihito.

(Additional reporting by Yoko Kubota; Editing by Neil Fullick)