Business, Economics and Jobs

Japan's next leader?


TOKYO, Japan – Following Wednesday’s resignation by Prime Minister Yukio Hatoyama after only eight months in office, his successor – to be chosen Friday – looks set to be Naoto Kan, the outspoken current finance minister and deputy prime minister. It's clearly a tough job.

Kan, 63, faces the immediate challenges of strained relations with the U.S., heightened regional tensions and creaking public finances.

With the only two other credible candidates, Transport Minister Seiji Maehara and Foreign Minister Katsuya Okada, having given Kan their backing, he faces only token opposition from within the Democratic Party of Japan (DPJ) in his bid for the party leadership, and therefore prime ministerial office.

The issue that proved the nail in the coffin for Hatoyama’s premiership – the controversial relocation of the Okinawan Marine base – can probably be conveniently avoided by Kan, for a few months anyway.

“The new prime minister will have to continue with Hatoyama’s policies because the Upper House election in July means there is no time to write a new manifesto now,” said Tetsuro Kato, a visiting professor of politics at Tokyo’s Waseda University.

“However, the Okinawan gubernatorial election in November could see the prime minister taking another look at the base issue,” said professor Kato.

For background on the Okinawa problems, watch this video:

The current troubles on the Korean peninsula, along with China flexing its muscles by recently sailing a navy convoy between Okinawa and mainland Japan, may be enough to convince the country’s new leader that the U.S. Marine base remains necessary, if unpopular with some.

Almost as imminent as any potential threat from outside is the danger posed by the ballooning national debt. The total liabilities of the government are either approaching, or, depending on whose figures are used, have already exceeded, 200 percent of GDP. Either way, with a shrinking workforce, graying population and a deflationary price spiral, the situation is deteriorating fast.

On this one, Kan may be just the man for the job.

Since his appointment as finance minister at the beginning of the year, Kan has taken a fiscally conservative stance and been one of the only political voices calling for a probably inevitable — though predictably unpopular — rise in Japan’s consumption (sales) tax rate from the current 5 percent.

At the press conference today to announce his leadership candidacy, he reiterated his commitment to releasing a plan this month addressing the debt issue. He has already set a relatively modest target of not exceeding the record levels of government bonds issued this year on international markets.

Throughout his career, Kan has garnered a reputation as a straight-talking, if sometimes ill-tempered, politician.

He first made his name in the mid-1990s, when as health minister from a junior coalition party he fought bureaucrats who tried to cover up an HIV-related blood scandal. The Ministry of Health officials had tried to hide the fact that thousands of hemophiliacs had been given blood containing the HIV virus.

Two years after receiving widespread accolades from the press and public for his actions, he resigned from the Socialist Democratic Federation — which is no longer in existence — after revelations about unpaid national pension contributions and an extra-marital affair.

Despite the resignation, he remains, by Japanese political standards a very clean operator untainted by shady contributions or other funding scandals. He will also be the first premier for well over a decade who does not owe his political ascent to powerful ancestors.

Hatoyama’s political dynasty on the other hand, stretched back to his great-grandfather, and included a prime minister and a foreign minister. He both tested credulity and convinced the public he was truly living in a different world when he denied knowledge of a monthly stipend that exceeded $150,000 from his mother, an heir to the Bridgestone Tire fortune.

Kan also offers another true break from the past in that he is the only senior member of his party that did not originate from the Liberal Democratic Party that the DPJ finally defeated last year after half a century of almost interrupted power.

After the disappointment of Hatoyama’s premiership, many will now be hoping that Kan’s, which could start as early as next week, will at least be measured in years rather than months.