Japan's Naoto Kan promises fresh start with new cabinet

Japan's new Prime Minister Naoto Kan unveiled a cabinet Tuesday of six new members and 11 from the Hatoyama administration. Polls show 63 percent of Japanese have high hopes for Kan's administration.

Shizuo Kambayashi/AP
Japan's new Prime Minister Naoto Kan speaks during a press conference in Tokyo Tuesday. He promised a fresh start Tuesday for the ruling Democratic party of Japan (DPJ) as he named a cabinet.

Japan’s new Prime Minister Naoto Kan promised a fresh start Tuesday for the ruling Democratic party of Japan (DPJ) as he named a cabinet tasked with reviving the economy and restoring public faith in politicians ahead of upper house elections.

The lineup of the new cabinet, which includes 11 of 17 ministers who served Mr. Kan’s predecessor, Yukio Hatoyama, is also being seen as a snub to Ichiro Ozawa, the party’s “shadow shogun,” whose implication in funding scandals has tarnished the party’s image.

Critics of Ozawa occupy key posts, and in recent days the former DPJ secretary-general has been conspicuous by his absence. He and Mr. Hatoyama resigned last week after the latter conceded he had badly mishandled the relocation of a key US military base on Okinawa island and failed to stamp out sleaze in the party.

Kan’s appointment has received a positive response from voters: A Mainichi Shimbun poll found 63 percent of respondents had high hopes for the new administration, compared with recent support ratings of under 20 percent for Hatoyama.

Diving into debt woes

Kan said Japan’s public debt, about 200 percent of gross domestic product, according to the International Monetary Fund, was his most pressing issue. “We need a bipartisan debate now on what really needs to be done to restore finances, in terms of the extent and time,” he told reporters.

His options include a potentially unpopular rise in the consumption [sales] tax, although the DPJ has ruled that out until after the next general election, which isn’t due until 2013.

Unlike his predecessor, who took office last September on a wave of popular support, Kan will not have the luxury of a honeymoon period.

Instead, he will have to work quickly to convince voters and investors that he has the wherewithal to fight deflation, rein in public debt, and raise the revenues needed to fund manifesto promises on public spending.

Kan, the former finance minister, chose as his successor his former deputy Yoshihiko Noda, a fiscal conservative who is expected to announce the government's new strategy on fiscal reform by the end of the month.

Kan’s enthusiasm for a weaker yen and a freer lending regime has already found favor among Japan’s battered exporters.

Old and new faces

Yoshito Sengoku, the new chief cabinet secretary, said the ministers were "young, fresh, and enthusiastic about their jobs.”

"Prime Minister Kan has appointed the ministers mindful of the need to form a government with professionalism, very clean politics, and ability to govern," he said.

Yukio Edano, a vocal Ozawa critic, replaced his nemesis as the DPJ’s secretary-general, and promised to win back public trust in the party, starting with a refusal to accept donations from firms and other organizations.

Among the ministers to have retained their posts include the foreign minister, Katsuya Okada, and the transport minister, Seiji Maehara.

Jun Okumura, a senior adviser to the New York-based Eurasia Group, a political-risk analysis firm, says he expects Kan to stay on a more even keel than his predecessor: “There will be more consistency and less politicking.”

“Kan has kept most of the previous cabinet, but they were a very decent team. Now they can follow a non-Ozawa political line that is more appropriate to the current situation and give themselves the chance to make a decent showing in the election.”

Sticking with unpopular US base decision

Despite his reputation for stubbornness, Kan demonstrated his pragmatic side by agreeing to honor Hatoyama’s decision to relocate Futenma airbase within Okinawa, as demanded by Washington.

In a phone call over the weekend with US President Barack Obama, he said relations with Washington were the "cornerstone" of Japan's diplomacy and vowed to "further deepen and develop the Japan-US alliance to tackle global and regional challenges," according to Japan’s foreign ministry

A White House statement said the leaders “agreed to work very closely” on a range of issues. The pair reportedly "hit it off well on a personal level.”

The Futenma debacle has divided opinion not only in Japan but also on the other side of the Pacific. Doug Bandow, a senior fellow at the Cato Institute, a Washington D.C.-based libertarian think tank, questioned the need for the US to bankroll Japan’s security.

“The new prime minister won't be much different from the old one,” Mr. Bandow wrote. “Or the ones before him. If change is to come to the US-Japan security relationship, it will have to come from America.

“And it should start with professed fiscal conservatives asking why the US taxpayers, on the hook for a US$1.6 trillion deficit this year alone, must forever subsidize the nation with the world's second-largest economy.”

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