Welcome Japan’s New PM
August 31, 2011
As expected, the ruling Democratic Party of Japan (DPJ) selected a new prime minister this week. However, in an unexpected twist, the winner was neither the popular Seiji Maehara nor Banri Kaieda, the candidate supported by DPJ powerbroker Ichiro Ozawa. After two rounds of voting, Yoshihiko Noda, the finance minister in outgoing Prime Minister Naoto Kan’s cabinet, won the post. Noda lacks charisma, but his down-to-earth, hardworking, pragmatic attitude will serve him well in tackling the many issues he inherits from Kan. Three of Kan’s biggest challenges will be shoring up DPJ support, tackling Japan’s finances, and attending to strained foreign relations.
The first order of business for the PM Noda will be to close DPJ party ranks. Noda won the election without the support of the 130-odd strong Ozawa faction, which rallied behind Kaieda. While Noda’s victory is a blow for Ozawa’s role as a kingmaker, he still exercises considerable influence and could make life difficult for the new prime minister. Ozawa’s lack of support for Kan ultimately led to the outgoing PM’s downfall and he could do the same to Noda. In an effort to placate the strongman, an Ozawa insider, Azuma Koshiishi has been appointed secretary-general of the DPJ. However, Noda’s stance on raising taxes and modifying DPJ policy initiatives makes internal conflict unavoidable. As for the opposition, the prime minister is likely to get on well with the Liberal Democratic Party (LDP) and New Komeito better than any of the other candidates. In keeping with his style, Noda will likely favor comprise and consensus building to allegiance to the DPJ manifesto.
As the outgoing finance minister, PM Noda has an understanding of the Japan’s economic problems and the painful measures required to tackle the soaring public debt. He was the only candidate who supported tax hikes, and after the election he reiterated his position that consumption taxes need to raised to 10% sooner rather than later; however, he left the year of implementation open to negotiation. Noda’s understanding of the economy should ensure that he does not push hikes before the economy is out of recovery mode, which will likely not happen until 2013. The immediate priority will remain passing the third supplementary budget to provide funds for disaster recovery and reconstruction. The budget, which is expected to pass in September, will add ¥13 trillion to the public debt burden.
Noda faces many challenges on the foreign policy front. The most significant being the perception that he will not be around long enough to make any real policy decisions. The US is thought to be frustrated with the revolving door of Japanese prime ministers, as well as the performance of the DJP to this point. Noda’s position within the DPJ also makes it unlikely that there will be any movement on the contentious issue of American troops stationed on Okinawa. China is likely to continue excursions into disputed territory, since it has likely calculated that Japan’s constant leadership changes limit its ability to construct a coherent policy response. Comments made prior to his election have also riled China and South Korea, particularly his assertion that Class A war criminals enshrined at Yasukuni Shrine are not technically war criminals. Noda’s stance on amending the constitution to remove the section renounces Japan’s right to have military forces for war or settlement of international disputes is also likely to raise some eyebrows.
Despite what appear to be his best intentions, PM Noda is probably destined to be another short-term leader. His downfall is virtually ensured by divisions within his own party and the unpopular economic decisions he appears poised to make. There is a good chance Noda will not survive past DPJ elections in September 2012, and it would defy imagination were he to remain PM after general elections in 2013. However, with the time he has in office, Noda can be of service to the Japanese people by using his limited political capital to push through needed fiscal reforms.