IHS Global Insight Perspective | |
Significance | Democratic Party of Japan (DPJ) leader, Yukio Hatoyama, has officially taken up the position of prime minister and announced the line-up of his cabinet. |
Implications | His inner circle is composed of allies who will work towards the achievement of domestic and foreign policy objectives. These include greater social spending, political reform, and a review of Japan’s relationship with the United States. |
Outlook | The incoming government faces daunting challenges as it steps in to oversee the weak economy while simultaneously attempting to carry out deep-seated governmental reform. |
The Japanese parliament convened a special session yesterday to confirm the leader of the Democratic Party of Japan (DPJ), Yukio Hatoyama, as prime minister. Taro Aso, outgoing prime minister for the Liberal Democratic government, formally resigned from his position. Hours later, Hatoyama announced the new line-up of his cabinet, whose top priority will be to guide the economy towards recovery by paying more heed to consumers while carrying out deep-seated governmental reform. The political shift took place after the Japanese electorate delivered an overwhelming defeat to the country’s ruling Liberal Democratic Party (LDP), while providing the DPJ with a strong mandate to implement its policy agenda during a general election held on 30 August (see Japan: 31 August 2009: Opposition Democrats Secure Landslide Victory in Japan).
Here are some of the key players in the new cabinet:
Finance Minister: The appointment of Hirohisa Fujii, 77, to the post of finance minister comes as no surprise. As an experienced bureaucrat and lawmaker, he is seen as a safe pair of hands who should be adept at guiding the country out of a protracted economic slump. Fujii held the same post in the early 1990s after he defected from the LDP to join the coalition government. Adding to that, he has worked in the Finance Ministry for more than two decades, building up his knowledge of financial and fiscal strategies. Fujii has been vocal in his support for an independent central bank and has been highly critical of the free-market initiatives undertaken by his former leader, Junichiro Koizumi. He has also been a strong critic of the LDP government’s stimulus measures, believing them to be indicative of their tendency towards wasteful spending. However, he has said that he would be prepared to launch a new stimulus package should the economy continue on its negative trajectory. He will face a difficult challenge in balancing "substantial cuts" to the massive economic stimulus package while increasing spending sharply in other sectors, such as childcare, and other social programmes—particularly as the country is already in serious debt. Fujii is a law graduate from the prestigious Tokyo University, entering parliament for the first time in 1977.
Foreign Affairs Minister: Katsuya Okada defected from the LDP in 1993 and is seen as a DPJ heavyweight, having formerly served as party leader in 2004. He previously worked in the Trade Ministry and is known for his strong anti-corruption stance, underscored by his squeaky clean image. He is the second son of Takuya Okada, owner of one of the country’s largest supermarket chains, Aeon. He has a law degree from Tokyo University and went on to study at Harvard. The media has labelled him a "lone wolf" due to the fact that he is not a member of any of the various factions within the DPJ, arguing that the party should move away from divisive politics. As foreign minister, Okada will have to carry out the DPJ’s policy of taking a more assertive stance with the United States, dealing with issues such as the realignment of forces as well as the re-fuelling of navy U.S. warships in the Indian Ocean in support of American operations in Afghanistan. However, he will need to tread carefully so as not to alienate Japan from its traditional ally. Indeed, there is a widespread expectation that the government will seriously tone down its rhetoric on this issue now that it is in government. Okada has been forthcoming in his respect for U.S. President Barack Obama, but has also expressed a desire to enhance co-operation with other Asian nations. He has a strong network of contacts in the region.
Deputy Prime Minister, National Strategy Bureau Chief: After first gaining a seat in the lower house of parliament in 1980 as a member of the now defunct Social Democratic Federation (SDF), Naoto Kan later changed parties, becoming one of the co-founders of the DPJ in 1996. Kan is highly regarded for his successes as health minister in 1996 when he exposed a government cover-up of HIV-tainted blood products that resulted in thousands of haemophilia patients contracting AIDS. As Hatoyama’s right-hand man, he may have been appointed for his hard-line stance towards the bureaucracy. Indeed, as chief of the new National Strategy Bureau, he will be tasked with wresting power from the bureaucracy over policy and budget processes—areas that were previously overseen by Finance Ministry officials. Kan is known for his sharp tongue, debating skills, and short temper.
Defence Minister: A member of the upper house of parliament, Toshimi Kitazawa has kept a relatively low profile. Previously with the Liberal Democratic Party (LDP), Kitizawa switched to the Democrats in 1998 before entering the upper house of parliament. He has served in policy-making posts in defence, transport, and land development. He has been chairman of the upper house committee on foreign affairs and defence since September 2007. In the past, he opposed the deployment of Japanese troops to Iraq to engage in construction work and accused former U.S. president George W Bush of "enforcing democracy by military might".
Postal and Financial Affairs Minister: A former policeman and senior official with the LDP, Shizuka Kamei has been an outspoken critic of the privatisation of Japan’s massive postal service during former prime minister Junichiro Koizumi’s period in office. In his current post, he has been assigned to re-form the sprawling institution. Kamei has also blamed American-style accounting and bank adequacy rules as the cause of Japan’s deflation problems. He has also been a staunch advocate of increased public spending, amounting to about 8% of GDP.
Minister of Economy, Trade and Industry: A former union official at Toyota Motor Corporation, Masayuki Naoshima has advocated tighter labour market regulations as well as increased public funding support for regional economies.
Outlook and Implications
Hatoyama’s cabinet choices reflect his desire to move away from the free-market principles of former prime minister Koizumi. Indeed, the severity of the LDP’s electoral drubbing was seen by many as a rejection of the right-wing, hawkish politics characteristic of the Koizumi era, with the so-called "Koizumi Children" faring particularly badly. In this light, the appointments mark a step towards greater regulation in Japan, as the government shows a preference for social equality over economic efficiency. The line-up also mirrors Hatoyama’s need to balance ideological differences within his party and its two small coalition partners, the Social Democratic Party and the People’s New Party. For example, Mizuho Fukushima, the new minister for family and consumer affairs is the current chair of the SDP. Given that the DPJ comprises a wide-range of politicians including defence hawks, socialists, pacifists, and former LDP members, the prime minister will need to make careful efforts to build consensus among its members so as to ensure that his government does not fracture under the weight of governmental responsibility.