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Japan installs its fifth prime minister in four years

Date Posted: 2010-06-05

Japan’s Finance Minister got a promotion Friday as he was chosen the new Prime Minister, replacing Yukio Hatoyama, who resigned earlier in the week.

Naoto Kan takes the reins of the Democratic Party of Japan-run government facing a series of critical issues. He was chosen first head of the Democratic Party of Japan Friday morning, then elected as Prime Minister by a solid majority in the afternoon. Known as a fiscal conservative, Kan is also a politician not afraid to speak out on issues.

“What I want to tell voters in the upper house election is that our reforms are becoming more concrete,” he said at his first news conference as Prime Minister. With Upper House of Councilors coming up July 11th, Kan has a lot of fence-mending to do with not only members of his own DPJ, but with the United States and Okinawa voters angry with his predecessor’s decision to keep Futenma Marine Corps Air Station on the island, moving it north to the Henoko district of Nago City.

Speaking with a visionary flair, Kan declared “the hopes voters had for the Democratic Party are not just ending up as a mere dream. They will be realized. That’s what I want people to know.” His first order of business over the weekend is to make decisions on a new cabinet line-up. Some politicians are expecting Kan to choose some bright young people, and are urging him to rid the cabinet of Foreign Minister Katsuya Okada and Defense Minister Toshimi Kitazawa, who were both instrumental in the U.S.~Japan agreement made a week ago to keep Futenma in Okinawa.

Kan, the Finance Minister in Hatoyama’s Cabinet, is expected to pick Yoshihiko Noda, a fiscal conservative until now the Deputy Finance Minister, to head that ministry. Reining in public debt promises to be a major issue facing the new Prime Minister as he tries to fulfill DPJ promises of last summer to create a better life for citizens through boosting domestic demand, cutting waste, and promoting a more effective government administered by the Diet instead of career bureaucrats.

Financial markets are showing a surge of excitement over Kan’s selection as Prime Minister, and politicians in the DPJ are pleased, too. ‘If Hatoyama had remained, the party would have had big losses in the election and the political situation would have been chaotic,” is how the chief strategist at Tokai Tokyo Research, Hiroyuki Nakai, explained it. “But with Kan now in charge, the sense of stagnation in politics and the economy is receding somewhat, even though much will depend on the makeup of the Cabinet.

All eyes will be on Kan, and his new Finance Minister, to see how they move on bond markets, raising the country’s 5% sales tax, and handling of the currency. “For the Nikkei to move much over 10,000, we need currencies to move toward a weaker yen,” said Kenichi Hirano of Tachibana Securities.

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