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Japan cabinet takes shape, Fujii for finance: media
Tue Sep 15, 2009 1:54am EDT
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By Linda Sieg and Yoko Nishikawa
TOKYO (Reuters) - Japan's next prime minister has picked veteran lawmaker Hirohisa Fujii as finance minister, media reported on Tuesday, adding a dose of experience and fiscal caution that helped ease market worries about the untested government's spending plans.
Yukio Hatoyama will be appointed prime minister on Wednesday after a big election win brought to power a government pledged to put more money in the hands of consumers, cut waste and reduce bureaucrats' control over policy-making.
The expected appointment of 77-year-old Fujii, who served as finance minister in 1993-1994, was welcomed by analysts worried that new government spending programs -- such as child allowances and toll-free expressways -- will boost issuance of Japanese government bonds (JGBs) as Japan struggles to emerge from recession.
"The appointment is a positive move for the bond market as Fujii has placed a strong emphasis on trying to tap sources of financing so the government does not have to issue more debt," said Noriyuki Fukuda, a Morgan Stanley fixed-income strategist.
Hatoyama's Democratic Party of Japan (PDJ) has promised not to raise Japan's 5 percent sales tax for the next four years while the government focuses on cutting waste, but Fujii has called for discussion of an increase to fund the soaring social security costs of an aging society.
Hatoyama, the 62-year-old rich grandson of a premier, has said he would start selecting cabinet members later on Tuesday after a meeting of all the Democratic Party's lawmakers.
He has already chosen Naoto Kan, an ex-party leader and former health minister, to head a powerful new agency tasked with overseeing the budget process and setting policy priorities.
That is a break with the stance of the previous, Liberal Democratic Party government, that relied heavily on bureaucrats during its almost unbroken half century rule.
Hatoyama has also said Katsuya Okada, another former party leader, would become foreign minister, a post being closely watched because of concerns about the U.S.-Japan alliance given the Democrats' pledge to adopt a diplomatic course more independent of close ally Washington.
EXPERIENCE IN KEY POSTS
The choices will give ballast to a cabinet that will inevitably be composed largely of lawmakers who have never served in government, analysts said.
"There is a lack of depth at the top, but he is taking some of the most talented and experienced people and putting them in key posts," said Jeffrey Kingston, director of Asian studies at Temple University's Japan campus.
Japanese media had widely tipped Fujii for the finance post, but recent reports had said that his appointment faced opposition from former party leader Ichiro Ozawa, a political mastermind whose influence is raising concerns about a possible rival power center that will complicate policy decisions.
"The party will have to try to live down the long shadow of Ozawa-style politics, because for a party that has promised to hit the reset button on politics as usual, it doesn't look that way," Kingston said. "Hatoyama is more of a waverer than a leader ... but power changes people," he added.
Japanese media said Democratic lawmakers known for keeping their distance from Ozawa would likely get cabinet posts, potentially soothing concerns about the extent of his clout. Continued...
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