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Japan cabinet takes shape, Fujii for finance - media
Reuters - Tuesday, September 15
By Linda Sieg and Yoko Nishikawa
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TOKYO - 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 his 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 programmes -- such as child allowances and toll-free expressways -- will boost issuance of Japanese government bonds 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, 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.
Hatoyama 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 centre 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.
The Democrats have vowed to centralise decision-making in the cabinet, and the new National Strategy Bureau will be tasked with reforming what the Democrats say is a cumbersome policy-making system that relied heavily on recommendations from bureaucrats.
That means Fujii could have somewhat less influence over the budget process than past finance ministers.
The septuagenarian lawmaker, who served in the finance ministry before entering politics, has backed the Bank of Japan's ultra-loose monetary policy, so he is unlikely to rock markets.
But some analysts feared he may try to wean Japan too quickly off its reliance on exports for growth and allow the yen to rise.
The Democrats have pledged to try to shift Japan to a model of domestic-led growth.
"What worries me about him is his comments that seem to support a strong yen," said Kyohei Morita, chief economist at Barclays Capital. "He can let the yen rise after transforming the economy into one led by domestic demand, but there is risk of the yen rising further before that happens."
The yen hit 90.18 against a tumbling dollar on Monday, its highest since February, and was trading around 91 yen per dollar on Tuesday.
Hatoyama is also expected to appoint the leaders of two tiny allies whose support the Democrats need in parliament's upper house to pass laws smoothly to cabinet posts.
Japanese media said he was leaning towards giving Shizuka Kamei, the head of the conservative New People's Party, the defence portfolio and might put Mizuho Fukushima, head of the Social Democratic Party, in charge of consumer affairs.
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