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New Japan PM faces hurdles on economy, U.S. ties
Wed Sep 16, 2009 3:06am EDT
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By Linda Sieg and Yoko Nishikawa
TOKYO (Reuters) - Japan's Yukio Hatoyama was voted in as prime minister by parliament's lower house on Wednesday, ushering in an untested government to deal with a struggling economy and the deep-seated problems of a fast-aging population.
Hatoyama, whose Democratic Party of Japan (DPJ) trounced the long-ruling Liberal Democratic Party in an election last month, faces pressure to make good on campaign promises to focus spending on consumers, cut waste and reduce bureaucrat control over policy.
Hatoyama, 62, wearing his lucky gold, silver and blue striped tie and signature pocket handkerchief, stood and bowed after the vote.
"I have mixed feelings of excitement about changing history and the very heavy responsibility of making history," said Hatoyama, whose party ousted the LDP for only the second time since its founding in 1955.
"The fight begins now," he said as he left home earlier.
Hatoyama's cabinet, a delicate balance of former Liberal Democrats, ex-socialists and younger conservatives, must hit the ground running.
"The DPJ has got to come up with an agreed list of priorities quickly, because its manifesto is just a long laundry list," said Koichi Nakano, a professor at Sophia University in Tokyo.
"And it better not just be how they will govern differently, but actual policies," he added. "They can expect something of a honeymoon for a year, but not longer than that."
Hatoyama's choice of veteran lawmaker Hirohisa Fujii, 77, as finance minister has soothed some analysts' concerns that the government's spending programmes will inflate an already huge public debt as Japan struggles to emerge from recession and cope with the bulging costs of a rapidly aging society.
But his choice of Shizuka Kamei, the outspoken head of a tiny coalition partner, as minister for banking supervision and postal services has spooked some experts worried about Kamei's opposition to market-friendly reforms.
"If foreign investors interpret Kamei's position as a slowdown for reform in Japan, stocks could come under pressure and this would be a buying factor for bonds," said Makoto Yamashita, a strategist at Deutsche Securities.
INDEPENDENT DIPLOMACY, BUDGET BATTLES
Hatoyama's vow to steer Japan on a more independent diplomatic course has sparked concerns about possible friction with top ally the United States ahead of his diplomatic debut there next week, where he will meet President Barack Obama.
The U.S.-educated Hatoyama is expected to reassure Obama over ties and perhaps postpone calls for re-negotiation of agreements on U.S. troops stationed in Japan.
On his return, Hatoyama faces the urgent task of drafting a budget for the fiscal year from next April 1 and finding ways to plug holes in this year's budget caused by sliding tax revenues as Japan struggles out of its worst recession since World War Two. Continued...
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