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Financial crisis boosts Aso's bid to become Japan's prime minister

Financial crisis boosts Aso's bid to become Japan's prime minister

Japan gets a new prime minister this week in the midst of a global financial crisis, which pundits say is strengthening conservative front-runner Taro Aso and weakening his reformist rivals.
The ruling Liberal Democratic Party (LDP) meets today to pick a successor to unpopular Prime Minister Yasuo Fukuda, who stepped down as the world's second largest economy teeters on recession.
Party members vote after one of the most tumultuous weeks ever on global markets, which seesawed after the collapse of Wall Street titan Lehman Brothers and U.S. plans for a massive bailout of the financial sector.
The old ways
Aso, an outspoken former foreign minister who turned 68 Saturday, promises to return to the old ways of the long-dominant LDP by using public money to boost the countryside, where the economy is in particularly dire shape.
He has hinted that he will ignore promises made by former reformist prime minister Junichiro Koizumi to rein in spending to tame the public debt, the highest among major economies.
"Whether it is good or not, the current economic situation is clearly favorable to Aso," said Yoshiaki Kobayashi, professor of politics at Keio University.
"People might be feeling more anxiety over the economy, including the decline in earnings of export-oriented companies and job cuts," he said.
He said that the financial crisis hurt the case of candidates such as Yuriko Koike, a former defense minister vying to be Japan's first female leader, who has vowed a new wave of government belt-tightening akin to Koizumi's reforms.
With the shock of the U.S.-led financial market crisis felt around the globe, even Kaoru Yosano, the LDP candidate advocating the most austere fiscal policy, has changed his tone.
Yosano, the economic and fiscal policy minister, has softened his calls for a politically sensitive tax hike, saying it should come in a few years and not now.
Public debt
Yosano, along with many economists, say that Japan urgently needs to trim the public debt - a hangover from spending aimed at boosting the economy after Japan's economic miracle collapsed in the early 1990s.
The Bank of Japan has kept interest rates at 0.50 percent, the lowest among major economies, meaning there is little scope for a cut.
"The key is a growth strategy for Japanese industries and not a strategy of income redistribution. But what Aso plans to do seems to be income redistribution" from the urban rich to the countryside, Kumano said.
But rural voters are a crucial base for the LDP, which has been in power for all but 10 months since 1955.
The new prime minister is widely expected to call new general elections soon in hopes of using initial popularity to dent opposition gains.


Updated : 2021-09-21 10:48 GMT+08:00