Japan's New Leader Scrambles After Victory

Published August 31, 2009

| AP

Japan's newly empowered leader Yukio Hatoyama rushed Monday to select Cabinet ministers after his party trounced the ruling conservatives in elections, sending them out of power for only the second time in 54 years.

Hatoyama said in a victory speech late Sunday that he would focus on making a quick and smooth transition, and said his priority was choosing the nation's next finance minister.

Official results were still being counted, but exit polls by all major media said Hatoyama's Democratic Party of Japan had won more than 300 of the 480 seats in the lower house of parliament. That would easily be enough to ensure that he is installed as prime minister in a special session of parliament that is expected to be held in mid-September.

Prime Minister Taro Aso, conceding defeat, said he would step down as president of the ruling Liberal Democratic Party.

Although the vote gave the Democrats a landslide win, most voters were seen as venting dissatisfaction with the ruling Liberal Democratic Party more so than endorsing the policies of the opposition.

The Democrats will also face next year an election for the less powerful upper house of parliament. They have controlled that chamber with two smaller allies since 2007, but if they fail to deliver quickly on their promises the ruling party could resurge.

The task ahead for the Democrats is daunting.

Japan managed to climb out of a yearlong recession in the second quarter, but its economy remains weak. Unemployment and anxiety over falling wages threatens to undermine any recovery. The jobless rate has risen to a record 5.7 percent. After a rapid succession of three administrations in three years, Japan is facing its worst crisis of confidence in decades.

In the long-term it faces a bleak outlook if it isn't able to figure out how to cope with a rapidly aging and shrinking population. Government estimates predict the figure will drop to 115 million in 2030 and fall below 100 million by the middle of the century.

The Democrats' solution is to move Japan away from a corporate-centric economic model to one that focuses on helping people. They have proposed an expensive array of initiatives: cash handouts to families and farmers, toll-free highways, a higher minimum wage and tax cuts. The estimated bill comes to 16.8 trillion yen ($179 billion) when fully implemented starting in the 2013 fiscal year.

The party has said it plans to cut waste and rely on untapped financial reserves to fund their programs. But with Japan's public debt heading toward 200 percent of gross domestic product, the Democrats plan has been criticized as a financial fantasy that would worsen Japan's precarious fiscal health.

Japan's stock market surged early in the morning on the news of the election, but then fell back.

"The key difference is the Liberal Democrats' spending on public projects and infrastructure, but the Democrats spend on family and education," said Martin Schulz, a senior economist at the Fujitsu Research Institute.

"The Democrats have a year to show results," he added, noting next year's elections are looming.

The Democrats are also under scrutiny for their positions on national security and foreign policy.

Party leader Yukio Hatoyama, set to become Japan's next prime minister, has been vocal about distancing the country from Washington and forging closer ties with its Asian neighbors.

Washington's new ambassador to Japan said the U.S. is looking forward to working with the new administration in Tokyo.

"The challenges we face are many, but through our partnership our two great democracies will meet them in a spirit of cooperation and friendship," Ambassador John V. Roos said in a statement Monday.

The Democrats first task will be to convince a skeptical public that they can actually lead.

"I feel very insecure with the Democratic Party of Japan," said 65-year-old voter Shuji Ueki a few hours after the polls closed. "They don't have a record."

The Democrats are made up of an inexperienced group of left-wing activists and LDP defectors. The party is just 11 years old, and only a handful have served in top government positions.

But Ichiro Ozawa, co-founder of the party, expressed a quiet confidence.

"We have no fear, and we will steadily achieve our campaign promises one by one," he said.

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