Bloomberg News

Noda’s Election Decision Looms After Winning Japan Party Contest

September 21, 2012

Japanese Prime Minister Yoshihiko Noda

Yoshihiko Noda, Japan's prime minister and president of the Democratic Party of Japan (DPJ). Photographer: Tomohiro Ohsumi/Bloomberg

Japanese Prime Minister Yoshihiko Noda’s victory in a ruling party leadership race brings him closer to a decision on whether to call elections as he confronts a slowing economy and a territorial spat with China.

Noda won yesterday’s Democratic Party of Japan contest, allowing him to remain premier because the DPJ controls the more powerful lower house of parliament. The main opposition Liberal Democratic Party chooses its leader next week, increasing pressure on Noda to sell himself to voters ahead of an election he must call by August 2013.

The country’s sixth leader in as many years must now push through a bill to fund this year’s budget amid concern the economy may contract as it struggles to recover from last year’s earthquake and nuclear disaster. With the public split over his sales tax increase, Noda also faces the threat of an insurgent political force led by Osaka Mayor Toru Hashimoto.

“The leadership race was a distraction,” said Ellis Krauss, a professor of Japanese politics at the University of California, San Diego. “Noda’s problem is convincing the public that the consumption tax hike was necessary and dealing with a recalcitrant opposition, deciding when to call an election, changing nuclear energy policies, and a troublesome China.”

Noda won 68 percent of the vote, defeating former internal affairs minister Kazuhiro Haraguchi and ex-farm ministers Hirotaka Akamatsu and Michihiko Kano.

“There are times when I have to make decisions even if it means dividing the party or public opinion,” Noda said in a victory speech. “I have felt the weight of that intensely over the past year.”

DPJ Defectors

Since taking office in September 2011, he won approval for a bill to double the consumption tax to 10 percent by 2015. In return for opposition backing for the levy, he shelved many of his party’s election pledges, such as providing minimum pension benefits, and promised to call an election “soon.”

Lawmakers opposed to Noda’s compromises defected from the party, threatening its majority in the lower house. A Yomiuri newspaper poll published Sept. 18 showed 31 percent of respondents planned to vote for the LDP in the proportional representation section of the next election, compared with 14 percent for Noda’s DPJ and 16 percent for Hashimoto’s party.

“Noda has not been able to sell his accomplishments in a way that gets through to the public,” said Steven Reed, a political science professor at Chuo University in Tokyo. “He does have accomplishments and supporters of the Democrats are perfectly aware of that, but it’s not clear to anybody else.”

Hashimoto’s Rise

Noda will shuffle his cabinet and party leadership positions by the end of the month, replacing DPJ Secretary- General Azuma Koshiishi, the Nikkei newspaper said yesterday, without citing anyone. Potential replacements include Finance Minister Jun Azumi, Deputy Prime Minister Katsuya Okada and policy chief Seiji Maehara, the newspaper said. Asked about the report, Noda said a reshuffle “is possible.”

Hashimoto has won backing of seven members of parliament, enabling him to register his group as a political party. The former lawyer and television commentator said he plans to field candidates across the country in the next election, without running for a parliamentary seat himself.

Meanwhile, Noda faces challenges including the phasing out of atomic power and the risk the government will run out of money because of a parliamentary deadlock over financing. The world’s third-largest economy, which contracted last year after the earthquake and Fukushima nuclear disaster, grew at half the pace initially estimated in the second quarter.

‘Disliked Incumbent’

“Sooner or later he will have to face the electorate,” said Koichi Nakano, a professor of political science at Sophia University in Tokyo. “For them he is a much-disliked incumbent. He needs to convince them that he’s better than the alternative.”

Much will depend on the stance taken by the new head of the LDP, set to be selected on Sept. 26, Nakano said. LDP candidates include current Secretary-General Nobuteru Ishihara, former defense minister Shigeru Ishiba and ex-premier Shinzo Abe.

Noda must also carefully navigate the re-ignited territorial row with China, said Alessio Patalano, a lecturer in war studies at King’s College in London. The government last week completed a deal to purchase islands in the East China Sea known as the Senkaku in Japanese and Diaoyu in Chinese, setting off protests throughout China that have imperiled a $340 billion trade relationship.

Before yesterday’s vote, Noda said Japan must be firm “without being provocative or being provoked” on territorial issues. He will give a speech at the United Nations General Assembly in New York next week that may refer to the dispute with China, Chief Cabinet Secretary Osamu Fujimura told reporters.

“Basically what they can try to do is establish a hot line to the Chinese government,” Patalano said. “There is nothing to be gained at this stage by Japan having its constabulary or military forces be any louder than they are.”

To contact the reporters on this story: Isabel Reynolds in Tokyo at ireynolds1@bloomberg.net; Takashi Hirokawa in Tokyo at thirokawa@bloomberg.net

To contact the editor responsible for this story: Peter Hirschberg at phirschberg@bloomberg.net


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