The Washington Post

Japan’s ruling party elects Yoshihiko Noda as chief

Finance Minister Yoshihiko Noda acknowledges his fellow lawmakers shortly after he was elected as the new leader of the Democratic Party of Japan. Noda’s appointment as prime minister will become official Tuesday after a vote in the lower house. (Koji Sasahara/AP)

TOKYO — Japanese finance minister Yoshihiko Noda on Monday was elected as the head of Japan’s ruling party, earning the right to become Japan’s next prime minister and assuming the burden of its many financial and disaster-related challenges.

In a runoff voted on by 392 lawmakers from the Democratic Party of Japan, Noda defeated trade minister Banri Kaieda, 215 votes to 177.

Noda’s appointment as prime minister could become official as early as Tuesday with a vote in the lower house.

The selection of Noda gives Japan its best chance in years to make the painful financial reforms necessary to curb a skyrocketing national debt, the highest among industrialized nations. Unlike other candidates vying for the job, Noda has advocated for a consumption tax increase to cover the escalating social security and disaster reconstruction costs.

But his emergence from a pack of five candidates was due more to intra-party rivalries than qualifications. In recent days, Ichiro Ozawa, Japan’s master of backroom dealmaking, tried his best to swing the vote for Kaieda. Because of Ozawa’s endorsement, Kaieda also had the votes of 120-odd party members — Ozawa loyalists.

Noda’s victory proved that within the fractured DPJ, the anti-Ozawa group still outnumbers the pro-Ozawa group.

During the initial voting contest, which also included popular favorite Seiji Maehara, none of the five candidates emerged with the necessary 50 percent, with Noda (102 votes) finishing second to Kaieda (143 votes).

For the resulting runoff, the candidates were narrowed to two. The anti-Ozawa group solidified behind Noda. And that’s how he prevailed in the head-to-head battle.

In a victory speech, Noda, 54, said that cooperation is necessary if Japan is to fight the problems that have stymied it for years.

Noda’s successors, though, have struggled to gain political consensus on Japan’s most urgent issues. Tokyo has made little progress in confronting its shrinking population, its sagging economy and more recently its reconstruction efforts along the battered northeast.

Noda will become Japan’s seventh prime minister in five years, and the third since the DPJ took power two years ago.

In opinion polls taken during the two-day campaign period, Noda roused little support. A Fuji TV poll showed that 53 percent of the public favored Maehara, a former foreign minister. In that poll, Kaieda had 6 percent of the support. Noda had 5 percent.

Noda stands to enjoy a bump of support as he enters office, particularly as he succeeds the widely unpopular Naoto Kan. But his tax policy, though lauded by economists, could be a tough sell.

Kan squandered his own support one month into office by advocating for a consumption tax hike, then backing away.

The IMF recently called on Japan to triple its consumption tax rate — currently at 5 percent — over the next several years.

Especially in the aftermath of the March 11 natural and nuclear disaster, Japan faces a growing strain on its finances, with a government debt of 218 percent. In his position as finance minister, Noda had also been dealing with problems related to the surging yen, which has thinned the profits of Japan’s major export-dependent corporations by making products more expensive overseas.

Chico Harlan covers personal economics as part of The Post's financial team.

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