Monday, September 10, 2012

Japan PM Noda to face fringe contenders in party race

By Tetsushi Kajimoto and Shinji Kitamura

TOKYO (Reuters) - Japan's Prime Minister Yoshihiko Noda will face three fringe contenders for one of the worst jobs around - leading the demoralised ruling party to almost certain crushing election defeat.

Japan's Prime Minister Yoshihiko Noda stands next to the Japanese national flag upon his arrival at a news conference at his official residence in Tokyo August 24, 2012. REUTERS/Yuriko Nakao

The Democratic Party election commission confirmed on Monday that besides Noda, former farm ministers Hirotaka Akamatsu and Michihiko Kano and an ex-internal affairs minister Kazuhiro Haraguchi would run in the September 21 leadership contest. With no party heavyweights on the roster, Noda is likely to retain his post as government and party chief.

In his election pledge, Noda said he would bring a lasting end to deflation that has plagued Japan for a decade and hit a 1 percent inflation target within a year. He also promised to work towards ending reliance on nuclear power, though he gave no deadline.

But his days in power appear numbered with opinion polls showing the Democrats trailing the opposition Liberal Democratic Party and a new grouping led by a popular Osaka mayor Toru Hashimoto which plans to contest the next general election expected before the end of the year.

Parliament's term ends in August 2013, but Noda promised to call an election "soon" in return for the opposition backing for his plan to raise sales tax to offset rising social security costs.

Last month's passage of the tax bill marked a rare break in Japan's long political gridlock and the biggest accomplishment of Noda's one-year tenure, but it came at a steep price.

About 50 lawmakers left the Democrats, with the rest bracing for voter backlash for backing the tax hike and other unpopular policies, such as Noda's push to restart nuclear reactors idled after last year's Fukushima disaster.

The government is due to present a national energy plan in coming days that will try to respond to the growing anti-nuclear sentiment among voters without alienating pro-nuclear industrial lobbies, but risk satisfying neither side.

If he is re-elected, Noda's immediate challenge will be to win approval of the opposition-controlled upper house for new borrowing in the current budget to avoid a government shutdown.

Whoever takes over after the election, many expect to be held in November, will face substantial unfinished business and a long list of deep-rooted problems dogging the world's third-largest economy and its 10th most populous country.

Further steps beyond sales tax hikes are needed to prevent Japan's public debt from piling up, the nuclear phase-out will require a major overhaul of the energy sector and pulling Japan out of deflation calls for major market and structural reforms.

The rebuilding after the magnitude 9 earthquake and tsunami that struck Japan's northeast on March 11, 2011 is far from over and the full decommissioning of the crippled Fukushima nuclear plant and the clean-up of its surroundings will take decades.

Tokyo's efforts to revive its exports through free trade deals have also stalled amid political stalemate, while relations with Asian peers South Korea and China soured in the past weeks as simmering territorial disputes flared up.

(Additional reporting by Shinji Kitamura; Writing by Tomasz Janowski, Editing by Jonathan Thatcher)

News

Monday, September 10, 2012

Japan PM Noda to face fringe contenders in party race

By Tetsushi Kajimoto and Shinji Kitamura