Japan’s Next Leader?

Tokyo, Japan – Following Wednesday’s resignation by Prime Minister Yukio Hatoyama after only eight months in office, his successor – to be chosen Friday – looks set to be Naoto Kan, the outspoken current finance minister and deputy prime minister. It’s clearly a tough job.

Kan, 63, faces the immediate challenges of strained relations with the U.S., heightened regional tensions and creaking public finances.

With the only two other credible candidates, Transport Minister Seiji Maehara and Foreign Minister Katsuya Okada, having given Kan their backing, he faces only token opposition from within the Democratic Party of Japan (DPJ) in his bid for the party leadership, and therefore prime ministerial office.

The issue that proved the nail in the coffin for Hatoyama’s premiership – the controversial relocation of the Okinawan Marine base – can probably be conveniently avoided by Kan, for a few months anyway.

“The new prime minister will have to continue with Hatoyama’s policies because the Upper House election in July means there is no time to write a new manifesto now,” said Tetsuro Kato, a visiting professor of politics at Tokyo’s Waseda University.

“However, the Okinawan gubernatorial election in November could see the prime minister taking another look at the base issue,” said professor Kato.

The current troubles on the Korean peninsula, along with China flexing its muscles by recently sailing a navy convoy between Okinawa and mainland Japan, may be enough to convince the country’s new leader that the U.S. Marine base remains necessary, if unpopular with some.

Almost as imminent as any potential threat from outside is the danger posed by the ballooning national debt. The total liabilities of the government are either approaching, or, depending on whose figures are used, have already exceeded, 200 percent of GDP. Either way, with a shrinking workforce, graying population and a deflationary price spiral, the situation is deteriorating fast.

On this one, Kan may be just the man for the job.

Since his appointment as finance minister at the beginning of the year, Kan has taken a fiscally conservative stance and been one of the only political voices calling for a probably inevitable — though predictably unpopular — rise in Japan’s consumption (sales) tax rate from the current 5 percent.

At the press conference today to announce his leadership candidacy, he reiterated his commitment to releasing a plan this month addressing the debt issue. He has already set a relatively modest target of not exceeding the record levels of government bonds issued this year on international markets.

Throughout his career, Kan has garnered a reputation as a straight-talking, if sometimes ill-tempered, politician.