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September 17, 2009

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Japan's new PM promises to shake up moribund economy

JAPAN'S long-time opposition leader Yukio Hatoyama was elected prime minister and installed his new Cabinet yesterday, promising to reinvigorate the country's economy and shake up government with his left-of-center party after more than 50 years of nearly unbroken rule by conservatives.

Hatoyama's victory marks a major turning point for Japan, which is facing its worst economic slowdown since World War II, with unemployment at record highs and deflation intensifying. But concerns ran deep over whether the largely untested government would be able to deliver.

Hatoyama has vowed to cut government waste, rein in the national bureaucracy and restart the economy by putting a freeze on planned tax hikes, removing tolls on highways and focusing policies on consumers, not big business.

He has also pledged to improve Tokyo's ties with its Asian neighbors and forge a foreign policy that is more independent from Washington.

"I am excited by the prospect of changing history," Hatoyama said. "The battle starts now."

The new prime minister said he wanted to build a "relationship of trust" with US President Barack Obama by exchanging views "frankly."

Parliament convened in a special session to formally select Hatoyama, whose Democratic Party of Japan won a landslide in parliamentary elections last month to take control of the body's lower house.

They succeeded in ousting Prime Minister Taro Aso's Liberal Democratic Party, which is conservative and staunchly pro-US.

In yesterday's parliamentary vote to choose the prime minister, Hatoyama won 327 of the 480 votes in the lower house. He needed a simple majority of 241 votes.

Ministers picked

Quickly after his election, Hatoyama named Katsuya Okada as his foreign minister and Hirohisa Fujii as his finance minister.

Though Okada has never held a Cabinet position, Fujii was finance minister under a coalition government in 1993-94, the only time in their 55-year history that the Liberal Democrats had previously been ousted from power.

Hatoyama, who has a doctorate from Stanford University and is the grandson of a prime minister, had a limited pool of seasoned politicians to choose from.

His party, created a decade ago, has never held power, and nearly half of the Democrats' members of the lower house will be serving in their first terms in parliament.

The inexperienced new government was bound to make some missteps, analysts said.

"This is a big change. But change often comes with uncertainty. Beginners usually have some troubles," said Tsuneo Watanabe, a senior fellow at the Tokyo Foundation, a think tank.

Hatoyama and his party, a mix of defectors from the conservative party and social progressives, face huge tasks that they must deal with quickly.

Although it has recently shown some signs of improvement, Japan's economy remains deeply shaken by the global financial crisis and unemployment is at a record high of 5.7 percent.

The rapid aging of its population also threatens to be a drag on public coffers as the number of taxpayers decreases and pension responsibilities swell.


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