JUNE 3, 2010, 1:34 P.M. ET
By MARIKO SANCHANTA And TAKASHI NAKAMICHI
TOKYO — Naoto Kan, the man certain to become Japan's next prime minister, underscored the importance of the U.S.-Japan relationship, calling it the "foundation" of Japan's diplomacy, in a signal that he won't backtrack on a recent pact between the two countries to keep a large American military base on the island of Okinawa.
But in a news conference to announce his candidacy, Mr. Kan, the current finance minister, also underscored the importance of China to Japan, calling the relationship with its neighbor as "equally important" as the relationship with the U.S. In terms of an economic policy, Mr. Kan—who is set to succeed Yukio Hatoyama, who resigned abruptly on Wednesday—offered few specifics, but made clear that he wouldn't necessarily place growth over fiscal discipline.
Mr. Kan said he will make a "big and sustained" effort to reduce the burden of the southern island of Okinawa for hosting U.S. military bases. But he also said he would "take into consideration the [recent] U.S.-Japan agreement" to keep a Marine air station in the prefecture. He added: "I believe the Japan-U.S. relationship is the foundation of Japan's diplomacy. ... The course we need to take is to maintain a trusting relationship with the United States and at the same time to consider China as equally important. I think that's the right course for Japan's future as well."
Mr. Kan is set to become Japan's fifth prime minister in less than four years, an embarrassing statistic for the world's second-largest economy, which has had a procession of new leaders nearly every year since the popular Junichiro Koizumi ended a five-year tenure in 2006. The Democratic Party of Japan swept to power eight months ago, ending a grip on power by the dominant Liberal Democratic Party that lasted for more than a half-century.
Despite a promise to transform the predictable and rigid nature of Japanese politics, Mr. Hatoyama resigned Wednesday amid plunging support over breaking a campaign pledge to move U.S. troops off Okinawa. The base controversy has revolved around where to move a Marine Corps Air Station currently located in a crowded urban area known as Futenma.
"The reason that [Mr. Kan] has distanced himself from the Futenma issue in the Hatoyama administration is that his opinion on that is different from that of Hatoyama. He is an extremely realistic person," said Toshikazu Inoue, a politics professor at Gakushuin University. "So, he has believed that the new government should stick to the deal agreed by the previous government on the diplomatic and security issues."
Mr. Kan, 63, has been a critic of Japan's powerful bureaucrats and is nicknamed "Ira Kan" in Japan, or "irritable Kan," due to his alleged short fuse. But he also has a sense of the irreverent: When he visited Iqaluit, Canada, for February's meeting of the Group of Seven leading nations, Mr. Kan delayed his closing news conference on Saturday so he and his aides could go dog sledding. Before becoming a politician, the former civic activist shot to fame in the mid-1990s when, as health minister, he exposed the bureaucracy's responsibility for infecting thousands of hemophiliacs with HIV-tainted blood.
Mr. Kan is a virtual shoo-in for the premiership, after the other top two potential candidates—Transport Minister Seiji Maehara and Foreign Minister Katsuya Okada—said they would throw their weight behind him. Democratic Party of Japan lawmakers will vote in a party election Friday morning and announce a leader shortly after lunchtime. That person will assume the premiership. A new cabinet will be formed the same day. On Monday, the winner will make a policy speech.
Shinji Tarutoko, 50, a little-known politician who heads up the House of Representatives Environment Committee, is set to run against Mr. Kan in Friday's elections. His candidacy, however, is seen as symbolic, so Mr. Kan isn't the sole candidate.
Mr. Kan, who has grown increasingly fiscally conservative over recent months as he watched Greece's debt problems rock global financial markets, signaled on Thursday that he will impose greater fiscal discipline in Japan. Since the Hatoyama administration was launched in September, it has largely focused on fixing the nation's economy, putting fiscal discipline on the back burner. The national budget it compiled for the fiscal year that started in April features record 92.299 trillion yen in spending and a record 44.3 trillion yen in new borrowing.
Mr. Kan pledged to finalize growth strategies and fiscal reform plans that the Hatoyama cabinet had been working on by the end of the month. "I have decided to run in [the election] to lead a campaign of implementing policy to break through 20 years of Japan's deadlocked situation," Mr. Kan said. "Unless we steer policy in a wrong direction, we can resuscitate the economy. We can correct the current state in which [government] borrowing seems to keep growing indefinitely."
Critics have said that Mr. Kan is a lightweight when it comes to his knowledge of economics. He once admitted, in a parliamentary session, to having read just 10 pages of Paul Samuelson's classic textbook—though it isn't clear whether he has read further since. In a post-cabinet-meeting news conference in February, Mr. Kan was asked about what he thought of the U.S. Fed's move to lift the discount rate, and said "it has caused the yen to weaken, so I don't think the move itself is negative to our nation's economy." A former senior ministry of finance official privately said: "The Fed's rate hike was good because it weakened the yen? What kind of finance minister would say things like that?"
Mr. Kan also suggested on Thursday that he may not give DPJ Secretary-General Ichiro Ozawa—the party's second-most-powerful man and chief election strategist—a key post in a new government or party management.
"Mr. Ozawa should stay quiet for a while, and that would be good for him, the DPJ, and Japanese politics," Mr. Kan said. "We have to value Mr. Hatoyama's feelings" that the DPJ should restart as a fresh party free from money scandals. Mr. Ozawa is set to step down from the current post Friday.
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