Japan PM to tap rival, put policy stamp on cabinet

TOKYO Fri Aug 1, 2008 3:07pm IST

Japan's Prime Minister Yasuo Fukuda (L) arrives at his official residence in Tokyo August 1, 2008. REUTERS/Kyodo

Japan's Prime Minister Yasuo Fukuda (L) arrives at his official residence in Tokyo August 1, 2008.

Credit: Reuters/Kyodo

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TOKYO (Reuters) - Struggling Japanese Prime Minister Yasuo Fukuda tapped a popular rival for a top party post and was tipped to axe his finance and economics ministers in a shake-up on Friday to boost his flagging support among voters.

Fukuda, 72, wants to put his stamp on economic policy and erase doubts about his leadership that threaten his grip on power after just 10 months in office.

But it was unclear how effective the personnel revamp will be, especially after a high-profile delay in making the move that fed perceptions that Fukuda is indecisive.

The prime minister would tap his ruling party No. 2, Bunmei Ibuki, for finance minister, Kyodo news agency said, after drafting former foreign minister Taro Aso, a hawkish veteran and a rival for the leadership, to take on the key party post.

The official cabinet line-up was to be announced after 6 p.m. (0900 GMT), with media reporting that Fukuda would tap veterans with extensive cabinet experience and keep several incumbents.

Fukuda probably wants to draw on the popularity of Aso, a fan of manga comic books, to improve the ruling bloc's chances in a general election that must be held by September 2009 and could well come sooner, analysts said.

The economics portfolio would go to Kaoru Yosano, another veteran who favours raising the national consumption tax to repair Japan's tattered state finances and fund the rising social welfare costs of a rapidly ageing population, Kyodo said.

But Fukuda was set to retain Foreign Minister Masahiko Komura and Chief Cabinet Secretary Nobutaka Machimura, the top government spokesman, Kyodo said.

If the new roster is confirmed, it would signal Fukuda's intention to stress welfare issues and consumer affairs, some analysts said.

"From foreigners' point of view, it might seem like a slowdown in reform, but Fukuda sees it as steady reform," said Keio University political science professor Yasunori Sone.

TOUGH TIMES IN PARLIAMENT

Yosano's appointment could be interpreted as a sign that the government was leaning toward raising the consumption tax, now at 5 percent, a step that might upset voters already worried about an economic slump and higher fuel and food prices, analysts said.

But with Ibuki at the finance ministry and a general election looming, Fukuda was unlikely to take that unpopular step any time soon, they added.

The revamped cabinet will face tough times in parliament, where a feisty opposition has been stalling legislation in the upper house and is campaigning for an early poll in hopes of ousting the long-ruling Liberal Democratic Party (LDP).

"I see this as a cabinet reshuffle to show that Fukuda wants to call a general election under his leadership," main opposition Democratic Party Secretary-General Yukio Hatoyama told reporters.

"I think an election is highly likely around the end of year to the beginning of next year, but it's possible that it'll be earlier than that. That's what we will be calling for."

Aso's appointment could increase speculation of an early poll. As secretary general, the party's No. 2 figure, the outspoken Aso would play a vital role in setting election campaign strategy for a lower house election due by September 2009.

Keio's Sone said Fukuda was most likely to call a lower house election in February to seek a mandate to break the deadlock in parliament, but a poll within the year could not be ruled out.

Appointing Aso, 67, a scion of a political family, might have less public appeal than Fukuda hoped, some analysts said.

"It sends a signal that the LDP is not coming up with fresh new ideas. That I think is going to be a losing strategy. I mean he is a throw-back to old-style politics," said Jeff Kingston, director of Asian studies at Temple University in Tokyo.

"OK, he can talk about how many manga he reads, but he is from the old school."

Accepting a party post could make it tougher for Aso to challenge for the premiership, but moves to oust his rival could emerge if Fukuda's ratings tumble.

"There are many (in the ruling bloc) who have a sense of crisis that they cannot win an election under Fukuda," Sone said.

(Additional reporting by Chisa Fujioka, Yoko Kubota, Naoto Okamura, Isabel Reynolds, Chikako Mogi, Rika Otsuka)

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