Japan PM wins party leadership battle

Japan’s prime ministerial revolving door missed a turn as incumbent Naoto Kan successfully fended off a challenge to his leadership from fellow ruling Democratic party heavyweight Ichiro Ozawa..

Mr Kan’s surprisingly emphatic victory on Tuesday after a hard-fought campaign for re-election as DPJ president meant relative continuity in the economic and diplomatic policies pursued by his administration since it took office three months ago.

If Mr Kan had lost, his successor would have been Japan’s sixth new prime minister in four years.

In a sharp reminder of the pressing challenges faced by the DPJ-led government, Mr Kan’s victory sent the yen climbing to a new 15-year high of Y82.90 to the dollar.

Mr Ozawa had been seen by markets as more likely to intervene to curb the yen’s rise, which has prompted howls of complaint from businesses and fuelled fears about the prospects for Japan’s fragile recovery from its sharpest postwar recession.

The overwhelming backing of DPJ rank-and-file members and supporters ensured Mr Kan a comfortable margin of victory over Mr Ozawa, a famously influential backroom politician who is deeply unpopular with the public.

But Mr Ozawa’s success in securing the support of 200 ruling party Diet members in the vote – only a handful fewer than the 206 who backed Mr Kan – highlighted deep divisions within the DPJ just a year after its historic general election landslide over the long-ruling Liberal Democratic party.

Mr Kan moved quickly to ease fears that the DPJ could split, with the prime minister vowing to ensure the party made full use of “the strength of all members”.

“The election is over, and as I promised there will be no more taking sides,” Mr Kan said, a pledge seen by many analysts as paving the way for the appointment of important backers of Mr Ozawa to cabinet and party executive positions.

Mr Ozawa has in the past repeatedly led supporters out of political parties when his will is thwarted, but the backroom strategist often known as the “shadow shogun” made clear he had no plans to quit the DPJ.

“From now on I want to work hard as a common soldier along with everyone else for the success of the DPJ administration,” Mr Ozawa said after the vote.

DPJ unity will be particularly important to Mr Kan as he searches for ways to ensure that his government can pass legislation through the Diet in spite of opposition parties’ dominance of its less powerful upper house.

The prime minister faces a host of problems, including friction with China over issues ranging from mineral export restrictions to Tokyo's detention of a Chinese fishing captain whose boat collided with Japanese coast guard vessels in disputed waters of the East China Sea.

Mr Kan will have to decide whether to intervene directly in currency markets to curb any further sharp climb in the yen, after the currency repeatedly shrugged off his administration’s threats of “decisive action” to ensure exchange rate stability.

The government is also struggling to decide how to implement an agreement with the US to move a marine air base to a new site on the southern island of Okinawa. Opposition to the deal was underscored when voters in the area that is the proposed new site backed opponents of the deal in a local election on Sunday.

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