Japan political mastermind Ozawa back in spotlight

TOKYO Fri Sep 4, 2009 5:05am EDT

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TOKYO (Reuters) - Japan's prime minister holds a late night news conference to unveil a stunning policy change, only to backtrack after an outcry from the public and members of his government.

That was the nightmare that played out in 1994, the last time master political strategist Ichiro Ozawa played a big role in a ruling bloc that ousted the long-ruling Liberal Democratic Party.

Memories of that sort of backroom maneuvering were foremost in the minds of media and some pundits on Friday after incoming prime minister Yukio Hatoyama tapped Ozawa as Democratic Party secretary-general following a huge election win over the LDP.

The LDP was ousted from power on Sunday for only the second time since its founding in 1955, setting the stage for Hatoyama to take over as premier on September 16.

The appointment of Ozawa is fueling fears that the veteran lawmaker will pull strings from behind the scenes -- yet again.

That could affect policy decisions on areas from diplomacy to spending when Hatoyama's government starts tackling problems including a weak economy and ties with close ally Washington.

"The question is to what extent Ozawa can restrain himself," said Tomoaki Iwai, a professor at Nihon University in Tokyo.

"There may be times when he can't."

If Ozawa acts as a shadow shogun, that could undercut a key Democratic campaign pledge to centralize decisions in the cabinet and make policy formation open and transparent.

Analysts and politicians noted, though, that times have changed since Ozawa persuaded then-premier Morihiro Hosokawa to unveil a plan to scrap a 3 percent sales tax and replace it with a 7 percent tax to fund social security costs.

Hosokawa, leader of an unwieldy coalition, dropped the plan after members of his cabinet and coalition partners called foul.

This time, Hatoyama has pledged to keep control of policy in the hands of the cabinet to avoid the haggling that has long plagued Japanese governments.

"It won't be the way it was under Hosokawa," outgoing Democratic Party Secretary-General Katsuya Okada told Reuters.

"This time, decisions will be made inside the government.

MAINTAINING DISCIPLINE

Ozawa, 67, resigned as party leader in May after his aide was charged with taking illegal donations, and the scandal is likely to come back into focus when the aide's trial gets under way.

But his influence never waned and has been further bolstered by a massive election victory he helped orchestrate that almost tripled the Democrats' representation in the 480-member lower house to 308 seats.

Defenders of Hatoyama's decision said the swollen ranks of party lawmakers make Ozawa's political skills all the more vital.

"The only one with the power to unify the party that has grown hugely is Ozawa," said Democratic Party lawmaker Akihisa Nagashima. "He's the only one who can maintain discipline."

Ozawa's campaign skills are in demand since the Democrats face an upper house election in less than a year, and are setting their sights on a majority that would end the need to rely on tiny allies to control the chamber, which can delay legislation.

Despite the worries, some analysts said it was too soon to conclude that Ozawa would call all the shots and much depends on who fills key cabinet posts.

"There are too many undecided factors to say whether there will be a dual decision-making structure or not," said Yasunori Sone, a political science professor at Keio University in Tokyo.

A protege of Kakuei Tanaka, an ex-premier who built Japan's postwar political regime of pork-barrel, factions and vested interests, Ozawa bolted the LDP in 1993 with dozens of lawmakers.

The defections sparked a chain reaction that led to the Hosokawa government and its even shorter-lived successor.

Ozawa spent the past decade and a half strategizing to create a viable rival to the LDP and took the helm of the Democrats in 2006 after a merger with his small Liberal Party.

An awkward public speaker, Ozawa has been dogged by an image as an autocratic loner who destroys the parties he creates.

He shook the political scene in 2007 with talk of a "grand coalition" with the LDP, and some wonder what he might do next.

"One thing we know about his character is that he is brooding, prone to sitting alone in his chamber and making decisions by himself, rather than by consultation," said Jesper Koll, CEO of investment consultancy Tantallon Research Japan, describing Ozawa earlier this year.

(Editing by Bill Tarrant)

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