Japan's opposition picks ex-trade minister as new leader

TOKYO Tue Dec 25, 2012 3:45am EST

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TOKYO (Reuters) - Japanese opposition party the Democratic Party of Japan (DPJ) chose former Economics Minister Banri Kaieda to replace the outgoing Prime Minister Yoshihiko Noda as its new leader on Tuesday, after a crushing lower house defeat earlier this month.

Kaieda, a vocal critic of the outgoing leadership, won because party members blamed Noda for his handling of snap elections, and for losing public support after unpopular decisions to raise the sales tax and restart some nuclear reactors despite the March 2011 Fukushima nuclear disaster.

In a short campaign neither Kaieda nor his rival, former transport minister Sumio Mabuchi, presented a detailed vision of how they wanted to position the DPJ in relation to the ruling Liberal Democratic Party (LDP)-led coalition.

Kaieda, 63, is best known in Japan for crying in public after being berated over the then-government's energy policy in the wake of the Fukushima crisis last year, and asked to resign as a minister.

The LDP's conservative leader Shinzo Abe, who formally takes office of the Prime Minister on Wednesday, has threatened to revise a law guaranteeing the BOJ's independence unless the central bank sets an inflation target of 2 percent and embarks on bold monetary easing steps to beat deflation.

Abe has also called for more public works to help revive the stagnant economy.

In his comments to reporters after the DPJ leadership race, Kaieda criticized the idea of reviving the economy through public works as an "old way of thinking" and stressed the need to protect the independence of the Bank of Japan.

Kaieda, who was running the Economy, Trade and Industry Ministry when the Fukushima disaster struck, also signaled he would cooperate with the LDP on the sales tax hike and social welfare reform deal struck in the previous parliament.

The LDP and its smaller coalition partner New Komeito secured more than two-thirds in the parliament's lower chamber, allowing it to override the upper house where the DPJ remains the largest force.

Still, the LDP may seek compromise on some issues as overruling the upper chamber in Japan is time-consuming, cumbersome and seen by many voters as high-handed.

Kaieda also said he will reach out to other opposition parties ahead of the upper house race next summer. He is close to a former DPJ powerbroker Ichiro Ozawa, a 70-year-old political mastermind who left the party earlier this year and was re-elected as a member of the Tomorrow Party of Japan.

(Reporting by Antoni Slodkowski; Editing by Daniel Magnowski)

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