Japan’s Prime Minister Naoto Kan said he was resigning 14 months into the job, undone by a backlash over his leadership after the March 11 earthquake and tsunami spawned the nation’s deepest postwar crisis.
“I feel I’ve done everything I could under these difficult conditions,” Kan, 64, told Democratic Party of Japan (DPJ) lawmakers at a nationally televised meeting on Friday in Tokyo. He spoke after parliament passed the final two pieces of his legislative agenda.
The ruling party will select his replacement on Monday in a race pitting former Foreign Minister Seiji Maehara against finance chief Yoshihiko Noda, Trade Minister Banri Kaieda, Agriculture Minister Michihiko Kano and three others. Kan said he will dissolve the Cabinet after the DPJ election.
Having built a reputation as a maverick by taking on bureaucrats in a 1996 blood-supply scandal, Kan was already under fire over campaign financing when the record 9.0 quake and tsunami struck March 11, killing almost 16,000 people. He failed in attempts to form a coalition with the opposition, and saw his own party press for his resignation over perceptions he was slow to react to the worst atomic disaster since Chernobyl.
“Kan lacked vision in a time of crisis,” said Jeff Kingston, head of the Asian Studies program at Temple University’s Tokyo campus. “It looks like the political elite of Japan is always inclined to squander their opportunities.”
His resignation will usher in the nation’s sixth head of government in five years, and the DPJ’s third since it unseated the Liberal Democratic Party in August 2009.
The party’s historic win over the LDP, which dominated Japan for half a century, came with pledges to restore a country burdened by deflation, an aging population and the world’s largest debt.
INCOMER’S CHALLENGES
The next leader will inherit an economy threatened by a potential exodus of companies beset by power and supply-chain challenges after the quake and an exchange rate near a postwar high against the dollar. With tax revenue eroded by three straight quarters of declines in gross domestic product, the next premier will also need to fund rebuilding after the quake leveled whole towns and sent 15-metre (49 foot) waves crashing into the Fukushima Dai-Ichi nuclear power plant.
Stocks were little changed after Kan’s announcement, with the Nikkei 225 Stock Average up 0.2 per cent at 2.29 pm in Tokyo. The yen rose 0.3 per cent to 77.20 per dollar. The Nikkei has declined eight per cent since Kan took office on June 8, 2010.
“GO” DEVOTEE
Kan, a devotee of the strategy game “go,” which he likes to play on the Internet, pledged in June he would resign after the Diet passed three bills that will help craft his legacy. The upper house on Friday approved the final two measures, including legislation that will subsidise electricity from renewable sources as the country reduces its dependence on atomic energy.
With his popularity plunging below 20 per cent, the countdown to Kan’s departure began June 2, when criticism from the opposition and some in his own party prompted a no-confidence vote that he fended off.
Kan at first won plaudits for a swifter response to the March 11 quake than the government’s reaction in 1995 to the Kobe temblor, donning disaster-response gear as he led televised press conferences and deployed the nation’s self-defence forces.
His political response started coming apart less than 10 days after the catastrophe, when LDP head Sadakazu Tanigaki rejected an overture to join with Kan and become vice prime minister. Tanigaki said he told Kan “you should devote yourself to help refugees and manage the reactors issues.”
RESPONSE STRUGGLES
The government also struggled to respond as the Fukushima crisis escalated, forcing the evacuation of 60,000 people as the crippled plant spewed radiation into the water, air and food.
While Kan’s commitment to overhaul Japan’s energy policy put him in sync with opinion polls that indicated rising public unease over the country’s reliance on nuclear reactors, he was unable to translate that into backing for his leadership, according to Richard Samuels, a political-science professor at the Massachusetts Institute of Technology who follows Japan.
The disaster at Fukushima capped decades of faked safety reports and fatal accidents in Japan’s atomic industry with the regulator in a conflict of interest as it was under the control of the ministry of economy, trade and industry, which had a mandate to promote nuclear power.
‘FAILED TO COORDINATE’
“Had Kan been a more a more skilled politician, he might have capitalised on this, and his plans for a fundamental shift in energy policy could have paved a path back to popularity,” Samuels said in remarks to the Seattle-based National Bureau of Asian Research this month. Instead, he “failed to coordinate his nuclear policy pronouncements” with his own cabinet members, Samuels said.
Kan’s leadership had already been at risk hours before the quake, when he had begun attempting to defuse a scandal over a political donation he received. His tenure was also blighted by the DPJ’s loss of an upper house election in July 2010 after he signaled he aimed to raise the national sales tax.
On Friday marks the third time Kan has stepped down as head of the party that he helped to found in 1998. In May 2004, he quit as DPJ chief after disclosing he didn’t make 10 months of compulsory pension payments while head of the health ministry, which supervises pensions.
During his tenure there, Kan forced bureaucrats to surrender documents that shed light on their role in causing thousands of Japanese to contract HIV through contaminated blood products.
Kan was born in Yamaguchi, western Japan, and went to high school in Tokyo. He earned a bachelor’s degree in applied physics at the Tokyo Institute of Technology, and became a patent attorney before entering politics.
PASSED BY CHINA
As prime minister, Kan has overseen an economy that lost its mantle as world’s second largest to China. Japan’s GDP, unadjusted for price changes, is about 17 per cent smaller today than at its peak in 1997.
The yen’s 18 per cent appreciation against the dollar since Kan took office has threatened manufacturing companies that are also coping with challenges to long-term power needs after the quake. Japan abandoned a six-year policy of refraining from currency-market intervention as Kan’s government implemented three rounds of yen sales in an effort to arrest the advance.
Toyota Motor Corp, the nation’s biggest car maker, has said that every one yen gain against the dollar cuts operating profit by 34 billion yen ($440 million) according to its current full-year outlook, which is based on 80 yen to the dollar. Nissan Motor Co and Honda Motor Co also expect the same exchange rate.
Kan also oversaw downgrades to Japan’s sovereign credit rating, with Moody’s Investors Service cutting it one step to Aa3 this week and Standard & Poor’s lowering it to AA- in January.
TAX POLICY
The nation’s new leader will face a party divide over whether to raise taxes to pay down the world’s largest debt.
Maehara, who would be the youngest premier since World War II, said in a June interview that deflation should be defeated before raising taxes. Noda supports tax increases to pay for reconstruction as well as doubling the sales levy to 10 per cent by the middle of the decade to contain the debt burden. Kaieda and Kano have yet to specify their positions
“No matter who becomes the next leader, he probably wouldn’t have the guts to raise taxes to fund reconstruction because they’re more worried about losing popularity than about Japan’s fiscal situation,” said Hiromichi Shirakawa, chief Japan economist at Credit Suisse in Tokyo.
Voters have soured on the DPJ since it failed to fulfill campaign pledges including on childcare assistance, and as it repeated the LDP’s record of a revolving door of leaders.
