— Adds Quotes From News Conference In Paragraphs 4-8

TOKYO (MNI) – Japan’s liberal Prime Minister Naoto Kan on Tuesday
scored an overwhelming victory in the ruling party leadership race
against conservative lawmaker Ichiro Ozawa, reflecting a public call for
the incumbent to continue his policy of creating jobs, fighting poverty
and ensuring social security even through a sales tax hike.

Kan won a total of 721 points in the Democratic Party of Japan
presidential election, beating Ozawa, who gained only 491 points.

While Kan, 63, has a grass-roots activist background and is known
for his fiscal conservatism, Ozawa, 68, is a behind-the-scenes dealmaker
who has in the past led the DPJ to major parliamentary election wins
with promises of larger program spending.

Kan, who assumed the premiership in June replacing Yukio Hatoyama,
told a news conference on Tuesday evening that he will listen to party
heavyweights from Wednesday onward before deciding what to do with the
new party leadership lineup.

He declined comment on whether he will give Ozawa any senior party
position but acknowledged that his challenger had “deep insight.”

“It’s been only three months since I took office but at the same
time in the past three months, we’ve embarked on the new growth strategy
and have been tackling many issues. We’re are now moving in full swing,”
he told reporters.

“We will make full-fledged efforts to revive the Japanese economy
for the next three years under the current (four-year) terms of the
House of Representatives” he said, when asked if he would consider
dissolving the lower house and call a national election during his
two-year term as the new DPJ leader.

Kan didn’t say when he plans to call an extraordinary parliamentary
session in order to discuss the need for further economic stimulus
measures backed by a supplementary budget.

Kan won 249 points from DPJ voters, 60 points from local assembly
members and 412 points from DPJ members of parliament, compared with 51
points, 40 points and 400 points scored by Ozawa.

Like his predecessors, Kan has been seeking ways to guide Japan out
of the persistent deflation while setting the stage for cutting the
government’s huge public debt and securing a stable source of funds for
rising social security costs due to the nation’s rapidly ageing
population.

The government’s latest economic package includes measures to help
new graduates find jobs through trial hire and internship programs,
support people living under the poverty line and back small businesses’
investment in technological development, all of which will be funded by
reserves for the fiscal 2010 budget.

Since June, Kan has been at odds with Ozawa as he revived the
function of the party’s policy research council, which had been
suspended during Ozawa’s tenure.

The idea behind abolishing the council was to concentrate
policymaking power at the Prime Minister’s Office but DPJ lawmakers who
held no cabinet or deputy ministerial positions have complained that it
was hard to contribute to the policymaking process.

Kan has also said the ruling party should push for cleaner politics
and “regain public confidence first and foremost.” He has renewed his
call for a total ban on political donations from corporations and
organizations.

Public support for the DPJ government had declined partly because
of political funding scandals involving both Hatoyama and Ozawa, and
eventually led to Hatoyama’s resignation in June.

Ozawa, the driving force behind the DPJ’s landslide election wins
in 2007 for the upper house and 2009 for the lower house, was forced to
resign as the DPJ secretary-general, the number two position at the
party, at the request of Hatoyama in early June.

On the policy front, Kan has called for a tax hike to allow the
government to secure a stable funding source for additional public
spending on job creation, which would help Japan move out of stubborn
deflation.

His abrupt call for a sales tax increase during parliamentary
election campaigns was partly to blame for the DPJ’s loss in the upper
house election in July this year.

But Kan appears to maintain his belief that the government should
implement “a combination of a strong economy, a strong fiscal position
and strong social security.”

Kan joined politics in 1974, when he managed an election campaign
for women’s rights activist Fusae Ichikawa. He lost his parliamentary
election bids the first three times he tried but won a Lower House seat
in 1980 as a member of the Socialist Democratic Federation. He’s been
re-elected 10 times since then while being affiliated with different
political parties.

This political lineage is in sharp contrast to his predecessor,
whose grandfather Ichiro Hatoyama was prime minister from 1954 to 1956
and the first leader of the Liberal Democratic Party, now the main
opposition party.

Last year, Yukio Hatoyama came under fire for saying he was unaware
of the fact that his wealthy mother donated a large amount of money to
his office. A former secretary to Hatoyama was indicted for falsely
reporting this and other political donations.

Kan gained national fame in 1996, when as health minister he
ordered ministry officials to find missing internal documents that, once
found, unveiled the government’s inaction in preventing tainted blood
from spreading through the medical system.

At the time, Kan belonged to a small political party called
Sakigake (meaning harbinger) that was part of a coalition with the
Liberal Democratic Party, which ruled Japan continuously — either
singlehandedly or with a coalition partner — from 1955 until last
summer, except for a brief period from August 1993 to June 1994.

In 1996, Kan, together with Hatoyama and other lawmakers, launched
what would become the current Democratic Party of Japan and served as
co-leader with Hatoyama. Kan then became the first DPJ president in
1998.

In 2002, Kan became the leader of the DPJ for the second time and
oversaw the 2003 merger with a smaller center-right party led by Ozawa,
who has his origin as a conservative LDP politician favoring
behind-the-scenes politics. Ozawa was behind the grand coalition that
ousted the LDP from power in August 1993.

msato@marketnews.com
** Market News International Tokyo Newsroom: 81-3-5403-4833 **

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