The game is on..Market loves waiting for a concrete gesture..sort of like PPI on friday ..
Race for Japanese prime minister catches fire
02:44 a.m. Jul 16, 1998 Eastern
By Eiichiro Tokumoto
TOKYO (Reuters) - Japan's prime ministerial race caught fire Thursday
when a ruling party elder popular with financial markets decided to
challenge Foreign Minister Keizo Obuchi, the front-running candidate for
the post.
Party officials said in a shock about-turn, Seiroku Kajiyama, a former
chief cabinet secretary, had decided to throw his hat in the ring,
setting up a possible bruising battle next Tuesday to replace Prime
Minister Ryutaro Hashimoto.
The news set off an immediate rally by the yen, with the dollar dropping
under 140 yen.
Tokyo stocks were higher by Thursday's close on the news.
The key Nikkei 225 average closed up 117.78 points or 0.71 percent at
16,731.92, reversing an early decline to 16,498.25. September Nikkei
futures were up 90 at 16,610.
Kajiyama is regarded as the most likely of Japan's political leaders to
take drastic economic reform measures demanded by global markets to get
Japan's economy back to health.
Kajiyama, 72, is seen as favoring a quick resolution of Japan's banking
woes and other measures such as tax cuts and government spending to get
the economy moving.
''Kajiyama is bullish for Japan. He is eager to clean up bank problems.
He means a change from old-fashioned factional politics,'' said a city
bank fund manager.
Japanese media said Kajiyama may formally announce his candidacy on
Thursday.
In a sign of how the tide was turning towards Kajiyama, a cabinet
minister took the unusual step of saying bluntly and publicly that
Kajiyama, not Obuchi, was the man Japan needed in its hour of economic
need.
''Obuchi is a great man. But in order to make a breakthrough from the
current situation, we need Kajiyama,'' Farm Minister Yoshinobu Shimamura
told reporters at LDP headquarters, where the news set off a buzz in
corridors already resonating with political intrigue.
Earlier on Thursday, Obuchi -- who is head of the largest faction in the
LDP and who received the backing of his group on Wednesday to run for
party president -- delayed until at least Friday a news conference to
announce his candidacy.
His supporters had said the delay was to gather more support for him so
that there would be no appearance of party in-fighting that might worry
financial markets.
The first sign of the unraveling of a deal that had appeared to have
been worked out between Obuchi and Kajiyama, who is in the foreign
minister's faction, came when former trade minister Shinji Sato walked
out of the faction in protest.
Under the deal, Kajiyama would have stepped aside for Obuchi, 60, and
instead taken the post of finance minister.
But the lukewarm reaction of financial markets to the possibility of
Obuchi as prime minister and anger among young reformers such as Sato
that the decision would be made in backrooms rather than at Tuesday's
election, appeared to set off the revolt that exploded on Thursday.
''We want someone with leadership. The need is to restore trust in the
party. If it's just another case of backroom politics, this will be
terrible for us,'' an LDP parliament member who supports Kajiyama told
Reuters.
Hashimoto, prime minister since January 1996, is resigning to take the
blame for an Upper House election defeat last Sunday regarded as a
no-confidence vote in policies that have failed to drag Japan out of its
worst recession since World War Two.
The election on July 24 will involve all 366 LDP parliamentarians as
well as a grassroots LDP representative from each of Japan's 47
prefectures.
The Obuchi faction numbers about one-quarter of the parliament members,
but Kajiyama's decision is certain to split the bloc.
Kajiyama was also believed to have the support of many members of the
LDP's third-largest faction, led by former prime minister Kiichi
Miyazawa. The faction has 82 parliament members.
Copyright 1998 Reuters Limited. |
