DPJ OKs Shirakawa, says no to Watanabe

End in sight for BOJ leadership vacuum

by and

The Democratic Party of Japan said Tuesday it will approve Masaaki Shirakawa as governor of the Bank of Japan and fill the leadership vacuum at the central bank but will shoot down the government’s nominee for one of the deputy governor positions.

DPJ chief Ichiro Ozawa is believed to have opposed Hiroshi Watanabe’s nomination for the No. 2 slot, even though many other lawmakers in the party supported him.

Both Diet chambers are scheduled to vote on the BOJ nominations Wednesday. The DPJ holds the decisive vote in the opposition-controlled Upper House.

With the party’s endorsement, Shirakawa, who has served as acting BOJ chief in the absence of a governor following the exit of Toshihiko Fukui on March 19, is set to formally become the central bank chief.

Last month, the DPJ endorsed Shirakawa when he was nominated as one of the two deputy governors, and the party had already indicated that it saw no problem in his promotion as the BOJ chief.

Thus the focus was on whether the DPJ-led opposition would approve Watanabe, a former vice finance minister for international affairs, given that the party had rejected two earlier government nominees for BOJ chief because of their Finance Ministry backgrounds.

After both Shirakawa and Watanabe appeared before the Diet to lay out their plans for the central bank, many key DPJ lawmakers appeared to support Watanabe’s appointment, saying they recognize his experience and qualifications.

But in the evening, the DPJ executive committee decided to reject the nomination, saying the party needs to be consistent in its policy of trying to end the practice of “amakudari,” in which retiring bureaucrats are handed high-paying jobs in the private or public sector.

“In the end, we decided to clearly say no to the amakudari (of Finance Ministry officials becoming BOJ governors or deputy governors), and we believe that the public will understand (our decision),” DPJ Secretary General Yukio Hatoyama said. “What we want is a country led by the public and not by bureaucrats.”

Hatoyama confirmed that the DPJ was divided over whether to endorse Watanabe.

Hatoyama was one of the DPJ lawmakers leaning toward supporting Watanabe, citing his experience in international monetary affairs. Some DPJ lawmakers expressed concern that the party could be criticized for repeatedly rejecting the government’s nominees for the BOJ jobs, he said.

“But regardless of personal opinions, I believe it is more important (for the party) to unite under the leadership of DPJ President Ichiro Ozawa,” who was against Watanabe’s nomination, Hatoyama said.

Some other DPJ lawmakers spoke favorably of Watanabe, currently a Hitotsubashi University professor, after he appeared before the Diet.

“(Watanabe) is different from the past nominees in that he was involved in the international monetary markets for 10 years” and has experience in the international arena, said Yoshito Sengoku of the DPJ.

The DPJ previously rejected Toshiro Muto and Koji Tanami, for the top spot.