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With a general election looming, one of Prime Minister Taro Aso’s key Cabinet members has put him in a predicament with his refusal to support the reappointment of the head of Japan Post Holdings Co., the body formed as a result of the postal system privatization.

Kunio Hatoyama, the internal affairs and communications minister, adamantly opposes Yoshifumi Nishikawa’s reappointment as president of Japan Post, which is wholly owned by the government.

Hatoyama wants to hold Nishikawa responsible for the firm’s dubious attempt to sell the Kampo no Yado nationwide resort inn network at fire-sale prices to Orix Corp. in what was deemed a conflict of interest.

Hatoyama has ultimate authority in deciding Japan Post’s board members.

He said Tuesday that he met with Aso the night before and told him he will not approve Nishikawa’s reappointment.

“If my stance is accepted, the issue will be solved immediately. It is common sense that Nishikawa should take responsibility and the prime minister is a person with common sense,” Hatoyama said.

Later Tuesday, Hatoyama urged Nishikawa to step down during an Upper House committee session on the Kampo no Yado issue.

Nishikawa, however, told the panel, “I will try to respond to the internal affairs ministry’s expectation for improvement.”

Japan Post decided late last year to sell dozens of Kampo no Yado inns and nine housing facilities to leasing firm Orix for ¥10.9 billion as a result of competitive bidding.

But Hatoyama voiced his opposition to the deal in January, calling it “a race whose result had already been decided” because Orix Chairman Yoshihiko Miyauchi was involved in crafting the government’s plan to privatize the postal services. Japan Post and Orix subsequently gave up on the deal.

The Japan Post board of directors agreed in mid-May that Nishikawa would be reappointed after his initial term expires at the end of June. Nishikawa is eager to stay on, saying he wants to push ahead with reforms.

The appointment will likely be finalized at a shareholders’ meeting slated for June 29.

One government source said Aso “will not be able to put an end to this unless either (Hatoyama or Nishikawa) quits.”

Aso, who has already had a tumultuous time since taking office last September, has said he will leave the decision to Hatoyama and two other members of his Cabinet — Chief Cabinet Secretary Takeo Kawamura and Finance Minister Kaoru Yosano.

The ministers, however, are apparently putting off dealing with the problem. Kawamura said that before there can be coordination among the ministers, they need first to see how Japan Post has improved its operations in line with Hatoyama’s business improvement order issued after the aborted Kampo inn deal.

Further trouble within Aso’s already beleaguered Cabinet could deal a crippling blow to the Liberal Democratic Party-New Komeito ruling bloc just before the next general election, which must be held by the fall, and cause further confrontations between LDP members who support postal privatization reforms and those who oppose them.

“Politicians should not overturn (a decision by) Japan Post, which is a private company,” former LDP Secretary General Hidenao Nakagawa said last Thursday. Nakagawa is close to Junichiro Koizumi, who as prime minister spearheaded postal privatization and other structural reforms in 2005.

Some LDP members are critical of Hatoyama.

“What he wants is just to grab the limelight (ahead of the election),” one party source said.

Yasuhiro Nakagawa, a Lower House member, said if the government replaces Nishikawa, the Cabinet should dissolve the Lower House. “Otherwise, Hatoyama, who is making a fuss by himself, should step down,” he said.

Nakagawa is one of the so-called Koizumi children who won their Diet seats in the 2005 election under Koizumi.

Aso has been evasive on postal reform. He said earlier this year he was not in favor of the reforms back in 2005 but later rephrased his comments and said he eventually thought the reforms were necessary.

Aso’s flip-flop created chaos in the LDP and triggered moves among lawmakers to oust him as party president.

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