The battle between Prime Minister Naoto Kan and Democratic Party of Japan kingpin Ichiro Ozawa comes at a time when Japan is struggling with a slumping economy, strong yen and numerous other issues requiring prompt attention.

But from fiscal to foreign policy, the remedies that Ozawa has proposed stand in stark contrast to the path so far tread by Kan, forecasting a drastic change in leadership if the DPJ power broker manages to emerge from the race as the next prime minister.

Experts say that while Kan is forced as prime minister to stick with realistic policies, Ozawa is capitalizing on his challenger status to criticize the administration and propose more daring alternatives.

“What I think is interesting about this race is that while Kan is being pragmatic, speaking from the standpoint of a ruling party, Ozawa is assuming the role of the opposition — although I doubt the practicality of his policies,” said Yasuharu Ishizawa, a professor of politics and media at Gakushuin Women’s College.

The differences between the two contestants were apparent from the first day of campaigning.

During a joint news conference with Ozawa on Wednesday, Kan stressed the need to create more jobs.

“A rise in employment will lead to economic growth, an increase in tax revenue, and to fiscal recovery,” he said.

Identifying unemployment as his priority, Kan also reiterated his intention to engage in a full-scale debate on tax reform, including a potential consumption tax hike, to cover snowballing social security costs.

But while Kan has indicated he might make a public apology if some of the promises made by the DPJ in the 2009 general election can’t be implemented due to fiscal constraints, Ozawa stood firmly behind the manifesto he helped create, calling for a full-scale review of the ¥207 trillion budgets for the general and special purpose accounts.

Ozawa stressed the need to implement all possible waste-cutting measures before debating a consumption tax hike, and promised to increase social welfare spending, including doubling the ¥13,000 monthly child care allowance to ¥26,000 by 2012.

“I feel that the current budgetary process is still dominated by bureaucrats, just like it was under the Liberal Democratic Party,” Ozawa said during a televised debate Thursday.

Emphasizing the need for policymaking based on political leadership, Ozawa was critical of Kan for urging his ministers to reduce their budget requests by 10 percent, saying that he was following the advice of bureaucrats at the Finance Ministry.

Instead, Ozawa said revenue could be squeezed out by measures such as granting lump subsidies to local governments to be used at their discretion, rather than letting the central bureaucracy hand out grants with strings attached.

“According to past DPJ surveys, municipal heads have said that if they were allowed free reign over government subsidies, they would be able to accomplish much more with only 70 percent of the amount of grants they are receiving now,” Ozawa said.

He added municipalities would be better off if they could assume control over highway construction, rather than having the central government monitor the process and assigning the work to major corporations.

While many analysts question whether Ozawa could actually deliver on such policies, some believe his reputation as an aggressive “strong hand” politician with great influence in the political arena might prove effective in wresting power away from the bureaucrats, as the DPJ initially promised when they assumed power a year ago.

Satoru Matsubara, an economics professor at Toyo University, said the screening process for the budget and public works implemented under the Hatoyama administration and now preparing for a third round under Kan, has been bureaucrat-led and can accomplish only so much.

“The method by which Kan is trying to squeeze out money is small in scale, and is no different to what the LDP and the Finance Ministry has been doing in the past,” he said. “But I believe the possibility isn’t nil for Ozawa to use his ‘strong hand’ to wring out much more.”

Matsubara said that while the bureaucracy will strongly resist measures such as granting municipalities lump subsidies, Ozawa might be able to force through such a plan.

“I believe Ozawa is far more powerful than Kan when it comes to decision-making and controlling the bureaucrats — everyone I had the chance to talk to has said that Kan’s a great hit among the bureaucrats,” Matsubara said.

The Sept. 14 election also comes at a time when the yen’s rise is weighing down the economy. The Kan administration indirectly pressured the Bank of Japan to make its recent decision to boost a cheap loan scheme, although this was mostly ineffective in weakening the currency.

Ozawa has stated he would be willing to take all possible measures, including market intervention, to counter the rise of the yen.

But most surprising may be Ozawa’s pledge to hold renewed dialogue with Washington and Okinawa over the contentious issue of relocating the Futenma air base.

Kan has stated he intends to follow through on the U.S.-Japan accord signed in May that the base be moved from Ginowan to Nago, both in Okinawa, while striving for other ways to ease the prefecture’s burden when it comes to hosting the U.S. military.

While Ozawa has revealed no specific details, his statement aroused speculation that he intends to scrap the deal and return to square one.

But during the Thursday debate, Ozawa backpedaled and said he had no specific alternate plans in mind, and the recent pact stands as it is.

Ishizawa of Gakushuin Women’s College said Ozawa was speaking the truth, that he probably doesn’t have any real solutions.

“It’s the same with his pledge to review the budget — his policies are based on what the DPJ has said before it came to power,” he said.

Ishizawa said that considering the sensitivity of the issue, Ozawa would face extreme pressure from all sides if he seriously considered tinkering with the Futenma deal and started searching for an alternative solution.

Notwithstanding who emerges as the victor, Ozawa will face possible indictment over his political money scandal if an official judicial review panel concludes for the second time that he should be charged with falsifying his political funding records.

And with the DPJ facing a divided Diet with the opposition camp holding a collective Upper House majority, enacting policies will be a difficult process.

Matsubara of Toyo University said that considering how the winner will immediately be crowned prime minister, the candidates need to be responsible with their words and be able to implement the policies they promise.

“But whatever they say is useless unless they are able to garner the cooperation of the opposition,” he said.

“I think debates should be practical and concentrate on how they plan to implement policies without an Upper House majority.”

Keep off Futenma

Kyodo News

Defense Minister Toshimi Kitazawa said Friday he believes redebating the planned relocation of a key U.S. military base within Okinawa is inappropriate ahead of the Sept. 14 Democratic Party of Japan presidential election, whose winner will be the prime minister.

Underlining that Japan and the United States reached an accord in May to move U.S. Marine Corps Air Station Futenma to another site within the prefecture, Kitazawa told reporters that bringing up the subject in the election may provoke international “skepticism” toward the government.

Current DPJ President and Prime Minister Naoto Kan and DPJ heavyweight Ichiro Ozawa are vying for the ruling party’s top post in the Sept. 14 election.

Ozawa has sent shock waves by saying it is necessary to rethink the Futenma issue, given the strong opposition from people in Okinawa to the current relocation plan.

“There may be such a discussion if the ruling and opposition parties compete in an election,” Kitazawa said. “But this is not necessarily appropriate for an election within the (ruling) party.”

Ozawa has said it is possible to find a resolution that could satisfy both the U.S. government and the people of Okinawa, who are calling for the base to be moved outside the prefecture.

But Ozawa, a former DPJ president and secretary general, has not put forth any specific alternative plans.

Kan has said the government should first respect the latest Japan-U.S. agreement, while pledging to make every possible effort to ease the burden on Okinawa, which hosts the bulk of U.S. forces in the country.

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