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. Last Updated: 07/27/2016

Japan Picks Party Stalwart Obuchi

TOKYO -- In a victory for Japan's political old guard over dissident lawmakers, Foreign Minister Keizo Obuchi won the vote for ruling party president Friday, virtually sewing up his quest for prime minister but dimming hopes of drastic action to fix the troubled economy.

Obuchi, a party stalwart with a long but conventional career in government, snared 225 of the 411 votes cast in a first ballot -- far more than rivals former Chief Cabinet Secretary Seiroku Kajiyama and Health Minister Junichiro Koizumi. Kajiyama came in second with 102 votes, and Koizumi took 84.

The new Liberal Democratic Party president automatically becomes the party's candidate for prime minister when the parliament convenes for a vote, expected July 30. Obuchi is nearly certain to win because the LDP has a comfortable majority in the powerful lower house, which can overrule opposition from the upper house.

Obuchi, 61, would take over from Prime Minister Ryutaro Hashimoto, who announced last week he would resign after the party's stunning reversal in July 12 elections for the upper house. He also would assume stewardship of Japan's economy, now in its worst recession since the end of World War II.

The new LDP standard-bearer vowed Friday to straighten out Japan's financial mess.

"The key issue at the moment is to repair Japan's economy, fulfill our expected role in the international community and ease the public's uncertainty about the future,'' Obuchi told reporters in a news conference after the vote.

"Because the economic slump in our country has a big impact on Asia and the rest of the world, we have to pull Japan out of recession as soon as we can,'' he said.

It was uncertain, however, if Obuchi -- backed by the largest and most traditional wing of the party -- was up to the tough task of the major changes analysts say are needed to solve the myriad problems his country faces.

So far, he has prescribed an income tax cut worth 6 trillion yen ($42.6 billion) and 10 trillion yen ($70.9 billion) in new spending to kickstart economic growth and spur lagging consumption, moves that economists say are needed but might not be enough.

"There will be a new face, but no big policy changes,'' said Shigenori Okazaki, a political analyst at SBC Warburg Japan Ltd., pointing out that Obuchi is supported by the same party cliques that were behind Hashimoto.

People in Tokyo expressed resigned displeasure at the LDP's choice of staid party-insider Obuchi, who had the least popular support among the candidates.

"I'm beyond disappointment,'' said Yuko Imamura, 28, a trading company employee. "This way, there was no point in having the upper house elections.''

The vote followed what was by Japanese standards a rough-and-tumble campaign for party president, an open race that was forced by a boisterous band of younger dissidents who argued the staid ruling party had to abandon backroom politics and appeal directly to voters to enhance its popular support.

Kajiyama, 72, jumped into the race after establishing himself in recent months as an economic reformer, at one point declaring that more than half of Japan's debt-laden banks should be allowed to fail. Koizumi, 56, who has proposed privatizing Japan's massive postal-savings system, was the favorite of party rebels.

As the second-place finisher with appeal both inside and beyond the party, Kajiyama, who served for a time under Hashimoto, could be in line for a prominent spot in an Obuchi Cabinet.

"Today is a new start for me,'' he told reporters, vowing to work inside the party to make it more appealing to voters. Party dissidents were disappointed. There were rumblings in the party that some of the more disaffected members could defect or abstain from the Parliament vote, but the numbers were small enough that the threats were unlikely to block an Obuchi premiership.

Still, critics attacked the party for being resistant to change.

"I was surprised. I thought I would be the runner-up,'' said Koizumi. "I guess the LDP has not developed enough flexibility to approve me.''

A top opposition leader said Obuchi's emergence would not lead to a change in Japan's direction.

"Without changes in the LDP's politics and its systems, there is little hope that they can live up to the public's expectations,'' said Kunio Hatoyama, vice president of the largest opposition group, the Liberal Party.

Should he become prime minister, Obuchi's job will not be simple.

Unemployment is at a record high of 4.1 percent. Bankruptcies are mounting at their fastest rate since the end of World War II. Japanese banks are saddled with 84 trillion yen ($604 billion) in bad loans. U.S. credit rating agency Moody's Investors Service announced Thursday it will review its rating for Japan's government debt.

The sour economy and general fatigue with the way the LDP is running the country were widely seen as the major factors in the party's disastrous showing in the upper house elections.

The party's attempt to remake its image as open to change, however, apparently did not make much of an impact on voters. A poll by a major newspaper, the Yomiuri, showed the LDP with its lowest approval ratings ever. This could mean more political turmoil down the road for Obuchi.

"Unless he finds a new coalition partner, there is a serious risk he will be forced to resign or call a snap election,'' said Okazaki, the political analyst.