Published February 18, 2009

Japan govt lurches into crisis as 'drunk' minister quits

Stimulus package may be delayed and general elections may be called early

By ANTHONY ROWLEY
IN TOKYO

	Email this article
	Print article
	Feedback

POLITICAL and economic crisis threatened to engulf Japan yesterday after Finance Minister Shoichi Nakagawa quit his post following an uproar over his odd behaviour at a news conference during last week's G-7 finance ministers meeting in Rome.

Mr Nakagawa: Slurred when he spoke, appeared to be on the point of sleep and even answered a question intended for Bank of Japan governor Masaaki Shirakawa

Mr Nakagawa, a close ally of embattled Prime Minister Taro Aso, at first said that he would step down once Parliament passes the budget for fiscal 2009. But yesteray, he yielded to intense pressure from both ruling and opposition parliamentarians and agreed to go immediately.

Economics Minister Kaoro Yosano, a 70-year-old veteran of Mr Aso's controlling Liberal Democratic Party, was appointed to replace him. But analysts said yesterday that Mr Aso is simply shoring up a crumbling political edifice and that an early general election now seems inevitable.

Japan is seeing its worst economic contraction in 35 years and Mr Aso's attempts to push through an economic stimulus are hampered by his weak political position. Visiting US Secretary of State Hillary Clinton yesterday invited Mr Aso to Washington next week, on behalf of President Barrack Obama, but analysts said that his position could be compromised.

Mr Aso's situation was already shaky after former prime minister Junichiro Koizumi lambasted him last week for what he called 'laughable' policy pronouncements by the prime minister, and criticised his strategy of making cash handouts to the public part of his fiscal stimulus plan.

With some opinion polls showing that Mr Aso's popularity may have sunk below 10 per cent and with the opposition Democratic Party of Japan pushing to oust the ruling Liberal Democratic Party from power as soon as possible, he could be forced to call an election before the due date in October, analysts said.

Even the LDP's coalition partner, the New Komeito Party, rebelled against him over the Nakagawa affair and joined the Opposition in demanding that the finance minister quit.

Mr Nakagawa slurred when he spoke, appeared to be on the point of sleep and even answered one question intended for Bank of Japan governor Masaaki Shirakawa during the press conference. The incident was widely reported and opposition politicians have claimed that it damaged Japan's international image.

Mr Nakagawa said that he had been taking cold medicine and denied that he had been drinking. Japanese media have previously commented on his alleged heavy drinking.

'I have caused trouble to the people,' Mr Nakagawa said in announcing his decision to step down. 'I apologise for causing commotion from my careless health management.'

Mr Nakagawa's initial stipulation that he would step down only after the fiscal 2008 budget is passed made the timing of his departure uncertain. The DPJ-controlled upper house of Parliament is expected to reject the budget, which would mean that the government-controlled lower house could then force it through on a second vote.

But with the possibility that some LDP members (including Mr Koizumi) could rebel against such a move unless the controversial cash handout measures are dropped, Mr Aso may wish to avoid railroading tactics. This would mean a delay in stimulus for the economy which some suggest is likely to contract by up to 6 per cent or even more this year.

Mr Aso had few obvious candidates to turn to to take over the finance portfolio and his choice of Mr Yosano was widely predicted once Mr Nakagawa said that he would go.

Mr Yosano was a contender with Mr Aso last September in a contest for the presidency of the LDP and for the position of prime minister. He is known for his fiscally conservative views and some analysts question whether he is the right man to push through the kind of bold stimulus policies that Japan needs now.

A 'revolving door' succession of prime ministers - three in the space of two years and possibly with another early departure in prospect - plus a string of resignations by other government ministers have badly damaged the credibility of the LDP, which has held power almost uninterrupted for five decades. Polls suggest that it would lose an election now.