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Politics

A fiscal conservative vows to help sharpen Abe's new economic arrows

Nobuteru Ishihara, Japan's new economy minister, speaks after a cabinet meeting on Jan. 29. (Photo by Makoto Okada)

TOKYO   Nobuteru Ishihara, Japan's new economic and fiscal policy minister, promised on Jan. 29 to focus on achieving growth, dispelling concerns that his fiscally conservative views could hinder some of Prime Minister Shinzo Abe's policy priorities.

     Ishihara has his work cut out for him in succeeding Akira Amari, a veteran lawmaker felled by graft allegations. Amari was a key architect of Abe's reflationary policy, known as Abenomics.

     "We must have solid discussions about policies for the first new arrow," Ishihara told reporters, referring to three new initiatives of the Abenomics policy. "I will put all my heart and soul into this."

     He added, "We will expand the economy's virtuous cycle."

     Ishihara will be in charge of that first "arrow" -- realizing a strong economy by combining fiscal and monetary stimulus with growth strategies. Specifically, Abe has set a goal of achieving a nominal gross domestic product of 600 trillion yen ($4.95 trillion) by around 2020.

     Some market participants thought that Ishihara's ascent might lead to belt-tightening, given his reputation as a fiscal conservative who has served as vice chairman of the ruling Liberal Democratic Party's tax commission. When the Democratic Party of Japan was in power, Ishihara, as the LDP's secretary-general, led talks between the LDP-Komeito alliance and the DPJ to work out an agreement that paved the way for raising the consumption tax.

     His mention of economic growth at the news conference, however, is being taken as a signal that he intends to stay the course.

     Ishihara will lead the creation of the government's annual blueprint for economic and fiscal policy, due out in early summer. This will include revised fiscal consolidation plans. Ishihara is aware that some members of his own intraparty faction are arguing against spending cuts ahead of the summer's upper house election, and speculation is growing that he will not push too hard for fiscal discipline.

NEW TARGET   While Ishihara may have allayed worries about the fate of Abenomics, concerns persist about his political instincts.

     Commenting on the construction of intermediate storage facilities for radioactive waste as environment minister, Ishihara drew fire by saying that, in the end, money would decide whether municipalities agree to host the facilities.

Akira Amari announces his resignation as economy minister in Tokyo on Jan. 28. (Photo by Akira Kodaka)

     Starting in April, a heated debate is expected in the Diet over the Trans-Pacific Partnership trade pact, for which Amari served as chief negotiator. Ishihara will have to field questions in parliament on the government's behalf. Opposition parties are already looking forward to grilling him; they consider him much easier to deal with than Amari.

NO PEACEMAKER   Amari's departure also cost the government a crucial mediator between key cabinet members. In particular, Amari served as a buffer between Finance Minister Taro Aso, who called for fiscal discipline, and Chief Cabinet Secretary Yoshihide Suga, who always backed Abe's economic approach.

     While Ishihara and Abe have known each other for years -- the two men and others formed a policy research group when they were young lawmakers -- they fought each other in the 2012 election for LDP president. From Aso and Suga's point of view, Ishihara is a rival of the Abe camp. So it is unlikely that Ishihara will be able to act as a mediator for the two heavyweights.

(Nikkei)

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