Ruling party picks outspoken Aso to be Japan PM

The former foreign minister will take over the reins from Yasuo Fukuda, who quit suddenly this month leaving a policy vacuum as the economy flirts with recession and risks further damage from turmoil on Wall Street.

The new leader must try to revive the world's second-biggest economy despite the constraints of its huge public debt, although he may have scant time to do so if, as media and pundits predict, he calls an early poll for parliament's powerful lower house.

"Standing here, I feel that this is Taro Aso's destiny," Aso, the grandson of a premier, told ruling Liberal Democratic Party (LDP) lawmakers after winning 351 of 525 valid votes cast by LDP lawmakers and local chapters.

"But the LDP, as the government party, must resolutely fight the (opposition) Democratic Party in the next election, and only when we have won that election will I have fulfilled my destiny," he was quoted by Reuters as saying.

Aso, who wants tax cuts for businesses and stock investors, has said Japan's goal of balancing its budget by 2012 could be put off, a stance that has alarmed fiscal reformers in his party.

Aso won the party leadership on his fourth attempt, picking up five times the vote of his nearest rival in the election among LDP lawmakers and party branches.

Economics Minister Kaoru Yosano, a fiscal conservative, was a distant second with 66 votes and former defense minister Yuriko Koike, who was bidding to become Japan's first female prime minister, placed third with a mere 46 votes.

Critics had charged the contest was just a show to appeal to voters ahead of an expected early general election and that debate, which focused on economic policies, became blurry.

Of the five candidates, only Yosano clearly stated the need to raise Japan's 5 percent consumption tax to help fix tattered finances and even he said an initial hike would be years away.

Media reports said Aso was considering keeping Yosano in a new cabinet to be formed on Wednesday as well as tapping another rival, former defense minister Shigeru Ishiba, in an effort to unify the party, which is suffering from dismal voter ratings.

The LDP leader is assured the premiership by virtue of the government's majority in parliament's powerful lower house, which is due to vote in a new prime minister on Wednesday.

OPPOSITION REACTS
Senior opposition leader Naoto Kan immediately went on the offensive, saying Aso spoke only about himself and the LDP in his first remarks.

"I’m worried about having him lead Japan," AFP quoted Kan as saying on television.

"Weve said that we need to hold real discussions on emergency measures to handle Lehman Brothers and oil prices," Kan said, referring to the collapse of the U.S. investment giant that has rocked global markets.

SNAP ELECTION
Although an outspoken nationalist, Aso would likely stick to Fukuda's line on foreign policy, solidifying Japan's tight security alliance with the United States and improving relations with China, which have warmed lately after years of strains due to disputes stemming from wartime history.

While Aso has called for more transparency in China's rising defense spending, he says Tokyo should welcome Beijing's economic growth and is likely to stay away from Tokyo's Yasukuni Shrine, seen by critics as a symbol of Japan's past military aggression.

Aso, a dapper dresser and fan of manga comic books popular with young people, regularly tops voter surveys for next prime minister, making him the LDP's natural choice to lead it in a general election that must be held by next September.

Japanese media say an election could be called for as early as Oct. 26 to make the most of any bounce in public support after the unpopular Fukuda became the second leader to abruptly resign in less than a year, although Aso said on Sunday that his priority was to pass an extra budget to support the economy.

The new leader would be seeking a mandate to break a deadlock in parliament, where the main opposition Democratic Party and smaller allies control the upper house and can stall legislation.

But the ruling coalition is widely expected to lose the two-thirds lower house majority that allows it to override upper house vetoes, and analysts say a clear victory for either side may prove elusive, leaving more policy paralysis.

Speculation persists over a possible rejigging of party allegiances to clear the way for smoother policymaking, although an attempt by Fukuda and Democratic Party leader Ichiro Ozawa to form a "grand coalition" flopped last year.

Photo: AP