CBSN

Obuchi Goal: To Fix Economy

Japanese Prime Minister Keizo Obuchi will stay in office only until the nation's economy is revitalised, a government source said on Friday.

Parliament declared ruling party candidate Keizo Obuchi Japan's next prime minister Thursday, rejecting an opposition leader who had a bigger following among Japanese voters. Obuchi takes the helm of a country wrestling with its deepest recession in decades.

CBS News Correspondent Barry Petersen reports that it was less an election than it was a coronation. Everyone knew the outcome because the ruling party controls the lower house, which ultimately decides a divided election. And Obuchi was the choice of the lower house.

So Obuchi, once dubbed "as exciting as cold pizza", was voted in. His new job came with a quick glitch. In a symbolic protest vote, the upper house voted for someone else, an opposition leader.

An anonymous source, who is close to Obuchi, told reporters that, "Mr. Obuchi does not intend to stay in power for too long." Although the source claims that Mr. Obuchi was committed to doing "something which is good for the nation, which is good for the region, which is good for the entire international community."

In a decisive victory in the powerful, ruling party-controlled lower house, Obuchi snared 268 votes of 497 ballots, a comfortable margin above the 249 needed. Opposition leader Naoto Kan was runner-up with 164 votes.

In a sign of the political divisions in Japan's government, however, the opposition-dominated upper house endorsed Kan as premier with 142 of the 245 votes counted. Obuchi came in second with 103 votes in the second ballot.

Since the lower house has the power to overrule the upper house in the vote for premier, Obuchi was declared the winner after a conference between the two chambers failed to produce a compromise. It was the first time since 1989 that the chambers had split over who should be premier.

Obuchi, 61, who served as foreign minister until resigning along with the rest of the Cabinet Thursday morning, succeeds Ryutaro Hashimoto, who was forced to quit after voter outrage over the stumbling economy dealt the ruling party a painful defeat in July 12 upper house elections.

The Liberal Democratic Party stalwart takes over a country suffering its worst recession since World War II, with record-high unemployment and spiraling bankruptcies. Obuchi also faces divisions in his own party and the growing threat of an increasingly popular opposition.

For Thursday's vote, the ruling party showed unity in backing Obuchi. Even former Health Minister Junichiro Koizumi, who challenged Obuchi for the LDP presidency, called for support for the new government.

"It's not a question of believing in the new administration or not," he said. "We have to believe in it, and we have to work toward the end of solving Japan's financial crisis."

The opposition, meanwhile, said te victory in the upper house better reflected the opinions of voters.

The new prime minister's first priority will be the economy - a priority illustrated by the rapt attention the country has paid to Obuchi's choice of former Prime Minister Kiichi Miyazawa to head the high-profile Finance Ministry.

While Obuchi is widely considered a cautious leader with few innovative ideas to reactivate Japan's troubled economy, Miyazawa, 78, is respected by many as an economics expert and architect of the government's plan to bail out its debt-laden banking system.

Talk that Obuchi would pick Miyazawa, who served as prime minister from 1991 to 1993, triggered rallies in the Tokyo markets this week.

On the Tokyo Stock Exchange Wednesday morning, share prices moved higher, with investors taking the Miyazawa appointment as a sign the incoming government will enact new measures to boost the economy. The yen slumped slightly against the U.S. dollar, however.

The finance job is considered the linchpin of Obuchi's so-called "economic reform Cabinet" and crucial to Japan's efforts to pull out of recession. With unemployment and bankruptcies at record highs, Obuchi is under intense pressure - at home and abroad - to move quickly to turn the economy around.

Obuchi already has pledged to cut income taxes by $42.6 billion and promised $70.9 billion in new spending to jump-start economic growth and consumption. "I will definitely carry out these promises," he stated in his first news conference since taking office. "The most important thing is to get the understanding of the Japanese people."

Analysts say that it is likely to take at least one or two years for the economy to turn around, and Obuchi's term expires in September of 1999.