Hatoyama Resigns Over U.S. Base Decision, Funding ScandalsYukio Hatoyama quit as Japan's prime minister less than nine months after ending a rival party's 50- year lock on power as money scandals and a broken promise to move U.S. troops cost him the support of four in five voters.
"In some cases the efforts of our party haven't reached the hearts of the people," Hatoyama, 63, said in a speech to Democratic Party of Japan lawmakers. Ichiro Ozawa, the party's campaign strategist and most senior official, will also step down. Stocks fell and the yen weakened on concerns that political instability may hamper efforts to reduce Japan's public debt, the world's largest, ahead of mid-term elections next month.
Hatoyama's term was the shortest for a Japanese leader since 1994, and his resignation will force parliament to select the nation's fifth prime minister in four years. The DPJ in August unseated the Liberal Democratic Party, which governed almost without interruption for more than 50 years.
The party will choose a new head on June 4, who would become prime minister thanks to the DPJ's majority in parliament. Likely candidates include Finance Minister Naoto Kan, National Strategy Minister Yoshito Sengoku and Foreign Minister Katsuya Okada, said Steven R. Reed, a political science professor at Chuo University in Tokyo.
"This is purely an election ploy," said Yasunori Sone, political science professor at Keio University in Tokyo. "Kan will probably be the next prime minister, and his mission is to avoid a bad defeat so he can remain (in office)."
The collapse of the Hatoyama administration highlights the difficulties of achieving political change in Japan, which has suffered four recessions and persistent deflation since 1990. Hatoyama led his party into office with a promise to dilute the power of the bureaucracy and shift public spending to people rather than infrastructure investment. The DPJ-backed childcare stipends to families are starting this month.
Still, the prime minister failed to live up to expectations. His self-imposed deadline for resolving the Okinawa base issue prompted him to take two trips to the island in May in a failed effort to win understanding from local officials.
"I worked for half a year to try and move the bases off Okinawa, but wasn't able to do so," Hatoyama said during his speech.
Hatoyama ultimately lost credibility with voters after breaking a campaign promise by deciding last month to uphold an accord reached between a previous LDP-led administration and Washington to keep U.S. forces in Okinawa. The decision angered the Social Democratic Party of Japan, which abandoned the coalition government in protest, and drove the prime minister's support ratings to 20 percent, comparable to predecessor Taro Aso's just before the LDP's defeat last summer.
Polls show voters equally likely to vote for the LDP as the DPJ in the July contest for half the 242 seats in the upper chamber of parliament. Outrage over Hatoyama's handling of the Futenma Marine Air base deployment issue overshadowed reports showing the world's second-largest economy is rebounding.
Bank of Japan Governor Masaaki Shirakawa said earlier this week that the economy is "making firm progress toward sustainable growth." A surge in exports helped drive Japan's 4.9 percent annualized growth in the January-March period, the fourth straight quarter of expansion.
Investors sold the yen and Japanese stocks over political uncertainty. The Nikkei 225 Stock Average fell 1.0 percent to 9,615.16 in Tokyo, while the yen weakened against all of its major counterparts, falling to 91.44 per dollar in Tokyo from 90.94 yesterday in New York.
"Emerging signs of political instability in Japan will gradually start to negatively impact the status of the yen," said Masakazu Sato, a foreign-exchange adviser at foreign exchange margin company Gaitameonline Co. "Foreign investors normally dislike political instability."
The party may choose a new head on June 4, legislator Yoshimitsu Takashima told reporters.
Hatoyama also lost support among voters because of campaign finance scandals involving himself and Ozawa, who had to step down as party leader before last year's election. His declining popularity raised concern among his party about their electoral prospects in July.
"Approval ratings have fallen. Top party executives have lost the trust of the people," senior party legislator Yukio Ubukata said on Asahi Television this morning, before Hatoyama resigned.
Prosecutors in February indicted three former Ozawa aides on charges of violating campaign funding laws two months after two men who had worked for Hatoyama were accused of falsifying income sources. Some of that money was a gift from Hatoyama's mother, and he was forced to pay about 600 million yen ($6.6 million) in back taxes.
Three polls released this week showed Hatoyama's approval rating at or below 20 percent, compared with 75 percent when he took office.
Half of the 242 upper-house seats are at stake in the July vote. The DPJ and its other junior partner, the People's New Party, have 122 legislators, and losing that majority might hinder the government's ability to increase social welfare spending while aiming to cut the world's largest public debt. [Bloomberg]