Naoto Kan Wants To Rule Japan And He Says So

The charismatic Democrat has Japanese excited about an opposition leader

Naoto Kan has never been busier. He has been working 16-hour days, thrashing out a bank rescue acceptable to the Democratic Party of Japan, which he heads, and the ruling Liberal Democrats. Before the drama of the bank rescue started, Kan was on the campaign trail, engineering the DPJ's stunning electoral victory in July. That upset blocked the LDP from gaining control of the national Diet's upper house and gave Kan the clout to negotiate the banks' fate with the Establishment. But even with this exhausting schedule, Kan still finds time to study. The text he pores over: The Downing Street Years, the memoirs of former British Prime Minister Margaret Thatcher. Says Kan's wife, Nobuko: "Yes, he'd like to be Prime Minister."

Kan's open ambition to rule has the political classes in a high state of excitement. The LDP has never had to face an opposition of any substance, and for decades it has only been absent from power for a brief period in 1993. But Kan looks like the genuine article--a charismatic politician boldly pursuing a policy of painful reform, but one who still commands huge popularity among voters. He has masterfully used negotiations over the banks to expose the LDP's policy waffles and inability to articulate a clear reform agenda. In short, he has a better chance than any outside politician of becoming the next Prime Minister. His bid might yet fail. But whatever happens, Japan is finally hearing an alternative view to the LDP policies that have pushed the country to the brink.

The next peril Kan must face is the consequence of success. He and his aides originally wanted to block any bank plan by the LDP and quickly force a general election instead. "He still believes we need an election to let voters decide who should carry out reform," says his wife. "But he has realized that voters want action on the economy first."

So in a quick change of strategy, Kan has hammered out a plan with the LDP, forcing the Liberal Democrats to agree to nationalize Long-Term Credit Bank of Japan, which is staggering towards insolvency. The LDP had wanted to ladle out cash to LTCB from a $100 billion public fund, then merge it with Sumitomo Trust & Banking Co. But Kan has said no, arguing that a bailout with taxpayer money would perpetuate the system of sick banks that never quite die. With their backs to the wall, the LDP negotiators caved.

But now, Kan's young party needs to show the people that its "hard landing" plan actually works. If a number of sick banks slip into bankruptcy, now that Kan has signaled his opposition to public bailouts, voters might turn on the DPJ for triggering a meltdown. "We are quite anxious," admits Satsuki Eda, a DPJ member of the House of Councillors, the Diet's upper chamber. "We are sure it is necessary to rebuild our economy. But we are not sure our intentions will be understood." For now, though, it seems the public favors Kan's call for tough policies that force fast solutions. "Kan has won the political lottery," says Seiji Maehara, a DPJ member.

IRRITATING. Kan, who turns 52 in October, has waited a long time for stardom. A patent lawyer and physicist by training, he has always been committed to the political life. During campus riots in the late 1960s, Kan emerged as a leader of a nonviolent, moderately left-wing student front. He got his first taste of national politics in 1974 by managing the successful campaign of the late Fusae Ichikawa, a leading feminist and a vehement critic of corruption. Like Ichikawa, Kan regarded LDP Prime Minister Kakuei Tanaka, who perfected the art of money politics and was later convicted of bribery, as the country's chief villain.

Kan ran for public office three times before finally winning a seat in the lower house in 1980. A member of the tiny, leftist Shaminren party, Kan pounded the LDP leadership with questions on everything from health-care reform to nuclear power safety. That earned him the label Ira Kan for his irritating ways.

But it wasn't until 1993, when a fragile coalition bumped the scandal-ridden LDP out of power, that Kan came into his own. For two years, Kan played a central role in drafting policy, including increased funding for basic science research in universities. He rose to national fame in 1996, when as Health Minister he lifted the lid on the scandalous failure of his agency's bureaucrats to block the sale of untreated blood products, despite knowing of the risks of HIV contamination. Bureaucrats nicknamed him the Destroyer for his ruthless attacks. Since then, Kan has topped nearly every poll querying voters on their choice of Prime Minister.

While support droops for LDP Prime Minister Keizo Obuchi, Kan's popularity continues to grow. Kan and the DPJ want permanent tax cuts to stimulate consumer spending and draconian measures to clean up the bad bank debts that Kan estimates total some 20% of gross national product.

But the DPJ has weakness. Kan still wants to engineer a general election, but his party as yet cannot match the LDP's organizational strengths, and it could fracture under pressure. The DPJ is called the "melting pot" party because its members hail from three different groups that merged to create Japan's second-largest political bloc. While it has agreed that taxpayer money should not prop up failing banks, members split on key issues, including the amendment of the U.S.-Japan Security Treaty. Moreover, the loyalty of DPJ insiders is not a sure thing. In briefings with the Japanese press, some DPJ politicians call Kan a dictator for single-handedly setting party strategy without consulting them. So Kan must watch out.

WIGGLE ROOM. The LDP may also strike back. Obuchi has consented to use the opposition plan as a basis for legislation--but it has not been drafted yet. "The only thing we have agreed on is the temporary nationalization of LTCB," exclaims Yoshimi Watanabe, an LDP member of the lower house. "We have not settled the most important issue of how to build a financial system that will avoid a crisis. We are supposed to draft this bill in a week." The LDP could still wiggle enough provisions into the bank bill to water down its reform elements and possibly discredit Kan's reputation as the scourge of the Establishment.

Kan also must watch his timing. He wants a general election as soon as his party has recruited enough candidates, ideally before the start of a special Diet session in November. For the moment, though, he can't criticize Obuchi openly now that the Prime Minister has adopted the DPJ plan. Kan also does not want to discredit Obuchi so badly that the LDP has to replace him with a new Prime Minister. In that case, Kan might face a tougher opponent, such as the feisty, opinionated Seiroku Kajiyama. If he prevails over all these challenges, he'll be able to write a book even Maggie Thatcher could learn from.

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