By: Dr. Mike Campbell

With the resignation of Prime Minister Naoto Kan last week, the ruling Democratic Party of Japan has had to find a new leader. A number of candidates had let their names go forward to the first round of the election with the early favourite being the former foreign minister, Seiji Maehara. However, Mr Maehara was eliminated after the first round, leaving a run-off election between the out-going Trade Minister, Banri Kaieda, and the out-going Finance Minister, Mr Noda.

The contest has highlighted the divisions within the ruling party. Mr Kaieda had the backing of Ichiro Ozawa who controls the DPJ’s largest faction, despite being suspended from the party as he awaits trial on charges related to misreporting of political donations.

Mr Maehara put his support behind Mr Noda (54) who emerged victorious in the final round of voting with 215 votes to his opponent’s 177. Mr Noda’s first task will be to find a way to get the party to rally behind him.

Mr Kan and his cabinet formally resigned once the new leader was elected. Mr Noda is set to become Japan’s sixth leader within the last five years when confirmed by parliament.

The new PM will need to oversee the rebuilding of Japan’s infrastructure following the earthquake and tsunami natural disaster that struck the nation in March. He will also be charged with the more daunting task of returning Japan from recession to growth; reversing deflation; and dealing with the consequences of a currency at record levels against its major trading partner’s currencies, amongst other tasks.

Mr Noda is regarded as a fiscal conservative who has called for a doubling of sales tax (to 10%) and other tax increases as a way to combat the nation’s debt and social cost problems. He favours a re-start of Japan’s nuclear reactors which would ease power shortages and help industry.