Finance Minister Naoto Kan, who took office this week, has limited experience in running Japan's economy, but he is known for challenging government corruption and bureaucracy. Yuriko Nakao/Reuters
January 9, 2010
News Analysis
TOKYO — It sounds like a script written for Hollywood: an idealistic reformer put in charge of cleaning up his nation’s most powerful center of entrenched bureaucratic influence.
Political experts say that the appointment Thursday of Naoto Kan, a former civic campaigner against government corruption, to run the Finance Ministry does just that, pitting a veteran bureaucracy fighter against the most formidable of the central ministries that have presided over Japan’s postwar economic rise and subsequent stagnation.
They say that the choice of Mr. Kan, a deputy prime minister with limited experience in running the nation’s economy, shows the desire of the new prime minister, Yukio Hatoyama, to step up efforts to achieve his government’s main goal: changing the way Japan is governed by shifting power to elected politicians, away from career bureaucrats.
“Mr. Kan is the administration’s most recognizable face when it comes to overcoming the bureaucracy,” said Tomoaki Iwai, a politics professor at Nihon University in Tokyo. “This appointment shows Mr. Hatoyama’s desire to show his resolve.”
Mr. Kan will have his work cut out for him, battling a secretive institution that claims historical roots going back 13 centuries and that has long drawn the best and brightest graduates from top universities. The ministry has long wielded enormous influence over Japan, the world’s second largest economy, using its broad budgetary powers to control the nation’s purse strings.
In his first news conference since taking office, Mr. Kan vowed Thursday to impose his will on the ministry.
“In ways both good and bad, the Finance Ministry has been a symbolic presence in Kasumigaseki,” said Mr. Kan, 63, referring to the district in Tokyo where the central ministries’ head offices are located. “It will now become a model of how to change Kasumigaseki.”
In his previous role as deputy prime minister, Mr. Kan was one of two top officials directing the Hatoyama government’s still-early efforts to make the bureaucracy more answerable to elected politicians, and to drag policy making out of smoky back rooms. But Mr. Hatoyama has come under criticism that he has failed to rein in the powerful Finance Ministry, which analysts said still played a leading role in drawing up the new government’s revised budget for 2010.
One of the founding members of Mr. Hatoyama’s Democratic Party, Mr. Kan first gained fame as a battler of bureaucracy during his brief stint as health minister in the mid-1990s, when he exposed the Health Ministry’s failure to prevent the spread of H.I.V.-tainted blood used in transfusions.
In challenging the Finance Ministry, Mr. Kan faces an uphill fight that could determine the success of the fledgling government’s efforts to bring change, said Professor Iwai and other analysts. The ministry has successfully resisted past efforts to curtail its budget-making authority, though in the late 1990s it did lose its powers to regulate the financial industry and its control over the nation’s central bank, the Bank of Japan.
“This won’t be ‘Mr. Smith Goes to Washington,’ ” Mr. Iwai said. “He cannot just demonize the ministry. He has to find a way to win the bureaucrats over to his side and use them effectively.”
The new government’s success in fulfilling its promises to make Japan more democratically accountable could largely rest on Mr. Kan’s ability to control the Finance Ministry, which is widely seen here as one of the last bastions of Japan’s crumbling postwar order. Mr. Hatoyama badly needs a political victory as he faces mounting criticism over political financing scandals and a spat with the United States, Japan’s traditional protector, over an air base on Okinawa.
Mr. Kan replaced Hirohisa Fujii, 77, who stepped down for health reasons. Though respected in the Democratic Party, Mr. Fujii was facing increasing criticism in the Japanese news media for allowing ministry bureaucrats to control the 2010 budget, undermining the new government’s efforts to put politicians in charge.
On Thursday, Mr. Kan vowed to be different from previous finance ministers, who tended to defend the ministry’s interests and to advocate policies fed to them by ministry bureaucrats. During his inaugural news conference, he spent much less time speaking about financial policy than speaking about how he would strengthen Japanese democracy by bringing the ministry to heel.
“The minister is not a representative of the ministry,” Mr. Kan told reporters. “He is a representative of the people.”
As if to underscore his lack of experience in financial policy, he briefly stirred up currency markets on Thursday by saying at the news conference that the yen should be weaker, a comment taken by traders as meaning the government may intervene to drive down the currency’s value. He later said he was misunderstood, and did not mean to imply that the government would weaken the yen.
Mr. Kan left little room for misunderstanding in his criticism of ministry bureaucrats. He threatened to replace uncooperative ministry officials. He also vowed to increase public oversight of so-called special accounts, vast pools of money from pension funds and elsewhere that his and other ministries have controlled with little disclosure.
Lastly, he promised to bring similar public exposure to the thousands of public corporations that are controlled by ministries, and that critics say are used to provide comfortable retirement jobs for former bureaucrats.
Mr. Kan said the ministry’s role as budget compiler gave it a view of the inner workings of other ministries as well. He vowed to make this information public in order to aid the government’s efforts to exert more control over the entire national bureaucracy.
“The Finance Ministry has all sorts of information, and is in a position to see inside of the pocketbooks” of other ministries, he said. “I will make that information public.”
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