Ozawa Pledges New U.S. Base Pact, More Spending

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TOKYO—The two candidates for Japanese prime minister laid out sharply contrasting visions for the country's future, with the challenger vowing to rip up a hard-fought agreement with the U.S. over a military base, taking a more aggressive stance than the incumbent on boosting spending to lift growth, and playing down the need for a concrete plan to curb the government's mammoth borrowing.

AFP/Getty Images

Ichiro Ozawa, center, raises his fist with his supporting lawmakers as he speaks about running in the Sept. 14 DPJ presidential election in Tokyo on Sept. 1, 2010.

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0901jpol

A day after efforts to avert a party showdown fell apart, Prime Minister Naoto Kan and his rival, Ichiro Ozawa, faced each other at a one-hour news conference as they unveiled their policy platforms ahead of an internal party election on Sep. 14. Mr. Ozawa is trying to unseat Mr. Kan as party chief and prime minister, the job that has eluded him repeatedly despite the huge influence he has had in Japanese politics for more than two decades. Analysts say the race is too close to call. Many fear the fight will lead to an eventual breakup of the ruling party,

While Mr. Kan played up his current role as a responsible national leader pursuing realistic solutions to difficult economic problems, Mr. Ozawa emphasized several of his trademark populist policies, such as boosting a monthly allowance to families with children and to farmers. But he didn't explain in detail how he planned to pay for such costly steps at a time when Japan grapples with government debts nearly twice the size of its economy. Mr. Ozawa said shifting policy priorities and eliminating waste by shrinking bureaucracy will free up huge amounts of funds.

Mr. Ozawa surprised the market with a pledge to "boldly implement steps, including intervention in the market, to protect Japan's economy" in case of a dramatic rise in the yen. The statement came amid criticism the ruling party's infighting is hurting the government's ability to cope with the current market turmoil, which sent the yen to a 15-year high against the dollar last week. Mr. Ozawa's plan would mark a sharp break from recent Japanese practices, as the government hasn't intervened in currency markets in six years.

Mr. Ozawa also suggested more complications in the Okinawa base debate that has strained the bilateral relationship since the DPJ took power last September. He said Tokyo should hold fresh discussions with Washington and the local government of Okinawa to find a solution more acceptable to both parties. "Under the current framework, no matter how hard we try, the plan will not move forward because of the opposition from Okinawa," Mr. Ozawa said.

In contrast, Mr. Kan repeated his intention to stick with an existing bilateral agreement reaffirmed in May for the construction of a new facility. "Starting over the discussion would only create a new chaos in this problem that has already lingered for nearly a year," the prime minister said.

In his policy statement, Mr. Ozawa emphasized the alliance with the U.S. is "the most important bilateral relationship" for Japan, but also suggested Japan should be more independent from the U.S.

"The alliance isn't a relationship of subordination, but it's an equal partnership," his platform says. "So Japan should pursue a bigger role and more responsibility as it plays a part in the international community alongside the U.S."

The policy debate shed light on an ironic reversal in the roles of the two iconic politicians. Mr. Kan, a former leftist civil activist who made his name going after powerful bureaucrats, is now playing the part of a practical leader, a fiscal hawk and a good steward of the U.S.-Japan military alliance. Mr. Ozawa, who started as a conservative politician deft at behind-the-scenes political maneuvering, is appealing to the public with generous handout policies and an outspoken stance challenging Washington.

A major point of contention in their debate was how closely they should stand by the campaign promises the DPJ made last year before rising to power, particularly costly steps such as the child allowance and a pledge to maintain the unpopular national sales tax at the current level for 5%.

Mr. Ozawa vowed to do his "utmost to diligently implement" those promises. Mr. Kan, meanwhile, said he would "honestly explain" to the public and seek their understanding if some plans had to be abandoned due to a shortage of funds.

Analysts say the race, open only to DPJ lawmakers and registered supporters, is a toss-up at this point. With his strong following among party lawmakers, Mr. Ozawa seems to enjoy an edge at this point. But Mr. Ozawa, embroiled in a campaign scandal at his fund-raising organization, is unpopular with the general public. Opinion polls show 70% or so of respondents favoring Mr. Kan over Mr. Ozawa. While only party members vote, the polls could influence those who haven't made up their minds.

Indeed, during the televised news conference Wednesday, Mr. Kan repeatedly alluded to Mr. Ozawa's scandal, by emphasizing the need to crate a "clean and open" party. "I feel strongly we need to rid ourselves of old-fashioned politics where money is the driving factor," he said.

Asked whether he will explain his role in the campaign-funds scandal during the election campaign, Mr. Ozawa said he already had been proven innocent when prosecutors decided not to indict him after a year-long investigation. Mr. Ozawa could still be indicted if a court-appointed citizen's panel currently debating his case decides to do so. The panel's ruling is expected within the next several weeks.

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