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Japanese Parliament Approves Central Bank Chief

  • Naomi Martig

Japan's parliament has approved the acting Bank of Japan Governor as the central bank's permanent head, partially ending a political stalemate that has left the post vacant for weeks. As Naomi Martig reports from Hong Kong, Masaaki Shirakawa's approval comes after the opposition rejected two previous candidates.

Japan's upper house of parliament, controlled by the opposition politicians, overwhelmingly approved Masaaki Shirakawa as the central bank's governor during a vote Wednesday in Tokyo. The lower house approved the nomination soon after.

Shirakawa had been serving as the bank's temporary governor since mid-March when the previous governor stepped down without a successor in place.

The upper house, however, voted down the government's candidate to replace Shirakawa as deputy governor, prolonging a dispute that has become an embarrassment for Prime Minister Yasuo Fukuda.

Shortly after the upper house rejected Hiroshi Watanabe's nomination, government spokesman Nobutaka Machimura said the result was very disappointing.

Machimura says he did not understand why the upper house refused to back Watanabe because he was more than qualified for the job.

The opposition Democratic Party of Japan blocked his nomination, and that of the earlier two candidates for BOJ chief because each had worked in the Ministry of Finance. The party says the government needs to ensure that the Central Bank works independently.

But some experts on Japanese politics say that excuse is nothing more than a political game. Jeff Kingston is a professor of politics at Temple University in Japan.

"This has really not a lot to do with whether or not the man in qualified for the position. This is the Democratic Party of Japan is trying to draw a line in the sand, and I think their best strategy for remaining a unified party is to take a hard line against the LDP [Liberal Democratic Party of Japan]," said Kingston.

Mr. Fukuda's popularity is standing at a record low since he was appointed last September. His ruling Liberal Democratic Party of Japan faces mounting criticism because of millions of lost pension records and other scandals.

The opposition gained control of the upper house last year. Kingston says the Democratic Party of Japan needs to be careful, because this dispute over the BOJ nominations can boomerang back to them.

"So I think that people are increasingly feeling that the DPJ [Democratic Party of Japan] is trying to score cheap political points at the expense of the national interest," said Kingston.

Kingston adds that the political dispute is not likely to have an effect on global finances. But some analysts say the political wrangling could become a liability as worries grow of an economic slowdown in the United States.

One of Shirakawa's first acts as BOJ chief is to attend a meeting of Group of Seven finance leaders in Washington and the World Bank meeting at the end of this week. Central bankers and finance ministers at the G7 meeting will seek ways to ease the global credit crisis.