Takenaka: no calls for reform to slow


Firing Tanaka is Koizumi's 'last card,' one expert says, and the leader's first choice of replacement turned him down

TOKYO, Japan -- Economics Minister Heizo Takenaka said Friday that the firing of Japan's foreign minister will not slow down the process of economic change in the country.

"It is not as if there are calls to slow down reform," Takenaka told reporters.

He said the government would keep to its course of promoting sustainable economic growth through reform.

Japan's outspoken foreign minister, Makiko Tanaka, was fired late on Tuesday night. Prime Minister Junichiro Koizumi faulted her for holding back reform.

The economics minister, Takenaka, was responding to speculation the firing will harm Koizumi's efforts at change.

Takenaka himself has come under fire in Japan at times. The former academic has made conflicting and sometimes muddled remarks on reform, occasionally contradicting the prime minister.

Stocks fall on replacement

On Friday, the Japanese leader named another woman, Environment Minister Yoriko Kawaguchi, to replace Tanaka.

Japan's stock market was down after the announcement. The Nikkei index ended the morning 1.8 percent lower at 9,818.75 on pessimism reforms would be disrupted, as well as on some depressing earnings news.

The yen is also on the move. After showing significant strength in recent days, mainly because the dollar lost ground, the yen has weakened since Tanaka was dispatched.

Finance Minister Masajuro Shiokawa said Friday that the yen's sudden move above 134 was "too rapid". It was trading at 134.57 heading toward Friday afternoon -- a change of two yen in one day.

The ousting of Tanaka poses a considerable challenge for the crusading Koizumi, who is known as the Lion Heart for his hair and unconventional tactics.

His popularity has showed signs of slipping since he removed Tanaka, one of the most-popular and high-profile politicians in his cabinet.

Tanaka's removal a 'crucifixion'

There are suggestions that his hand was forced by the conservative elements of his Liberal Democratic Party and that he removed Tanaka to save himself.

"This is essentially the last card Koizumi has to play, although it has been sufficient to hold off increasing opposition from within his own Liberal Democratic Party," J.P. Morgan economist Ryo Hino wrote on her dismissal.

"The crucifixion of Tanaka poses the threat that Koizumi will make an enemy out of one of his most important allies," he said.

Koizumi has promised to make some tough changes in Japan. But those efforts have seen the jobless rate rise to a record 5.6 percent.

Rating agency Standard & Poor's warned on Thursday in London that it expects creditworthiness among "essentially all sectors of the economy" will get worse throughout 2002.

"Japan's economic stagnation has evolved into a worrisome deflationary recession, with no signs of upturn for the foreseeable future," the agency stated.

It is weighing whether to downgrade Japan's creditworthiness as a nation again, which would spell problems for the bond market. It lowered the rating twice last year, leaving it at Aa2.

Tanaka had led the battle against Japan's entrenched bureaucracy. But experts suggest she took on one senior diplomat too many.

Koizumi's first choice as a replacement, Sadako Ogata, turned down the post. She said she had work to do that she couldn't give up to serve as foreign minister.

Ogata is serving as special envoy on Afghanistan affairs.

Keith Henry, a political analyst in Japan, has said that Koizumi is relying on his public popularity to push ahead with reform. If that lags, the leader could be pushed aside by his LDP, Henry says, as previous reform-minded leaders have been.