Fiscal conservative Noda to become Japan's prime minister, facing daunting mix of challenges

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Finance Minister Yoshihiko Noda stands up and bows after he was elected as the new leader of the Democratic Party of Japan during an election by the party lawmakers in Tokyo Monday, Aug. 29, 2011. Japan's ruling party elected Noda as its new chief Monday, paving the way for him to be the next prime minister and inherit the daunting task of recovering from the huge tsunami and nuclear crisis. (AP Photo/Hiro Komae)

TOKYO - Japan's finance minister was voted ruling party leader Monday and soon will be the prime minister taking on a mind-boggling mix of challenges: tsunami recovery, a nuclear crisis and bulging national debt, to name a few.

As finance minister, Yoshihiko Noda already has been battling economic malaise and the yen's record surge, which hurts Japan's exporters. But when he takes over from Naoto Kan, Noda will take on an even more unenviable role with a much broader set of problems, including a rapidly aging population, public dismay with government and the efforts to rebuild from the worst disaster to hit Japan since World War II.

Nearly six months after the quake-spawned tsunami devastated Japan's northeastern coast, dozens of towns are still cleaning up and struggling to come up with reconstruction plans. The tsunami-damaged nuclear plant in Fukushima has displaced about 100,000 people who live in temporary housing or with relatives, unsure of when they will return.

"It's a tremendous pile of difficulties," said Koichi Nakano, a political science professor at Sophia University. "All the while, there's so much pressure on the government to deliver."

A fiscal conservative, Noda is well-liked by some in the business community, but he's also viewed as lacking charisma. A profile in the mass circulation Asahi newspaper earlier this year described him as "a deep thinker, but also bland, inoffensive and nonconfrontational."

Noda defeated Trade Minister Banri Kaieda — who was backed by a party powerbroker — in a run-off election 215-177 among ruling party members of parliament after none of the initial five candidates won a majority in the first round.

As party chief, Noda will become prime minister because the Democrats control the more powerful lower house. Parliament is expected to approve Noda on Tuesday.

He faces an immediate challenge in restoring public confidence shattered by political infighting in the wake of the disasters — sentiment that sent Kan's approval ratings plunging below 20 per cent.

"Let us sweat together for the sake of the people," Noda told fellow party members after the vote. "This is my heartfelt wish."

Noda will become Japan's sixth prime minister in five years, a dismal track record of turnover that has done little to help the country tackle its problems and recover some of the confidence it has lost since the booming 1980s.

Even before the tsunami hit, Japan's economy was stuck in a 20-year funk and its population was greying, shrinking the tax base and labour pool.

"We lost the decades when Japan was more prosperous and world economic conditions were more conducive" to growth, said Nakano. "Now things have started to sour. We have these long-term structural issues waiting to be resolved."

With Japan's ballooning deficit now twice the size of its gross domestic product, Noda has in the past suggested raising Japan's 5 per cent sales tax. But he's toned down that talk lately, and no quick change is expected on taxes, which would need parliamentary approval.

Japan's confluence of crises can be turned into an opportunity to set "a national agenda" that can get widespread public support, said Kiyoaki Aburaki, a senior fellow at the Center for Strategic and International Studies in Washington. "It's a good chance for Japanese politics to evolve," he said.

Noda came from behind to win the run-off, getting 102 votes in the first round to Kaieda's 143. The result could be seen as a slap against Ichizo Ozawa, a scandal-tainted party powerbroker who threw his support behind Kaieda.

Ozawa, a 69-year-old veteran who heads the largest faction in the ruling Democratic party, is known for engineering elections, sending novices to parliament and dooming some candidates to defeat. He is embroiled in a political funding scandal but his presence has hung like a shadow over the party leadership campaign.

Ozawa's dislike of Kan was one reason Kan never fully got his party's backing while in power.

After the vote, Noda called for party unity, using a popular rugby term in Japan referring to the tradition that after a game ends, there are no longer opposing sides on the field.

Still, Noda must also deal with a divided parliament, which has increased gridlock, after the opposition won control of the upper house last summer.

Noda is a staunch supporter of the Japan-U.S. security alliance, which he has called "essential for Japan's security and prosperity." And while praising China's economic development, he has cited concerns about their growing military strength.

Noda is not from an elite background like many Japanese politicians. His father was a member of the Self-Defence Force, Japan's military. He began honing his political skills at a postgraduate institute designed to groom a new generation of progressive leaders.

Before he took on a ministerial post, he was known for standing at train stations in his district in Chiba, just east of Tokyo, every morning to greet commuters personally.

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Associated Press writers Eric Talmadge, Yuri Kageyama and Tomoko A. Hosaka contributed to this report.