Japan awakes to new era as opposition sweeps into power

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Japan awakes to new era as opposition sweeps into power

'We have reached the starting line,' says new PM Yukio Hatoyama after election landslide redraws political landscape

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* Justin McCurry in Tokyo
* guardian.co.uk, Monday 31 August 2009 11.23 BST
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Election in Japan

The media wait for the vote count to start in front of posters for the Democratic Party of Japan, which swept into power yesterday. Photograph: Itsuo Inouye/AP

Japan's new prime minister, Yukio Hatoyama, began the delicate task of forming a new government this morning, hours after inflicting a devastating defeat on the ruling Liberal Democratic party [LDP].

The euphoria of the night before, when his Democratic Party of Japan [DPJ] secured 308 out of 480 seats in the lower house, quickly gave way to the business of addressing record unemployment and deflation as Japan struggles to emerge from its worst recession since the second world war.

Questions are already being asked about his government's ability to end the bureaucracy's stranglehold on economic policy and to focus on the interests of consumers rather than those of powerful corporations.

"It has taken a long time, but we have at last reached the starting line," Hatoyama told reporters at his home in Tokyo. "This is by no means the destination. At long last, we are able to move politics – to create a new kind of politics that will fulfil the expectations of the people."

His opponent, Taro Aso, resigned as president of the LDP, which now has just 119 MPs in the lower house compared with 300 before the election.

Hatoyama has about two weeks to put together his administration. Elite bureaucrats and business leaders will use that time to prepare themselves to work with a different ruling party for only the second time since 1955.

Japan's parliament will look radically different when it formally elects Hatoyama as prime minister at a special session in the middle of next month. The lower house will contain 158 first-time MPs, just over 90% of them from the DPJ, and a record 54 women, 40 of them from Hatoyama's party. The chamber's 480 MPs have an average age of 52, with the youngest aged 27.

The LDP's depleted ranks will be missing several senior politicians, including the current finance minister, Kaoru Yosano. Over 46% of its remaining MPs are "hereditary candidates" who inherited their seats from their fathers or mothers, compared with just over 10% among DPJ MPs.

The financial markets reacted positively to the prospect of a new government, with the Nikkei benchmark index rising to a near-11-month high before retreating slightly as a stronger yen pushed down shares among exporters.

The DPJ's honeymoon period promises to be shortlived amid nagging concerns about its ability to fund spending pledges that are expected to reach 16.8tr yen over the next four years.

The party has vowed to end wasteful spending and invest heavily in welfare, to introduce a child allowance and to raise the minimum wage while keeping the consumption tax unchanged at 5% for the next four years.

But despite disquiet about Hatoyama's recent attack on "unrestrained market fundamentalism", business leaders offered him a cautious welcome.

Fujio Mitarai, chairman of the Japan Business Federation, said the DPJ had made a "genuine transition of power" possible for the first time in Japan's postwar history.

Kaoru Yano, president of the electronics firm NEC, said the result was "an expression of the people's call to break out of these tough economic and stagnant social conditions".

The US president, Barack Obama, said he looked forward to working closely with Hatoyama, who has promised to end Japan's "subservience" to US foreign policy. In recent days, however, Hatoyama has toned down his rhetoric, pledging that the bilateral alliance would remain the "cornerstone of Japanese diplomatic policy".

"The people of Japan have participated in an historic election in one of the world's leading democracies," White House spokesman Robert Gibbs said in a statement. "President Obama looks forward to working closely with the new Japanese prime minister on a broad range of global, regional and bilateral issues."

The new US ambassador to Tokyo, John Roos, said: "The challenges we face are many, but through our partnership our two great democracies will meet them in a spirit of cooperation and friendship."