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Japan Keeps Its Economy, Banking Minister

September 22, 2003

TOKYO (AP) _ Heizo Takenaka, a former university professor often derided by old-guard politicians, kept his two jobs heading Japan’s economy and banking ministries in a Cabinet reshuffle Monday that underlined the administration’s commitment to tough economic changes.

The appointment of Takenaka, 52, amid speculation he would lose at least one portfolio, shows Prime Minister Junichiro Koizumi’s determination to oppose lawmakers in his ruling party who want to defend the pork-barrel setup that’s being unraveled by Koizumi’s reforms.

Party bosses had repeatedly said Takenaka must go, and Takenaka’s fate was the biggest question in the Cabinet reshuffle.

``I intentionally didn’t replace Minister Takenaka despite a chorus of cries for his removal,″ Koizumi told reporters. ``I wanted to show the public there was absolutely no change in our reform program.″

Koizumi’s decision to stick behind Takenaka highlights the 61-year-old leader’s style that has won him popularity among voters during his two years in office and a landslide victory in balloting Saturday for party chief.

``The seeds of structural reform are at last starting to bud. My job is to help turn the buds into trees,″ Takenaka told reporters after his reappointment.

Takenaka, formerly visiting scholar at Harvard, has been criticized as pushing the economy to its brink, pushing up corporate bankruptcies and unemployment and forcing Western-style models of open markets and free competition that have outraged Japan’s conservatives.

``Koizumi kept his flag for reforms standing,″ said Koji Shimamoto, chief strategist for BNP Paribas in Tokyo. ``Carrying out reforms in Japan is very difficult, and Takenaka is putting up a good fight considering the obstacles.″

Takenaka has been stepping up pressure on Japanese banks to clean up bad debts, estimated at 35 trillion yen ($312 billion). The loans gone sour have been blamed for hobbling the economy, which had recorded dynamic growth for decades until the 1990s.

The reforms touted by Koizumi and Takenaka to trim public-works spending, privatize chunks of the public sector and invite foreign investment have won praise from some investors. Washington has also expressed support for the reforms.

The only complaint from such circles has not been over the direction of the reforms _ merely that they aren’t coming quickly enough or haven’t gone far enough.

Koizumi defied the skeptics in other ministerial appointments.

He named as finance minister Sadakazu Tanigaki, 58, the official in charge of turnarounds in the private sector and a champion of Koizumi’s reforms. Speculation had been rampant that a party elder would be named to that post.

Nobuteru Ishihara, 46, formerly a minister in charge of reforms, was appointed construction and transportation minister, a critical post in the administration’s effort to privatize the money-bleeding public-roads project, a proposal that has met fierce opposition from the old guard.

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