Japan's new PM committed to U.S. relations, reform

Japan's new PM committed to U.S. relations, reform

TOKYO (Agencies): New Prime Minister Junichiro Koizumi said on
Friday Japan's alliance with the United States was central to his
nation's diplomacy, while vowing to improve ties with Asian
neighbors.

Addressing his inaugural news conference as prime minister,
Koizumi also vowed to deflect opposition to his reformist
policies aimed at salvaging the troubled Japanese economy.

"The basis of Japanese diplomacy and the main base for our
prosperity until today have been friendly Japan-U.S. relations,"
Koizumi said, a day after being elected by parliament to replace
the unpopular Yoshiro Mori.

"We should not forget this point," the new leader said, adding
he wanted talks with U.S. President George W. Bush "as early as
possible."

Koizumi also said "amicable relations with neighboring nations
such as China, South Korea and Russia are very important."

In a nod to other Asian countries' resentment at Tokyo's
refusal to apologize for its wartime aggression, Koizumi said it
was most important for Japan to "regret World War II."

"In a word, the reason why Japan entered that war was that
Japan was isolated from the international community," he said,
stressing Japan must not be isolated again.

Asian countries, invaded by Japan's Imperial Army before and
during World War II, have expressed concern at the new prime
minister's nationalist leanings.

Koizumi has said he plans to visit the controversial Yasukuni
Shrine on Aug. 15, the anniversary of Japan's surrender in World
War II. The shrine commemorates Japan's war dead, including
convicted war criminals.

He said after he became LDP leader on Tuesday that he wanted
to revise the constitution to recognize Japan's Self-Defense
Forces as a fully fledged military.

The prime minister also vowed not to be swayed from his pledge
to carry out drastic reforms of the world's second-biggest
economy, although he acknowledged "unexpectedly high tension and
heavy pressure."

He had admitted: "I am facing tremendous resistance but I must
not be scared by that. I have to stir up my fighting spirit."
Koizumi insisted at the news conference "there will be no
economic recovery without structural reforms."

Priority

The prime minister said his top priority was to swiftly
dispose of bad loans held by banks -- the legacy of the "bubble
economy" collapse of the early 1990s -- and liberalizing
information-technology.

According to Japanese newspapers, Koizumi passed his first
test in introducing fresh faces to his cabinet but had yet to
present his reform blueprint.

Koizumi's cabinet features an elderly finance minister and
Japan's first woman foreign minister, one of a record five women
in the government line-up.

While Koizumi faces thorny tests in his foreign policy, his
biggest challenge domestically will be convincing the public he
has a winning formula for an economic turnaround ahead of
parliamentary polls in July.

Those efforts were complicated Friday with media reports just
one day after Koizumi was installed in office saying that highly
regarded central banker Masaru Hayami will resign.

It remained unclear what the implications of such a move would
be on future economic policy, or why Hayami is reportedly
contemplating resignation. However, he had a well-publicized
fight with the Liberal Democratic Party over his decision to
raise interest rates, a move that angered party elders.

Despite the confusion over Hayami's departure and a slew of
bad economic data released on Friday, Koizumi expressed
confidence that he could cure the economy.

"We must rethink structural reform from zero," he said.
He also indicated that he will not abandon his pet project of
privatizing the postal service, which effectively doubles as the
world's largest bank.

"Everything the private sector can do, it should do," he said.
In what will be his Cabinet's first international test, Koizumi's
new finance minister, Masajuro Shiokawa, boarded a flight Friday
for a Group of Seven ministerial meeting in Washington.

Japan's role in that meeting will be closely watched.