Maehara Enters Race for Prime Minister - Wall Street Journal

TOKYO—Former Japanese Foreign Minister Seiji Maehara said Tuesday he will run in a ruling party contest to replace Prime Minister Naoto Kan, throwing the race into turmoil with less than a week to go.

Mr. Kan is expected to formally announce his departure on Friday following the passage of a key renewable energy bill through parliament, a condition given by the embattled premier for his resignation. The opposition-controlled upper house is expected to pass the bill by Friday, allowing the ruling Democratic Party of Japan to hold a leadership contest on Monday.

Bloomberg News Seiji Maehara, Japan's former foreign minister,is the most popular candidate for prime minister in public polls with 28% support, according to Kyodo News.

Mr. Kan said he will likely dissolve his cabinet on Aug. 30 once a new DPJ leader is chosen, Economy Minister Kaoru Yosano said Tuesday. The leader of the ruling party usually becomes prime minister in Japan's parliamentary system.

Mr. Maehara, who is the most popular candidate in public polls with 28% support in a recent survey from Kyodo News, had until now thrown his support behind finance minister Yoshihiko Noda's informal bid. If Mr. Maehara wins, the 49-year-old will become Japan's youngest post-war prime minister.

Although Messrs. Noda and Maehara agree on most policies—fiscal discipline, slow and gradual fade-out of nuclear power, need for close collaboration with the opposition, strong U.S.-Japan alliance—they differ on tax policy.

Mr. Noda is pushing for core tax increases to fund disaster reconstruction, while Mr. Maehara wants to put tax increases on hold for the next couple of years for the sake of economic growth.

Mr. Maehara's bid will split the combined support base, boosting the influence of party kingpin Ichiro Ozawa's voting bloc of 100-plus lawmakers. Mr. Ozawa and his supporters are against raising taxes to pay for postquake reconstruction, instead looking to the Bank of Japan to underwrite government bonds for the Y19 trillion said to be needed for reconstruction over the next five years.

Mr. Maehara resigned as foreign minister days before the March 11 disaster, when it was revealed that he received political donations from a Korean supporter. Japanese law prohibits lawmakers from knowingly accepting money from foreign nationals.

Mr. Maehara's previous fall from grace took place in 2006, when he was the head of then-opposition DPJ. Mr. Maehara led a campaign against the son of a major Liberal Democratic Party lawmaker for having received illegal funds, only to have to step down when the allegations couldn't be proved.

Write to Toko Sekiguchi at toko.sekiguchi@dowjones.com

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