Signs of compromise?

With the end of Fukui Toshihiko’s term as BOJ president rapidly approaching, there are signs that the LDP and the DPJ might be able to come to terms on the nomination of his successor.

Messrs. Oshima and Yamaoka, Diet strategists for the LDP and DPJ respectively, met once more on Thursday and agreed that a vacancy at the BOJ is undesirable. The two reportedly discussed an idea, emerging from within the LDP, to revise the BOJ law to allow for a temporary extension of the BOJ president’s term. There is also the possibility that Shirakawa Masaaki, a Kyoto university professor already confirmed by both houses as vice president, could serve as acting president until the parties agree on a BOJ president.

In the meantime, the LDP has announced that it will wait until Monday to submit Mr. Muto’s nomination once again, giving the parties time to pursue a compromise while ensuring that the BOJ presidency will not be vacant. Sankei suggests that there are signs that the LDP might be willing to reconsider its support for Mr. Muto.

On the gasoline tax front, Mr. Fukuda alluded to the possibility of a compromise in deliberations at the HC Budget Committee Thursday, although he provided to details on what a compromise might entail. Ota Akihiro, Komeito head, suggested that the compromise could entail shortening and trimming the 10-year, 59 trillion yen road-construction plan, directing more gasoline tax revenue to the general fund, and putting a shorter time limit on the temporary tax. Koishi Azuma, the head of the DPJ group in the HC, dismissed Mr. Ota’s suggestions off hand.

Compromise on this issue has proved elusive even among the LDP’s and DPJ’s young reformers, who agree on so much else. At a debate on Thursday, each party’s Young Turks repeated the party line: LDP members emphasized the importance of road construction for rural areas, DPJ members emphasized the importance of redirecting road construction funds into areas that have even more importance for the lives of Japanese citizens. The DPJ reasons — not inappropriately, I think — that it stands to gain from letting the gasoline tax lapse, at least for the month until the HR can automatically pass it again. Local governments will be unhappy with the DPJ, of course, but then with so many local governments in LDP hands, should the DPJ be bothered by their criticism? What matters is how voters will respond, and I find it hard to believe that they will be too irate about a tax break.

Koizumi Junichiro has used the stalemate to continue raising his political profile. The former prime minister, speaking in Hamamatsu on Thursday, appealed to the leaders of both the LDP and the DPJ to compromise for the good of the nation. Will Koizumi power be enough to break the deadlock? I’m skeptical.

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