The BOJ battle’s winners and losers

The big news of the day is, of course, the government’s decision to submit a new candidate for the BOJ governorship in place of Muto Toshiro. It is still unclear who the government will submit in his place — the LDP is reportedly sounding out the plausibility of Mr. Fukui’s staying in office, although the DPJ has nixed it. But a compromise is likely to emerge any day now.

So who won, who lost?

Obviously the biggest loser is Muto Toshiro, who was rejected for the scantiest of reasons, guilt by association with the Ministry of Finance. Then again, with the Bear Stearns blowout and its likely ramifications, maybe he’s the biggest winner of all, given that he won’t have to the helm of the BOJ in the midst of a rapidly worsening global financial crisis.

Did the government and the LDP win or lose? Politically, the LDP lost, simply because it conceded. But by conceding, the government can spin its concession as an illustration of its willingness to compromise with the opposition and its desire to put the national interest before political opportunism.

As for the DPJ, in simple political terms, the DPJ won. It forced the government to withdraw Mr. Muto, and showed that it will not be ignored by the LDP, especially on appointments.

But it is necessary to look at the winners and losers within the DPJ. This is not a victory for Mr. Ozawa, who found as the BOJ fight intensified that his hands were tied by hardline Muto opponents who are also opponents to Mr. Ozawa’s leadership. The anti-Ozawa group will likely emerge from this fight emboldened, more confident in its ability to pressure Mr. Ozawa to bend to their wishes — and more prepared to unite behind a candidate to oppose Mr. Ozawa in the September leadership election.

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