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Japan PM-elect's pick of powerful ally raises worry
(Agencies)
Updated: 2009-09-04 22:52

Japan PM-elect's pick of powerful ally raises worry
Japan's Democratic Party secretary-general Katsuya Okada speaks to reporters at the party headquarters in Tokyo August 31, 2009. [Agencies]
Japan PM-elect's pick of powerful ally raises worry

Hatoyama has also said he wants two other former party leaders, Okada and Naoto Kan, to take top portfolios.

Okada and Kan have been tipped as candidates for finance minister, a vital post as Japan struggles out of its worst recession since World War Two.

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The head of a new National Strategy Bureau, likely to be deeply involved in drawing up the budget and setting policy priorities, will also be a key appointment.

Investors have expressed concern that the new government will need to increase already high borrowing to fund its election promises and the appointments will be key to identifying the balance between social spending and reining in the fiscal deficit.

"The biggest concern -- even bigger than who will be the new finance minister -- is how they will secure funding for all their promised programmes," said Yutaka Miura, senior technical analyst, Mizuho Securities.

A third name often floated for the finance post is Hirohisa Fujii, who served as finance minister in an anti-LDP coalition from 1993-1994.

Hatoyama's choice for foreign minister will be closely watched after concerns the Democratic Party's policy of building a more independent stance from the United States could damage ties with Tokyo's biggest security ally.

Negotiations continued on Friday on a coalition agreement with the two tiny parties which could help make up for the Democrats' lack of a majority in the less powerful upper house of parliament but whose policies are markedly different.

Mizuho Fukushima, leader of the Social Democratic Party, said on Thursday the alliance was very likely to go ahead, but media said the talks would run into next week.