Magazine article Newsweek International

He's the Answer; Heizo Takenaka: The Man to Manage Japan's Rapidly Shrinking Recovery

Magazine article Newsweek International

He's the Answer; Heizo Takenaka: The Man to Manage Japan's Rapidly Shrinking Recovery

Article excerpt

Byline: Christian Caryl

Two questions loom large in the minds of Japan's political class in 2005. One concerns the economy. Recent indicators suggest that a full-scale recovery remains elusive, and whatever happens, it's clear that the year to come holds plenty of nerve-racking moments in store. And then there's leadership. Prime Minister Junichiro Koizumi has declared that he's stepping down in 2006. That raises the issue of who will succeed him and carry the torch for Koizumi's program of reform.

The answers to both questions intersect in an unlikely character by the name of Heizo Takenaka. A former professor who came to prominence as a TV commentator on economics, Takenaka entered the political arena in 2001 at the age of 50. These days the soft-spoken economic-reform czar is riding a reputation as a hard-nosed reformer who's not afraid to take on the establishment. "I'm not committed to any vested interest," says Takenaka. "I'm not financially supported by any special groups or special companies. In that sense I'm very free, politically. Powerful or not, I'm not sure, but I'm free. Freedom is sometimes the source of power." If Takenaka is intent on pursuing the top post after Koizumi's departure, 2005 could well prove to be a make-or-break year.

In the spring he'll be marking the final stage of one of his most notable successes, when Japanese banks will almost certainly announce that they've met the target of slashing their nonperforming loans in half (to 4 percent of total assets, down from more than 8 percent in 2001). At the same time, a spate of dispiriting economic data raises the possibility that Takenaka's wunderkind aura could be dented by negligible growth or possibly even recession. (He himself admits, "Next year's growth rate will be a little lower than this year's.") "He's seen as the person within the cabinet who best understands economic issues," says Richard Jerram, an economist at Macquarie Securities in Tokyo. …

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