Government plans to fill a vacancy on the Bank of Japan's rate-setting policy board were thrown into disarray on Tuesday when a nominee's name was leaked, prompting opposition lawmakers to reject him.
The turmoil over the BoJ appointment cast more doubt on the leadership of Prime Minister Yasuo Fukuda, who is facing pressure to step down as support rates plunge and the opposition camp seeks a chance to take power by forcing a snap general election.
"Such a leak happens when the government is losing control of the administration," said political commentator Minoru Morita. "It's a lame duck government that cannot handle personnel affairs."
Japanese media said economics professor Kazuhito Ikeo was the government's choice for one of two vacancies on the central bank's nine-member board, and his name had been due to go before a parliamentary panel on Tuesday morning. But a senior ruling party lawmaker said Ikeo's name will now be removed from the list of candidates, with the opposition bloc poised to veto him if the government asks parliament to approve him before its current session ends on June 15.
A split parliament has forced the government to spend months battling to get BoJ nominees approved in the midst of the credit crisis, with the opposition so far rejecting five candidates for various positions at the central bank. BoJ Governor Masaaki Shirakawa only won the job last month as third choice after a three-week vacancy at the top of the BoJ.
A senior opposition lawmaker, Takeo Nishioka, told reporters that parliament's upper house, which the opposition parties control and which must approve senior BoJ appointments, would reject Ikeo because of the leak. "The government leaked the information, so we cannot accept the nomination unless the candidate is replaced with someone else," Nishioka said, after the opposition refused to attend a parliamentary panel due to consider the BoJ nomination.
Such doubts may have fuelled anger among opposition lawmakers that the government leaked the candidate intentionally so that it could give voters a negative impression before a general election that the opposition just opposes anything, Morita said. For markets, the ongoing political saga is a side-show but the row comes amid a repeated warning from Shirakawa of highly uncertain times that have led the BoJ to end its bias towards raising rates.