Incoming Japan PM pledges no compromise on islands

TOKYO – Incoming Japanese prime minister Shinzo Abe came out fighting Monday after his sweeping election victory, saying there can be no compromise on the sovereignty of islands at the center of a dispute with China.

Abe, whose conservative Liberal Democratic Party secured a comfortable win in national polls Sunday, acknowledged Japan’s relationship with China was important but stuck to the hard line he pushed throughout the campaign.

“The Senkaku islands are Japan’s inherent territory,” he told a press conference, referring to an archipelago Beijing calls the Diaoyus.

“Japan owns and controls the islands… under international law. There is no room for negotiation on this point”.

But he also struck a slightly more conciliatory note, saying he wanted to “deepen dialogue” with China.

“We need to have wisdom not to turn political issues into economic issues,” he said.

Abe’s large electoral margin boosted hopes for the country’s problem-plagued economy, with investors pushing stocks up as the painfully high yen eased.

The one-time premier has vowed to put the moribund economy back on track after years of deflation, made worse by a soaring currency that has squeezed exporters.

Topping his agenda was a promise to pressure the Bank of Japan into more aggressive easing policies aimed at kick-starting growth as the world’s third-largest economy slips into recession.

All eyes will be on the bank’s policy meeting this week to see whether the central bankers move in line with Abe’s wishes.

Investors are increasingly betting on some action from the central bank, with the yen tumbling against the dollar and euro on Monday while Tokyo’s Nikkei 225 stock index surged 0.94 percent by the close.

Voters on Sunday dumped Prime Minister Yoshihiko Noda three years after his Democratic Party of Japan (DPJ) promised a change from more than half a century of almost unbroken LDP rule. The result cost Noda his party leadership.

The rout was completed by news that the LDP and its junior coalition party New Komeito had secured a large enough majority in the lower house to overrule the upper chamber.

“Control of two-thirds of lower house seats would alleviate concerns about divided control of the Diet’s two chambers,” brokerage giant Nomura said in a note.

“It is also likely to fuel expectations, particularly among foreign investors, of more expeditious policymaking.”