Japan's Fukuda wins PM vote, to form new cabinet

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TOKYO, Sep 25 (Reuters) Japan's Yasuo Fukuda was chosen as prime minister by parliament's lower house today, setting the stage for the seasoned moderate to form a cabinet that must confront a feisty opposition keen to force an election.

The ruling Liberal Democratic Party (LDP) chose the 71-year-old Fukuda as its leader to revive party fortunes after a disastrous year of scandals and election defeat under Shinzo Abe, who resigned abruptly on September 12.

The bespectacled Fukuda, a proponent of warmer ties with Japan's Asian neighbours, bowed and smiled after being voted in as prime minister by the lower house, where the ruling camp has a huge majority.

In a sign of the battles ahead, the opposition-controlled upper house voted shortly afterwards for Ichiro Ozawa, 65, leader of the main opposition Democratic Party, but the vote by the more powerful lower chamber takes precedence.

Fukuda told reporters that he wanted to discuss vital policy matters with the Democrats and other opposition parties.

''I want to have dignified discussions with the aim of protecting the people's livelihoods and the national interests,'' he told reporters.

But Ozawa repeated his call for an early lower house poll. ''The only thing to be done is to seek the will of the people in a lower house election,'' he said after the upper house vote.

The typically bland but occasionally testy Fukuda will become the oldest new prime minister since Kiichi Miyazawa assumed the office in 1991 at the age of 72, and the first son of a premier to hold the post.

Japanese media have reported that Fukuda will likely retain most ministers -- including Finance Minister Fukushiro Nukaga -- from Abe's cabinet, which was reshuffled just last month in an attempt by the outgoing premier to maintain his grip on power.

Fukuda said former Foreign Minister Taro Aso, Fukuda's sole rival in the LDP leadership race, declined an offer of a cabinet post, but added he was still seeking his cooperation.

Fukuda on Monday tapped faction leaders who had backed his bid for the top job as his party lieutenants, prompting criticism from the opposition and media for relying on old-style factional dynamics and cronyism in his personnel decisions.

Looming large among the battles for Fukuda is one over xtending beyond November 1 a Japanese naval mission in support of US-led operations that opposition parties do not favour.

The Democrats and their allies won a majority in a July upper house election and can delay legislation, including a bill to extend the mission to refuel coalition ships in the Indian Ocean that close ally Washington is anxious to see continued.

Fukuda will also have to balance calls to pay more heed to regions and sectors left behind by reforms begun under Abe's predecessor, Junichiro Koizumi, with the need to rein in spending because of Japan's huge public debt, and find ways to fix social welfare creaking under the weight of a fast-ageing population.

No election for the lower chamber is needed until late 2009, but many expect one sooner, possibly after the government budget is enacted in March 2008.

Abe, who was hospitalised for a stress-related stomach ailment after he resigned, apologised again for quitting and told a final meeting of his cabinet that it broke his heart to leave office when the country faced so many problems.

REUTERS ARB SSC1235

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