Monday, February 25, 2013
DJ: Govt Mulling Nominating MOF Nakao as Next ADB Chief
TOKYO--The Japanese government is considering proposing Takehiko Nakao, the nation's top financial diplomat, as the next Asian Development Bank chief, government officials say, as Tokyo seeks to maintain leadership at the key regional lender even if current ADB President Haruhiko Kuroda steps down to head the Japanese central bank.
The Finance Ministry appears to be growing more confident that Tokyo won't lose the presidency of the ADB to China, a perch it has controlled since the founding of the Manila-based institution in 1966.
Officials from the Japanese and Chinese finance ministries had extensive discussions over the ADB presidency on the sidelines of the most recent meeting of finance chiefs from the Group of 20 leading industrial and developing nations held in Moscow earlier this month, people familiar with the matter said. The Chinese officials gave Tokyo the strong impression that Beijing had little intention of competing for the position in the next ADB presidential election, those people said.
Compared with China, Japan is in a relatively "advantageous position" at the 67-member ADB, one of the Japanese government officials said, pointing to the bank's election rules which make it challenging for any Asian nation other than Japan to win the presidency.
A presidential nominee needs to clear two requirements to land the job, and one is to get approval from a majority of the ADB's member countries, according to the bank's charter. The other condition is that this majority vote has to be large enough to account for no less than a majority of the member nations' so-called "voting power," which is determined by countries' basic and proportional votes.
The G-7 alone--Japan, the U.S., Germany, France, the U.K., Canada and Italy--holds 39.77% of the voting power. The figure rises to 50.6% if other advanced nations within the ADB--Australia, New Zealand and seven euro-zone countries other than Germany, France and Italy--are taken into account.
But the coming ADB election would still be a major test of Japan's diplomacy over recent years with the rest of Asia, Japanese officials said. It would constitute a diplomatic victory should East Asian nations refrain from putting up their own candidates and instead back Japan's, they said.
While dismissive of the suggestion that China may field a candidate for the ADB election, some Japanese government officials have been voicing concerns that they could face an uphill battle should well-known individuals from East Asian countries run for the race, such as Sri Mulyani Indrawati. A former Indonesian finance minister, Ms. Sri Mulyani is now the managing director at the World Bank.
Mr. Nakao's position, vice finance minister for international affairs, gives him significant influence over Japan's currency policy, including whether the government should intervene in the currency market.
Should the government have Mr. Nakao resign from the position to take the ADB's helm in the near term, that would be something unusual in Japan's bureaucracy, where the reshuffling of positions takes place in summer by custom. Such a move would demonstrate Tokyo's determination to keep the ADB presidency, a post many Japanese government officials consider far more important than the No. 2 position Tokyo currently holds at the International Monetary Fund.
Speculation could now intensify over who would succeed Mr. Nakao as Japan's top currency-policy bureaucrat. Normally, that post is reserved for the director general of the finance ministry's International Bureau. Currently atop this bureau is Tatsuo Yamasaki, an expert of international financial affairs, in particular currency policy.
Mr. Yamasaki was deeply involved in Japan's "Great Intervention" in 2003-2004 as director of the ministry's Foreign Exchange Markets Division. In that campaign the Bank of Japan, under orders from the finance ministry, sold a whopping 35 trillion yen in just 15 months to try and curb the yen's rise.