Japan's Yukio Hatoyama was voted in as prime minister by parliament's lower house today, ushering in an untested government that must try to revive a struggling economy and manage ties with nervous ally Washington.
Mr Hatoyama, whose Democratic Party of Japan (DPJ) trounced the long-ruling Liberal Democratic Party in an election last month, faces pressure to make good quickly on campaign promises to focus spending on consumers, cut waste and reduce bureaucrat control over policy.
Mr Hatoyama (62) wearing his lucky gold, silver and blue striped tie and signature pocket handkerchief, stood and bowed after the vote.
"I have mixed feelings of excitement about changing history and the very heavy responsibility of making history," said Mr Hatoyama, whose party ousted the LDP for only the second time since its founding in 1955.
"The fight begins now," he said as he left his home earlier.
Mr Hatoyama's cabinet, a delicate balance of former Liberal Democrats, ex-socialists and younger conservatives, must hit the ground running.
Mr Hatoyama's choice of veteran lawmaker Hirohisa Fujii (77) as finance minister has soothed some analysts' concerns that the government's spending programmes will inflate an already huge public debt as Japan struggles to emerge from recession and cope with the bulging costs of a rapidly ageing society.
Mr Fujii moved currency markets even before he was sworn in, pushing the yen up 0.5 per cent against the dollar by telling reporters a strong yen had merits for Japan's economy and that recent moves were not rapid.
Mr Hatoyama's choice of Shizuka Kamei, the outspoken head of a tiny coalition partner, as minister for banking supervision and postal services has also spooked some experts worried about Kamei's opposition to market-friendly reforms.
His vow to steer Japan on a more independent diplomatic course has sparked concerns about possible friction with top ally the United States ahead of his diplomatic debut there next week, where he will meet president Barack Obama.
The US-educated Mr Hatoyama is expected to reassure Mr Obama over ties and perhaps postpone calls for re-negotiation of agreements on US troops stationed in Japan.
On his return, Mr Hatoyama faces the urgent task of drafting a budget for the fiscal year from next April 1st and finding ways to plug holes in this year's budget caused by sliding tax revenues as Japan struggles out of its worst recession since World War Two.
The new government must balance the need to nurture a recovery and fund its consumer-friendly spending programmes with concerns about a public debt heading towards 200 per cent of GDP.
The Democrats have promised to scrap public works projects and other programmes they consider wasteful and use freed up cash to stimulate consumption through measures such as payouts to farmers and families with children and ending highway tolls.
The economy returned to slow growth in the second quarter but still suffers a record high jobless rate and record deflation.
The Democrats have vowed to centralise decision-making in the cabinet, and a new National Strategy Bureau will be tasked with reforming what the Democrats say is a cumbersome policy-making system that relied heavily on recommendations from bureaucrats.
Mr Hatoyama must also hold together an awkward coalition with the two tiny parties whose support he needs in parliament's upper house, and may face fall-out from money scandals looming over him and party number two Ichiro Ozawa.
Besides Mr Kamei, head of the conservative People's New Party, he will appoint Social Democratic Party leader Mizuho Fukushima to take charge of consumer affairs and policies to boost Japan's very low birthrate.
Reuters