Outcome will threaten policy paralysis and pressure Abe to resign

Jul 4, 2007

TOKYO, July 4 (Reuters) - Japanese Prime Minister Shinzo Abe's coalition looks increasingly likely to lose a July 29 upper house election, an outcome that would threaten policy paralysis and put pressure on him to resign.

Public anger at government bungling of pension records had already slashed Abe's poll ratings, and weekend remarks by Defence Minister Fumio Kyuma that appeared to condone the 1945 atomic bombings of two Japanese cities compounded the woes.

Despite Kyuma's hasty departure on Tuesday, Abe faced stiff criticism from opposition parties and media for appointing the gaffe-prone politician in the first place and then refusing to fire him after his latest slip.

"Eventually Mr Kyuma resigned of his own accord to try to avoid casting a shadow over the election, but the feeling remains that the prime minister should have shown leadership by stripping him of his post quickly," said the conservative Sankei newspaper.

Abe, a soft-spoken 52-year-old security hawk who wants to boost Japan's global diplomatic clout, took over as Liberal Democratic Party (LDP) chief last September amid hopes that his popularity would lift the party in the coming upper house poll.

But while Abe won praise for mending ties with China, he has fared badly on the domestic front, where the pension furore and doubts about his leadership abilities have pushed his support below the critical 30 percent level.

Fyuma's resignation was the second by a cabinet minister since Abe took office in September, and came less than two months after his scandal-tainted farm minister committed suicide.

WORSE AND WORSE

"The situation is getting worse and worse for the LDP," said Toru Umemoto, a chief forex strategist who analyses politics for Barclays Capital.

The LDP and its junior coalition partner, the New Komeito, must win a total 64 seats of the 121 up for grabs to retain their majority in the 242-seat upper house. New Komeito is aiming to get 13 seats.

Abe would not automatically have to step down if his coalition lost its upper house majority since it is the lower chamber which picks the premier.

With voting still nearly a month away, analysts cautioned that predictions were risky, especially given the main opposition Democratic Party's penchant for making mistakes at key junctures.

If the ruling bloc falls short by a few seats, it could keep its grip on the upper house by wooing independents or members of a tiny conservative party, the People's New Party.

The danger line for Abe is around 45 seats for the LDP, said Yasunori Sone, a Keio University political science professor.

"If the LDP gets fewer than 45 seats, there will be two types of pressure on Abe to resign -- from within his own party, and from the opposition and the mass media," Sone said.

A bigger loss would threaten legislative near-paralysis.

"Only very, very limited laws could be passed, effective policies could not be implemented and foreign investors will be disappointed," said Umemoto, from Barclays Capital.

Abe could try to stay on after a poor LDP showing, but a haul of fewer than 40 seats was likely to prove fatal, Umemoto said.

Foreign Minister Taro Aso, an outspoken security hawk, is generally seen as frontrunner to succeed Abe if he goes.

The opposition has pledged to press for an early lower house election if the ruling camp loses on July 29, but some analysts doubted whether the LDP-led bloc would be tempted by that option since it has a two-thirds majority in the lower chamber now.

No lower house election need be held until 2009.

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