/ 30 July 2007

Japan PM to stay after poll defeat, gridlock looms

Hawkish Japanese Prime Minister Shinzo Abe vowed to stay in his post despite a crushing defeat for his ruling camp in an upper house election, but policy gridlock loomed and Abe's grip on his job was still uncertain. Voters outraged at a string of government scandals and gaffes and the bungling of pension records stripped Abe's coalition of its upper house majority.

Hawkish Japanese Prime Minister Shinzo Abe vowed to stay in his post despite a crushing defeat for his ruling camp in an upper house election, but policy gridlock loomed and Abe’s grip on his job was still uncertain.

Voters outraged at a string of government scandals and gaffes and government bungling of pension records stripped Abe’s coalition of its upper house majority in his first big electoral test since taking office 10 months ago.

”The election expressed the frustrations of the people,” said Akihiro Kodaira, a 38-year-old civil servant.

”He really needs to accept the results of the election and think about the future. This might include quitting. At the very least, he needs to recognise the opinion of the people and reflect this in his policies,” Kodaira said.

But Abe reiterated on Monday his intention to stay on.

”We must take these results very seriously and reflecting on what we must reflect on … I want to fulfil my responsibility to proceed with reform to build the nation and promote economic growth that the people can feel,” Abe told a news conference.

Abe has pledged to boost Japan’s global security profile, rewrite its pacifist Constitution and ensure growth while pursuing economic reforms and cutting the huge public debt.

Abe’s bloc will not be ousted from government by the upper house defeat, since it has a huge majority in the more powerful lower chamber, but he said he would reshuffle his Cabinet in an effort to win back voter trust.

”The voice of the people is saying ‘renew personnel completely’,” Abe said.

Pressure to quit

The soft-spoken, once-popular Abe still faces pressure to quit from within his own Liberal Democratic Party, which has ruled Japan for most of the past five decades.

”Prime Minister Abe should quit,” former defence minister Shigeru Ishiba was quoted as saying by the Yomiuri newspaper.

”If he doesn’t, the LDP will be finished.”

For now, though, a lack of suitable successors in the LDP could help him survive, analysts said.

The LDP and its partner, New Komeito, won 46 seats compared with 60 for the Democrats.

The ruling coalition had needed 64 to keep its majority in the upper house, where half of the 242 seats were up for grabs.

The LDP alone won only 37 seats, worse than a loss in 1998 that forced Ryutaro Hashimoto to resign as prime minister.

That leaves the ruling bloc with just 103 upper house seats in total, down from 133 before the poll, Kyodo news agency said. Final official results will not be available until late on Tuesday.

Without ruling coalition control of the upper chamber, laws will be hard to enact, threatening legislative paralysis.

Some analysts noted, however, that Abe had never stressed economic reforms to begin with, in contrast to former prime minister Junichiro Koizumi.

”Investors may worry that the LDP’s defeat means that the ongoing reform drive will take a back seat, but they won’t be greatly disappointed because expectations for Abe as reformer were not high in the first place, compared with his predecessor,” said Takahide Kiuchi, chief economist at Nomura Securities.

The election loss came on top of a global shake-out in markets, and the two factors combined to push the Nikkei stock index to a four-month low.

Opposition dilemma

Critics said Abe was out of touch with voters concerned with bread-and-butter issues such as pensions and health care.

Democratic Party leader Ichiro Ozawa, a pugnacious veteran who bolted from the LDP 14 years ago, had pledged to shrink income gaps and help farmers, long an LDP support group.

Ozawa has vowed to make an upper house win a step towards an early general election, but media warned that his party’s public image could suffer if it takes too obstructionist a stance.

No lower house poll need be held until late 2009, and Abe said he was not considering calling a snap poll anytime soon for that chamber, in which his coalition has a big majority.

Ozawa, who suffers heart problems, failed to appear in public on Sunday. Party officials said he was resting after a tough campaign, but his absence cast doubt on his ability to keep leading his often fractious party.

The Democrats are a mix of ex-LDP lawmakers, former socialists and young conservatives, some of whom are seen as ripe for poaching. – Reuters