August 7, 2005 - 5:35 PM

Japan's fractured LDP faces uphill battle in poll

By George Nishiyama

TOKYO (Reuters) - Japan's long-ruling Liberal Democratic Party (LDP) had grand plans to mark the 50th anniversary of its founding in November, but there may be little to celebrate after next month's general election.

At the very least, the bitterly divided party seems set for a major shake-up. Almost just as possible, analysts say, the LDP could not only lose power but disintegrate.

Prime Minister Junichiro Koizumi called a snap election on Monday after 22 members of his own party voted in the upper house to help defeat bills to privatise Japan Post, a behemoth with $3 trillion in assets including savings and insurance businesses.

Koizumi, who is also LDP president, said he hoped to secure the approval of voters for his plans to sell off the post office, which he sees as crucial to his goal of cutting wasteful public spending and reducing the role of government in business.

"This election is about accepting or rejecting postal privatisation, and I believe many Japanese people will show they accept privatisation," Koizumi said on Tuesday.

But winning the election, let alone securing a majority, won't be easy, analysts and some politicians say.

Three main scenarios have emerged, including one in which the opposition Democratic Party wrests power away from the LDP, which has ruled Japan almost uninterrupted for the past half century.

Analysts agree that the dissent-ridden LDP is vulnerable. and some say the election is the Democrats' to lost.

"The Democrats would have to run a really bad election to lose, but they are quite capable of doing it," said Steven Reed, a political science professor at Chuo University.

But a poll conducted after the dissolution of the lower house and released on Tuesday by Kyodo news agency showed that support for Koizumi's cabinet rose to 47.3 percent, up 4.7 percentage points from the previous poll in July.

SCENARIO ONE

Under the first -- but by no means most likely -- scenario, the LDP and its coalition partner, New Komeito, would retain their lower house majority.

Koizumi would stay on as prime minister and push ahead with his reforms, including the privatisation of the postal system, confident that he had the support of the voters.

The bills that were rejected by the upper house on Monday cleared the lower house by just five votes in July.

The LDP currently enjoys a majority on its own in the 480-seat lower chamber, with 249 seats. New Komeito has 34 seats. The opposition Democrats have 175.

But winning a majority will be more difficult for the LDP this time around, as it is unlikely to award party tickets to 37 lower house members who voted against the bills, and may also refuse to give backing to 14 who abstained.

If those who do not obtain LDP tickets choose to launch a new party, the LDP will be divided into two groups.

"If this happens, the LDP ... will encounter the worst moment since its foundation," the conservative Yomiuri Shimbun daily said in an editorial on Tuesday.

Koizumi said on Monday he would step down if the coalition failed to secure a majority in the election, ruling out any cooperation with party rebels or the opposition.

SCENARIO TWO

In the second scenario the LDP-New Komeito coalition falls far short of its target, allowing the Democratic Party to become the biggest party in the lower house, the main seat of power.

This would result in a new government headed by Democrats' leader Katsuya Okada.

The Democrats would form a government on their own should the party win a majority, and build a coalition with other smaller parties, or with the LDP rebels, should it fail to secure a majority but become the number-one party.

Chances of the New Komeito switching partners and joining with the Democrats cannot be ruled out, analysts say.

SCENARIO THREE

The third scenario would see the LDP and Komeito combined fail to win a majority and forging an alliance with its rebels to stay in power in exchange for Koizumi's resignation as party head and, hence, prime minister.

Koizumi's party presidency ends in September 2006.

Former LDP secretary-general Koichi Kato, a Koizumi critic on many matters, told Reuters on Tuesday it appeared quite likely the two ruling parties together would get only about 240 seats, short of a stable majority.

"But Koizumi says he won't join hands with the rebels, so he'd have to step down to obtain a stable majority, or else stay on with a very weak government," Kato said.

Analysts said former top government spokesman Yasuo Fukuda was a possible Koizumi replacement who would satisfy the rebels to either form a coalition or to return to the party.