Japan to decide on U.S. base plan Monday: report

TOKYO (Reuters) - The Japanese government is set to decide on Monday on a proposal to relocate a controversial U.S. airbase, Kyodo News Agency reported on Sunday, but there was no sign Washington or local residents would agree to the plan.

The row over relocating the Futenma U.S. Marine base has upset bilateral ties and contributed to Prime Minister Yukio Hatoyama's falling support rates as he faces a midyear election his ruling Democratic Party must win to avoid policy deadlock.

The floundering premier faces grim prospects on settling the feud by his self-imposed deadline of end-May, as speculation simmers that he may have to resign if he cannot do so.

Hatoyama pledged to move the base off the southern island of Okinawa during last year's election campaign that led his party to power, but angered local residents last week by saying he now realized a marine presence was needed for deterrence in Okinawa, host to some half the 49,000 U.S. military personnel in Japan.

Meanwhile, local mayors of a tiny island northeast of Okinawa rejected Hatoyama's proposal last week to shift a part of Futenma's facility there.

The government plan to be decided on Monday will likely modify a 2006 Japan-U.S. deal to shift Futenma's facilities to a site off Camp Schwab, another Marine base in a more remote part of Okinawa, Kyodo said.

Washington's top official for East Asia, Kurt Campbell, said on Sunday he was certain a resolution on the base would be reached.

"I remain very confident that we will be able to arrive at an outcome that meets the operational needs of the United States but is also politically responsible," Campbell, the U.S. Assistant Secretary of State, told a news conference in Bangkok.

But Washington remains reluctant about the modification to the 2006 deal, the Sankei newspaper reported.

Facing opposition from Washington, Okinawa and a potential relocation site, the likelihood for Hatoyama to keep his deadline is dimming.

"A resolution by the end of May is impossible," Yukio Okamoto, a former diplomat now with think-tank Okamoto Associates, said on national broadcaster NHK.

Even a cabinet minister suggested the prime minister may need more time to sort things out.

"I think the prime minister's determination to set out a certain direction for the issue has not changed, but that does not mean everything will be over," Kyodo news agency quoted transport minister Seiji Maehara as saying on Sunday.

Some analysts say the next target date to resolve the feud could be in November, when U.S. President Barack Obama is expected to visit Japan to attend the Asia Pacific Economic Cooperation forum.

Japanese and U.S. officials are set to meet in Washington on Wednesday for working-level talks on the base issue, Kyodo said.

(Reporting by Yoko Kubota in TOKYO and Alex Richardson in BANGKOK; Editing by Sugita Katyal)