Japan PM spells out conditions for stepping down

TOKYO Mon Jun 27, 2011 11:00am EDT

Japanese Prime Minister Naoto Kan leaves a gathering with members of his ruling Democratic Party of Japan (DPJ) in Tokyo June 2, 2011. REUTERS/Kim Kyung-Hoon

Japanese Prime Minister Naoto Kan leaves a gathering with members of his ruling Democratic Party of Japan (DPJ) in Tokyo June 2, 2011.

Credit: Reuters/Kim Kyung-Hoon

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TOKYO (Reuters) - Japanese Prime Minister Naoto Kan on Monday spelled out conditions for keeping his promise to resign, including the passage of a bill to allow deficit bond issuance and another to promote renewable energy sources.

Kan, the fifth Japanese leader in five years, sidestepped a question of whether he would call a snap election if the renewable energy bill, a new priority issue for the unpopular premier, did not pass in a divided parliament.

Kan is under mounting pressure to keep a pledge to quit as Japan struggles to rebuild after the March 11 earthquake and tsunami and the subsequent accident at Fukushima nuclear plant, the world's worst atomic crisis in 25 years since Chernobyl.

Kan said this month that he would hand over his duties to the younger generation in his party when certain objectives have been achieved.

"I think that these three -- the passage of a second extra budget, the deficit bond bill and the renewable energy promotion bill -- are these certain objectives," Kan told a news conference, spelling out conditions for his resignations clearly for the first time to the public.

In an apparent effort to bolster his fading clout, Kan promoted Goshi Hosono, a close aide, to be the minister in charge of Japan's nuclear crisis as a part of a minor cabinet reshuffle. He also tapped a coalition partner to be an adviser.

Ryu Matsumoto became the minister for reconstruction and gave up his environment portfolio, which the justice minister will double. Most key ministers, including Finance Minister Yoshihiko Noda and Economics Minister Kaoru Yosano, kept their posts, indicating no impact on economic policy.

"With all the confusion going on, it's a sign that Kan wants to exert his influence and to stay in the job longer," said Hiroshi Hirano, professor of political science at Gakushuin University.

A political stalemate over Kan's departure, however, risks slowing efforts to recover from the March disaster and the radiation crisis, and could delay steps to tackle structural problems including massive public debt.

Moody's rating agency said on Monday that Japan, the world's third biggest economy, could face a third "lost" decade of sluggish economic growth that will leave it struggling to whittle down the heaviest debt burden among developed nations.

Kan, under fire for his response to the disaster, pledged this month to step down to quell a rebellion in his Democratic Party of Japan (DPJ), enabling him to survive a no-confidence vote, but has declined to say when he will go.

Sixty percent of Japanese voters want Kan to resign by the end of August, a survey by the Nikkei business daily showed.

Opposition parties, which control parliament's upper house where they can block bills other than treaties and budgets, look set to help pass the small second extra budget.

But they want changes to the ruling DPJ's spending plans in return for backing the bill that would enable the government to issue bonds to fund about 40 percent of a $1 trillion budget for the year from April 1.

They are also cautious about the renewable energy bill, which businesses fear will raise electricity costs.

(Reporting by Linda Sieg, Kiyoshi Takenaka, Yoko Kubota, Shinichi Saoshiro and Chisa Fujioka; Editing by Sugita Katyal)

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