SCENARIOS-Weak Japan PM in pinch as ponders election timing

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By Linda Sieg

TOKYO, July 2 (Reuters) - Speculation is swirling over whether unpopular Japanese Prime Minister Taro Aso will soon call an election, due by October, or be ousted before the poll.

Media surveys have shown the opposition Democratic Party has the lead over Aso's Liberal Democratic Party, raising the chances of an end to more than 50 years of almost unbroken rule by the conservative, business-friendly party. [ID:nT135345]

Below are scenarios for how developments may unfold in the run-up to the election and implications for government policies.

QUICK ELECTION CALL

Japanese media say Aso might unveil plans to call an election before or during a July 8-10 Group of Eight (G8) summit to avoid pressure to step down. That would be an unusual move, however.

Instead, if Aso is determined to call a snap poll, he would more likely do so right after a July 12 Tokyo Metropolitan Assembly election that is being closely watched as a bellwether for the national poll. In either case, the general election would then probably be held on Aug. 2, Aug. 8 or Aug. 9.

But Aso's failure on Wednesday to carry out a proposed revamp of the LDP executive line-up due to opposition from party heavyweights has further weakened his clout, calling into question his ability to call an election. [ID:nSP500042]

PARTY DUMPS ASO

Aso's sagging popularity has sparked increasingly public moves in the LDP to dump him before the election, with possible successors including Health Minister Yoichi Masuzoe.

A popular comedian-turned-governor, Hideo Higashikokubaru, has also said he wants the job, but prospects he would get it seem slim. [ID:nT248205]

"Oust-Aso" moves could gain momentum following the furore over party personnel, and ruling party losses in an election for governor of Shizuoka, central Japan, on Sunday and/or the Tokyo assembly poll would almost certainly add fuel to the fire.

But Aso is the third prime minister to take office since the LDP won big in the last general election for the lower house in 2005, so changing leaders again might well outrage voters.

Finding a successor popular enough to turn the tide for the ruling bloc could be difficult.

The LDP's poor outlook has also prompted talk of new parties, with former internal affairs minister Kunio Hatoyama, who quit the cabinet last month, and ex-financial service minister Yoshimi Watanabe, who left the LDP in January, possible focal points.

WAITING GAME

A weakened Aso might hold on in hopes that huge government stimulus steps will bolster signs of recovery from Japan's worst recession since World War Two, encouraging voters to stick with the ruling bloc. [ID:nT53503] Possible election dates in this scenario include Aug. 30, Sept. 6 and even Oct. 18.

The LDP has also launched a task force to probe a scandal over improper reporting of political donations by Democratic Party leader Yukio Hatoyama, in hopes the affair will hurt the Democratic Party's chances. The ruling party itself, however, is far from immune to scandals.

BIG DEFEAT FOR LDP PREDICTED

Analysts say the LDP and its junior coalition partner are headed for a big defeat, although some add that a Democratic Party slip-up might help them to hang on with a tiny margin.

If the ruling bloc does stay in power, it is expected to lose the two-thirds majority that allows it to override the opposition-controlled upper house. That means political stalemate could worsen and policies become even harder to implement, unless lawmakers switch sides or form a "grand coalition".

The Democrats could well win a majority on their own, but are still expected to form a coalition with two small allies whose cooperation is needed to control the upper house.

The Democrats have pledged to reduce bureaucrats' grip on policy, cut waste and pay more heed to consumers and workers' interests than to companies.

But a Democrat-led government would probably not implement sharp shifts on economic policies since, like the LDP, they are stressing the need to give priority to recovery rather than the repair of Japan's tattered public finances.

(Editing by Jeremy Laurence)