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SCENARIOS: Possible results and implications of Japan election

(Reuters) - Japanese Prime Minister Taro Aso is expected to call an election for August 30, paving the way for a possible change in government after more than 50 years of almost unbroken rule by the conservative Liberal Democratic Party.

The opposition Democratic Party has vowed to pay more heed to the rights of consumers and workers than companies, keep the sales tax at 5 percent for the next four years, and wrest control of policy-making from bureaucrats as a way to cut waste.

It also wants to adopt a diplomatic stance less subservient to close security ally the United States while cultivating good ties with Asian neighbors such as China.

Following are possible outcomes of the election for the 480 seats in parliament’s lower house, where Aso’s LDP and its junior coalition partner, the New Komeito, now hold a combined 334 seats.


The main opposition Democratic Party looks set to either win a majority on its own or become the biggest party in the lower house and form a coalition with smaller allies, ousting the LDP from power for only the second time in its 54-year history.

Financial markets would likely welcome the prospect of a breakthrough in a long-running political stalemate but worry about the ability of the untested Democrats to govern and their possible lack of commitment to cutting Japan’s huge public debt.

Even if they win a majority on their own, the Democrats need to join hands with two small parties, one conservative and one leftist, in order to keep control of parliament’s upper house and break a deadlock that has stalled policy implementation as the country struggles with its worst recession in 60 years.

A new coalition government, like the LDP, would stress the need to revive the recession-hit economy over repairing Japan’s tattered public finances and would be unlikely to make sharp shifts in policies.

Victorious Democrats would quickly focus on keeping voter support, probably by implementing pledges to boost disposable income, ahead of a mid-2010 election for the upper house.


Should the Democrats stumble on the way to the polls, the result could be that the margin of victory is so small that both the LDP and Democratic Party try to form a ruling coalition through a tug-of-war to lure defectors into their camps.

This could spark a realignment of party allegiances, possibly but not necessarily along clearer policy lines.

Disaffected lawmakers from both major parties might form one or more small parties of 20-30 members in hopes of holding the balance of power in a coalition led by the LDP or the Democrats.

The confusion would make policy implementation difficult.


Although it seems unlikely at this stage, the LDP and its junior partner, the New Komeito, might miraculously win a simple majority and stay in power.

But they are certain to lose their current two-thirds majority in the lower house that has enabled them to enact laws rejected by the opposition-controlled upper chamber.

Without the two-thirds majority, Japan’s policy stalemate would worsen, at least until the 2010 upper house election.

That means the notion of a “grand coalition” among ruling and opposition blocs could be revived as the only way to break the political deadlock. Aso’s predecessor Yasuo Fukuda attempted to form such a coalition with then-Democratic Party leader Ichiro Ozawa, only to have the Democrats reject the notion soundly.