Economic Calendar

Tuesday, September 2, 2008

FACTBOX-Likely scenarios after Japan PM Fukuda resigns

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Sept 2 (Reuters) - Whoever succeeds Prime Minister Yasuo Fukuda following his abrupt resignation faces big problems, including a deadlocked parliament and pressure to call an early election.

Opposition parties won control of parliament's upper house last year, enabling them to delay legislation and reject key appointments.

An election for the more powerful lower chamber, where the Liberal Democratic Party-led ruling bloc holds a huge majority, must be held by September 2009.

The following are some possible political scenarios.

NEW PM, ELECTION TIMING

* Frontrunner LDP Secretary-General Taro Aso, or another candidate, wins a party leadership election expected around Sept. 22, gets a bounce in public opinion polls and calls a general election by the end of this year after enacting an extra budget to fund an economic relief package, or early in 2009 at the start of the next regular session of parliament.

* The new prime minister fails to boost the LDP's popularity, and delays the general election until after the 2009/10 budget is passed in March of next year or even closer to the end of lower house lawmakers' terms in September 2009.

ELECTION OUTCOME?

* No matter when the election is held, the LDP and its junior partner are expected to lose their two-thirds majority in the lower house, which allows them to enact laws rejected by the upper chamber, but the scale of their setback remains in doubt.

* The main opposition Democratic Party could become the biggest party in the lower house and form a coalition with smaller allies, ejecting the LDP from power for only the second time in its 53-year history.

* The LDP remains the biggest party in the lower house, keeps its junior partner the New Komeito party in the coalition and stays in power, although with a reduced majority, meaning policy-making remains difficult.

* The margin of victory is so small that both the LDP and Democratic Party hope to form a ruling coalition and engage in a tug-of-war to lure potential defectors into their camps. The New Komeito party is a wild card in that it could decide to change sides and link up with the Democrats.

* Disaffected lawmakers from both major parties 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.

Decisions to change party allegiances are likely to be determined as much by personal factors as policy stances, if not more so. Both the LDP and the Democrats are a mix of lawmakers from across the political spectrum, while in many ways the junior coalition partner, the New Komeito party, is closer in policy terms to the Democrats. (Reporting by Isabel Reynolds and Linda Sieg; Editing by Michael Watson)


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