Koizumi suffers poll setback but keeps job
(Agencies)
Updated: 2004-07-12 08:57

Japanese Prime Minister Junichiro Koizumi's party suffered an embarrassing setback in a weekend upper house election that allows him to keep his job but weakens his ability to forge ahead with economic reforms.

Official results have not yet been published but media said on Monday that Koizumi's Liberal Democratic Party (LDP) won only 49 of the 121 seats at stake in Sunday's poll, missing its modest target of 51.

Koizumi's ruling coalition retained its majority in the upper house and holds a majority in the more powerful lower chamber, which chooses the prime minister, so his job seems safe.

Japanese Prime Minister Junichiro Koizumi watches result of flash report of the Upper House election at headquarters of his ruling Liberal Democratic Party (LDP) in Tokyo July 11, 2004. Koizumi's party looked headed for a setback in the upper house election, a verdict on his three years in office that would weaken his clout and might hamper his economic reforms.  [Reuters]

But the main opposition Democrats, buoyed by voter dismay over pension reforms and Japan's troop dispatch to Iraq, made impressive gains, winning 50 of the seats contested, up from 38 before the poll.

Media said on Monday that the poor showing would reduce the once wildly popular prime minister's clout within his party and could cast a shadow over his economic reforms.

"Resistance toward Koizumi's reforms is likely to increase ... Pressure from opposition parties will no doubt strengthen as well. Against this harsh environment, will it be possible to make the reforms into something fruitful?" the Asahi Shimbun daily said in an editorial.

The fact that the LDP struggled despite stressing the merits of Koizumi's economic reforms -- such as reining in public spending -- may bode ill for such policies, the Mainichi Shimbun daily said.

"There is a possibility that calls for ... public works to be increased could re-emerge within the LDP," it said.

Financial markets took the election results in their stride.

Traders and analysts said the LDP had not suffered as big a setback as some had feared and that Koizumi would stay in office, dispelling concerns of political instability.

"Some investors are buying back the yen after they had sold heavily last week on the expectation the result would be worse," said Tohru Sasaki, a strategist at JP Morgan Chase.

"They've been encouraged by the fact it looks like Koizumi won't have to take responsibility."

The yen rose to a two-week high against the dollar of around 107.65 yen on Monday morning.

In the stock market, the Nikkei average was up 1.05 percent at 11,543.92.

Bond prices dipped, but that was more in reaction to the rise in share prices than to the election result itself, traders said. The benchmark 10-year yield rose 3.5 basis points to 1.835 percent, its highest in 10 days.

OPPOSITION GAINS

The junior coalition partner, the New Komeito, won 11 seats, which meant the ruling coalition had 139 of the 242 seats in the upper house.

The main opposition Democratic Party outperformed the long-ruling conservative party and boosted its presence, winning 50 seats. It previously held 38 of the seats contested.

The Democrats had harshly criticized Koizumi's track record on reform as well as unpopular changes to the creaking state pension scheme and a controversial dispatch of troops to Iraq.

"We will make every effort to have the pension reform legislation repealed and call for the withdrawal of Japanese troops from Iraq," Democratic Party leader Katsuya Okada said.

Media reports said that although the weak LDP showing would undermine the maverick Koizumi's influence inside his party, there were virtually no calls for him to step down due to a lack of viable alternatives.

Voter turnout was 56.57 percent in prefectural constituencies and 56.54 percent in the proportional representation bloc, official figures showed, little changed from a 2001 poll.

Koizumi, 62, sprang to power in 2001 on a groundswell of popular support for his promise to abandon the wasteful public spending that had inflated Japan's government debt and to privatize debt-laden public corporations and postal services.

Economists say his record is patchy and his support has fallen to half of the 80 percent of three years ago when he led the LDP to a solid showing in a previous upper house election.

While the LDP and the Democrats do not differ radically on many policies, some voters said they wanted change to revive democracy after LDP rule for most of the past half-century, and the Democrats attributed their solid performance to such views.

The Democrats' gains came mainly at the expense of smaller parties, including the Communist Party and the Social Democrats, once the largest opposition party. They won four and two seats respectively.

The upper chamber has 242 seats and half are contested every three years.

Close

Today's Top News     Top World News
China opposes Singapore deputy PM's Taiwan visit         Sudden storm hits Beijing hard         Voters in Japan deal a setback to Koizumi         Freeze extended on demolishing firms         Annan: We must do better on AIDS         Power cuts put many business in bind	Annan urges global AIDS effort       Koizumi suffers poll setback but keeps job       US ponders delay Election Day       Mexico first lady under fire over ambitions       Wife says Cheney's cursing was out of character       Four U.S. Marines killed in Iraq