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Japan PM says to stay despite pressure to quit

JAPANESE Prime Minister Yukio Hatoyama said today he would stay on as leader, despite pressure from within his own party to resign as his approval ratings sink ahead of an election likely next month.

Calls have emerged in Hatoyama's Democratic Party of Japan (DPJ) for the premier to step down after just eight months on the job, to revive the party's chances in the upper house election expected on July 11 that it must win to smooth policymaking.

Political confusion, including the recent departure of a tiny leftist party from the ruling coalition, has distracted the government as it thrashes out a plan to cut huge public debt and a strategy to engineer growth despite a fast-ageing population.

There had been some hope in the bond market that the DPJ would unveil its medium- to long-term fiscal strategy and that it may refer to the possibility of raising Japan's consumption tax in that plan, said one strategist.

"But if Hatoyama were to really resign and the Democratic Party were to go through the process of choosing a new party leader, that would likely lead to considerable delays to such discussions and could be negative for the bond market from the standpoint of fiscal risk premiums," said Naomi Hasegawa, a senior fixed-income strategist at Mitsubishi UFJ Morgan Stanley Securities.

Hatoyama, who met with DPJ kingpin Ichiro Ozawa on Monday, reiterated that he would stay.

"I will discuss, cooperate (with Ozawa) and tackle the difficulties this country faces," Hatoyama told reporters.

Ozawa, the DPJ's secretary-general and widely seen as the real power behind the government, will meet Hatoyama again later on Tuesday, Banri Kaieda, deputy chair of the Democrats' election campaign committee, told TV Asahi.

LEADERSHIP DOUBTS

"There are various moves in the upper house, but there is hardly anyone in the lower house calling for him to quit," said Kaieda, adding that given the short time before the election it would be hard to change leaders now.

"I think he can still become a good prime minister."

The Democrats swept to power last August after a landslide election win for parliament's powerful lower house, ousting the conservative Liberal Democratic Party (LDP) after more than 50 years of almost non-stop rule.

But doubts over Hatoyama's leadership skills have eroded the government's approval ratings, with one poll showing support at just 17 percent after he failed to keep a campaign pledge to move a U.S. airbase off Okinawa island in southern Japan.

Most analysts have tipped outspoken Finance Minister Naoto Kan as the likely successor if Hatoyama quits.

But while recent surveys show a majority of voters think Hatoyama should resign over his broken promise on the Futenma airbase, some party lawmakers called for him to hang on.

"We should see real results going forward, so I think it's best if he continues his work," Health Minister Akira Nagatsuma told reporters, saying more time was needed for the Democrats' policies to take root.

It was also unclear whether a change at the top would improve the Democrats' chances in the upcoming election, since many voters were outraged when two leaders of previous LDP-led governments quit abruptly after just a year in office.

"They must decide whether to aggressively switch to a line-up that can win or stick with Hatoyama and Ozawa," said Yasunori Sone, a political science professor at Keio University in Tokyo.

"But that raises the question of who should replace him. Of course, (Finance Minister Naoto) Kan is most likely ... but it is not clear whether things would go well under Kan."

 

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