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Japan PM's party seen far short of election goal
Source: Agencies |
July 7, 2010, Wednesday
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JAPAN'S ruling Democratic Party could win fewer than 50 seats in an upper house poll on Sunday, media said, a result that could put Prime Minister Naoto Kan's job on the line and stall efforts to curb huge public debt.
The Democratic Party of Japan (DPJ), which swept to power for the first time last year, will almost certainly run the government regardless of the July 11 result, because it controls the powerful lower house. But the party needs a majority in the upper chamber to enact laws and implement policies smoothly.
Kan, who took over from his unpopular predecessor in June, has put fiscal reform at the centre of the election campaign, including a possible doubling of the 5 percent sales tax to curb a public debt already nearly twice the size of the GDP.
Kan has set a relatively low target of winning at least 54 seats, the same number that the DPJ has up for grabs in the election but already fewer than the 60 it needs for an outright majority in the 242-seat chamber, where half the seats are being contested.
But a July 4-6 survey by Kyodo news agency published today showed the DPJ might not even win 50 seats, and the Tokyo Shimbun newspaper forecast a similar result.
VULNERABLE TO CHALLENGE
Japanese government bond yields have fallen since Kan put fiscal reform on the agenda and a messy election outcome could weaken that trend.
"It's looking like it could be difficult for the ruling party to win an outright majority, and if that happens it could curb the market's expectations on fiscal reform, putting a floor under yields, which declined steeply in June," said Koichi Ono, a senior strategist at Daiwa Securities Capital Markets.
Kyodo also said the DPJ and its tiny ally, the People's New Party, would also have a tough time winning the 56 seats that would allow them to keep control of the upper chamber, meaning the Democrats would have to seek new allies.
But a weak showing for the Democrats would undercut Kan's ability to get backing from other parties to implement policies and could leave him vulnerable to a challenge from within his own party ahead of a leadership vote in September.
"If they get more than 50 seats, the Kan administration can continue but if below 50, calls for him to take responsibility will emerge," said independent analyst Atsuo Ito.
Support for the DPJ rebounded after Kan, a former grassroots activist, took over from unpopular Yukio Hatoyama in June, but has receded since he floated the possible sales tax hike.
The main opposition Liberal Democratic Party and smaller opposition groups such as the pro-reform Your Party have flatly rejected the notion of a tie-up, although analysts said they could change their tune if the Democrats do well.
"Party executives and those close to Kan are talking not of a rejig of the coalition, but of cooperation with opposition parties on a policy-by-policy basis," Ito said. "In that case, they won't be able to make progress on policies ... and they will not be able to take bold measures on fiscal reform."
Kyodo said the LDP was likely to win around 46 seats, while the Your Party could win around nine seats.
But with a hefty chunk of voters still undecided how to vote -- Kyodo put the figure at about 40 percent -- the outlook remains murky.
"I said 51 seats and I wouldn't be surprised to see it drop, but it's impossible to tell with so many voters saying they haven't made up their minds," said Gerry Curtis, a Columbia University professor.
"At the last minute, a lot of people may hold their noses and vote for the DPJ."
The Democratic Party of Japan (DPJ), which swept to power for the first time last year, will almost certainly run the government regardless of the July 11 result, because it controls the powerful lower house. But the party needs a majority in the upper chamber to enact laws and implement policies smoothly.
Kan, who took over from his unpopular predecessor in June, has put fiscal reform at the centre of the election campaign, including a possible doubling of the 5 percent sales tax to curb a public debt already nearly twice the size of the GDP.
Kan has set a relatively low target of winning at least 54 seats, the same number that the DPJ has up for grabs in the election but already fewer than the 60 it needs for an outright majority in the 242-seat chamber, where half the seats are being contested.
But a July 4-6 survey by Kyodo news agency published today showed the DPJ might not even win 50 seats, and the Tokyo Shimbun newspaper forecast a similar result.
VULNERABLE TO CHALLENGE
Japanese government bond yields have fallen since Kan put fiscal reform on the agenda and a messy election outcome could weaken that trend.
"It's looking like it could be difficult for the ruling party to win an outright majority, and if that happens it could curb the market's expectations on fiscal reform, putting a floor under yields, which declined steeply in June," said Koichi Ono, a senior strategist at Daiwa Securities Capital Markets.
Kyodo also said the DPJ and its tiny ally, the People's New Party, would also have a tough time winning the 56 seats that would allow them to keep control of the upper chamber, meaning the Democrats would have to seek new allies.
But a weak showing for the Democrats would undercut Kan's ability to get backing from other parties to implement policies and could leave him vulnerable to a challenge from within his own party ahead of a leadership vote in September.
"If they get more than 50 seats, the Kan administration can continue but if below 50, calls for him to take responsibility will emerge," said independent analyst Atsuo Ito.
Support for the DPJ rebounded after Kan, a former grassroots activist, took over from unpopular Yukio Hatoyama in June, but has receded since he floated the possible sales tax hike.
The main opposition Liberal Democratic Party and smaller opposition groups such as the pro-reform Your Party have flatly rejected the notion of a tie-up, although analysts said they could change their tune if the Democrats do well.
"Party executives and those close to Kan are talking not of a rejig of the coalition, but of cooperation with opposition parties on a policy-by-policy basis," Ito said. "In that case, they won't be able to make progress on policies ... and they will not be able to take bold measures on fiscal reform."
Kyodo said the LDP was likely to win around 46 seats, while the Your Party could win around nine seats.
But with a hefty chunk of voters still undecided how to vote -- Kyodo put the figure at about 40 percent -- the outlook remains murky.
"I said 51 seats and I wouldn't be surprised to see it drop, but it's impossible to tell with so many voters saying they haven't made up their minds," said Gerry Curtis, a Columbia University professor.
"At the last minute, a lot of people may hold their noses and vote for the DPJ."
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