By Linda Sieg
TOKYO, June 26 (Reuters) - Japanese Prime Minister Taro Aso
could dissolve the lower house of parliament as early as next
week for an August general election to escape pressure to
resign, but growing fears of defeat inside his party may stay
his hand.
Media surveys show the main opposition Democratic Party is
more popular ahead of the election, which must be held by
October. That raises the prospect the business-friendly Liberal
Democratic Party could find itself out of power after more than
half a century of almost unbroken rule.
Below are scenarios for how developments may unfold in the
run-up to the election and implications for government
policies.
QUICK ELECTION CALL
Aso might dissolve the lower house around July 2 to avoid
pressure to step down, which is expected to grow if the ruling
bloc does badly in a Tokyo Metropolitan Assembly election on
July 12. The general election would then probably be held on
Aug. 2.
Aso was considering reshuffling the LDP executive line-up
soon to include more telegenic lawmakers, media and political
sources said, and might make changes to his cabinet as well.
But an early election under Aso would almost certainly
spell defeat for the LDP and its junior coalition partner, so
many lawmakers in both parties oppose the plan.
PARTY DUMPS ASO
Aso's sagging popularity has revived moves inside the LDP
to dump him before the election, with possible successors
including Health Minister Yoichi Masuzoe seen as a competent
manager.
A popular comedian-turned-governor, Hideo Higashikokubaru,
has also said he wants the job, although many in the LDP are
angrily opposed to his apparent bid.
A poor performance for the ruling bloc in the Tokyo local
election would fuel the "oust Aso" movement.
But Aso is the third prime minister since the last general
election for the lower house in 2005, so changing the leader
again might well outrage voters. Finding a successor popular
enough to turn the tide for the ruling bloc could be difficult.
ALTERNATIVE ELECTION DATES
Other election dates floated are Aug. 9, Aug. 30, or Sept.
6 -- or even Oct. 18. LDP officials have said they hope massive
stimulus steps will bolster signs of recovery from Japan's
worst recession since World War Two, encouraging voters to
stick with the ruling bloc.
A group formed by popular governors to promote local
government autonomy is a wild card, since they may back one
side or the other in the election, or even form the core of a
new party. Should they opt for the LDP, their support could
have a significant effect on the election outcome, some
analysts said.
The LDP may also be hoping that a fresh scandal could
emerge to damage the Democratic Party's chances. But the
long-ruling conservative party is far from immune to scandals
itself.
BIG DEFEAT FOR LDP PREDICTED
Analysts say the LDP and its junior coalition partner are
currently headed for a big defeat, although some add that
support from the governors might help them to hang on with a
tiny margin.
Even if the ruling bloc stays in power, it is expected to
lose the two-thirds majority that allows it to override the
opposition-controlled upper house. That means political
stalemate could persist at least until the next upper house
election in 2010, unless lawmakers switch sides or form a
"grand coalition".
The Democrats could well win a majority on their own, but
are still expected to form a coalition with two small allies
whose cooperation is needed to control the upper house.
The Democrats have pledged to reduce bureaucrats' grip on
policy, cut waste and pay more heed to consumers and workers'
interests than to companies.
But a Democrat-led government would probably not implement
sharp shifts on economic policies since, like the LDP, they are
stressing the need to give priority to recovery rather than the
repair of Japan's tattered public finances.
(Editing by Dean Yates)
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