Hatoyama to Consider Future Amid Pressure to Quit Over Japan Base Backlash

Prime Minister Yukio Hatoyama said he will consider his political future and do “what’s best for the people of Japan” after polls showed four in five voters want him to step down six weeks before mid-term elections.

“This new administration will continue to take action in a way that’s appropriate,” Hatoyama said today at his office in Tokyo when asked whether he would step down. Japanese stocks fell partly on concerns of political instability.

The prime minister’s popularity has plummeted since his Democratic Party of Japan’s landslide August victory, with voters disenchanted over campaign finance scandals and his vacillating over where to move a U.S. military base. Transport Minister Seiji Maehara today said criticism of Hatoyama “was inevitable” and the election outlook “is tough.”

“Hatoyama has totally screwed things up,” said Gerald Curtis, a professor of Japanese politics at Columbia University in New York. “Clearly, the party sees a disaster looming.”

Japan’s Nikkei 225 Stock Average fell 0.7 percent to 9,700.91 at 1:27 p.m. in Tokyo. The yen traded at 91.02 per dollar from 91.27 late yesterday in New York, where it slipped as low as 91.62. Japan’s currency was also at 111.63 per euro, from 112.31 yesterday.

Party’s Future

Hatoyama, 63, will meet later with Ichiro Ozawa, the DPJ’s secretary-general and top campaign strategist, to discuss the party’s future before July elections for the Diet’s upper house. The DPJ-led coalition’s majority was cut when the Social Democratic Party left two days ago, having refused to endorse a deal with the U.S. to relocate a Marine base in Okinawa.

Should Hatoyama step down before the elections, likely candidates to replace him include Finance Minister Naoto Kan, National Strategy Minister Yoshito Sengoku and Foreign Minister Katsuya Okada, Curtis said. Hatoyama’s term as party leader expires in September.

Kan, who is also deputy premier, said today “there’s no change” in his desire for Hatoyama to stay on.

Hatoyama unseated the Liberal Democratic Party, which governed almost without interruption for more than 50 years, beginning a new chapter in Japanese democracy. Buffeted by economic stagnation and surging welfare costs, the LDP’s last three prime ministers each served for only one year, a trend Hatoyama is in danger of continuing.

Voter, Party Discontent

Three polls released yesterday showed Hatoyama’s approval rating at or below 20 percent and six in 10 voters think he should quit. Sentiment for him to step down is growing within the party, especially among lawmakers up for re-election, DPJ legislator Yoshimitsu Takashima told reporters yesterday.

“These voices are increasingly overwhelming,” he said.

Half of the 242 upper-house seats are at stake in the July balloting. The DPJ and its other junior partner, the People’s New Party, have 122 legislators, and losing that majority could slow Hatoyama’s legislative goals of increasing social welfare spending while aiming to cut the world’s largest public debt.

Hatoyama last night vowed to stay in his post after a meeting with Ozawa and Azuma Koshiishi, head of the Democrats’ upper house members.

“I intend to work hard for the people of this country,” Hatoyama said yesterday. Asked if he would continue as premier, he replied: “Of course,” while adding that “I understand I’ve caused trouble” within the party.

Okinawa Base

The Social Democrats left the coalition after Hatoyama fired leader Mizuho Fukushima from the Cabinet for refusing to endorse last week’s accord with the U.S. to relocate the Futenma Marine Air Base within Okinawa. Hatoyama has apologized for breaking a campaign pledge to transfer the facility off of Okinawa in line with local sentiment.

The controversy over Futenma and campaign finance scandals involving both Ozawa and Hatoyama have overshadowed reports showing the world’s second-largest economy is rebounding. Gross domestic product grew at the fastest pace in three quarters in January through March, and the Organization for Economic Cooperation and Development raised this year’s growth forecast for Japan last week to e percent from 1.8 percent.

Hatoyama’s approval rating fell to 19 percent from 24 percent last month, according to a Yomiuri newspaper poll published yesterday. Taro Aso, Hatoyama’s predecessor, had an approval rating of around 14 percent just before his party lost in last year’s lower-house elections.

To contact the reporters on this story: Takashi Hirokawa in Tokyo at thirokawa@bloomberg.net; Sachiko Sakamaki in Tokyo at Ssakamaki1@bloomberg.net

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