Ruling DPJ Faces Seat Losses in Mid-Term Elections Even Without Hatoyama

Whether Prime Minister Yukio Hatoyama stays or goes may not matter much for his ruling Democratic Party of Japan in next month’s mid-term elections.

Hatoyama met with Ichiro Ozawa, the party’s No. 2 official and architect of its 2009 election victory, yesterday to discuss his future. Hatoyama’s public approval rating has tumbled 50 points since the vote, Cabinet colleagues have questioned his leadership over disputed U.S. troop deployments and some DPJ lawmakers concerned about re-election say he should quit.

Changing prime ministers so soon before the upper-house election won’t prevent the DPJ from losing seats and risks tarnishing his successor, said Gerald Curtis, a professor of Japanese politics at Columbia University in New York. The government will retain power regardless of the result because of its majority in the more powerful lower chamber.

“Who would want to replace him under these circumstances?” Curtis said in a phone interview in Tokyo. “Better to wait until after the election to try and turn things around.”

Should Hatoyama quit, he would be the shortest-serving Japanese Prime Minister since Tsutomu Hata led a minority government for two months in 1994. He would also make way for the country’s fifth leader since Junichiro Koizumi stood down in September 2006.

Choosing a new leader would also entail a two-week party selection process that might disrupt efforts to pass key legislation in the upper house, including a bill expanding the business of the state-owned postal system. Stocks fell yesterday amid the political uncertainty, with the Nikkei 225 Stock Average losing 0.6 percent.

Historic Victory

The DPJ came to office in August by ousting the Liberal Democratic Party from more than half a century of almost unbroken government control. Hatoyama and his party have made good on pledges to cut public works construction and boost social welfare spending, and the economy rose an annualized 4.9 percent in the first quarter amid an export-led recovery.

Those successes have been overshadowed by Hatoyama’s eight- month tussle with the U.S. and his own coalition partners about where to relocate the Futenma Marine Air Base on Okinawa. Hatoyama last week reached an agreement with the Obama administration to move the facility to a less populated part of the island, breaking a campaign pledge to transfer it elsewhere in Japan and dismaying local residents.

The Social Democratic Party left the ruling coalition on the weekend after Hatoyama fired its leader from the Cabinet for refusing to endorse the accord, prompting him to repeat his apology for his handling of the affair.

Salient Issue

“Futenma is the single most salient issue that would contribute to Hatoyama’s departure,” said Koichi Nakano, a political science professor at Sophia University in Tokyo. “But if the DPJ ditches him now, they’d have to put out a fresh face and there’s no time to recover before the elections. He may survive for now.”

Hatoyama also lost support among voters because of campaign finance scandals involving himself and Ozawa, who had to step down as party leader before last year’s election.

Prosecutors in February indicted three former Ozawa aides on charges of violating campaign funding laws two months after two men who had worked for Hatoyama were accused of falsifying income sources. Some of that money was a gift from Hatoyama’s mother, and he was forced to pay about 600 million yen ($6.6 million) in back taxes.

Three polls released this week showed Hatoyama’s approval rating at or below 20 percent, compared with 75 percent when he took office. Sentiment for him to step down is “increasingly overwhelming,” DPJ legislator Yoshimitsu Takashima told reporters on May 31.

Half the Seats

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

Other DPJ lawmakers, while acknowledging the sentiment against Hatoyama, say a new leader won’t be enough. And the prospect of the DPJ emulating the LDP, whose last three premiers each served for only one year, runs counter to the party’s call to change the face of Japanese politics.

“The damage will be even bigger if our prime minister becomes the fourth to quit after only serving about a year,” said DPJ lawmaker Kotaro Tamura, who left the Liberal Democrats in December. “The election results will be the same regardless of whether there’s a change.”

To contact the reporters responsible for this story: John Brinsley at jbrinsley@bloomberg.net; Sachiko Sakamaki in Tokyo at Ssakamaki1@bloomberg.net;

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