Your Party Gains in Japan Election, Making It `Kingmaker' For Legislation

Japan’s opposition Your Party won 10 seats in upper house elections yesterday, vaulting the group formed 11 months ago into a position to make or break legislation proposed by a weakened ruling bloc.

Your Party leader Yoshimi Watanabe vowed not to join Prime Minister Naoto Kan’s Democratic Party of Japan-led coalition and to pursue a separate legislative agenda. Kan will have to negotiate with the new group as well as the main opposition Liberal Democratic Party on legislation, potentially signaling renewed political gridlock. Watanabe is a former LDP cabinet minister.

“We’ll see political power games and Kan won’t be able to deliver policies easily,” said Jiro Yamaguchi, political science professor at Hokkaido University in northern Japan. Your Party “will try to play a kingmaker role.”

Watanabe’s group campaigned on a promise to slash the ranks of civil servants by one third and to cut corporate taxes. Its members also opposed raising the sales tax to curb the nation’s debt, an approach favored by both the LDP and DPJ.

Raising the consumption tax would drag on the economy at a time when it is struggling to overcome two decades of stagnant growth, Kenji Nakanishi, a former JPMorgan Chase & Co. executive and Your Party candidate, said earlier this month. Nakanishi defeated Justice Minister Keiko Chiba in Yokohama to win yesterday. Former Tully’s Coffee Japan Co. President Kota Matsuda was another of Watanabe’s candidates who won.

Coalition Strength

Kan’s coalition now has 110 lawmakers in the 242-seat upper house after yesterday’s vote, compared with Your Party’s 11. Kan’s block has 311 seats in the lower house, short of the two- thirds majority necessary to overrule upper house decisions.

“It’s inevitable that the influence of the policy agendas of the LDP and Your Party will increase,” Hiromichi Shirakawa, chief Japan economist at Credit Suisse Group AG in Tokyo, wrote today in a report.

Watanabe, a financial services minister in the LDP, formed Your Party ahead of last year’s lower house contest. Support for the group gained as Kan’s predecessor Yukio Hatoyama failed to make good on campaign promises such as relocating a U.S. military base off the island of Okinawa.

“Your Party will become a key player in the divided parliament,” Hiroyuki Kishi, professor of economic policies at Tokyo-based Keio University, said in an interview. “The party presents an alternative.”

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

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