Japan's PM poised to deliver on reforms

Koizumi has to prove his reformist potential

TOKYO, Japan -- Junichiro Koizumi makes a speech on Monday that will either cement his popularity as prime minister or create the impression he may be as transient as his predecessors.

Koizumi, who won a landslide victory to become Japan's 11th prime minister in 13 years, is committed to structural reform to revive the feeble economy, even suggesting that his administration would tolerate a short-term economic contraction.

That bravado has made him popular with voters and financial markets, encouraging wary foreign investors to pour money back into the ailing Tokyo stock market.

With support ratings topping 80 percent, Koizumi has helped the benchmark Nikkei 225 share average roar to its highest level this year.

But with such high expectations for concrete reforms, his failure to deliver could have devastating results, observers say.

Indeed, financial markets in Tokyo have been eagerly awaiting Koizumi's speech, to be delivered on Monday afternoon, to see whether it would include specific proposals to carry out reforms.

On national television on Sunday, opposition leaders were quick to point out that the proposals -- including solving the problem of banks' bad loans, privatising the postal system, and reducing public spending -- lacked teeth.

"There have been no specific proposals (for the reform plans)," Yukio Hatoyama, head of the main opposition Democratic Party, said on a talk show on NHK.

"There is a chance that (the reforms) will end in nothing but promises."

After laying out his policy planks, Koizumi will be questioned by opposition lawmakers in parliament for three days, beginning Wednesday.

How Koizumi performs will be key amid speculation he will call a snap general election this summer.

While Koizumi has denied plans to call for a dual election of the Upper House -- scheduled for July -- and the powerful Lower House, speculation persists that, should the high support levels hold firm, his ruling Liberal Democratic Party (LDP) might seize the chance to boost their standing in the Lower chamber.

The LDP lost its majority in a general election last June and has stayed in power by virtue of its two coalition partners.

While echoing Koizumi's denial, LDP Secretary General Taku Yamasaki hinted that an early election could work in the party's favor.

"The mood has somewhat brightened for the LDP," Yamasaki said on the TV program when asked about a possible poll.

"There are more candidates saying they want to run on the LDP ticket."

The next Lower House election need not be held until the summer of 2004, but the prime minister has the right to dissolve the chamber at any time.

"There is a 30 percent chance (that a snap election will be held)," said Democratic Party leader Hatoyama. "We are preparing ourselves for a dual election."

The LDP's coalition partners, meanwhile, oppose an early election, most likely due to fears of losing seats in the house.

"I don't think a dual election should be held," said Takenori Kanzaki, head of the Buddhist-backed New Komeito Party and the LDP's main partner.

"We (the coalition members) should concentrate on the Upper House election alone," he added, stressing the top priority was to ensure a continuous effort to jump-start the economy.

So far, the LDP appears to have the wind at its tail.

A newspaper survey published earlier this week showed that two-thirds of Japanese voters want a general election this year. Almost half of the respondents said they favored an LDP-led coalition at the helm.

Even 42.9 percent of supporters of the opposition Democratic Party shared that view, with support for the party slipping six points to 11.9 percent from a February survey.

Reuters contributed to this report.

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Japanese Prime Minister
Japan Liberal Democratic Party

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