Koizumi Can't Savor Victory

Japanese Prime Minister Junichiro Koizumi guided his party to victory in legislative elections but Monday had to fend off investors' skepticism, word of a rift in his party and a controversy over visiting a WWII shrine.

"They (the results) were better than our expectations," Koizumi said on Monday, a day after the voters gave his Liberal Democratic Party (LDP) and its coalition partners 78 of the 121 seats at stake in the Upper House election. The LDP gained three seats to 64.

"I must make use of the people's expectations and support for the LDP to implement the reforms of the Koizumi cabinet," he told a nationally televised news conference at the LDP's headquarters.

The victory gives the ruling bloc 139 seats overall in the 247-seat chamber. Roughly half of the seats are up for election every three years.

Koizumi needed a solid win in the Upper House election to survive challenges to his leadership and to his proposals to rein in Japan's massive public debt and clean up a banking system weighed down with bad loans.

Fast on the heels of victory, though, came a sobering reminder of the urgent task Koizumi faces. The 59-year-old prime minister is now serving out the term of Prime Minister Yoshiro Mori, who resigned in April after talking himself into trouble with a series of politically incorrect statements.

Koizumi also found himself answering questions about the commitment of his LDP's conservative factions to his policies. Senior lawmakers have not hidden their displeasure with Koizumi's talk of reducing pork-barrel spending and exposing protected industries to competition.

Koizumi said the coalition's strong showing gave him the needed stamp of approval.

"I was able to overcome the first obstacle," Koizumi told reporters earlier on Monday.

With the strong victory, Koizumi is also expected to easily survive an LDP presidential election in September, offering the potential to stop the revolving door that has seen 11 Japanese leaders in 13 years.

The LDP's number two said the party could re-confirm Koizumi as its president next month without a fight and give him a full two-year term.

LDP Secretary General Taku Yamasaki told reporters that if there were no other candidates as of August 9, then Koizumi would be named the winner and therefore continue as prime minister.

The first major test of Koizumi's reform efforts comes in mid-August when government ministries and agencies file their budget requests for the next fiscal year beginning in April.

Analysts say powerful politicians, many of them Koizumi's colleagues in the LDP, could hamper reform moves by jockeying for their share of the budget.

Some also question whether this is the right time for radical reforms that are certain to boost unemployment and spark corporate bankruptcies amid signs the economy is sliding into its fourth recession in a decade.

The prime minister also faces serious problems with some Asian nations if he goes ahead with a planned visit to Tokyo's Yasukuni Shrine for Japanese war dead on August 15, the anniversary of Japan's surrender in World War Two.

While he insisted throughout the election campaign that he would make the visit, Koizumi on Monday said he would decide after consulting his coalition partners, a sign he might be seeking a way out of the diplomatic bind.

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