Mon, Aug 08, 2005 - Page 1 News List

Koizumi's survival at stake over reform

AP , TOKYO

Lawmakers were locked in last-ditch lobbying yesterday ahead of a vote on postal reform that could decide the fate of Prime Minister Junichiro Koizumi, as well as that of his ruling Liberal Democratic Party and its almost unbroken grip on power in postwar Japan.

The upper house is widely expected to vote today on a package of six bills aimed at privatizing the country's cash-rich postal savings system, and weekend newspaper polls said the result was too close to call.

Saying its rejection would amount to a no-confidence vote, Koizumi has indicated he will dissolve Parliament's lower house for nationwide elections if the package fails.

"This is not just a matter of postal privatization. It's about whether we want to stick with being a public-servant paradise and with big government or do away with it, do away with the waste," said Hidenao Nakagawa, chief of parliamentary affairs for Koizumi's ruling Liberal Democratic Party.

"This is the first step toward large-scale administrative reform to fundamentally change the shape of this country. That's what this is about," he said on an Asahi TV news program.

Privatizing Japan Post, which has ?330 trillion (US$2.9 trillion) in savings and insurance deposits, would create the world's largest bank.

Those funds have financed the massive public works projects central to the LDP's pork-barrel system, while the network of unionized postal workers has long proved a bastion of support for the party.

Koizumi argues that reform is now needed to make that money open to more efficient investment, helping jump-start a country that is only just emerging fitfully from a long slowdown triggered by the bursting of the 1980s' "bubble economy."

Opponents, including some in his own party, argue that privatization would reduce postal services in rural areas and lead to layoffs among the 400,000 postal system workers. They also say the new, giant bank would drive private financial institutions out of business.

Nakagawa said party officials were working through the weekend to rally support for the bills but acknowledged, "the situation is severe. There is a possibility they could be rejected."

A rejection could change the face of Japanese politics if, as some predict, the LDP splits in nationwide elections with members opposing the bills forming a new party.

Shizuka Kamei, a key figure in the LDP camp rebelling against the bill, did not rule out the possibility Sunday that such a crisis could force the party into opposition for only the second time since World War II.

"If it came to the point that we broke off and formed a new party, there is that possibility," he said.

The showdown was stirring memories of an eight-month period between 1993 and 1994 -- the only time in the past 50 years that a non-LDP bloc controlled the government after groups of lawmakers broke with the LDP in the wake of a power struggle.

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