Hatoyama has met with ruling party kingpin

TOKYO - Japanese Prime Minister Yukio Hatoyama met with a ruling party kingpin on Tuesday as speculation swirled that he might bow to pressure from within his party to resign as his support ratings sink ahead of an election.

Calls have emerged in Hatoyama's Democratic Party of Japan (DPJ) for the prime minister to step down after just eight months in the job, to revive the party's chances in the upper house election expected on July 11.

Political confusion, including the departure of a tiny leftist party from the ruling coalition, has distracted the government as it thrashes out a plan to cut public debt and a strategy to engineer growth despite a fast-aging population

Hatoyama, who met with DPJ kingpin Ichiro Ozawa on Monday as well as Tuesday, reiterated that he would stay and some analysts said it would be hard for him to quit unless Ozawa stepped down too.

Voter suspicions about a funding scandal embroiling Ozawa, the party's chief campaign strategist, have also eroded public support.

Ozawa, the DPJ's secretary-general and widely seen as the real power behind the government, met with Hatoyama late on Tuesday.

There had been some hope in the bond market that the DPJ would unveil its fiscal strategy and that it might refer to the possibility of raising Japan's consumption tax in the plan, said one strategist.

"But if Hatoyama were to really resign and the Democratic Party were to go through the process of choosing a new party leader, that would likely lead to considerable delays to such discussions and could be negative for the bond market from the standpoint of fiscal risk premiums," said Naomi Hasegawa, a senior fixed-income strategist at Mitsubishi UFJ Morgan Stanley Securities.

Reuters

(China Daily 06/02/2010 page11)