(Agencies)
Updated: 2007-09-22 11:42

Yasuo Fukuda looks likely to win the leadership of Japan's ruling party on Sunday and become the nation's next prime minister, a job in which he will face a divided parliament and conflicting policy pressures.

Former Chief Cabinet Secretary Yasuo Fukuda (L) and former Foreign Minister Taro Aso, candidates for the Prime Minister post, shake hands after their debate in Tokyo September 21, 2007. [Reuters]

Seen as an experienced moderate who can avoid the missteps that plagued outgoing Prime Minister Shinzo Abe, the bespectacled Fukuda has won the backing of major factions in the ruling Liberal Democratic Party (LDP) and is firm favorite to win the job.

But a media report on Friday linking a local LDP branch headed by Fukuda to small donations from a business with ties to a pro-DPRK (Democratic People's Republic of Korea) group in Japan could affect the race against former Foreign Minister Taro Aso, political analysts said.

The victor in the leadership race is sure to become prime minister by virtue of the ruling coalition's huge majority in parliament's lower house.

But the next prime minister faces a divided parliament, where combative opposition parties control the upper house, as well as dueling pressures to help out those left behind by recent economic reforms while also reining in a huge public debt.

"Politics is the art of the possible and unfortunately, the possibilities are very limited," said Jesper Koll, president of investment advisory firm Tantallon Research Japan.

"That's the real political risk - not getting things done."

Kyodo news agency reported that an LDP branch headed by Fukuda, 71, had received $1,740 in donations from a pachinko pin-ball game firm with ties to the General Association of Korean Residents in Japan (Chongryon).

It was unclear if Fukuda had been aware of the donations several years ago from the pachinko firm.

Fukuda's aides declined to comment but the Mainichi newspaper quoted his office as saying it had not checked the nationality of the donor and now planned to return the money.

Fukuda has adopted a softer stance toward normalizing ties with the DPRK, and the rival candidates clashed on the topic at a news conference on Friday, with Aso, 67, stressing "pressure was needed" and Fukuda calling for a strategy that balanced pressure with dialogue.

Abe, who turned 53 on Friday, suddenly announced his resignation last week after a year in office during which he improved ties with China but was plagued by scandals and gaffes by his ministers that contributed to a humiliating election rout in July, handing control of the upper house to the opposition.

The hawkish Aso - a fan of "manga" comic books who casts himself as a strong leader - saw his early lead in the LDP race evaporate suddenly, partly because of his close ties to Abe.

"Aso is part of the old Abe regime. No matter how much he jokes and talks about 'manga', he's still no change," said Chuo University political science professor Steven Reed.

"With Fukuda, going back to the old ways looks like change."

Both Fukuda and Aso have pledged to pay more heed to those left behind by economic reforms begun under Abe's predecessor, Junichiro Koizumi, whose cuts in wasteful public works spending won plaudits from many voters but angered traditional LDP backers in rural areas.

Abe's conservative agenda including a bolder global security role for Japan and more patriotism in schools will almost certainly take a back seat under the next Japanese leader.