Published August 31, 2009

Sun sets on Japan's LDP after 54 years in power

Country embraces call for change, markets poised to rally after DPJ's big win

By ANTHONY ROWLEY
IN TOKYO

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COUNTING continued late last night in Japan's landmark general election but it was very clear that the nation had rebelled against its postwar political tradition and rejected the Liberal Democratic Party (LDP) that has been in power for over half a century.

Mr Hatoyama: Highlighted the serious economic challenges confronting Japan as it wrestles with record unemployment and deflation in the wake of the global recession

The rival Democratic Party of Japan (DPJ) swept to power on a tide of popular support with a projected majority big enough to ensure it commanding control over government.

Exit polls showed the DPJ led by Yukio Hatoyama likely to win at least 300 of the 480 seats in the policy- initiating Lower House of the Diet (Parliament), while Japanese television stations projected that the party would secure more than 320 seats.

The Democratic Party already controls the Upper House of the legislature and now has a complete lock on parliamentary power.

Tokyo financial markets are expected to open in buoyant mood today as the DPJ's stunning victory ends a long period of near political deadlock in Japan between what has been the LDP-controlled Lower House and the opposition-controlled Upper. The Nikkei-225 stock average is expected to enjoy what analysts called a 'victory rally'.

The election outcome sets Japan on a new course that could see it carving out a stronger relationship with Asia while distancing itself somewhat from the United States in certain policy areas. It is also expected to usher in an era of more 'people-friendly' economic policies that break the hold that bureaucrats and business have had on postwar Japan.

A triumphant Mr Hatoyama, who will now become prime minister of Japan, was expected to name key members of his new administration as soon as the early hours of today, and to name a transition team to take over the reins of power held by the LDP for the past 54 years. Mr Hatoyama will also hold talks with two smaller parties to join a coalition with the DPJ.

Prime Minister Taro Aso held on to his parliamentary seat, while many other key members of his party were ousted by DPJ rivals. Mr Aso announced last night that he would resign to take responsibility for his party's massive and humiliating electoral defeat. He is the third LDP president (and prime minister) to resign in the past three years.

With the LDP's seat- holding in the Lower House crumbling to less than half of the more than 300 won in the 2005 general election when former prime minister Junichiro Koizumi was at the helm, the future of the party itself is at stake, some analysts said. Some LDP members are expected to follow the lead set by others in recent months by forming splinter groups.

In a high-turnout election where nearly 14 million voters or 13 per cent of the electorate cast their votes in advance of the election, it was obvious that the Japanese population had summoned up the courage to embrace the philosophy of 'change' espoused by the DPJ.

They also rejected Mr Aso's attempts to paint the party as 'naive' and unready to take power. The election outcome was a personal triumph for veteran Japanese politician Ichiro Ozawa, who bolted from the LDP in 1993 and put together a government composed of rival parties that held power for nearly one year. After it collapsed, Mr Ozawa - a consummate political strategist - went on to build the DPJ, which has now taken power more convincingly.

An acting president of the party at present, Mr Ozawa is expected to have a key role in shaping government policy, along with another acting DPJ president, Naoto Kan, and with party secretary-general Katsuya Okada.

The honeymoon the DPJ is expected to enjoy with voters and markets is likely to prove shortlived, analysts said, unless the party can deliver on promises of boosting consumer spending to pull the world's second largest economy out of recession, and to break the hold that bureaucrats have long exercised on power.

A serious-looking Mr Hatoyama, an engineering graduate and scion of a famous political family in Japan, stressed on Japanese television last night the serious economic challenges confronting Japan as it wrestles with record unemployment and record deflation in the wake of the global economic recession.

The DPJ will announce as early as next month an outline budget for the 2010/11 fiscal year, according to Japan's Nihon Keizai Shimbun newspaper.

The budget will be the first opportunity for the party to prove that it can shift emphasis on government- controlled spending to putting more money into the pockets of consumers through child allowances and other income supports.

The party will also prepare to launch one of its key bodies, the Administrative Reform Council, designed to check wasteful spending and irregularities among Tokyo's central bureaucrats, Japan's Kyodo news agency said yesterday. The Administrative Reform Council and a proposed National Strategy Bureau will be formally established after the party passes amendments to related laws at an extraordinary Diet session to be convened as early as October, Kyodo said.