Japan PM Aso to delay poll, focus on economy: report

Japan's Prime Minister Taro Aso delivers a speech in Tokyo's Akihabara district October 26, 2008.
(Toru Hanai/Reuters)

By Isabel Reynolds Isabel Reynolds – Tue Oct 28, 3:47 am ET Reuters – Japan's Prime Minister Taro Aso delivers a speech in Tokyo's Akihabara district October 26, 2008. (Toru … TOKYO (Reuters) – Prime Minister Taro Aso has decided to put off calling an election so he can deal with the global financial crisis and take steps to address Japan's own economic woes, Kyodo news agency reported on Tuesday.

A decision to delay an election for parliament's lower house could prompt the opposition, which controls the upper chamber, to drag out debate on key bills, including a bank rescue plan, even as Japan faces financial turmoil that on Tuesday saw Tokyo's Nikkei share average veer wildly from a 26-year intra-day low to close more than 6 percent higher.

"We cannot create a political vacuum at this time," the agency quoted Aso as telling members of the ruling coalition. "I will put economic and financial measures first."



The Kyodo report, which quoted sources close to the premier, was the second in two days to say Aso would put off elections.

On Monday, Aso denied a report in the Nikkei business daily that he had told an aide there would be no election for a while.

The Japanese leader has repeatedly said, however, that he wants to prioritize policy-making, given deepening unease over the economy. Asked at a parliamentary panel what he wanted to achieve while in office, Aso replied: "Short-term, what I need to do most is to revive the economy."

Kyodo said late on Monday that Aso would formally state his intentions about an election on Thursday, when the government is expected to unveil an emergency economic package.

But a deputy government spokesman said he did not expect Aso to announce a delay to the poll.

"Can we expect the prime minister to come out and say he's putting the election off? I don't think so," Jun Matsumoto told reporters.

No election need be held until next year, but when Aso came to office in September he was widely expected to call an early poll to try to gain a mandate to break a stalemate caused by the divided parliament.

Aso's two predecessors quit within a year, worn out from battling the opposition and undercut by sagging public support.

The main opposition Democratic Party, previously eager to clear the legislative decks so Aso could call an early election, had shown willingness to act swiftly on key bills, but on Monday it signaled it was considering changing gears.

DELICATE TASK

Pending legislation includes a law to extend Japan's naval mission in support of U.S.-led military operations in Afghanistan, and a bank bailout scheme to allow the government to inject funds into banks, mainly regional institutions.

The Democrats would risk voters' ire if they appeared to be putting political maneuvering ahead of the public good at a time when the economy is slipping into recession and being hit by a surge in the yen's value that is battering exporters' profits, analysts said.

"It's a delicate situation to be in. If it's to do with the current economic crisis, they'd better not appear obstructionist," said Koichi Nakano, a political science professor at Tokyo's Sophia University. "They might be able to do it on the refueling bill."

Aso also has a tough challenge given the limits to what one country can do on its own to cope with the global crisis.

"It's beyond the power of the Japanese government to do anything meaningful except exert leadership in international coordination, but I don't think Aso or any other Japanese leader has that ability," Nakano said.

Voters tend to support the view that an immediate election is not desirable, a poll published in the Asahi newspaper showed.

About 57 percent of respondents to the poll carried out last weekend said there was no need to rush to hold an election, compared with 33 percent who wanted one soon.

On Monday, Japan's biggest bank, Mitsubishi UFJ Financial Group, said it would raise up to $10.6 billion to replenish a depleted capital base, while the government moved to beef up a bailout package for the country's ailing banks, which are big investors in domestic equities.

(Additional reporting by Linda Sieg; Editing by Michael Watson)