Koizumi to push ahead with reform amid poll setback

Max Sato, Agence France-Presse, Tokyo

Japanese Prime Minister Junichiro Koizumi vowed Monday to push ahead with his reform agenda despite suffering a setback in elections seen as a verdict on unpopular policies on Iraq and pensions.

Koizumi's Liberal Democratic Party, which has ruled Japan almost uninterrupted for nearly 50 years, won 49 of the 121 seats contested in Sunday's upper house election, a net loss of just one seat.

The main opposition Democratic Party of Japan (DPJ) won 50 seats, up from 38 before the election.

However Koizumi's ruling coalition retained its majority in the upper house after its coalition partner the New Komei party won 11 seats. It also holds a majority in the more powerful lower chamber of parliament which chooses the prime minister.

Newspaper editorials described the results as a slap down for an "arrogant" Koizumi by voters who were angry he had failed to explain the planned overhaul of the creaking pension system and the decision to send troops to Iraq.

But senior members of the ruling party, who have expressed frustration at Koizumi's high-handed management style, expressed support after last week suggesting a poor election result could see him deposed as premier.

Koizumi said he would not change course on key policy initiatives. He promised to keep up the structural reform of the economy and said Japan would maintain the contingent of troops doing reconstruction work in southern Iraq.

"I believe the public is calling for the ruling coalition to work with the opposition to push for our reform agenda," Koizumi, told reporters, saying his reforms were responsible for the current economic recovery.

Japanese share prices responded positively to the election outcome, rising 1.4 percent, amid relief that Koizumi suffered only a minor setback and would be able to continue with his policies.

Koizumi acknowledged that a majority of Japanese opposed his decision to keep troops in Iraq as part of a multinational force, but he insisted it was the right thing to do.

"Japan needs to continue activities which will be regarded as valued work there," he said.

"In line with a UN agreement, Japan wants to play a role as a member of the international community by providing both personnel support by the Self-Defense Forces and material support," he said.

Koizumi also said he had no plans to bring forward a September cabinet reshuffle because of the election results, and he received strong backing from his coalition partner who said the premier could not be blamed for the result.

"The selection of government was made at last year's lower house elections ... I would like to continue supporting Prime Minister Koizumi," said Komei party leader Takenori Kanzaki.

Economics minister Heizo Takenaka, who was hand-picked by Koizumi to handle banking reform and the economic recovery, played down the opposition's electoral success.

"The public has complaints about the ruling parties but at the same time they think the opposition is not reliable," said Takenaka, who won his first parliament seat in the election. The main opposition DPJ won 50 seats to take its total to 82 seats and the party's leader Katsuya Okada hailed the result as a turning point.

"The bubble of the Koizumi politics has burst", Okada told reporters.

The ruling coalition controls 139 seats in the upper house against 103 seats held by opposition parties and independent lawmakers.