Mori's future measured in months

By Linda Sieg

TOKYO (Reuters): Unpopular Japanese Prime Minister Yoshiro Mori was dealt a critical blow by the sudden resignation of his top lieutenant on Friday and his future will likely be measured in months, if not days.

Analysts said a politically weakened Mori would probably last until March, when an early election for the presidency of his ruling Liberal Democratic Party (LDP) could be held -- unless a fresh scandal suddenly surfaced or opinion polls showed over the weekend showed his support ratings sliding below 10 percent.

Either way, turmoil and uncertainty in Japan's often-staid political scene look set to persist, unnerving investors, many of whom would prefer Mori's early departure in the hope that it would improve the outlook for vital economic structural reforms.

"It's sad for Japan, but even though Mori is very vulnerable, he could stay in office until March, when an early election for party president could be held to replace him," said Hitoshi Ichio, a strategist who follows politics for Commerz Securities.

"What we can say is that he has lost his supporters and the outlook has become even murkier."

LDP Secretary-General Hiromu Nonaka -- the top powerbroker in the long-ruling party -- threw a spanner into Mori's plan to bolster his tenuous grip on power with a new cabinet lineup by tendering his resignation.

Mori did get one bit of good news when Finance Minister Kiichi Miyazawa, 81, accepted the prime minister's plea to retain his post when the cabinet is reshuffled, probably on Tuesday.

Nonaka, 75, the eminence grise of the LDP, told Mori in a meeting on Friday that he wanted to quit.

A masterful back-room dealer, Nonaka played a key role in tapping Mori for premier after his predecessor suffered a fatal stroke in April and in quashing last month's rebellion by reformist LDP rival Koichi Kato.

That challenge ended in tears last week when Kato abstained from an opposition-sponsored no-confidence vote that he had threatened to support.

Some pundits familiar with the wily Nonaka's ways said his move was designed as a final, fatal blow to Mori, who has seen his public support plunge due largely to his penchant for verbal gaffes and his image as a policy lightweight.

LDP lawmakers as well as the party's two junior coalition partners are loathe to see Mori lead the fight in an election for parliament's Upper House to be held next July.

"I think Nonaka's patience was broken and despite his advice...Mori continued to stick to his position," said University of Tokyo political science professor Takashi Inoguchi.

"If Mori doesn't step down, the next step will be something more formidable", Inoguchi added. Others, though, said a weary Nonaka may merely have had enough of the high-profile post.

Analysts said there was a slim chance that Mori might resign before the cabinet reshuffle expected on Tuesday, especially if a fresh scandal came to light or his popularity ratings -- already below 20 percent -- slipped to single digit levels.

"I'm not saying there's a zero chance (he'll quit before Tuesday) but it's less than 10 percent," said Shigenori Okazaki, political analyst at UBS Warburg. "But he's much, much weaker."

That means the most likely scenario is still for Mori to stay at the helm until the end of March 2001, when parliament enacts the budget for the next fiscal year, analysts said.

The government has targeted spending for 2001/2002 at roughly this year's level in an effort to begin to get a public sector debt already the worst in the advance world under control, but some critics say faster fiscal reform is needed.

Once the budget is enacted, the LDP could decide to move forward its election for party president, not mandated until September. The LDP chief is ensured the premier's post as long as the ruling bloc has a majority in parliament's Lower House.

"There is certainly a possibility that there could be a discussion of an early LDP presidential election," LDP lawmaker Masahiko Komura, told Reuters earlier on Friday. "What Prime Minister Mori thinks himself is also a big point."

Komura, a former foreign minister, has been cited as a possible successor should Mori quit, along with current Foreign Minister Yohei Kono and Junichiro Koizumi, the nominal leader of Mori's LDP faction but a proponent of fiscal and economic reform.

If, however, no candidates emerge for the top post, which the winner might have to relinquish if the ruling camp loses heavily in the July election, Mori might hang on until after the poll.

"Mori will be trying to hang on as long as possible," Okazaki said. "It's all up to luck."