Reformer headed for upset victory as Japan premier

Former health minister gains key support from ruling party rank and file


TOKYO - Maverick politician Junichiro Koizumi was headed for an upset victory today in the battle to head Japan's government, after his calls to radically reform the country's wobbly economy won him overwhelming support yesterday from the ruling party's rank and file.

The final results of an unusual nationwide primary last night showed that the former health minister collected 123 of the 141 votes cast by local supporters of the incumbent Liberal Democratic Party.

Those votes, combined with those of parliamentary supporters, leave Koizumi fewer than 30 votes shy of the 244 votes needed to succeed Prime Minister Yoshiro Mori when formal balloting takes place this afternoon, analysts said.

The winner of the party election is all but certain to be confirmed as prime minister by the Diet, Japan's parliament, raising the prospect that a politician with genuine reform credentials will run the world's second-largest economy.

Despite his credentials, Koizumi would face a monumental task pushing his reforms through parliament or securing the support of powerful bureaucratic mandarins.

His election nonetheless would mark a milestone for the LDP, which traditionally has been tightly managed by faction bosses who control access to political funding. Koizumi, by contrast, is riding on a wave of popular support. The LDP has ruled Japan since 1955 with just one short break, but faces parliamentary elections in July.

Even some of Koizumi's opponents nearly conceded the battle was over before the final vote began.

"It's necessary to heed the will of the party members" in selecting the next prime minister, Shizuka Kamei, the LDP's policy chief and one of three rival candidates for prime minister, said at a news conference, acknowledging that Koizumi's momentum appeared unstoppable. "The voters want to see a break from the old regime."

In both style and substance, Koizumi is unorthodox by Japanese standards. His selection by the conservative LDP would represent a stark reversal for a party that, for most of the past decade, has continued to throw public money at Japan's thorny economic problems.

Koizumi has been the darling of Japan's powerful news media for his proposal to privatize Japan's postal service. Effectively the world's largest bank, it controls more than $2 trillion in deposits and also operates the world's largest life insurance system. Putting that money into private hands would limit the government's ability to redirect the nation's savings into wasteful public-works projects.

Koizumi has also advocated limiting the amount of government bonds Japan issues each year to 30 trillion yen, making him one of the rare leaders of the ruling party who have gone on record to oppose huge government spending.

As a result, his victory would push the yen higher against the U.S. dollar, at least in the short run, and probably would drive Japan's equity markets higher, analysts said.

Despite Koizumi's long-term vision, he has no obvious way to stimulate the slumping economy.

"Everybody knows that economic policy is his big policy weakness. It's widely discussed," said Katsuei Hirasawa, an LDP parliamentary supporter of Koizumi. "I think Koizumi himself is surprised to find himself winning."

Moreover, Koizumi's call to radically restructure the nation's weak economy generates anxiety among the LDP's coalition partners, who might leave the fragile coalition government if they find his prescriptions unacceptable.

The big loser in the contest would be former Prime Minister Ryutaro Hashimoto, who entered the race for party head as front-runner because he controls the largest faction of LDP lawmakers.

Hashimoto theoretically could salvage victory in today's balloting if every other faction lined up against Koizumi. But most analysts said they did not think the party could simply ignore the overwhelming message of its local chapters.

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