— Adds Details, Quotes, Background In Paragraphs 3, 9, 19-20, 23-25
— Hatoyama Has Also Asked Ruling Party No. 2 Ozawa To Quit

TOKYO (MNI) – Japanese Prime Minister Yukio Hatoyama on Wednesday
told a nationally televised meeting of lawmakers from the ruling
Democratic Party of Japan that he is resigning after less than nine
months in power and before Upper House elections expected in July.

It is unknown who will replace the 63-year-old blueblood politician
but Deputy Prime Minister and Finance Minister Naoto Kan has been touted
by some politicians and the media as a top candidate for the job. The
Hatoyama administration was formed on Sept. 16 last year.

NHK public television said DPJ lawmakers plan to elect Hatoyama’s
successor on Friday. Senior party officials have also decided to resign,
it said.

Hatoyama said he’s taking the blame for the plunging public
approval of the administration and the departure of one of the two small
ruling coalition partners earlier this week. He sacked the head of the
Social Democratic Party over policy differences regarding a
controversial U.S. air base.

He said two main reasons have prompted him to resign.

The DPJ has failed to keep its election campaign promise of
relocating the Futenma U.S. Air Base somewhere outside the prefecture or
even outside the country.

The party has also suffered political funding scandals involving
both Hatoyama and Ichiro Ozawa, the conservative politician who is
number two at the DPJ and has been the driving force behind major
election wins for the party.

“It is truly regrettable that the public has stopped listening to
us gradually. That is my own fault,” Hatoyama said while claiming credit
for shifting the political focus toward supporting households from big
businesses and reducing lawmakers’ dependence on bureaucrats in
policy-making.

“I am taking the blame for forcing the Social Democratic Party to
leave the coalition,” he said. “The other issue at stake is money and
politics.”

“I am resigning my position but I’ve also asked Secretary General
Ozawa to step down. With this, I believe we can revive a cleaner DPJ,”
he said.

He added that Ozawa told him he understood. There was no official
announcement as to the fate of Ozawa.

Hatoyama has been under fire to step down from within his own
Democratic Party of Japan after the Social Democrats left the ruling
coalition.

The public approval rating of the administration has plunged in the
past several months after the prime minister showed what many voters
thought was a lack of leadership and broken election campaign promises.

The departure of the small coalition partner is complicating the
passage of bills in the Upper House of parliament where the DPJ only has
a majority with support of its allies.

In the key Lower House, the DPJ holds 310 seats, easily clearing a
majority of the 480-seat chamber without support of other parties, but
in the Upper House, the DPJ and its small allies have 122 seats, a tight
majority of the 242-seat chamber without counting the five seats held by
the Social Democrats.

This prompted some DPJ lawmakers in the chamber to call for
Hatoyama’s resignation before House of Councillors elections expected in
July.

Before the House of Representatives elections last August,
Hatoyama, who heads the Democratic Party of Japan, promised to relocate
the key U.S. air base on Okinawa somewhere outside the prefecture or
even outside the country given the heavy presence of U.S. forces on the
tiny island, the site of one of the fiercest battles between the U.S.
and Japanese troops in the closing days of World War Two.

Months later Hatoyama found that the U.S. government would not
agree to such an idea and no other prefectures would accept this
particular air base.

On Wednesday, Hatoyama noted the importance of the Japan-U.S.
alliance for not only Japan but also security for North Asia, meaning
the stability of the Korean Peninsula.

“But I don’t think we should continue relying on the U.S. for
Japan’s peace and security for the next 50 or 100 years. It may not
happen during my time but I hope we can create an environment for a
change for you in the younger generation,” he said.

The DPJ scored a landslide win in the elections on voters’
disappointment with the lack of leadership under the Liberal Democratic
Party. But several months after taking power away from the LDP, Hatoyama
has been criticized for not being able to make up his mind on key policy
issues.

Hatoyama had vowed to deliver campaign promises within four years
of taking power, saying the DPJ has received the mandate to do so from
voters.

As part of its campaign promises, the DPJ government has just begun
providing allowances to families with children up to ninth graders and
paying subsidies to make high school education basically free.

But at the same time, the government has not addressed the issue of
how to continue funding these programs and growing costs of public
medicine and pensions, which economists said is making consumers
cautious about spending.

Hatoyama said the DPJ would not consider raising the 5% sales tax
while it is in power, but Finance Minister Kan has instructed ministry
officials to start looking into the need for a tax hike.

Under the recent LDP-led governments, Japan had three prime
ministers in as many years through September 2009, with each of them
being criticized for a lack of leadership on key policy issues. Until
then the LDP ruled the country since 1955 except for a brief period from
August 1993 to June 1994.

tokyo@marketnews.com
** Market News International Tokyo Newsroom: 81-3-5403-4833 **

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