JAPAN: Japan was heading for a period of political turmoil last night after parliament stopped Prime Minister Junichiro Koizumi's reform drive in its tracks by rejecting his plans to privatise the country's huge postal system.
The result, which follows weeks of bitter in-fighting within the coalition government, has badly split his Liberal Democratic Party and forced Mr Koizumi to call a snap general election in September that could end the party's decades-long hold on power.
Economy minister Heizo Takenaka, who drafted the bill, called the rejection "a huge loss" to Japan's future, but his opponents were jubilant.
"The result shows the cabinet lacks the confidence even of members of the ruling LDP," said opposition Democratic Party leader Katsuya Okada, who predicted that the bill's failure could finally pave the way for two-party rule in Japan.
"For the first time in the postwar period we will openly go head-to-head in elections and we aim . . . to take power.
"The moment is coming when Japan's democracy will be tested," Mr Okada said on a weekend TV show.
Mr Koizumi had promised for years that he would dissolve parliament if it did not back his plans for Japan Post, which is effectively the world's biggest bank with total assets of $3.2 trillion - larger than Britain's entire GDP.
Yesterday, 125 lawmakers in the country's Upper House, including 22 members of his own party, called his bluff, soundly defeating the 108 pro-votes.
Technically the bill could still be passed with a two-thirds majority in the more powerful Lower House, but Mr Koizumi, in a typically flamboyant political gesture, rejected any compromise, angering many on his own benches.
"There is no justification. It's like suicide bombing," LDP lawmaker Housei Norota said. Another LDP member, Atsushi Onita, was in tears after the defeat was announced. "I hate the prime minister for putting me in the position of having to vote against the bills," he said.
Many analysts here doubt whether Mr Koizumi would survive an election.
"He has a very slim chance of winning," said Kiichi Murashima, director of economic analysis at NikkoSalomonSmithBarney in Tokyo.
"Either way, his political power is badly weakened."
A grim-faced Mr Koizumi immediately announced plans to hold elections on September 11th.
At a press conference he insisted that those members of the LDP who opposed privatisation would not receive the party's endorsement in the election.
He also said that he dissolved parliament to "seek a mandate" from the Japanese people for his reform plans.
"I will never co-operate with those party members who are opposed to privatisation", but said if they changed their views he would consider allowing them to stand.
The move threatens to further weaken a party that, except for a brief period in the early 1990s, has been in power for half a century but which in recent years has been in slow decline.
Mr Koizumi tried to persuade his LDP colleagues that privatisation would help revitalise Japan's moribund economy. But many feared for their own political base and some worried that the move could lead to mass closures of countryside branches and huge layoffs.
LDP bigwig Shizuka Kamei, who voted against the bills, warned that Mr Koizumi could have wrecked his own party. "If we are again forced into the opposition, the Liberal Democratic Party will never return," Mr Kamei said.