In the immediate future, the withdrawal of the Socialists means continuing instability and the lack of a strong political direction for Japan, at a time when it is faced with several pressing international and domestic problems. But in the longer term the process of political realignment and reform will be enhanced by their departure: their left-wing policies have become increasingly irrelevant to Japan after the end of the Cold War.
The Socialists were outraged that they had not been included in a new political grouping that was formed yesterday by several of the more conservative parties in the seven- party coalition government. A total of 130 Lower House members, mostly from the Japan Renewal Party headed by Mr Hata and the Japan New Party of the former prime minister, Morihiro Hosokawa, announced they would form the Kaishin, or 'Innovation' group. This was the first step in establishing a single political party to fight the next elections.
The Socialists have long suspected that conservative politicians, led by Ichiro Ozawa, the powerbroker within the coalition, intended to bypass them in the next elections. This morning several saw Mr Ozawa's hand in the formation of the Kaishin group, and suspected him of a deliberate attempt to back them into a corner, possibly even splitting the party into two parts.
The Socialists have 74 members in the 511-seat Lower House of the Diet. By withdrawing from the coalition, they leave Mr Hata with about 200 seats, way short of the 256 needed for a parliamentary majority. But if Mr Hata can attract some defectors from the Socialists, along with reform-minded members of the LDP, he could avoid going to the polls immediately.
A faultline has long existed between the Socialists, whose policy- making is dominated by a group of hardline left-wing ideologues, and the more right-wing parties of the coalition government. Although the timing of today's split was unexpected, most commentators had predicted an eventual parting of ways between the two wings of the coalition. The Socialists have disagreed with Mr Ozawa and his allies on almost every significant issue of policy, both domestic and foreign. Most recently the two sides have argued over policy towards North Korea and over a proposed reform of the country's tax system.
The announcement that the Socialists were leaving the government came after a late-night crisis meeting of the party's leaders. 'The Socialist Party cannot forgive the arbitrary handling of power like this,' said Tomiichi Murayama, the party chairman, in an early morning press conference. 'The Socialist Party will neither remain as a partner of the coalition government, nor co-operate in the formation of a new cabinet.'
The dispute with the Socialists has meant that Mr Hata has not even begun to draw up a new cabinet. Since his election as Prime Minister yesterday afternoon, he kept a low profile as the Socialists fell on their swords in public.