Mr Hata had struggled up to the last minute to persuade the Socialist Party to support his government and its commitment to political reform against a no-confidence motion tabled by the LDP last Thursday. When that failed on Saturday morning, Mr Hata resigned rather than endure the no- confidence motion, which could have led to the dissolution of the Diet. Mr Hata said he wanted to avoid creating a 'political vacuum' in the run-up to next month's G7 summit of industrialised nations in Naples.
But even if an election is avoided, Japan's plan to offer market-opening measures to the G7 summit, and its ability to cope with the record-high yen, will be compromised by the ongoing instability. Mr Hata's chief ally, Ichiro Ozawa, had already warned on Thursday that 'Japan will lose the respect of the international community' if the government was again facing an election as it was during last year's G7 summit.
The Diet will reconvene this afternoon to begin the process of electing a new prime minister. Mr Hata is unlikely to be a candidate as his allies prepare to wait out the LDP-Socialist courtship. 'We have stepped down from office and what we are saying is, if the LDP and the Socialists can really get together, go ahead and do so,' said Yuichi Ichikawa, secretary-general of the Komei party, a member of Mr Hata's old coalition.
Yohei Kono, president of the LDP, said that his party 'has a responsibility to end the political confusion'. It was Mr Kono who tabled the no-confidence motion which plunged the political world into confusion last week, after a key budget bill had been passed.
Mr Kono said there would be no difficulty in a link-up of the LDP and the Socialists, because 'the policies do not differ a lot'. The LDP and the Socialists held diametrically opposed views for the 38 years from 1955 until the last year that the LDP ruled Japan. The left-leaning Socialists and the conservative LDP sat on opposite sides of the Cold War fence, and the Socialists in particular have been slow to update their policies.
'This plan represents a denial of everything the LDP stands for,' editorialised yesterday's Yomiuri Shimbun, the biggest-circulation daily newspaper. It said that the Socialists still regard the existence of Japan's armed forces as unconstitutional, are opposed to the Japan-US security treaty, and differ fundamentally from the LDP over how to deal with North Korea's nuclear programme. 'The plan to form a coalition . . . shows how irresponsible the two political parties are,' it said.
Kozo Watanabe, former trade minister and a leading member of Mr Hata's Japan Renewal Party, lamented that an LDP-Socialist coalition would block plans for political reform. Mr Hata and his powerbroking ally, Mr Ozawa, began the process of political reform last June when they quit the LDP and established their own party to fight the elections in July.
But the LDP and the Socialists, while paying lip service to political reform, tried to prevent it from happening. Both parties feared that Mr Hata's electoral reforms would end four decades of effective gerrymandering of constituencies, and reduce the number of their seats in the Diet.
Yen-dollar battle, Page 25