A senior executive of Japan's ruling Liberal Democratic Party said on Tuesday there was a 50-50 chance that bills to privatise Japan's huge postal system would pass and that a snap election was likely if they did not. Ruling party rebels have vowed to kill the legislation - the centrepiece of Prime Minister Junichiro Koizumi's reforms - in an upper house vote expected around August 5.
Koizumi has said that failure to pass the legislation to privatise the postal system, including the world's biggest deposit-taking institution, would be tantamount to a no-confidence vote, a tacit threat to call a snap election for parliament's powerful lower house.
"Based on his previous remarks, I think that if the postal bills are not enacted, Prime Minister Koizumi will dissolve the lower house without hesitation," LDP upper house executive Toranosuke Katayama told a news conference.
"We still can't completely predict the situation," he added. "There are many people who still need to make up their minds."
Besides delivering the mail through a network of almost 25,000 post offices, Japan Post controls $3 trillion in assets.
Its savings arm is the world's biggest deposit-taking institution, and its life insurance business equals that of Japan's four biggest private insurers combined.
Many analysts expect the bills to pass, if only barely, but say the outcome is tough to call.
The lower house earlier this month approved the legislation by just five votes after some LDP rebels voted against it.
The upper house is now discussing the bills, which Koizumi has said he wants to be passed into law before the current session of parliament ends on August 13.
Koizumi has staked his political legacy on achieving postal privatisation, arguing that the system is a symbol of big and wasteful government and distorts Japan's financial system.
Many LDP lawmakers have counted on support from powerful rural postmasters to mobilise voters and on funds funnelled from the postal savings into public works to woo their constituencies.
Katayama also said that if a lower house election were called, the LDP would not be able to win - a forecast many analysts have said could turn out to be correct.
He warned that the LDP could well split under these circumstances, throwing the political world into flux.
The main opposition Democratic Party fared well in an upper house election last year and is increasingly looking like a viable alternative to the LDP, which has been in power for most of the past half-century.
"Things could become extremely unstable," Katayama said.
No lower house election need be called until late 2007.
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