A political showdown that could determine the fate of the government of Japanese Prime Minister Junichiro Koizumi has been set for Monday when parliament's upper house will vote on bills to privatise Japan's vast postal system.
Koizumi has said rejection of the six bills, opposed by many in his own Liberal Democratic Party (LDP), would be tantamount to a vote of no-confidence - a tacit threat to call an election.
The make-or-break vote will be held during a session of the upper house starting at 0400 GMT, a parliamentary source said.
"There is no change in the difficult situation, but people are saying there is a fifty-fifty chance of them passing, so we must keep up our efforts until the end," Koizumi told reporters.
Concerns about political instability if the bills fail have put Japan's financial markets on edge.
News on Friday that two senior LDP lawmakers had declared their intention to oppose the bills added to the uncertainty, and media reports said prospects for the bills' passage looked increasingly tenuous.
The yen weakened on Friday and the stock market dropped about one percent as concern about political instability grew.
"If it doesn't get through, that means there would likely be a backtracking on reform in Japan as a whole," said Charles Lambert, vice president of equity sales at J.P. Morgan Securities.
"Second is the resulting political chaos," he said, noting worries that the fallout could include a break-up of the LDP, in power for most of the past half-century.
"That means uncertainty - you don't know what combination of groups might get together to form a government."
Koizumi hinted on Friday an election might be on the cards when asked about opponents of the bills who said he might not dissolve the lower house even if the bills failed.
"They don't understand my true feelings," he said.
Koizumi sprang to power in 2001 pledging to reform the economy along with the LDP.
Legislation to privatise the postal system - including the world's biggest deposit-taking institution and Japan's largest life insurer - is the centrepiece of his platform.
The bills were approved by an upper house panel on Friday, clearing the way for Monday's vote by the full upper house.
The bills squeaked through the lower house by just five votes, and could be rejected in the upper chamber if 18 LDP lawmakers join the opposition in voting for them.
PARTY REBELS The vote will be conducted using named ballots rather than being tallied electronically, meaning LDP rebels who cast dissenting votes won't be able to take comfort in anonymity.
The coalition has a majority in the 242-seat upper house, with the LDP holding 114 seats and New Komeito 24.
The Mainichi Shimbun daily said that as of Friday, 21 LDP upper house lawmakers were likely to vote against the bills and that another 20 had not made their stance clear.
Yomiuri, another major daily, said 16 LDP members had clearly stated they would oppose the bills and that two others said they would abstain. Another four may vote against the bills and around 20 were undecided, the newspaper said.
Former education minister Hirofumi Nakasone, who had not previously publicly declared his intentions, said he had decided to vote against the bills.
He was joined by Takeaki Kashimura, a junior defence minister, who also said he would vote "no" and would resign his government post to do so. Combined, the postal savings and insurance businesses control about $3 trillion in assets.
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