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Japan opposition seeks to force early election
Tue Nov 18, 2008 6:45am EST
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By Linda Sieg
TOKYO (Reuters) - Japan's opposition stepped up efforts on Tuesday to force an early election by stalling key bills including help for struggling banks, a strategy that threatens to further paralyze an economy in recession.
The bickering could delay a government bill to allow the injection of public funds into regional and other banks, mainly to facilitate loans to smaller firms facing a credit crunch.
Legislation to extend Japan's naval mission in support of U.S.-led operations in Afghanistan after it expires in January has also become ensnared in the maneuvering, risking a rocky start to relations with U.S. President-elect Barack Obama.
Prime Minister Taro Aso told reporters later on Tuesday that given the importance of the bills, an extension of the session might well prove necessary, depending on the opposition's stance.
"Things have gotten stalled in political wrangling and that can't be good either for the economy or the confidence of investors in the political mechanism," said Robert Feldman, chief economist at Morgan Stanley in Tokyo.
Japan's economy slipped into recession for the first time in seven years in the July-September quarter, as the global financial crisis slashed overseas demand and a strong yen made Japanese exports less price competitive.
The main opposition Democratic Party is refusing to bring the refueling and bank recapitalization bills to a vote in the upper house, which it controls together with small allies, media and ruling party executives said.
Delaying the first could create friction with Obama's new administration, while stalling the latter would spell bad news for some regional banks and their smaller corporate customers.
"In Japan, the big banks are not really in trouble so this is not about the overall economy," said Martin Schulz, an economist at Fujitsu Research Institute. "But it is very possible that some regional economies will get into trouble and injections would be very important to stabilize the regions."
ELECTION TIMING
The ruling bloc can enact bills rejected by the upper house by using its two-thirds majority in the lower house, but if the upper house declines to hold a vote, 60 days must elapse from the time the legislation was first approved by the lower chamber.
That means parliament's current session would need to be extended beyond its scheduled end on November 30 into early January to enact both the naval mission law and the banking legislation.
The Democrats argue that a refusal by Aso to say when he would submit an extra budget to fund a promised 5 trillion yen ($52 billion) package of stimulus steps means he has gone back on a promise to put the economy first.
Behind the political squabbling, though, is a clash over the timing of an election for the more powerful lower house.
No election need be held until September 2009. Continued...
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