Japanese Prime Minister Announces Resignation

Tokyo, Sept. 1 (Jiji Press)--Japanese Prime Minister Yasuo Fukuda said Monday night he has decided to resign in an effort to break a prolonged parliamentary deadlock.

"I have decided to resign," Fukuda told a hastily called press
conference. "I have judged that a new regime should be formed in order to
carry out policy measures," he said.
Fukuda said parliamentary deliberations have made little headway
because of the main opposition Democratic Party of Japan's refusal to take
part. Parliament is divided between the House of Representatives controlled
by Fukuda's ruling coalition and the opposition-controlled House of
Councillors.
Fukuda said his resignation is designed for the coming
extraordinary parliamentary session to go as smoothly as possible because
such important issues as a supplementary budget for financing economic
stimulus measures and the proposed establishment of a consumer protection
agency are high on the agenda.
He stressed that he believes now is the most favorable time for
stepping down because the extraordinary parliamentary session has yet to
start, while economic stimulus measures and other key policies have been
drafted by his government.
Fukuda said he made the decision to resign over the weekend.
Fukuda took up his post on Sept. 25, 2007, after his predecessor,
Shinzo Abe, suddenly stepped down because of health reasons.
His announcement of resignation came only a month after he
reshuffled his cabinet on Aug. 1.
Although he filled key cabinet posts with heavyweights in his
ruling coalition, the prime minister failed to shore up his flagging public
support.
Before the press conference, Fukuda met with Taro Aso,
secretary-general of the ruling Liberal Democratic Party, to instruct him to
prepare for a presidential election for the party.
Aso is seen as a promising candidate for the next LDP leader,
expected to assume the post of prime minister because of the party's control
of the all-important Lower House.
Aso told reporters that he thinks he may be suitable for the next
LDP president.
The LDP will set the schedule of the presidential election Tuesday
afternoon, said Hideo Usui, chairman of the presidential election committee.
Fukuda told the press conference that he hopes the next LDP
president will create a stronger regime than his.
The ruling coalition plans to review the schedule of the
parliamentary session initially set to start Sept. 12, sources familiar with
the matter said.
Fukuda's departure increases the likelihood that Japan's fiscal
reconstruction drive initiated by former Prime Minister Junichiro Koizumi
will lose momentum, as ruling party lawmakers are calling louder for
increased spending and tax cuts in order to win votes in Lower House
elections that must be held by late next year.
Fukuda has expressed his strong resolve to maintain fiscal
discipline and ruled out the issuance of deficit-covering bonds for
financing the economic stimulus package announced last week.
In contrast to Fukuda, Aso has called for putting off a key fiscal
reform target and expressed support for securities tax breaks and other
measures requiring big government spending.
Kazuhiko Sano, chief strategist for Nikko Citigroup Ltd., said that
if Aso succeeds Fukuda, he will likely pursue a switch from fiscal reform to
expanded spending. Even if the DPJ takes over, the party's president, Ichiro
Ozawa, is unlikely to favor austere fiscal policies, Sano said.
In financial markets, Fukuda's departure is a potential cause of
triple falls in Japanese shares, the yen and government bonds, Sano said.