For Kaifu, Election Victory May Yet Be a Loss : Japan: Some say he’s outlived his usefulness to the ruling party’s bosses. But he vows ‘to go on working diligently.’

Despite his success in leading fellow conservatives to victory in Sunday’s election for the lower house of Parliament, Prime Minister Toshiki Kaifu was on the defensive Monday amid widespread speculation that ruling party bosses may yet force him out of office toward the end of the year.

The ordinarily smooth-tongued premier was momentarily at a loss for words during a news conference, called after all the ballots were counted, when a reporter asked him whether he was certain he could serve out the rest of his two-year term.

“Just watch,” a flustered Kaifu replied somewhat testily. “I intend to go on working diligently. That’s why there are terms of office, and that’s why there is something called an electoral system.”

Kaifu, 59, an obscure politician with a clean record but a limited power base, rose last August to become nominal head of the governing Liberal Democratic Party, a post that automatically leads to the premiership by virtue of the LDP’s lower house majority. The ruling party had just suffered a humiliating setback in an upper house election, and Kaifu’s two immediate predecessors had been forced to resign because of influence-peddling and sex scandals.

“My administration may have started out from rock bottom, and there have been ups and downs,” Kaifu told reporters in a televised appearance. “But at last, I’ve made it this far and battled through the election in rough seas. Under law, and in fact, I have won (the people’s) confidence.”

Indeed, Kaifu’s energetic performance on the campaign trail deserves at least some of the credit for the LDP’s surprisingly strong showing at the polls Sunday. The ruling party held on to 275 of its 295 seats in the 512-member lower house, a stable majority that is expected to rise to the 290-seat mark once unaffiliated conservatives are recruited.

Yet Kaifu may have already outlived his usefulness to the powers-that-be in the LDP.

Political analysts and the media continue to ask whether he can hold out until the end of his term as party president, which is due to expire a year from November. By most accounts, Noboru Takeshita, the old-guard politician who resigned as prime minister because of his links to the Recruit Co. fund-raising scandal last June, still manipulates the party machinery from behind the scenes.

“Whether Mr. Kaifu can survive until the end of next year depends on Mr. Takeshita,” said Rei Shiratori, a political science professor at Tokai University.

Now that the opposition has been put in its place with Sunday’s election triumph, the LDP appears ready to get down to the lifeblood of Japanese politics: intra-party intrigue. One of Takeshita’s rival factional bosses, Shintaro Abe, is believed to be positioning himself to replace Kaifu as early as this autumn.

“Mr. Abe is obviously anxious to be prime minister, and he’s going to be looking for any sign of weakness in Mr. Kaifu to have an excuse,” said Gerald L. Curtis, director of the East Asian Institute at Columbia University.

Curtis, who together with Shiratori spoke on Monday at the Foreign Correspondents Club of Japan, said Kaifu’s chances of remaining in office greatly improved with the ruling party’s strong showing at the polls. But pending trade negotiations with the United States will “test his leadership,” Curtis added.

Japanese business leaders reacted with enthusiasm to the election results, although the Tokyo stock market took a minor plunge in Monday’s trading, with the Nikkei index closing 237.72 points lower at 37,222.60. Investors supposedly were looking beyond the good news of the LDP victory and fretting about the possibility of another hike in Japan’s official discount rate.

But the message from Eishiro Saito, chairman of the Japan Federation of Economic Organizations (Keidanren), was less ambiguous.

“We must praise the people for their decision not to destroy the free economy,” Saito told reporters, equating the LDP victory with an endorsement of the party’s pro-business slant.

Curtis, however, said support for the LDP had less to do with ideology than with the concern that an opposition coalition would be incapable of handling the affairs of state.

“The voters were saying ‘no’ to opposition government in Japan,” Curtis said. “It was a defeat for the opposition. That’s why it was a victory for the LDP.”

While they were saying no to the opposition, the voters also said yes to the controversial right-wing LDP lawmaker, Shintaro Ishihara, who has raised hackles in the United States with a controversial America-bashing book--”A Japan That Can Say No.” The former novelist was reelected for the seventh time by his Tokyo constituency.

Takako Doi, the popular chairwoman of the Japan Socialist Party, warned against ascribing the LDP triumph to public acquiescence to a controversial 3% consumption tax. The opposition made repudiation of this LDP-sponsored tax its paramount campaign issue.

“In a word, people aren’t looking for confusion in politics, they want stability,” conceded Doi, whose party gained a whopping 53 seats Sunday. “But seeking stability isn’t the same as accepting the consumption tax.”

The LDP has proposed limited revisions of the tax to make it more palatable, and the ability of Kaifu and the Liberal Democrats to nurture a dialogue with the opposition on tax-related legislation will be a test of the ruling party’s mastery of the domestic political situation.