Miyazawa’s Party Loses By-Election : Japan: Prime minister is dealt blow in the first parliamentary vote since he took office.

An opposition alliance struck a severe blow to Prime Minister Kiichi Miyazawa and his ruling Liberal Democratic Party on Sunday by winning a by-election in a conservative stronghold.

Yukihisa Yoshida, 65, swamped the Liberal Democratic candidate, Nobuharu Enoki, 52, by winning 51% of the votes cast for a seat in the upper house of Parliament in rural Nara prefecture (state). It was a 14% margin of victory.

Supported jointly by the Socialists, the middle-of-the-road Democratic Socialist Party, the splinter Social Democratic Federation Party and Rengo (the Japan Trade Union Confederation), Yoshida focused his campaign on a series of scandals beleaguering Miyazawa.

Yoshida, a Democratic Socialist who is a 20-year veteran of the lower house, garnered 244,930 votes to 178,002 for Enoki, the conservatives’ unsuccessful candidate in Nara in 1989. A Communist candidate got 55,927 votes. The voter turnout was 47.1%.

The result, which stock analysts said added uncertainty to politics, pushed the the 225-issue Nikkei average lower today in the absence of any buying incentives. Nikkei closed the day’s trading at 21,819.52, down 287.60 points or 1.3%.

The victory preserved a seat that an opposition alliance won three years ago, when the ruling party for the first time lost its majority in the upper house and Nara voters, also for the first time, elected a non-conservative to the upper house.

The Liberal Democratic Party’s defeat in the first parliamentary election since Miyazawa took office last Nov. 5 was yet another setback for the 72-year-old prime minister. Miyazawa and other Liberal Democratic kingpins had traveled to Nara to stump for Enoki.

“The influence of the Kyowa incident can’t be denied,” admitted Tamisuke Watanuki, secretary general of the ruling party. He was referring to a scandal in which Kyowa Corp., a now-defunct steel frame maker, is alleged to have paid a $640,000 bribe to Fumio Abe, a key aide of Miyazawa who was indicted Feb. 1, and to have distributed $14.4 million to other politicians, including former Prime Minister Zenko Suzuki.

“I accept the result as the voice of the people demanding political reform,” Watanuki said. A ruling party reform committee will speed up its deliberations to offer new proposals, he promised.

Miyazawa, in a statement, said he takes the defeat “seriously.”

“Looking forward to the next victory, I will press for political reform and acceleration of deliberations on the budget to restore people’s confidence in politics and raise living standards,” he said.

The victory is certain to add steam to the opposition’s attack on political corruption. Since Wednesday, the opposition has been staging a boycott in Parliament to demand that figures involved in the Kyowa scandal, as well as former Miyazawa aides implicated in the 1988-89 Recruit Co. stocks-for-favors scandal, be called to testify.

A pre-election poll by Kyodo News Agency found that 70% of Nara voters said the scandals would affect how they voted.

The Nara outcome signaled the potential for damage to the ruling party in a March 8 upper house by-election in Miyagi prefecture and elections in July for half of the seats in the upper house. The Nara victory is expected to spur the splintered opposition to repeat its successful 1989 strategy of running unity candidates, a move that reduced Liberal Democratic strength in the upper house to today’s 114, 13 shy of a majority.

During the Nara campaign, former Finance Minister Ryutaro Hashimoto warned voters that “if you give the opposition a victory, it could lead to a bigger one later this year.”