Miyazawa Quitting as Premier, Party President : Japan: He accepts blame for lower house election defeat. Dissension breaks out on selecting new leadership.

TIMES STAFF WRITER

In a speech that lasted only two minutes and drew no applause, Prime Minister Kiichi Miyazawa today told ruling Liberal Democratic Party legislators of both houses of Parliament that he intends to resign as party president to assume responsibility for the party's first-ever defeat in a lower house election.

The long-awaited announcement came three days after Miyazawa indicated he would try to retain the party post, a move that stirred an explosion of protest.

"I ask for party unity," Miyazawa said in wrapping up his speech.

But hardly did he stop speaking before new dissension broke out. After Seiroku Kajiyama, the party's secretary general, made a proposal to choose a new president and four other new leaders through discussions, more than two dozen legislators registered with a clerk to argue against the proposal. They insisted that the new party president be chosen by secret balloting in another meeting of all of the party's legislators.

Public disagreement with a party leader's proposal is virtually unprecedented in the ruling party's history.

The debate was continuing early this afternoon.

Miyazawa noted that "many defectors" had left the ruling party after Parliament was dissolved June 18 in the wake of a no-confidence motion against him for his failure to enact political reforms.

"As a result, many of you were forced to go through severe election campaigns. That responsibility is mine as party president, and to make that responsibility clear, I have determined to resign," Miyazawa said.

Miyazawa added that the Liberal Democrats, as the largest party despite its defeat, should continue to lead the government, maintain stability and carry out political reform. He urged the legislators to choose new leaders as soon as possible to respond to the people's trust and form a new government.

His resignation will become effective when a successor is chosen, probably early next week.

The new party president would become the party's candidate in a lower house election to choose the new prime minister. That election is expected to be held around Aug. 11.

With at least 19 seats fewer than a majority, the Liberal Democrats, who have ruled Japan since 1955, need to seek a coalition or rule through a "minority Cabinet" if seven non-Communist opposition parties fail to come up with a non-Liberal Democrat opposition coalition.

Already, two party leaders have announced their intention to run for the party presidency.

They are Hiroshi Mitsuzuka, chairman of the party's Policy Board, and former Foreign Minister Michio Watanabe.

Watanabe declared in a TV interview Wednesday that he would "stake his life" on serving as prime minister if a call from within the ruling party arose for him to succeed Miyazawa.

Watanabe, who resigned the Cabinet in April because of an undisclosed illness reported to be cancer, described his illness as "not as bad as is believed by the public."

He also announced an about-face in policy by declaring that he would support reforming Japan's electoral system by adopting a system combining single-member districts with proportional representation. Mitsuzuka, in a TV debate, came out in favor of the same system, which is close to proposals for reform made by the opposition during the last session of Parliament.

Both Watanabe and Mitsuzuka opposed such a reform in June--helping precipitate the vote of no confidence against Miyazawa.

Meanwhile, the Asahi newspaper reported that a poll it conducted of 1,500 voters showed that 56% preferred a coalition government led by the Liberal Democrats, compared with 33% who preferred a non-Liberal Democrat Cabinet. Only 5% favored a Liberal Democrat-only government.

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