Reports of Japan ruling party demise exaggerated

By Linda Sieg - Analysis

TOKYO (Reuters) - Betrayals by allies, plots to oust the premier and the risk of more chaos to come: Japan's ruling Liberal Democrats look a lot like a party in its death throes ahead of an election that polls show they are likely to lose.

But a stint in the opposition wilderness may be just what the long-ruling Liberal Democratic Party (LDP) needs to reemerge as a formidable challenger in a modern-style, two-party system where parties compete based on policies.

Surveys suggest the LDP, in power for all but 10 months since its founding in 1955, is likely to lose an August 30 poll that unpopular Prime Minister Taro Aso is set to call on Tuesday.

Aso, the 68-year-old grandson of a prime minister, fought off a rebellion by LDP critics last week, but the image of bitter bickering lingers among voters worried about Japan's worst recession in 60 years.

A victory by the opposition Democratic Party of Japan (DPJ) would usher in a government pledged to focus more on the interests of individual consumers and workers than the organised groups of builders, farmers and businesses patronised by the LDP.

Forecasts of defeat have prompted speculation that the LDP will fracture, sparking a rejig of Japan's political landscape.

Purists have long argued that realignment was needed for policy clarity, since the LDP and Democrats are both home to lawmakers with diverse views on key matters such as security and the proper role of government in managing the economy.

Many analysts, though, expect the LDP to survive.