TOKYO (Reuters) - Japan's main opposition party picked former prime minister and security hawk Shinzo Abe as its new leader, giving him another shot at the premiership and possibly alarming Beijing and Seoul, both locked in territorial disputes with Tokyo.
Opinion polls suggest that the conservative Liberal Democratic Party (LDP), ousted in 2009 after more half a century of almost non-stop rule, will come first in a lower house election expected within months.
That would put Abe in position to become the next prime minister and he wasted no time in laying out his credo, promising to protect Japan's borders and revive its economy.
"Japan's oceans and territory are being threatened and the economy has stagnated due to prolonged deflation and the strong yen," he told a news conference after being chosen by party lawmakers. "It is my mission to overcome these difficulties and build a strong and prosperous Japan."
Five years ago Abe, 58, quit after a year in office, citing ill health and many commentators had doubted in his comeback.
All LDP leadership contenders had struck hawkish tones as a row with China flared this month after Prime Minister Yoshihiko Noda's government bought some disputed islets in the East China Sea from their private Japanese owner.
The islands, known as Senkaku in Japan and Diaoyu in China, lie near potentially rich natural gas deposits and both countries stood their ground in the long-festering territorial row after their foreign ministers met on Wednesday.
But Abe has been the most vocal in urging Tokyo to take a tougher line in its territorial rows with China and South Korea.
"I think China will be alarmed as will Korea," said Sophia University professor Koichi Nakano.
Nakano said Abe's win could boost Noda's struggling Democrats, but others said voters would still turn to the LDP.
"I don't think anyone wants to give the Democratic Party a second chance," said Katsuhiko Nakamura, executive director at think tank Asian Forum Japan.
Japan's biggest business lobby welcomed Abe's election. "The new president is a political leader well versed in policies, has abundant experience and the ability to get things done," Keidanren Chairman Hiromasa Yonekura said in a statement.
However, the prospect that Abe could lead the next government may worry the Bank of Japan.
Abe has been among proponents of amending central bank laws to force it to do more to prop up the economy.
"It is expected that the pressure on the BOJ to implement more easing policy will increase," said Hidenori Suezawa, chief bond strategist at SMBC Nikko Securities.
Abe, who became Japan's youngest post-World War Two premier in September 2006, quit after a year marked by scandals, a big election defeat and a crisis over Japan's support for U.S.-led operations in Afghanistan.
The grandson of a prime minister, Abe has long called for Tokyo to tighten its alliance with the United States. He wants to revise the post-World War Two pacifist constitution.
As a member of a conservative camp that thinks Japan has apologized too much for its wartime past, Abe wants to replace a 1993 government statement apologizing to women forced to serve as sex slaves at wartime military brothels.
He also seeks the revision of a historic 1995 statement by then-prime minister Tomiichi Murayama, apologizing for suffering caused by Japan's wartime aggression.
Neither change would win friends among Asian neighbors.
When in office, however, Abe took a big step to repair Sino-Japanese ties, which soured under his predecessor Junichiro Koizumi.
"We must show our will to firmly protect our territorial waters and Senkaku amid China's movements. That said, when I took office as prime minister six years ago, I first visited China because the Japan-China relationship is very important," Abe told reporters.
"Even if our national interests clash, we should acknowledge that we need each other and control the situation while thinking things strategically. My stance on this has not changed."
Opinion polls suggest that LDP will need a coalition partner and Abe has signaled a possible tie-up with a party led by populist Osaka Mayor Toru Hashimoto, which critics say is tapping simmering nationalist sentiment.
Whoever takes charge of the world's third-largest economy after the election will face various unfinished business and deep-rooted problems.
Rebuilding the northeast ravaged by a March 2011 earthquake and tsunami is not over yet and full decommissioning of the crippled Fukushima nuclear plant will take decades.
Any new government will have to revamp energy policy amid deep public concerns about nuclear safety. Abe has already made clear he does not favor ditching atomic power.
In addition, a plan to double the sales tax that Noda pushed through with opposition help after promising early elections is seen as just a first step towards cutting a ballooning public debt.
Abe said that while he would honor the tax deal he also expected Noda to keep his word to hold elections "soon."
Additional reporting by Antoni Slodkowski and Kiyoshi Takenaka; Editing by Linda Sieg and Ron Popeski