* Internal affairs minister, PM’s ally, quits in postal row
* Row hurts ruling party just months from poll - analyst
* Japan Post debate seen as distraction in midst of recession
By Yoko Nishikawa
TOKYO, June 12 (Reuters) - A close ally of Japanese Prime Minister Taro Aso quit his cabinet post on Friday after a weeks-long row analysts said could further erode the government’s popularity ahead of an election due within months.
The resignation of Internal Affairs Minister Kunio Hatoyama, comes as Aso’s ruling Liberal Democratic Party (LDP), which has enjoyed almost unbroken rule for more than half a century, trails in the polls and risks losing a general election due by October.
The main opposition Democratic Party leads in opinion polls with calls to rein in wasteful government spending. [ID:nT44020]
Hatoyama’s resignation, sparked by the sale of Japan Post real estate and a scandal over misuse of discounts, followed weeks of wrangling but analysts said the damage had been done, with voters unhappy that this issue had distracted the government when it should have been focused on fighting a deep recession.
“I think it may be a negative for Aso in opinion polls, because it will be seen as reflecting badly on his leadership skills,” said Katsuhiko Nakamura director of research at think tank Asian Forum Japan.
“The effect may be small, but there is nothing to stop it going down further and support is low these days in any case.”
For more stories on Japanese politics click [ID:nPOLJP])
Hatoyama had wanted to sack the head of Japan Post for what he said was the mishandling of the sale of a chain of company-owned resorts and the illicit use of discounts for the disabled, but Aso backed the company president instead.
The row has reopened wounds within the conservative LDP over plans to privatise the sprawling postal system, which had been a key source of political patronage in the past.
Analysts had said that keeping the postal chief, a former president of a major bank, Sumitomo Mitsui Financial Group (8316.T), signalled that privatisation would carry on.
Hatoyama, known as the Grim Reaper when he was Justice Minister for the speed at which he signed off on death sentences, is the brother of the opposition leader Yukio Hatoyama but he pledged his loyalty for now to the ruling party, despite the row.
“I think his (Aso’s) decision is wrong this time, but I trust him to make the right decisions from now on,” he added when asked whether he would continue to support Aso’s government.
The resignation comes as polls show the Democrats well ahead of the LDP, with the election only a few months away at most. A poll published by Jiji news agency on Friday put the Democrats at 33.9 percent, ahead of the LDP on 24.8 percent. [ID:nT44020]
Hatoyama is the third minister to leave Aso’s cabinet, after the transport minister quit over a series of gaffes and the finance minister resigned after denying he had been drunk at a G7 news conference. [ID:nT79787]
Hatoyama will be replaced by Tsutomu Sato, who also serves as Public Safety Commission chief.
Katsuya Okada, secretary-general of the Democratic Party, was quick to blame Aso for the saga. “I can’t help but wonder why they were not able to deal with the issue in a better way. This is not a kids’ fight,” Okada told a news conference.
“The case showed yet again that Prime Minister Aso lacks leadership.” (Additional reporting by Chisa Fujioka, Yoko Kubota and Isabel Reynolds; Editing by Rodney Joyce and Jeremy Laurence)