Mon Apr 12, 2010 9:30am IST
By Isabel Reynolds
TOKYO (Reuters) - Japan's prime minister will hold talks with U.S. President Barack Obama on the sidelines of a global summit this week as he nears a self-imposed end-of-May deadline to resolve a row over a U.S. Marine base on Okinawa.
Washington wants Tokyo to implement a 2006 agreement to relocate the Marines' Futenma airbase to another site on Okinawa as a prerequisite for shifting up to 8,000 Marines to the U.S. territory of Guam, part of a broader realignment of U.S. forces.
But Prime Minister Yukio Hatoyama raised hopes ahead of his election victory last year that the base could be moved off the island entirely, and some in his own party have said he might have to resign if he fails to resolve the row by the deadline.
Following are some possible scenarios :
HATOYAMA BROKERS A DEAL
Probability: low.
Hatoyama said he would urge Obama to cooperate to reach a solution on time, but the chances of progress at the Washington meeting are considered low.
Hatoyama has insisted he will reach a deal between all parties by the end of May and even told parliament last month he had a plan in mind, though he refused to make details public.
If he manages to pull it off, he would likely gain voter approval ahead of an upper house election expected in July or August, which the Democrats must win to avoid policy gridlock.
Angered by the noise, crime and pollution they associate with the bases, many residents want him to stick to the stance of moving them off altogether.
Media say several options are being floated, one involving building a new runway within the existing Camp Schwab base on Okinawa. This would reduce the bases' overall footprint and avoid landfill in a bay frequented by the dugong, a rare marine mammal.
Another involves construction on landfill off another part of Okinawa, media say, but neither option is likely to find favour with local residents.
DELAY
Probability: fairly high.
Hatoyama could announce he will push back the deadline, possibly to a date ahead of Obama's next expected visit to Japan in November, but stay in his post and continue to seek a deal.
This would likely prove a further blow to his floundering Democratic Party ahead of the election, where a poor result might force the Democrats to expand their coalition, especially as an increasingly fragmented opposition offers a growing range of partners.
Media polls show voters think Hatoyama lacks the leadership skills to make tough decisions and are concerned about his handling of ties with Japan's biggest ally. Failure to keep the pledge would reinforce both of these concerns.
The United States has said the deadline is a Japanese issue, but missing it might fan concerns that Hatoyama is more interested in building ties within Asia than strengthening its alliance with Washington.
Japanese financial markets are not reacting to the base row on a daily basis, because expectations were low from the outset that Hatoyama could resolve the issue quickly. But any sudden and serious worsening of bilateral ties could jolt confidence in Japanese stocks, the yen and Japanese government bonds
RESIGNATION
Probability: fairly high.
If Hatoyama fails to reach a deal, he could opt to resign, possibly clearing the way for combative Finance Minister Naoto Kan, who has had little involvement in the Futenma row, to take his place.
Though analysts say Hatoyama is unlikely to make an immediate decision to step down at the end of May, a fresh start with a new leader might help the Democrats in the election, possibly allowing them more freedom to implement policies opposed by their current allies.
Markets would generally welcome Kan, though there are no signs that he would offer any bold policy changes.
(Additional reporting by Yoko Nishikawa; Editing by Sanjeev Miglani)
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