Prime Minister Ryutaro Hashimoto announced Monday that he will resign to take responsibility for the massive defeat of the Liberal Democratic Party in Sunday’s Upper House election.

In the wake of the widely expected announcement, the LDP began a full-scale process for choosing Hashimoto’s successor as party president and prime minister.

The LDP is scheduled to hold a general assembly of LDP Diet members on July 21 to select a new party president, who will most likely be elected prime minister at an extraordinary Diet session to be convened at the end of the month.

It is speculated that Foreign Minister Keizo Obuchi is Hashimoto’s most likely successor. Obuchi has emerged as a candidate partly because he chairs the LDP’s largest faction, once headed by former Prime Minister Noboru Takeshita, and partly because he can handle diplomatic issues, including Japan’s relations with Russia. But Obuchi is said to be far from well-versed in economic policy affairs, which may affect his chances of taking the helm of the LDP and thus the government.

Seiroku Kajiyama, former chief Cabinet secretary, is widely believed to be Obuchi’s toughest competitor for the top party and government posts because he is known as the staunchest LDP advocate of strong measures to pull the nation out of the economic doldrums – one of the major reasons that led to voter discontent over the ruling party.

Hashimoto announced his resignation at a meeting of top LDP executives that began at 12:30 p.m. LDP Secretary General Koichi Kato and other top party chiefs also announced at the meeting that they will quit their party posts.

Hashimoto asked the other top LDP leaders to stay on at their jobs until a new prime minister is elected. Meeting participants agreed to convene a plenary session of LDP members from both Diet chambers on July 21 to select a new party president.

Later in the day, Chief Cabinet Secretary Kanezo Muraoka said the current Cabinet will resign en masse at the opening of the extraordinary Diet session, which is expected convene on July 30 at the earliest. Following the mass resignations, the LDP wants to vote that day on a new prime minister, Muraoka told a regular press conference.

Immediately after the meeting of top LDP executives, Hashimoto held a 2 p.m. news conference at LDP headquarters and said, “I am fully responsible for the election defeat. “I expressed my intention to resign as head of the party at a meeting of the party’s top executives, and they accepted,” Hashimoto said.

Asked about his successor, Hashimoto said he is not in a position to mention any specific names and noted the matter will be discussed during a meeting of the LDP executive council planned for today. The council is the LDP’s top decision-making body.

Declining comment on reasons for the LDP’s huge election losses, Hashimoto simply said: “It is all my responsibility. I did not have sufficient ability. I have nothing more to say about the reasons.”

Hashimoto, who had planned to visit Moscow in fall to meet with Russian President Boris Yeltsin, said relations between the two countries will progress regardless of his resignation. “I earnestly hope the fledgling friendship with Russia will not be affected by my resignation. With that hope in mind, I will meet with Russian Prime Minister Sergei Kiriyenko this evening,” Hashimoto said.

Hashimoto said he believes the LDP will still promote the economic policy measures he had planned to implement, including a scheme to dispose of bad loans at financial institutions by setting up “bridge banks.” Hashimoto also said the party’s pledges to reform the nation’s tax system and implement permanent income tax cuts should be carried out.

Expressing concern about the fate of “six big reforms” he had promoted, Hashimoto said his party colleagues will deal with the reforms appropriately to prepare the nation for the 21st century, when the growing older population will contrast sharply with the declining number of young people. He had promised to carry out six big reforms geared at the nation’s administrative, fiscal, monetary, economic, social and education systems.

Hashimoto, 60, has been LDP president since September 1995 and has served as the nation’s leader since January 1996, marking the sixth-longest tenure of a postwar prime minister. Last September, Hashimoto became the first LDP president to win a second two-year term in 13 years, because no other candidates emerged to challenge him.

Caught in a dilemma over whether to promote fiscal structural reform or focus on economic pump-priming measures, Hashimoto has been criticized for what observers call “a repeat of haphazard policies.”

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