Prime Minister Junichiro Koizumi's diplomatic policies on Iraq and North Korea could take a knock due to the setback experienced by his dominant Liberal Democratic Party in Sunday's House of Councilors election.

Koizumi is expected to maintain his basic stance of viewing the Japan-U.S. alliance as the cornerstone of Japan's diplomacy, given that the LDP and its coalition ally, New Komeito, retained a combined overall majority in the Upper House.

But because he failed to steer the LDP to victory in the election, Koizumi might face a growing number of situations in which he must not only think about what he wants to do but also what the public or the opposition camp wants, some LDP lawmakers said.