Mr Yukio Hatoyama, re-elected Monday to his third term as head of the Democratic Party of Japan, faces a daunting challenge: leading the country's largest opposition party to victory in the next legislative election for the influential Lower House. Mr. Hatoyama retained the post in a close runoff with Mr. Naoto Kan, who resigned as secretary general on Tuesday.

The crunch time will come by June 2004 at the latest when a general election must be held. The big question is whether the DPJ will be able to assemble a parliamentary majority or gain more seats than the ruling Liberal Democratic Party. The LDP, together with its two junior coalition partners, now commands a majority in both chambers of the Diet.

The immediate question is how Mr. Hatoyama and his party will confront Prime Minister Junichiro Koizumi's administration. Koizumi and his team are having a hard time reviving the sluggish economy and keeping structural reforms alive. Diplomatically, Mr. Koizumi's historic visit to North Korea has created knotty problems with regard to the kidnappings of Japanese nationals by North Korean agents.