The first half of 2003 was volatile both internationally and domestically. Severe acute respiratory syndrome hit China, other Asian countries and Canada at the beginning of the year and spread around the world. Then, in the Middle East, war broke out when the United States and Britain invaded Iraq, overthrew the regime of Saddam Hussein and occupied the country. The situation in Iran and relations between Israel and Palestine are fluid as well.

In Asia, the atmosphere is tense. The U.S. is aiming to check the nuclear development of North Korea, while Japan and South Korea, worried about the possibility of war breaking out, are looking to China and Russia to play an intermediary role.

The world economy although dealt blows by SARS and the Iraq war, at last is showing signs of recovery. As for Japan, the two years since the inauguration of the administration of Prime Minister Junichiro Koizumi have, by and large, been smooth sailing. The reason is twofold:

* The economy and the domestic political situation have been calm. The pillar of Koizumi's administration has been structural reform. Despite criticism by conservatives and forces of resistance within both the Liberal Democratic Party and the country at large, amid the worldwide economic slump, the public generally can be said to have opted for structural reform rather than temporary economic stimuli.

The general feeling seems to be that priority should now be given to moderate structural reform and that Japan should try for development only after first carrying out needed reforms of the economic structure.

* Koizumi has scored points in the fields of diplomacy and security. In the war against Iraq earlier in the year, Japan quickly supported the action taken by the U.S. and Britain and contributed to the overthrow of the Hussein regime and the occupation of Iraq. With regard to the abduction issue and nuclear development problem of North Korea, Koizumi's stern approach has matched the mood of the Japanese people.

As a manifestation of this approval, recent public opinion surveys have shown that the Koizumi administration maintains a high support ratio, close to 50 percent. Support is particularly high for the administration's diplomacy and security policies, and a little lower for its domestic political and economic policies.

In the final stages of the ordinary session of the Diet, which concluded at the end of July, Koizumi took advantage of this favorable situation and bullishly indicated his own vision of the political schedule after August: Koizumi will be re-elected in the presidential election of the Liberal Democratic Party in mid-September. He will then reshuffle the Cabinet, convene an extraordinary session of the Diet in October, dissolve the House of Representatives in mid-October and hold a general election in November in which the three ruling parties (Koizumi's LDP, New Komeito and New Conservative Party) will gain a majority in the Lower House.

According to this blueprint, Koizumi will then remain in office at the head of a lengthy administration. The blueprint, however, has sparked a wave of criticism not only from the opposition camp but also from within the LDP.

Before the party's presidential elections in September, LDP factions can be expected to look around earnestly for candidates to rival Koizumi -- either well-known names or newcomers. Much coordination and whittling down of possible candidates are likely in the weeks to come.

As for the opposition camp, the Democratic Party of Japan, led by Naoto Kan, and the Liberal Party, led by Ichiro Ozawa, were quick off the mark when they announced an agreement to merge at the end of July. As a result, a new DPJ is scheduled to be established shortly, with Kan as its head and Ozawa, a dark horse in the political world, as its "special representative." The battleground is beginning to take shape for the political showdown in the fall.