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* Cabinet approves dissolution of lower house

* Election unlikely to resolve policy deadlock

* Ruling party MPs dash to defect

* Mini-parties scramble to get ready for vote

By Linda Sieg

TOKYO, Nov 16 (Reuters) – Japan is set to dissolve

parliament’s lower house on Friday for a Dec. 16 election that

is likely to return the long-dominant Liberal Democratic Party

(LDP) to power with a conservative former prime minister at the

helm.

However, few expect the poll, three years after a historic

victory swept the Democratic Party of Japan (DPJ) to power for

the first time, will fix a policy stalemate that has plagued the

economy as it struggles with an ageing population and security

challenges due to China’s rapid rise.

Political experts worry former Prime Minister and head of

the LDP Shinzo Abe, who polls suggest will be the next premier,

will further fray ties with China, already chilled by a

territorial row over a group of islands.

“They will probably have the same problems of a revolving

door at the top and a weak government that finds initiating

tough reforms difficult and is tempted to enjoy nationalist

grandstanding,” said Jeffrey Kingston, director of Asian studies

at Temple University’s Japan campus.

Prime Minister Yoshihiko Noda, Japan’s sixth prime minister

in six years and the third since the DPJ’s landslide election

win, said on Wednesday he would call the election. He had

promised three months ago to call an election in exchange for

opposition support for his pet policy to double the sales tax by

2015 to curb massive public debt.

His cabinet approved the dissolution on Friday morning,

Japanese media said, ahead of the formal announcement by the

speaker of the house later in the day.

Among the policies to be debated are how aggressive the

central bank should be in trying to beat deflation as the

economy slips into its fourth recession since 2000, the role of

nuclear power after last year’s Fukushima nuclear disaster, and

whether Japan should take part in the Trans-Pacific Partnership,

a U.S.-led trade pact that Noda favours joining.

Some, however, say the biggest question on voters’ minds

will be who is best qualified to lead.

“The main issue will be whether we should get rid of the

‘incompetent’ DPJ and bring experienced people (the LDP) back,”

said one ruling party lawmaker, speaking privately.

“Or whether because the LDP created the mess, we should have

a stronger more intelligent leader, like Hashimoto,” the

lawmaker added, referring to p o pular Osaka Mayor Toru Hashimoto,

who leads the small Japan Restoration Party.

DEMOCRATS DEFECT, MINI-PARTIES SCRAMBLE

The DPJ took power in 2009 pledging to pay more heed to the

interests of consumers and workers than corporations and give

control of policy to politicians rather than bureaucrats.

Hopes of meeting those pledges largely evaporated after the

first DJP premier, Yukio Hatoyama, squandered political capital

in a failed attempt to move a U.S. airbase off Japan’s Okinawa

island.

Successor Naoto Kan led the party to an upper house election

defeat in 2010 and then struggled to cope with the huge

earthquake, tsunami and nuclear crises in 2011.

With the party’s prospects dim, DPJ lawmakers were

scrambling to defect. The Asahi newspaper said at least nine of

its 244 members in the 480-seat lower house planned to bolt.

Smaller parties, such as the Japan Restoration Party, are

scrambling to try to join forces despite major gaps in their

policies and competition over who would lead the bigger block.

The LDP looks likely to win the most seats in the lower

house poll but a lack of voter enthusiasm makes it uncertain

whether the party and its former junior partner, the New Komeito

party, can win a majority.

“We must achieve victory. That is our mission for the people

and with that in mind, I resolve to fight this historic battle,”

Kyodo news agency quoted Abe as telling party executives.

If not, the LDP will need to seek another coalition partner

either from among a string of new, small parties, or even what’s

left of the DPJ after the election.

That latter option is less unlikely than it might seem at

first blush. The LDP and DPJ lack stark policy differences,

especially since Noda – a conservative on both fiscal and

security matters – took the helm of what began as a centre-left

party in 1996. The party’s membership has been whittled by a

series of defections over Noda’s policies.