By Linda Sieg
TOKYO (Reuters) - Japan ruling party lawmaker Mieko Nakabayashi isn't just worried that her Democratic Party will lose power in next month's election; she fears a comeback by rival conservative Liberal Democrats will spell a return to the prolonged one-party rule that critics blame for many of the country's past policy ills.
Three years after the Democratic Party of Japan (DPJ) ended more than half a century of nearly non-stop Liberal Democratic Party (LDP) rule, surveys suggest disappointed voters will hand the LDP the most seats in a December 16 poll for parliament's lower house. That would put LDP leader Shinzo Abe in pole position to form the next government and regain a job he quit in 2007.
"The risk is that the old LDP will come back and once that happens, Japan will take a long time to change back," said Nakabayashi, a former academic elected in the 2009 vote that propelled the Democrats to power for the first time.
"The DPJ could be an opposition party forever," she said, in an interview in her office near parliament.
Critics say the LDP's long reign created a triad of ruling politicians, bureaucrats and vested interests such as farmers, doctors and big businesses that rigidified over time, keeping Japan from responding to global and domestic changes.
Not all agree Japan's experiment with alternating power between two big parties is over after just three years, though some pundits agree the Democrats' demise can't be ruled out.
A more likely scenario is that the December election ushers in a period of confusing coalition politics, partly because of a spate of new parties eyeing voters discontented with both the LDP and the DPJ but also because whoever wins will still lack a majority in parliament's upper house, which can block bills.
That will complicate policymaking in a political system already criticized as indecisive as Japan struggles with such challenges as China's rise, the role of nuclear power after last year's Fukushima crisis and the ballooning costs of a fast-ageing population.
Such prospects would deepen concerns at ratings agencies over Japan's ability to deal with its high public debt, which at more than twice the size of the $5 trillion economy is the heaviest among leading industrialized nations. They have already cut the country's credit status and warned of further cuts, citing a lack of political will to deal with the looming crisis.
Indeed, Prime Minister Yoshihiko Noda called the Dec 16 election because the opposition demanded it as the price for help to enact a national sales tax rise to curb the public debt.
"No one can win an overwhelming majority," said Steven Reed, a political science professor at Chuo University in Tokyo.
Complicating the picture are a clutch of new mini-parties, several with a right-leaning, hawkish tinge, that aim to woo the many voters fed up with the two biggest parties.
Two of those new parties, one led by popular Osaka Mayor Toru Hashimoto and the other by nationalist ex-Tokyo Governor Shintaro Ishihara, agreed over the weekend to merge under the 80-year-old Ishihara's leadership, despite some serious policy gaps such as over nuclear power's role in Japan's energy mix.
"I think we are definitely entering a new phase - fragmentation rather than bifurcation," said Jesper Koll, head of equity research at JP Morgan in Tokyo.
"Why? Because we have the stale LDP and the stale DPJ and now new charisma parties with 'can-do leaders' who will 'rescue' Japan," Koll said. "There will be more, not less, horse trading. Governing will be more complex."
Still, such confusion could turn out to be the cost of a rocky transition to a system centered on two major parties alternating in power that would boost competition over policies and lessen the likelihood of corruption. That was a key goal of electoral reforms, introduced in 1994, that favor big parties.
"Maybe it is simply the process of political creative destruction ... and at the end of the day we may look back and say it was the establishment of a new, stable system," said Gerry Curtis, a professor at New York's Columbia University who has studied Japanese politics for decades.
"I still have hope that is what's going on, but it is taking time - more time than I thought."
The gloom in the DPJ these days is a stark change from the optimism that greeted the Democrats' landslide win in 2009, both among voters frustrated with the LDP's long rule and DPJ lawmaker pledges to change how Japan is ruled by paying more heed to individuals than companies and prying control of policy away from elite bureaucrats.
Former National Strategy Minister Motohisa Furukawa thinks that sort of exuberance was one reason the inexperienced Democrats made missteps once they gained power.
"We won too big in the election three years ago. The people's expectations ballooned and we ourselves thought we could change everything all at once," he said in an interview.
"Looking back, it would have been better to try to do things one by one."
The composition of the Democratic Party, which was begun by a core of center-left lawmakers but grew into an often-fractious group of former LDP members, ex-socialists and young conservatives, also plagued the party, hampering policymaking and ultimately setting the stage for a string of defections.
"I don't think the direction the DPJ aimed at was mistaken," Furukawa said. "But was there a consensus? There were lots of people who just tried to use the DPJ to take power."
The Democrats going into the election will be a far slimmer group. While 308 DPJ took 308 of the 480 lower house seats in 2009, dozens of parliamentarians left the party after Noda - the third DPJ prime minister in three years - pushed through the sales tax rise in the face of criticism it violated campaign pledges.
For all the Democrats' woes, the LDP - itself divided on many policies - has hardly seen a groundswell of public support.
A Yomiuri newspaper survey published on Sunday showed 26 percent of voters would cast their ballots for the LDP against 13 percent for the DPJ, a smaller gap than in recent surveys.
Abe's lead over Noda, as the most appropriate to become premier, also narrowed though he still outscored his rival 37 to 31 percent. Forty-four percent of respondents backed no specific party, suggesting a large chunk of votes are in play.
Even if the LDP - either alone or with its partner, the smaller New Komeito party - wins a majority in the lower house, it would still need to woo support from other parties in order to pass bills in the upper house, which can block legislation, at least until an election for that chamber set for July 2013.
Possible partners include the mini-parties such as the Hashimoto-Ishihara duo's Japan Restoration Party or even the DPJ, the same line-up that joined hands to raise the sales tax.
"Whoever wins a majority, the 'twisted parliament' remains ... At least until next year, things will not stabilize," the DPJ's Furukawa said.
"In any transition period, confusion must be overcome. You can't destroy the old and build something new without confusion. I think we are still in that process."
(Editing by Neil Fullick)