By Linda Sieg and Nobuhiro Kubo
TOKYO (Reuters) - Japan is looking into creating an overseas intelligence agency possibly modeled on Britain's MI6 spy service, ruling party lawmakers say, 70 years after Allied victors dismantled Japan's fearsome military intelligence apparatus following World War Two.
A new foreign intelligence agency would be an integral part of a security framework Prime Minister Shinzo Abe is building as he seeks to loosen the post-war pacifist constitution's limits on the military's ability to operate overseas.
The idea that Japan's fragmented intelligence community needs a makeover has also gained momentum since the killing of two Japanese captives by Islamic State militants in Syria earlier this year showed how much Tokyo relied on friendly countries for information.
Abe has already set up a U.S.-style National Security Council and enacted strict state secrets legislation, and is now working on laws to lift a ban on exercising the right of collective self-defense, or militarily aiding an ally under attack.
"To become a 'normal country', an intelligence agency is vital," said Takushoku University professor Takashi Kawakami, using a phrase referring to shedding constitutional constraints that conservatives say limit Japan's ability to defend itself.
Lawmakers in Abe's Liberal Democratic Party (LDP) hope to draft proposals in the autumn after visiting countries such as Britain, whose MI6 foreign intelligence service is a possible model.
If the LDP and the government conclude a new agency is needed, legislation could be enacted next year, LDP lawmaker Takeshi Iwaya told Reuters in a recent interview.
"In an age when we don't know when or where Japanese lives will be at risk ... we need to collect more overseas information," said Iwaya, who heads a team studying the issue.
Asked about the idea of a new spy agency in parliament recently, Abe said his government wanted to research the issue while working to bolster Japan's intelligence capabilities.
TURF BATTLES, WARTIME MEMORIES
Japan's existing intelligence community has about 4,400 personnel split into units under different ministries, but has been hampered by a reluctance to share secrets across bureaucratic lines, experts say.
That reluctance to work closely stemmed partly from a lack of rules setting common standards for preventing leaks of classified information, a problem that has been eased by the state secrets law that took effect in December.
Turf battles, however, persist, complicating the outlook for a new intelligence agency.
The main actors in Japan's intelligence community are the National Police Agency (NPA), the Justice Ministry's Public Security Intelligence Agency (PSIA), the Defence Ministry's Defence Intelligence Headquarters, the Foreign Ministry, and the Cabinet Intelligence Research Office, whose staff come largely from other ministries.
"The NPA is very influential in the Abe government and Japanese bureaucracies," said one security expert.
"If a new agency was established, probably the NPA would take the initiative and the Foreign Ministry and PSIA wouldn't like that."
The PSIA, with some 1,500 staff and whose main job is to monitor domestic subversive and extremist groups, could be a logical choice to form the core of a new agency, adding overseas counter-terrorism to its portfolio, some experts said.
Bureaucratic rivalries aside, politicians may be wary of setting up a new agency given public memories of a wartime military intelligence apparatus that operated outside civilian control.
Abe's support ratings slipped in 2013 after his ruling bloc enacted the state secrets act despite criticism it would muzzle the media and let officials hide misdeeds, and he is already pushing controversial changes to the scope for military actions.
Attitudes, however, may have shifted after the killing of the two hostages, Iwaya said.
"It was a fact that we didn't have enough presence in the Middle East and had to rely mainly on foreign countries beginning with Jordan and Turkey," he said. "So the public has begun to think they want information gathering and analysis to be done properly."
If the government decided to create a new agency, building an organization that could function as well as overseas counterparts would take decades.
After unifying oversight of different forms of intelligence gathering, Japan would have to boost the number of agents, send them abroad and develop contacts on the ground, Kawakami said.
"That would be intelligence gathering, not clandestine activity," he said. "Even that would take at least 30 years."
(Editing by Dean Yates)