By Rie Ishiguro and Shinichi Saoshiro
TOKYO (Reuters) - Unpopular Prime Minister Naoto Kan confirmed on Tuesday he would step down as head of the ruling party this week if two key bills were enacted, clearing the way for a new leader to try to cope with Japan's nuclear crisis and slew of economic ills.
The race to become Japan's sixth leader in five years was blown wide open on Monday when former foreign minister Seiji Maehara, 49, decided to run.
That cut the chances of Finance Minister Yoshihiko Noda, a fiscal conservative. The support base for the two men overlaps in the Democratic Party of Japan (DPJ) -- and whoever is elected next week as leader of the party with control of the lower house will become prime minister.
"...on Friday if the two pending bills pass parliament by then, I will resign as head of the DPJ," Kan told a parliamentary panel. "Then, when the new leader is chosen, I will quit as prime minister."
Japan's new leader must grapple with a soaring yen that threatens exports, rebuild from the March earthquake and tsunami, end a nuclear crisis at the crippled Fukushima plant and forge a new energy policy -- all while trying to curb public debt and cure the ills of a fast-aging society.
But concerns run deep as to whether the next prime minister will fare any better than his predecessors in the face of a divided parliament and ruling party split by policies and personal feuds.
"The chances of a stable government capable of doing the bold and decisive things needed to deal with the problems in Tohoku (northeast Japan) and revitalize Japan are very, very low," said Columbia University professor Gerry Curtis. He suggested the next government could also be short-lived.
Kan, whose voter support has sunk below 20 percent, pledged in June to step down after achieving certain tasks. With key bills expected to pass this week, the DPJ is set to pick a successor on August 29. One of those bills, to promote renewable energy sources such as solar power, was approved by a lower house panel on Tuesday.
VETERAN KANO FOR CONSENSUS?
Maehara is a security expert who has irritated China by warning about its growing military might and has lately put beating deflation at the top of his policy list. Japanese media said he would announce his candidacy later on Tuesday.
"We need to stand beside the disaster victims and overcome this national catastrophe together," Maehara told a group of party backers. "I think many people are disappointed by the current state of politics ... We need to regain faith in politics. Allow me to stand at the lead to build a new Japan."
At least five other lawmakers are considering a run at the nation's top job, including farm minister Michihiko Kano, 69.
An 11-term veteran, his policies are vague but he could win backing from those keen for an experienced hand at the helm.
The farm minister could also be well-placed to win support from scandal-tainted party powerbroker Ichiro Ozawa and his ally, Yukio Hatoyama, the man Kan replaced as prime minister. The two head two of the biggest intra-party groups.
"What is being sought now is experience and know-how," Kano supporter Tenzo Okumura told Reuters this week.
Noda, 54, had hoped to win the backing of Maehara -- the most popular potential candidate among voters -- in his push to replace Kan. The prime minister has come under fire for his response to the triple March disasters despite public backing for his vision of a future free of dependence on nuclear power.
How to win cooperation from opposition parties, which control the upper house and can block bills, will be one focus of the party race. Another is whether and when to raise taxes to pay for rebuilding the northeast and to fund bulging social security costs.
Noda told reporters he remained in the race, but declined further comment on the challenge by Maehara.
"I will focus on fulfilling my duties as finance minister and dealing with key bills as well as the yen's rise," he said.
(Additional reporting by Tetsushi Kajimoto; Writing by Linda Sieg; Editing by Edmund Klamann; Nathan Layne and Jonathan Thatcher)