By Linda Sieg
OSAKA, Japan (Reuters) - Gathered in a hall in the city of Osaka, about 900 students at Toru Hashimoto's school for candidates listen raptly as the populist mayor issues a clarion call to shake up Japan's deadlocked politics in an election that could come this year.
"It means nothing if you do not win. I don't know when it will be, but everyone, get ready," said a shirt-sleeved Hashimoto, wrapping up a speech in which he blasted mainstream parties, chided the media and pledged to speak for a silent majority.
"Become warriors. Let's fight together. Let's change Japan."
Detractors call the boyish-faced Hashimoto a dangerous, right-wing populist who targets unpopular groups such as overpaid civil servants, tattoo-sporting city workers and electric power companies discredited by the Fukushima nuclear crisis, and bashes them to public applause.
Fans argue his brand of strong leadership is what Japan needs to break out of decades of policy impasse that last month prompted rating agency Fitch to downgrade its credit status.
Either way, Hashimoto's ability to tap voter discontent far beyond the western city of Osaka means the former lawyer and TV talk show celebrity has the potential to shake up Japan with far-reaching results for the world's third-biggest economy and its neighbors.
"People in Tokyo thought he was just an Osaka phenomenon, but that is changing," Kunio Hiramatsu, the former mayor of Osaka easily defeated by Hashimoto last year, told Reuters. "If they run 200 candidates in the next election, I think they could win a substantial number."
Hashimoto's plan is for the best and brightest of the students at his cram school for candidates to join more experienced allies to run in a national election that must be held by August 2013 but could come sooner.
SENSE OF DEADLOCK
Hashimoto's stronghold is in Osaka, Japan's second largest but declining metropolitan area, where business executives dream of reviving past commercial glories.
After resigning as governor of Osaka Prefecture in 2011, he won a landslide victory to become city mayor on a platform attacking scandal-tainted civil servants while promising to unify city and prefecture governments to eradicate duplication and cut wasteful spending.
"In a situation where people felt a sense of deadlock over a stagnant economy, deflation, a lack of jobs or stalled income and wanted to change something, Hashimoto's easy-to-understand call for change resonated in people's hearts," said Akira Yanagimoto, a city assembly member from the rival Liberal Democratic Party (LDP) and no fan of the mayor.
With memories of Japan's military aggression in the 1930's and 1940's still raw, even some conservative critics find Hashimoto's tactics disturbing. Others worry about what they see as an authoritarian streak.
"Right now, he is fashioning domestic enemies - those in the minority and 'vested interests'," Yanagimoto said. "But I worry that if he goes on the national stage, foreign companies or even foreign countries could become the 'enemies'."
Some backers acknowledge that propelling Hashimoto, 42, to the nation's top job, prime minister, would carry risks, but argue that Japan's prolonged stagnation makes drastic action vital.
"Frankly, I do feel some sense of danger, but I am more worried about the situation now," said Shimpei Fukuda, 36, a former aide to a ruling party member of parliament and a student at Hashimoto's school. "The only option is change."
Clearly, there is a deep well of disillusion to tap. Nearly 80 percent of Japanese are dissatisfied with the way things are going in their country, while 86 percent said the government is having a bad influence, according to a recent survey by the Washington-based Pew Research Center.
That sort of discontent helped sweep the novice Democratic Party of Japan to power in 2009 with promises to take control of policy-making away from bureaucrats and pay more heed to consumers and workers rather than big corporations.
Three years and three prime ministers later, the Democrats look set to split after cutting a deal with the opposition to raise Japan's sales tax to curb ballooning debt, a move critics inside and outside the party, including Hashimoto, say violates its 2009 campaign pledges.
Hashimoto could also be well placed to take advantage of fears that political paralysis is keeping Japan from competing successfully with Asian rivals China and South Korea.
"While Japanese politics is in great confusion over the sales tax, neighboring countries are ready to pounce," Hashimoto said in his speech. "They are aiming at Japan's weakness."
The policies of Hashimoto's Osaka-based Ishin no Kai (Restoration Group) are a work in progress, not least when it comes to diplomacy and defense. An eight-point policy plan calls for supporting the U.S.-Japan security treaty and joining a U.S.-led free trade pact.
Still, even some conservatives worry his allies and advisers could push him toward right-wing positions that could upset China and other neighbors - Tokyo Governor Shintaro Ishihara, for one, is well known for remarks that upset China.
His insistence that public school teachers sing the national anthem - for some still a symbol of pre-war militarism - at ceremonies and a ban on city workers having tattoos, long associated with "yakuza" gangsters, upset liberals.
"He is a kind of nationalist" but not extreme, said Shinichi Kitaoka of the Institute for International Policy Studies.
"But he is still surrounded by more hawkish people," said Kitaoka, who said he had lectured at Hashimoto's school to prevent a "right-wing coalition from happening".
On the economic front, Hashimoto's stance - like his talent for punchy remarks in front of the television cameras - echoes that of the popular Junichiro Koizumi, who promoted privatization, competition and deregulation during his 2001-2006 stint as premier.
He also wants to create regional blocs that can collect their own taxes and set spending priorities while leaving diplomacy and defense to the central government.
Some say Hashimoto's own background - he was raised in a poor family by a single mother, but went on to prestigious Waseda University and became a lawyer - has formed his policy stance.
Hashimoto grew up in an Osaka "buraku" community, home to members of an invisible minority racially and ethnically indistinguishable from fellow Japanese but long the target of discrimination rooted in ancient religious concepts.
Those who know him say he does not identify with the group or back the idea of special financial help for its members.
"His view is that one can succeed through one's own efforts and competition," said Yuji Yoshitomi, a journalist who has written a book about Hashimoto.
The platform of Hashimoto's Ishin no Kai group includes radical reforms such as abolishing the upper house, whose ability to block legislation in a divided parliament has been one reason for political stalemate, and the direct election of the prime minister by voters rather than by parliament. Both innovations would require hard-to-achieve constitutional reform.
Hashimoto adopted an anti-nuclear stance after last year's disaster at the Fukushima nuclear plant. But he softened his opposition to restarting two reactors after lobbying by business groups about the dangers of blackouts.
The party itself favors less reliance on nuclear power, but is not calling for a complete exit, said its policy chief, Hitoshi Asada.
"We are not saying, like Merkel, that after 20 years there should be no nuclear power," he told Reuters, referring to Angela Merkel, the leader of Germany, where nuclear power is being phased out.
Whether Hashimoto himself will take a shot at parliament, a pre-requisite to becoming premier, is unclear. Some say it would be tough for him to quit as mayor mid-stream. Others argue that, ultimately, he will not be able to resist.
Politicians and experts say Ishin no Kai and its allies could well garner enough to play a key role in the formation of a new coalition government.
"I think what he is hoping for is to become the most visible and most popular so that when his small group goes national, he'll be seen as the person who can galvanize these disparate groups or link them together," said Andrew Horvat, director of the Stanford Center in Kyoto.
(Editing by Ron Popeski)