Koizumi calls early election after vote defeat

Japanese Prime Minister Junichiro Koizumi on Monday called early elections after parliament shot down his plan to privatise the post office, the cornerstone of his agenda since taking office four years ago.
Koizumi had staked his political career on breaking up Japan Post, which is also effectively the world's largest bank, hoping a sell-off would inject new life into a Japanese economy that has been stagnant for a decade.
But 30 members of his party voted against or did not show up, killing the controversial measure which many citizens had said they did not want, and casting doubt on the political future of the maverick 63-year-old premier.
One cabinet minister resigned immediately after Koizumi's decision to call snap elections for September 11, which some leaders in his ruling Liberal Democratic Party (LDP) have warned could spell political disaster.
A glum-looking Koizumi watched on television at his residence as the upper house voted down the privatisation plan 125 votes to 108. It had squeaked through the lower house in July.
He showed confidence and occasional anger later at a news conference, vowing to bar LDP dissenters from the ticket.
"I want to ask the public whether they choose the reformist LDP or those who oppose postal privatisation," Koizumi said. He pledged to resign if the LDP and its coalition partner New Komeito did not win an absolute majority.
The post office is used by many Japanese as a bank and sits on 355 trillion yen (3.2 trillion dollars) in savings and insurance, effectively making it the world's largest financial institution.
Koizumi believes that breaking it into four entities, including a bank, would give the private sector reason to compete and help Japan out of more than a decade of zero to little growth.
"It was extremely regrettable," said Heizo Takenaka, the state minister in charge of postal reform. "The legislation was an important milestone. The rejection is a major loss to the Japanese economy."
The LDP, which has ruled Japan almost uninterrupted since the end of World War II, enjoys wide support from Japan Post's 270,000 workers, who are reputed to be able to mobilise one million votes in a national election.