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Japan sets course for December 16 election and seventh PM in six years

By Linda Sieg

TOKYO (Reuters) - Japan is set to dissolve parliament's lower house on Friday for a December 16 election that is likely to return the long-dominant Liberal Democratic Party (LDP) to power with a conservative former prime minister at the helm.

However, few expect the poll, three years after a historic victory swept the Democratic Party of Japan (DPJ) to power for the first time, will fix a policy stalemate that has plagued the economy as it struggles with an ageing population and security challenges due to China's rapid rise.

Political experts worry former Prime Minister and head of the LDP Shinzo Abe, who polls suggest will be the next premier, will further fray ties with China, already chilled by a territorial row over a group of islands.

"They will probably have the same problems of a revolving door at the top and a weak government that finds initiating tough reforms difficult and is tempted to enjoy nationalist grandstanding," said Jeffrey Kingston, director of Asian studies at Temple University's Japan campus.

Prime Minister Yoshihiko Noda, Japan's sixth prime minister in six years and the third since the DPJ's landslide election win, said on Wednesday he would call the election. He had promised three months ago to call an election in exchange for opposition support for his pet policy to double the sales tax by 2015 to curb massive public debt.

His cabinet approved the dissolution on Friday morning, Japanese media said, ahead of the formal announcement by the speaker of the house later in the day.

Among the policies to be debated are how aggressive the central bank should be in trying to beat deflation as the economy slips into its fourth recession since 2000, the role of nuclear power after last year's Fukushima nuclear disaster, and whether Japan should take part in the Trans-Pacific Partnership, a U.S.-led trade pact that Noda favors joining.

Some, however, say the biggest question on voters' minds will be who is best qualified to lead.

"The main issue will be whether we should get rid of the 'incompetent' DPJ and bring experienced people (the LDP) back," said one ruling party lawmaker, speaking privately.

"Or whether because the LDP created the mess, we should have a stronger more intelligent leader, like Hashimoto," the lawmaker added, referring to popular Osaka Mayor Toru Hashimoto, who leads the small Japan Restoration Party.

DEMOCRATS DEFECT, MINI-PARTIES SCRAMBLE

The DPJ took power in 2009 pledging to pay more heed to the interests of consumers and workers than corporations and give control of policy to politicians rather than bureaucrats.

Hopes of meeting those pledges largely evaporated after the first DJP premier, Yukio Hatoyama, squandered political capital in a failed attempt to move a U.S. airbase off Japan's Okinawa island.

Successor Naoto Kan led the party to an upper house election defeat in 2010 and then struggled to cope with the huge earthquake, tsunami and nuclear crises in 2011.

With the party's prospects dim, DPJ lawmakers were scrambling to defect. The Asahi newspaper said at least nine of its 244 members in the 480-seat lower house planned to bolt.

Smaller parties, such as the Japan Restoration Party, are scrambling to try to join forces despite major gaps in their policies and competition over who would lead the bigger block.

The LDP looks likely to win the most seats in the lower house poll but a lack of voter enthusiasm makes it uncertain whether the party and its former junior partner, the New Komeito party, can win a majority.

"We must achieve victory. That is our mission for the people and with that in mind, I resolve to fight this historic battle," Kyodo news agency quoted Abe as telling party executives.

If not, the LDP will need to seek another coalition partner either from among a string of new, small parties, or even what's left of the DPJ after the election.

That latter option is less unlikely than it might seem at first blush. The LDP and DPJ lack stark policy differences, especially since Noda - a conservative on both fiscal and security matters - took the helm of what began as a centre-left party in 1996. The party's membership has been whittled by a series of defections over Noda's policies.

(Editing by Neil Fullick)

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