As expected, PM Aso and leaders of the ruling parties LDP and Komeito, yesterday dissolved the Parliament for Lower House election that will take place August 30. Finally we will see the long awaited showdown between LDP, that has ruled Japan for 54 years and DPJ, the main opposition party that has been challenging LDP more and more over the past 10 years. In fact, DPJ was widely expected to take power already in the previous election 4 years ago, but, instead, charismatic PM Koizumi performed then a miraculous landslide win for LDP that has helped to keep party in power until now. Yet successive prime minsters after him - Abe, Fukuda and Aso - have all disappointed the public time after time. The opinion polls show that majority of the voters are now ready for change and support opposition much more than government parties. LDP already lost the control of Upper House 3 years ago and was soundly beaten again by DPJ in Tokyo City Council elections one week ago.

If LDP and its ruling partner will lose their majority in Lower House, this will mean new government and new policies in Japan politics and economics. Looking at past history, this change would be tantamount to Communist Party losing control in China. In practice, however, the policy differences between center-right LDP and center-left DPJ are not that big. Main worry is actually that Japan will be run by politicians who have no earlier experience in government or support from their predecessors and whose announced policy is to challenge the powerful bureacracy in numerous ministries that has been running the country in practice, only protected by LDP politicians. Judging by financial market reactions, next to none so far, any risk is seen as minimal. Same goes for foreign policy, social policy etc. Differences yes, but not that big.

In fact, DPJ is much like LDP, an amalgamation of different political factions losely bound together to achieve power. In case of DPJ, many are ex LDP members who defected because they could not agree on policies or power sharing. Party leader and possible next Japan PM, Yukio Hatoyama, is ex LDP whose father also was PM, just like Fukuda's father and Abe's and Aso's grandfathers. It would be another step in hereditary politics, that prevail in Japan. As for policies, well, the previous DPJ leader was LDP's ex chief strategist. Other DPJ MP's are ex socialists and trade unionists as well as intellectuals and "new wave" businessmen - different from old big business and heavyweight industries represented in Keidanren. The expected benefit for many businesses is new fresh wind for reform and deregulation that has almost died in LDP since pro-reform PM Koizumi retired 4 years ago. One worry is that, much like LDP, even DPJ has recently resorted to many kind of "sweeteners" to get votes - support to farmers, free health care for elderly, free basic education etc - without saying clearly where the funds would come from. In fact, both parties main message is they will "protect the Japanese people's lives" against the global winds that blow now cold all over world. In other words, not change, but safety and certainty. Everybody knows that a full scale tax overhaul is long overdue and that the big untapped income source is VAT tax that still is only 5% in Japan, but no party dares to say this out of fear losing votes.

Also, it is unlikely that DPJ will win an outright majority but has to contend to support from other opposition parties to form a government. If so, the new policies would be a compromise to be negotiated between the partners. So let's not expect too much change in any direction - certainly it will be "evolution" rather than "revolution"! One revolutionary reaction, though, could take place: the dissolution of LDP as a party it is today and a full scale change of all parties as they are today in Japan. After all, as said, the main reason for the existence of LDP until today has been that it has helped its members to rise into power and promote policies dear to each faction's interest rather than to Japanese society overall. If the party now loses power, it loses the main reason for its existence.

Finally, a word of warning. The old monster LDP has proved hard to kill before and may make a miraculous win after all - as it did in 2005. Let's wait for August 30. And then see what DPJ can deliver - and for how long. In best case, iIf the result will turn out as expected, it's a historical change in making that could lead to changes in our business environment as well as in regional and global relations.