Japanese Prime Minister Junichiro Koizumi has called a snap election for 11 September after losing a vote on a key economic reform.
Mr Koizumi's proposal to privatise the country's postal system was rejected by parliament's Upper House.
The defeat was a huge blow to Mr Koizumi, who staked his reputation on the issue as part of his reform programme to help economic recovery.
Mr Koizumi's own party the Liberal Democratic Party was deeply divided over the move and many voted against the reform.
Is this the end of Koizumi's hopes for economic reform? What will happen to the Liberal Democratic Party? Can real change be implemented? Send us your comments using the form on the right.
This page is now closed. Read a selection of your comments below.
The following comments reflect the balance of opinion received so far:
Unlike the Japan Railroad (JR) which improved business and produced profit through privatisation, the postal system was working fine especially for those in the rural area where the population is too sparse for convenience stores and private parcel service to launch their business. The initial intention of the reform was sound, but numerous amendments turned it to take away many benefits from the weakest part of the society. I think Japan is ready for Koizumi's departure and the fall of his party.
Ada, Acton, London
Let alone the controversial way he manages things, we would definitely need the reform, otherwise we will end up with postponing what have been long postponed already. His leadership may appear to be arrogant but we should also remember the likes of Margaret Thatcher and JF Kennedy.
Shinya Yoshida, Tokyo, Japan
It seems shallow reasoning to describe the on-going situation as the battle between reformists and conservatives in the LDP. What is the Koizumi's claim to reform aimed at? During the past two decades, as also happened in the US, UK and some other countries, so-called neo-liberal economic policies have overwhelmed everything in Japan. In terms of "economic" efficiency and profitability, the idea of de-regulation and privatisation can be said successful. But who have such economic achievements benefited? I don't say that there is no need to reform (in real terms) the Japan Postal System, but we should think twice: for what and for whom.
Shuji, Kyoto, Japan
Koizumi is witnessing a revolt in his own party ranks. This defeat in the upper house is more about his followers protesting against his increasingly dictatorial rule than over economic reforms. He will be ousted in the coming election.
Kwok, Sydney, Australia
Local people such as the isolated islands in Nagasaki don't support the privatisation of the country's postal system because they are afraid that small postal offices may disappear. But most people in Japan are not so interested in the reform of the postal system. At the general election Koizumi's foreign policy and the dispatch of self defence forces to Iraq will be more important issues. The polling day is 11 September. It is a symbolic day to reflect over his strong policy following America.
Matsuda, Nagasaki, Japan
This was never going to be about whether reforms would be better for Japan Post or for the Japanese people. Irrespective of Koizumi's personal ability and integrity he was always going to be up against the vast majority of politicians in Japan with a personal financial interest in maintaining the status quo in the country. Many others have pointed out how the postal system props up a huge part of the public sector through postal bonds. Koizumi would have needed far more vocal public support (which he lost a while ago by supporting the US) to make a difference.
Oliver, Beijing, China
Japan Post is far more than just a postal system. It offers banking services and holds assets of nearly $3 trillion, which probably means it is the world's largest banking group. Its customers choose to use it because, unlike other Japanese banks, it is crash proof. Privatise it and it loses that appeal to its customers who trust and depend on it, removing a crucial service from thousands of Japanese households. This is not a loss leader for Japan - the Post makes a massive amount of money - so privatising it seems to be a pointless piece of political engineering that benefits nobody.
Mike, London, UK
We need to reform Japan in order to make the Japanese economy better. And the privatization of the postal service is the main policy. It's time for politicians to ask the Japanese citizens.
Keisuke, Japan, Fukuoka
The postal system is one of the only parts of the Japanese government that works. The reform plan is deeply unpopular, as people count on the postal system for services that will vanish as unprofitable if it's privatized.
I'm a little bit disappointed at the result. The privatization would enhance its quality in the long term, just like Japan Rail. But I am also excited. This situation must be one of the most interesting chances to see political drama in recent years in Japan.
I hope it's the end of both Koizumi and his hopes. I hope DPJ wins and Japan gets out of Iraq. Finally.
Marilyn, Boston, USA
The election will put the fate of Japan's economy right where it belongs, in the hands of its voters. Whichever way things go, they will have only themselves to thank, or blame.
PM Koizumi is not interested in reforming the postal delivery system in Japan. He is much more interested in privatizing the postal savings system which currently has deposits in excess of 200 trillion yen. Privatization of this hoard will result in the largest financial institution in the world.
What makes a reform realistic? Does it have to do with what is according to Western standards? If so, when are we to understand that this issue of power has nothing to do with promotion of freedoms and rights of peoples? Maybe when we start respecting other peoples value systems, then this question of "realistic reforms" may take a completely different focus.
Carlos Sebastian, Schomberg, Canada
The political agenda in this election is not only the reform of the postal system. More importantly, it's the further progress of the reform of Japanese economy. Maybe his methodology was wrong, but who else can make it happen?
Mino, Birmingham, UK
Beyond the issue of postal reform, Japanese politics in general are in need of reform, and away from domination by the LDP, which is neither Liberal, nor Democratic, nor a Party. A revamped LDP, or giving the opposition a chance at power, may do far more to help Japan than the status quo and postal privatization.
George Malvern, Toronto, Canada
The bill to gradually privatise Japan Post appears to be little more than a sideshow to the real issues - the battle between reformists and conservatives in the LDP, access to funding for pork barrel politics, and the loyalty of individual members to the party or their faction (habatsu). The failure to pass the bill resulting in the dissolution of the lower house may be an opportunity for the LDP to offload dissenters, weaken or extinguish the factions and become a modern political party capable of taking Japan into the 21st century and dealing with real issues such as pension reform and public sector deficits. Good luck, Koizumi-san!
Keith, Hyogo-ken, Japan
For the Japanese government, reform is probably unrealistic. With factions and groups looking after there own self interests there is little chance of change. The same party has been in power for 50 years so how can the country change, how can policy change? The Japanese psyche doesn't really like change and tries to keep everyone happy but in doing so - no changes are really made. Just look at simple things like a female monarch, or even pension reform which ministers themselves haven't paid or to more important international events like the recent distorted history books reducing Japan's responsibility during the war. It looks like the end of any real reforms and maybe they need a women prime minister like Thatcher. The pain was evident but we changed for the better. I'm not so sure about Japan
Scott Wallace, Japan, Nagoya
The postal services in Japan have been very efficient until now. People rely on this efficient institution and even foreigners living here have find it simpler than banks. I wonder if privatizing it will make it more reliable or hinder its reliability?
Luisa K, Okinawa, Japan
For the first time in living memory the Japanese electorate can vote on real issues rather than scandals and decide whether they want Koizumi, a politician with principle, dedicated to reform, or the conservative blockers who would like to continue to preside over Japan's decline.
Paul, Tokyo, Japan
Japanese people are among the most forward-thinking and considered thinkers in the world. Change and reform is a not a new concept for these people. They have overcome some of the biggest challenges any nation has faced in the last 60 years without fear or conflict.
The slow moving and ponderous image portrayed by the political 'leaders' of Japan is unrepresentative of the desire of the people for success and economic growth. They seek to stifle economic growth by instilling fear of a return to the recession of the early 90s to control the cash-cow public sectors that they take healthy incomes from. Koizumi is right by daring to speak out with economic reforms that the people really want from their government. Growth isn't something they should fear, it is something country needs desperately. The postal service is great in Japan; cheap, efficient and a model for other countries. However, this has little to do with the funding it receives, and a lot more to do with the conscientious Japanese people who make it up. In private hands it would be just as impressive, if not more.
Will, Birmingham, UK
Mr Koizumi's decision would bring about a serious split in the LDP, which means the reorganization of the conservatives including the possibility of a new party, with Mr Ishihara, the popular incumbent Tokyo governor, at its top.
Kurama Tengu, Tokyo Japan
Of all the negatives I read toward the current Japanese government it amazes me that such interest is not funnelled in the direction of their government, but rather pinned in response to the outside world. Reform will be slow if at all until the Japanese youth break the monopoly of the current elders in government. I am 62 and can see this so why can't they? The people of Japan must become engaged directly with the government, which their constitution allows or some day these rights will disappear for lack of exercise. Balance is important with all things and aspects of life to include politics.
Robert Moore, USA/Japan
Service is one of the strengths in Japan's economy compared to the other countries. Post privatization will definitely promote the creativity to develop new services in that section. Koizumi is not an ordinary politician who is skilled with politics well-enough, but, at least he is successful in attracting people's eye on the deadlock of LDP and its reform. It is very interesting to see how people will decide on Koizumi's administration and the Democratic Party's possibilities.
H K, Tsukuba, Japan
I no longer live in Japan so this may not be my business to comment. As far as I see from the news, I don't think the Japanese government did a good job convincing people that such reform was really necessary. Government-run postal service has been the backbone of any modern countries, including UK and US. This election may be a good thing for Japanese people as they can cast their vote to voice their opinion.
Aki, California, USA
As someone who is currently living in Japan, I am overjoyed that Koizumi's reform bill has failed. Far from being an "inefficient behemoth", the services offered by Japan Post are outstanding: postage is cheap, efficient and with city centre post offices open 24 hours (for all basic postal needs) offer unparalleled service. In rural areas, the complete absence of ATMs and banks mean that the local post office is also the only finance option. Would the service remain as good for the average customer under privatisation? Of course not. Reform of some antiquated aspects of Japan Post may be necessary, and desirable, but these can be achieved without privatisation.
Richard, Tokyo, Japan
Since Mr Koizumi had promised to break up the LDP when he took the premiership, it is a reasonable decision for him. He has just carried out his pledge. It's time to leave.
PM Koizumi has been claiming postal reform for several years. He should pay more attention to other problems. Our country has a lot of problems. I wonder if PM Koizumi and other political parties will be able to reform Japan. I guess Japanese people should have interest in politics, the percentage of votes has been declining for several years. It's a very bad thing.
I doubt that the majority of the Japanese contributors to this posting will even bother to vote. Huff and puff. This loss is simply yet another indication of the old-school style of politics here in Japan. The fact that the Post Office here acts as a support agency for a large portion of the Diet members is quite clear. No wonder so many voted against the reform, and looking at the stats just in, it seems the rural Diet members all voted against. Of course they would, why give up their easy life for the cut and thrust of real life on Planet Earth. Figure this, if a privatized German, British, American, Canadian, French post service can run better in the private sector, why can't the world's largest post office also. This is nothing to do with the Post Office itself, but self-interested politics. Koizumi has done nothing wrong but fight reforms head on. It is about time that people realized that since the bubble burst, the only sector not to have made significant changes to its way of business is the public sector. If the Government were a private company, it would have gone bust years ago. Koizumi-san, don't give up!
Steve, Sapporo, Japan
Erm to Steve from Sapporo, I'm assuming by your comment on privatised Postal Services in US, UK, Canada and France working better in the private sector that you are not from the UK. The Royal Mail is an absolute mess since privatisation
Alan, Yokohama, Japan
I don't think this rejection was the tragic event for most Japanese as many foreigners do. Koizumi's reform attempts have not been about fair competition. We watched a series of his superficial reforms in pensions, public investment, and postal services. We gave Koizumi and LDP a chance, but they failed. Now our answer is simple. If Democrats fail, we will vote a new party in.
Yusuke Ohno, Saitama, Japan
Reform? In Economic usage this is another "weasel word" , just like "Liberalisation" where the meaning has changed from an improvement for all concerned to a deterioration in service and an advantage only to the few. The ordinary citizen usually suffers from such "reforms". Many ordinary Japanese workers rely on their Post Office not only to deliver mail but in addition as their savings bank. I hope they will remember this at their Election and sling Mr Koizumi and his Liberal Party out on their ears!
Steve Foley, Reading, UK
With Koizumi's dissolution of the Lower House, Japan is entering a period of perilous uncertainty. The Japanese people will be fortunate indeed if after the 11 September election Koizumi or the opposition can form a strong, coherent government and carry through needed reforms. What is more likely is endless political bickering and stalemate, or perhaps a new confrontational style of politics yet to be seen in post-war Japan. Whatever happens, it will be very interesting, though the consequences may not be what most people here want to live with.
Donald M Seekins, Okinawa City, Japan
We didn't reject his idea. The government officers did. They are from Japanese typical society which doesn't work in such a global economy in the world. He was only one who didn't change his opinion for many years. He is honest. We need change by someone like him. There is no one who is expected to be the next prime minister and they know it!
Fumi Kaneko, Tokyo
This is a major blow for Japan. Not freeing up money for efficient use will lead further away from being a productive economy. Government spending will continue to be uncontrolled, with financing a class of a political cast through public works, resulting in giving away further the future of generations to come and at the expense of "salary men" who continue to receive minimal interest from their savings. In the end, similar things will happen as in Germany - non-competitive structures to compete with highly motivated economies.
George Hansen, Yokohama, Japan
Now is the time that the politicians do not depend on the postal system for political support. These politicians are selfish to serve their own needs of getting votes from the people by continuing not to allow the postal service to break up into four. What I'm worried is that basic postal services in the rural areas are at risk of closure if the reforms are not done is a delicate manner.
As someone who lived for years in Japan and has seen the crushing inefficiencies of the Japan Post behemoth first hand, I thoroughly applaud Koizumi's attempts to drag it kicking and screaming into a more competitive state of being. The political elite in Japan need to accept things have to change, and need to be woken from their smug complacency. Koizumi has the right idea - things will have to get worse before they get better, and the very fabric of Japanese society needs to change if the Japanese people wish to avoid becoming the next Argentina.
Ed Fitzhugh, London, England
At last someone has said that privatisation is not the panacea for economies. I am sure the stock market gamblers and asset-strippers are disappointed.
Martin, Accrington, UK
Japan needs to change its image and society. Rejection is really a major blow to the Japanese economy. I see many unwanted post offices in Japan. They should slim down the post offices and reduce cost. We can see how the JR (Japan Railway) improved by becoming a non government firm.
D.R. Vinay Kumar, Tokyo, Japan
It is indeed a relief to many here in Japan that Mr Koizumi's selfishness is coming to an end. He has shown no compassion for the weak, or sensibility for Japan's Asian neighbours. He has fallen under the spell of Mr. Bush's unilateral policies, which are unpopular with most Japanese. Reforms in Japan will go on but the Japanese way and will not follow the will of the Bush administration.
Richard Meikl, Nagoya Japan
Japan Post has been integral to the LDP's vice-like grip on power since the end of World War II, by mobilising the conservative rural vote and underwriting the vast, wasteful public works spending that has led to the concretisation of Japan. But its sale would alter the social fabric of the countryside and result in massive job losses. It's as if Japan Post is one huge pillar of a welfare state. A snap election may punish not only Koizumi for attempting the sale, but the LDP for resisting it.
Russell Ward, Tokyo
Koizumi is absolutely right: only by confronting protectionism in this own country - including within his LDP party - is there any serious chance of reviving the Japanese economy. The opponents of liberalisation now have to face the consequences.
Prime Minister Koizumi was trying to make fundamental reform to a Japanese institution, the Postal Bank, that has served as a vote getter and dispenser of patronage and pork-barrel, particularly in rural areas. What this vote illustrates to Koizumi is that reform can easily be resisted by those who do not want change. Unfortunately, reform lost, and the status quo won.
Eric Otiende, Denver, Colorado, USA
It's a disaster. It locks the Japanese economy into the kind of ossification that almost destroyed the UK economy in the 1960s and 70s. Just as badly, it will turn Japanese people even further away from the democratic process. Don't expect anyone much to bother voting in the September election.
Ian Richards, Osaka
The best thing that can now happen in Japan is an election which the Liberal Democratic Party lose, and through its members' blinkered determination to hold onto support in rural communities, they are well on the way to making that possible. Sooner they are out of power, the better.
Simon Foston, Kagoshima, Japan
A bit of a shock - a bit drastic too. It's a shame the chance for a reform geared to changing world trends has not been more acceptable to a greater majority in Japan.
The current system can breed corruption and is holding back Japan's private sector. If Japan cannot get this reform done, then what hope is there of Japan completing the reforms its needs in order to be able to compete against other countries like America, India, South-east Asia and China.
Adil Certel, London
The problem is not whether privatisation is right or wrong. We are worried about his way and his lack of sensibility as a leader. He will stop at nothing to follow Bush administration. His dream is to make Japan a country like the USA. We should realize that we are a country in Asia and that we have different history and tradition than the USA. We should think about what we can do in international society as a country respected by Asian neighbours. Now is the time we should change our leader.
Shinichi Koriyama, Kyoto, Japan
I have yet to hear a persuasive argument of how privatisation of this (or other many examples) will actually make things better for the national good, rather than for lining the pockets of vested interests. And why do so many foreign observers refer to Japanese public projects as 'pork-barrel concreting and bridges to nowhere' etc, while similar examples in Europe and elsewhere are all 'wondrous' projects, despite the fact that construction costs in Western Europe (and the UK in particular)are often now often much higher and bloated than in Japan. I wonder, which country is really stable in the long run. One that still has a manufacturing base and basic home-grown technology, or one that relies on stock-markets and media marketing, etc.
Mark, Tokyo, Japan
While postal reform is undoubtedly a positive thing for Japan, Koizumi should have gone about securing votes in a more diplomatic manner, by working on presenting a better case for reform, instead of repeatedly threatening to disband the lower house of parliament if things did not go his way. His untactful, rather arrogant approach seems to indicate that he cares more about his legacy as a prime minister than enacting real reform.
It would seem that the already faltering Koizumi bandwagon has now hit a brick wall, just as the Japanese economy appears on track for sustainable recovery. This is less about the pros and cons of post office privatisation (it is unquestionably a good and necessary thing) than increasingly bitter LDP infighting. Consequently, an election in which the LDP suffers a proper drumming may precipitate its break-up along progressive/conservative lines which in turn could usher in a new era of welcome fluidity in Japanese politics. I'm not holding my breath, however, as old school LDP grandees are nothing if not seasoned backroom dealmakers adept at saving their own skins over and above the good of the country. Instead, expect frantic efforts to reach a limp and disappointing compromise.
Andy, Bath, UK
P M Koizumi did not take time to explain his policy to the people in the street. Then he sounded like Bush - you are with me or not. If he tackled and ironed out the highway and pension problems then I am sure his postal reforms would have been accepted. People in the streets are worried about their pension. People in the streets are worried about the rich get rich political attitude. The people in the street are worried that politicians and their cronies never end up in prison for all their wrong doings. Koizumi does not understand the reform the people in the street need. The post office reform is another pork barrel reform.
Thomas C Kantha, Osaka Japan
The unemployment rate in Japan is artificially low, due to massive public spending on unnecessary public works such as roads and bridges that lead to nowhere, unused multi- purpose event halls, airports located in the middle of nowhere, museums etc. Even most of the coastline and the country's river banks have been concreted over as well as many mountain sides! The money for public construction is underwritten by the Post Office. Such work employs a sizeable percentage (20-30%) of the rural population and this helps the LDP to stay in power.
The wider problem here is that the politicians have too many financial incentives to maintain the current system.
Ciaran Starrs, Aichi, Japan
I salute the Japanese People for showing to the world that their policies can not be moved by external pressures specifically that of the Bush Administration. Asia must be united together we can be the strongest trading bloc.
C B, Manila, Philippines