The Democratic Party of Japan (DPJ) will stay in power no matter who wins the upper house poll by virtue of its majority in the lower house, but it needs a decisive win in the upper chamber to smooth policymaking, including work to cut huge public debt.
Many DPJ lawmakers have called for an early poll to capitalize on a big leap in voter support after Kan took over the leadership from unpopular Yukio Hatoyama, who quit last week after just eight months in office.
But the DPJ's small coalition partner, the People's New Party (PNP), has insisted that a controversial bill to roll back privatization of the postal system be passed in the current session of parliament, in a move that would require the session to be extended.
Extending the session for about two weeks beyond its original end on June 16 would likely push back the election to July 25.
A senior DPJ official sought to compromise with the PNP, saying the bill could be enacted after the election.
"It would be best if we can have the PNP agree on a plan to make the the bill our highest priority in the extraordinary session of parliament that follows the upper house election," Azuma Koshiishi told reporters.
A senior PNP official had said on Wednesday that his party might leave the coalition if the bill is not enacted, in line with an agreement between Kan and outspoken PNP head Shizuka Kamei.
But Kamei, who is also banking minister, declined to comment to reporters on Thursday when asked if his party would bolt if parliament did not pass the bill before the election.
BLUFFING?
An earlier election would likely boost the Democrats' chances in the upper house election, analysts said, although it remains unclear if they can win a majority on its own.
About 40 percent of voters intend to cast their ballot for the DPJ in the election, newspaper polls showed on Thursday, a sharp rise from about 20 percent in Hatoyama's final days.
Analysts also played down the threat of the PNP leaving the ruling coalition since Kamei and his tiny party, who favor big spending to revive the economy, need the Democrats to push their policies.
"They are bluffing. They will probably compromise in the end but they need to show that they are fighting to the end to get the postal bill passed, so that post office chiefs will vote for them," said Tomoaki Iwai, political science professor at Nihon University, referring to the PNP's main support group.
The PNP, with just nine members in parliament, was formed by Kamei in 2005 when he and others bolted the then-ruling Liberal Democratic Party to protest a plan to privatise the postal system.
PNP lawmakers need the support of a powerful postal workers union that is opposed to privatization, and that would also provide backing for DPJ candidates in the election.
But some in the Democrats are wary of the postal bill, which the financial industry says could lead to the postal system's banking and insurance services eating into their market share.
The United States and Europe also said last month that the draft postal reform legislation had not addressed their concerns about what they see as the preferential treatment that Japan Post receives compared with private-sector companies.
