Rift Over Reform Could Imperil Miyazawa’s Rule : Japan: Beleaguered premier faces rebellion in his party, threat of no-confidence move as he decides issue.

TOKYO —  Facing a rebellion in his own ruling party, threats by the opposition of a no-confidence motion and hints of his own resignation, Prime Minister Kiichi Miyazawa today was expected to abandon a pledge to carry out sweeping political reforms.

In a meeting with the Liberal Democratic Party’s four top operating executives Tuesday night, Miyazawa was reported to have doomed reform by agreeing to drop efforts to reach a compromise with opposition parties. With his party lacking a majority in the upper house of Parliament, a compromise is the only way any reform bill can be enacted.

Although Miyazawa favored compromise, the party executives insisted that a majority of his party in Parliament opposed it.

Only two weeks ago, Miyazawa declared that “reform must be carried out in this session (of Parliament), whatever the cost. I will do it. I have never told a lie.”

Failure to act in the current session of Parliament, which ends Sunday, would destroy both the momentum for reform and the time needed to carry it out before the next lower house election, which must be held by February.

Reacting to rising prospects for political instability, the Tokyo Stock Exchange today dropped below the benchmark 20,000 level for the first time in a month and a half. It finished morning trading at 19,909.65, down 136.23 points from Tuesday’s close.

Earlier Tuesday, 128 reform-minded lower house Liberal Democrats set up an informal “league” to demand reform and harassed members of the party’s general affairs board as they were about to rubber-stamp a no-reform decision.

“Politicians must act with sound judgment,” shouted Takayuki Sato, chairman of the board, shaking his finger in rebuke at reformist legislators who blocked his way. Sato, who was convicted in 1982 of accepting a $6,667 bribe from Lockheed Corp., is one of the leading opponents of reform.

Reformist Hajime Ishii said the expected decision marks the second time in two years that the Liberal Democrats have gone through a pretense of carrying out reform.

The Liberal Democrats made a reform proposal in 1991 that they knew had no chance of being enacted; in April, the party submitted bills to control political spending and replace Japan’s multi-seat constituencies with single-member districts.

With single-seat districts, the ruling party would win 80% or more of the seats in the lower house, political analysts said.

Justice Minister Masaharu Gotoda, Miyazawa’s close ally, suggested that Miyazawa would resign to assume responsibility.

“The prime minister is both head of the (ruling) party and the government. . . . I believe the prime minister himself is thinking of that responsibility,” Gotoda said at a news conference Tuesday.

Aides of the prime minister were quoted as saying that Miyazawa already has resolved to “assume responsibility” after hosting the summit of leaders from the Group of Seven (G-7), the world’s most industrialized nations, that will be held here July 7-9. Russian President Boris N. Yeltsin also will come to Tokyo to meet the leaders from Japan, the United States, Canada, Britain, France, Germany and Italy.

Three opposition parties threatened to put Miyazawa through a no-confidence vote.

If such a motion is submitted and supported by ruling party reformists, it would pass and probably force Miyazawa to call a general election for the lower house.

The current push for reform came in the wake of a series of scandals dating back to 1988 that was capped by the arrest of the party’s vice president, Shin Kanemaru, 78, on charges of tax evasion.