For most of the postwar period, Japan has been a paragon of political stability among industrial democracies. Since the formation of the conservative Liberal Democratic Party (LDP) in 1955, Japan has enjoyed remarkable political continuity. With the exception of less than a year of opposition government in the early 1990s, the LDP has ruled Japan for more than half a century.

This past summer, following the July elections for the Upper House of Japan's parliament (the Diet), Japan entered a new era of political uncertainty. The opposition Democratic Party of Japan (DPJ) won control of the Upper House in a stunning defeat for the LDP. For the first time, control of the Diet is split--the ruling coalition of the LDP and the Komeito Party still control the lower house that determines the formation of the government. Passage of basic legislation now gives rise to intense political battles. There is widespread anticipation that the LDP will be forced to carry out early elections for the lower house next spring, opening the door to the possibility that the opposition could come to power in Japan.

The election results surprised many observers, who were blinded by the LDP's massive victory in the 2005 lower house elections, under the leadership of then-Prime Minister Junichiro Koizumi. Koizumi had called a snap election around the issue of reforming the postal savings system, but that success was an aberration from a long-term trend of declining support for the LDP that grew during the 1990s. Increasingly, Japanese saw the party as a hostage to special interests and their allies in the bureaucracy who have used the budget to fund wasteful pork barrel projects--Japan's own "bridges to nowhere"--particularly in rural areas. Younger urban and suburban voters who favor deregulation and reform had come to see the LDP as an obstacle to needed change.

Koizumi, who came to power as prime minister in 2001, single-handedly reversed this downward trend of support. He developed a strong personal following, an appeal that came in large part from positioning himself as a maverick reformer who ran against his own party and against the opposition in equal measure. His five years in office were a testament to his charisma and ability to rise above the system that brought him to power.

Unfortunately for the LDP, this appeal does not seem to extend beyond Koizumi. After leaving office in 2006, he was replaced by Shinzo Abe, an LDP conservative who typified the party's long history of rule, in that he is the grandson of a former prime minister and the son of a former cabinet minister. Abe's policy agenda largely ignored the concerns of Japanese voters about the failing social welfare system and the impact of global competition, and instead favored conservative themes such as "patriotic" education and the revision of the postwar American-imposed constitution.

Voters decisively repudiated Abe, his agenda, and his party in the Upper House vote. The opposition DPJ, led by the wily former LDP leader Ichiro Ozawa, emphasized economic reform, as well as relief for those in rural and urban Japan who are falling behind. The DPJ's election manifesto focused on pension reforms--bolstered by a scandal of tens of millions of lost pension records--price supports for farmers, subsidies for families with children, and a crackdown on wasteful government spending.

The election result triggered Abe's resignation and in September 2007, he was replaced by his LDP rival Yasuo Fukuda. The new premier has managed, temporarily, to halt the massive slide in the government's support. Ozawa's mistakes have helped in this task. The DPJ, mainly for reasons of the legislative calendar, chose a foreign and security policy issue--the reauthorization of Japan's naval mission in the Indian Ocean in support of the U.S.-led "war on terrorism"--as the first test of strength. The DPJ has opposed this mission, arguing that Japan should not deploy forces overseas except in support of United Nations authorized operations.

This water was further muddied when Ozawa emerged from a series of meetings with Fukuda to announce his support for a deal on the maritime mission, tied to the formation of a "grand coalition" to govern Japan. The coalition proposal was reportedly offered by Fukuda and seemed to acknowledge the LDP's weakness. Ozawa's willingness to embrace this deal puzzled most observers and his own party repudiated him. Over the span of a few days, Ozawa resigned his party leadership and then agreed to come back to the post after issuing a public apology for his actions. Polls show that Ozawa suffered a significant loss of support from a public that is increasingly eager for change. But Fukuda is also very vulnerable. Among other things, the LDP is now stung with a growing scandal over questionable deals with defense contractors.

The Japanese Diet and political scene are now poised for months of battles over a range of policy issues, most of them related to domestic policy and the budget, rather than foreign policy. The DPJ, with a chastened Ozawa back at the helm, is apparently ready to use its control of the Upper House to challenge the ruling party coalition. Political uncertainty is now likely to be a dominant feature of Japanese life for months, if not years, to come.