Tokyo

PRIME Minister Shinzo Abe's government on Monday sought to put behind it the worst of a suspected cronyism scandal that has clouded Mr Abe's chances for re-election, as his finance minister said he'd give back a year's salary but not quit.

Mr Abe's ratings have been on a roller coaster since last year, when the public learnt of the heavily discounted sale of state-owned land to a school operator with ties to his wife. Questions also arose over government approval for a new veterinary school by another educational body run by a friend of Mr Abe.

The prime minister has denied any wrongdoing by himself or his wife, Akie.

Finance Minister Taro Aso said on Monday he would voluntarily return his salary and apologised for his ministry's handling of documents related to the land sale to school operator Moritomo Gakuen. But he said he planned to stay in his job.

Opposition leaders were not impressed.

"This has confirmed that PM Abe bears grave responsibility," said Democratic Party for the People leader Yuichiro Tamaki, as quoted by Kyodo news agency.

But Mr Abe's allies hope he can now draw a line under the controversies that have weighed on his aspirations and agenda. Ruling party members support him for stability's sake, business leaders like his "Abenomics" policies, and rivals have so far failed to catch the imagination of the public.

That may allow Mr Abe to win a Liberal Democratic Party leadership race planned for September, despite persistent voter doubts about the scandals, analysts and several political sources said.

"The view that Abe and his wife have lied has spread quite a bit," said a governing coalition source. "But if one thinks about replacing Abe, there is the question, who else could run a stable government?"

Just what Mr Abe will achieve if he wins another term remains unclear, including whether he can change Japan's post-war, pacifist constitution.

"His true goal is to revise the constitution, but his coalition partner is not keen, and with local and upper house elections next year, it will be difficult," said the source. "He'll focus on the economy and foreign policy."

Allies are betting that Mr Abe's ratings have bottomed out. In the most recent Nikkei business daily survey, 42 per cent of respondents supported Mr Abe. The Mainichi newspaper put his support rate at 31 per cent.

For now, his backing inside his party matters most.

"Almost all the stakeholders in the Abe administration want him to stay. It's up to the LDP, not the public," said Tomowaki Iwai, a political science professor at Nihon University.

"If his ratings fell to 20 per cent or lower, then there could be moves. But for now, his support inside the LDP is high."

Mr Abe's challengers have so far failed to benefit from his lacklustre public support.

Telegenic lawmaker Shinjiro Koizumi, whom at 37 is viewed as too young to run, topped general voters' list of politicians favoured to be the next premier, with 28 per cent versus Mr Abe's 24 per cent in the Nikkei survey. But Mr Abe came in first among LDP supporters, with 45 per cent versus 21 per cent for rival Shigeru Ishiba, a former defence minister.

Mr Abe and Mr Aso cleared a key hurdle when prosecutors decided last week not to charge former finance ministry official Nobuhisa Sagawa with breach of trust. He was in charge of the ministry division that altered documents involving the land sale to Moritomo Gakuen. A civil group plans to appeal that decision.

Mr Sagawa resigned as head of the National Tax Agency in March. Opposition parties are still calling for the resignation of Mr Aso, whose support Mr Abe needs to win another term. But the 77-year-old Aso, who also is deputy prime minister, is unlikely to bow to pressure, analysts and political sources said.

On Monday, the finance ministry said it would reduce Mr Sagawa's retirement pay and punished other officials involved. But some analysts said the scandals would keep dogging the government.

"It's like a slow death," said Sophia University professor Koichi Nakano. "Turning a new page, hitting bottom - I'm not so sure." REUTERS