TRADE FRICTION THREATENS TO TOPPLE NAKASONE Prime Minister Yasuhiro Nakasone may have been dealt a fatal political blow by the yen's renewed rapid rise and the threat of a trade war with the United States, political analysts said. Nakasone, already under fire over an unpopular tax reform plan, may now be forced to resign before the June economic summit of seven industrialised nations if local elections later next month go against candidates from his ruling Liberal Democratic Party (LDP), they said. "The close relationship between Nakasone and President Reagan was an important element of Nakasone's power base," Waseda University Political Science Professor Mitsuru Uchida told Reuters. "So the emergence of U.S. Criticism damages Nakasone." Even before the latest trade friction flared, Nakasone was encountering criticism not only from opposition parties but also within his own LDP over his proposal to levy a sales tax. "Many factions within the LDP are distancing themselves from Nakasone," Uchida said. "His position within the LDP itself is not so strongly established today." Nakasone, who has been more popular with the general public than with many LDP members, is now seeing his public support eroded, the analysts said. The yen's rise to record highs and the U.S. Threat on Friday to impose tariffs on Japanese electronics goods in retaliation for Japan's alleged violation of a microchip trade pact are now giving Nakasone's critics fresh ammunition, the analysts said. "Apparently the special relationship between Reagan and Nakasone hasn't worked effectively," Rei Shiratori, director of the Institute for Political Studies in Japan, said. This is making the Japanese people doubt Nakasone's credibility, Shiratori told Reuters. The cumulative impact of the sales tax issue, the yen's rise and mounting trade friction could mean serious LDP losses in the April 11 and 26 local elections, analysts said. "If the elections go against the LDP, Nakasone may have to resign early," Shiratori said. But Nakasone still has a chance to soothe U.S. Tempers before or during his week-long Washington visit from April 29, some analysts said. However, "unless the Japanese political system can move more quickly to give Nakasone some nice present to take to Washington on smouldering trade issues, he will face a very hostile audience," said Merrill Lynch Securities economist William Sterling. "If the trip is a major disaster, it would seem to put the final nail in his coffin," he said. Reagan's own weakened domestic position, and growing Republican as well as Democratic anger with Japan, argue against a quick settlement to the trade dispute, the analysts said. But a desire on both sides to find some solution, coupled with uncertainty at home and abroad over likely successors to Nakasone, could still lead to an attempt to paper over the differences and aid Nakasone, they said. "One factor against a trade war may be that Washington is not anxious to push Nakasone into his grave," Sterling said.