By Linda Sieg
TOKYO (Reuters) - Japanese Prime Minister Shinzo Abe, fresh from a strong election victory, vowed on Monday to stay focused on reviving the stagnant economy and sought to counter suspicions he might instead shift emphasis to his nationalist agenda.
The victory in parliament's upper house election on Sunday cemented Abe's hold on power and gave him a stronger mandate for his prescription for reviving the world's third-biggest economy.
At the same time, it could also give lawmakers in his Liberal Democratic Party (LDP), some with little appetite for painful but vital reforms, more clout to resist change.
"If we retreat from reforms and return to the old Liberal Democratic Party, we will lose the confidence of the people," Abe told a news conference on Monday.
He emphasized that his priority remains proceeding with his "Abenomics" program of hyper-easy monetary policy, government spending and economic reform, describing it as the cornerstone of other policy goals.
"It is not easy to overcome 15 years of deflation," Abe said. "It is a historic project. We will concentrate on that. We won't be able to strengthen the financial base for social security without a strong economy. The same goes for security and diplomacy."
Abe's LDP and its coalition partner, New Komeito, won 76 of the 121 seats contested. Along with seats that weren't up for election, the bloc now has a commanding 135 seats in the 242-seat upper chamber.
The win also raises the chances of a long-term Japanese leader for the first time since the reformist Junichiro Koizumi's rare five-year term ended in 2006.
It also ends a parliamentary deadlock that began in 2007 when Abe, then in his first term as premier, led his party to a humiliating upper house defeat that later forced him to resign. The LDP remains short of a majority on its own.
Ever since Abe stormed back to power with a big win in a December lower house poll, some - including Japanese businesses with a big stake in the matter - have worried the hawkish leader will shift focus to the conservative agenda that has long been central to his ideology.
That agenda includes revising the post-war pacifist constitution, strengthening Japan's defense posture and recasting Tokyo's wartime history with a less apologetic tone.
Despite the hefty win, Abe's mandate was undercut by low voter turnout, with 52.61 percent of eligible voters casting ballots, more than 5 percentage points below the turnout in the last upper house poll in 2010. That could keep up pressure to stay focused on the economy.
For now, many experts suggest, Abe will stick with economic matters as he tries to beef up his so-far disappointing economic reform plans. He also confronts a decision on whether to go ahead with raising the 5 percent sales tax to 8 percent next April, part of a planned doubling by October 2015 aimed at reining in Japan's massive public debt.
"My understanding is that Abe-san has three faces: Abe as right-wing, Abe as a pragmatist, Abe as the economic reformer," said Shinichi Kitaoka, president of the International University of Japan. "He has been showing the third face so far and will try to do the same after the election."
Still, Abe is moving towards security policy changes that mark a big shift in a country that has prided itself on pacifist ideals even as it built up a military bigger than Britain's.
Abe reiterated on Monday that he wants to debate changing a self-imposed ban on exercising the right of "collective self-defense", or aiding an ally under attack.
The ban means Japan would be unable to intercept an enemy missile fired at a U.S. navy ship, Abe noted, which he said would call into question the U.S. alliance itself.
Abe's government is also reviewing the possibility of acquiring a preemptive strike capability and creating a Marine force to protect remote islands such as those at the core of a territorial row with China.
One clue to how Abe intends to proceed on the touchy topic of wartime history will be whether he visits the Yasukuni Shrine for war dead, where Japanese leaders convicted as war criminals by an Allied tribunal are also honored, on the emotive August 15 anniversary of Japan's defeat in World War Two.
A pilgrimage to the shrine would outrage China, where bitter memories of Japan's past militarism run deep, and upset Washington, which fears a further fraying of Tokyo's already fraught relations with its neighbors.
Abe moved quickly to improve ties with China and South Korea at the start of his first 2006-2007 term but it is unclear whether he will repeat that success in his second.
He has since taken a tougher stance towards Beijing, but reiterated on Monday his "door is always open" to diplomacy.
Ties between China and Japan have been seriously strained by territorial rows and feuds over wartime history. Concerns are simmering about the risk of an unintended clash near disputed isles in the East China Sea where Japanese and Chinese vessels have been playing a cat-and-mouse game for months.
"In that environment, something could go wrong," said Michael Green, Japan Chair at the Washington-based Center for Strategic and International Studies. "That's the Black Swan."
Abe again said he wants to revise the 1947 constitution, drafted by U.S. occupation forces after Japan's defeat and not altered since, although he made clear that was a long-term goal.
Conservatives see the constitution as not only restricting Japan's right to defend itself but as responsible for eroding traditional mores such as duty to the state.
The LDP and smaller parties that also favor revising the constitution failed to obtain the two-thirds majority required in both houses before a constitutional revision can be put before the government in a referendum.
The LDP's coalition partner is cautious about changing the charter's signature war-renouncing Article 9 which, if taken literally, bans maintenance of armed forces.
Sunday's election also left many wondering about the future of a competitive two-party democracy in Japan.
The opposition Democratic Party of Japan, which surged to power in 2009 only to be ousted last year, suffered its worst drubbing since its founding in 1998.
(Writing by Linda Sieg and William Mallard; Additional reporting by Kaori Kaneko, Kiyoshi Takenaka and Leika Kihara; Editing by Paul Tait)