Okinawa shows vulnerability of Japan PM's popular appeal By Nathan Layne NAHA, Japan (Reuters) - Masatoshi Onaga says Japanese Prime Minister Shinzo Abe is out of touch with Okinawa, one of Japan's poorest prefectures and the reluctant host to half the U.S. forces in the country. To understand the island's pain, Onaga would like to see Tokyo-based leaders try living in the shadows of the Futenma air base, a facility targeted for closure since 1996 because of its location in a densely populated area, with warplanes taking off and landing over surrounding houses, hospitals and schools. "The central government has no idea how serious the situation is here," said Onaga, 64. The problem for Abe is that Onaga is not a banner-waving activist. He is the local head of Abe's own Liberal Democratic Party, and his opposition to the relocation of Futenma within Okinawa highlights a rift within the ruling party and a reminder that some of Abe's hardest work is ahead. Okinawa, which handed the LDP one of its few defeats in last month's upper house election, represents a microcosm of the hurdles facing Abe. From sugar farmers who fear the trade treaty will wipe out their crop to small business owners who feel the economic upswing is helping big mainland companies most, Okinawa offers a glimpse of what serious Abe opposition looks like. Abe, who took power in December and strengthened his mandate with the LDP's decisive victory in the upper house poll, remains popular on a national scale with approval ratings above 50 percent. He has enjoyed early success because of "Abenomics," a combination of aggressive public spending and monetary easing that has kick-started economic growth. But with the opposition in disarray and no need to face voters for several years, elements within the LDP are starting to dig in their heels on issues important to Abe's reform agenda, including a multilateral trade treaty. The opposition to Abe in Okinawa can be especially fierce. Many residents are angered by the Abe administration's continued support of a plan to relocate Futenma to the island's more remote Henoko district on reclaimed land, despite local political opposition to the move. There are two looming events that could turn Futenma into a pressing problem for Abe and rattle the U.S.-Japan security alliance at a time when it is being tested by tensions with China over disputed islands in the region. Okinawa Governor Hirokazu Nakaima will decide whether to grant Tokyo permission to reclaim stretches of the Henoko coast, located within the electorate of Nago town, as early as November, a step toward building the air strip. A mayoral election in Nago, in which a strident opponent of the plan is the incumbent, is set for January 2014. Abe could force the issue by seeking to pass special legislation. Even if Nakaima grants approval for reclamation, the central government will find it very difficult to move the project forward, Nakaima's top aide said. "There would be mass protests," said the aide, Susumu Matayoshi. The next several months will be marked by intense back-and-forth between Okinawa and the central government on this. Matayoshi said the worst outcome for Okinawa would be continued use of Futenma, a risk if no progress is made on finding an alternative solution. It's not as if Okinawa isn't benefiting from Abenomics. Kokusai Street, a major thoroughfare in the capital of Naha, is bustling with summer tourists. The jobless rate fell to 4.9 percent in June, below 5 percent for the first time in 18 years and narrowing the gap with the national average of 3.9 percent. The LDP's election defeat underlines the importance of Futenma for Okinawa people who believe they bear an unfair burden of the U.S. bases, a legacy of the battle on the island in World War Two and the U.S. occupation that lasted until 1972. Anger over the military presence flared after the rape of a 12-year-old girl by three U.S. troops in 1995, and a series of incidents since then has kept tensions high. By area, the Okinawa government says it hosts 74 percent of bases used exclusively by the U.S. military in Japan, and nearly a quarter of all bases, including those shared with Japanese troops. Many want the mainland to share more of that burden, starting with Futenma. Keiko Itokazu, a firebrand independent, beat the LDP challenger to retain her upper house seat by tapping that distrust. She also railed against the deployment of more M-22 Osprey aircraft to Futenma, a move Abe has supported. The August 5 crash of a U.S. military helicopter in Okinawa gave fresh ammunition to critics who say the bases aren't safe. "The people of Okinawa have shown their will in this election," said Itokazu, who was also critical of Abe's economic policies during her campaign. "If safety is important then take the base back to America," she said in an interview. Why can't the Japanese government say that on our behalf? Not everyone in Okinawa goes that far. Itokazu's margin of victory narrowed from the previous election to about 33,000 votes overall. She took Nago, the town that would host the relocated air base, by just 151 votes. The U.S. and Japan have taken steps to reduce the U.S. military footprint, including a plan to move several thousand Marines from Okinawa to Guam. Robert Eldridge, an Okinawa-based government and external affairs official for the U.S. Marines, says there is a "silent majority" that understands or supports the military's role on the island, including the positive economic impact of the bases. "The perceptions that exist aren't necessarily a reflection of the reality," Eldridge said. Masayoshi Kiyoda, who owns a general store close to the Henoko coast, says he is typical of others in his community who were resigned to accept the relocation plan until 2009 when Yukio Hatoyama, then head of the Democratic Party of Japan, promised to find a site off the island. Hatoyama later retreated from that pledge. But the genie was out of the bottle and "outside Okinawa" became the prevailing political stance. "For me, a new facility in Henoko would mean more people and more business for my store," said Kiyoda, who gets most of his customers from neighboring Camp Schwab. But I don't support it. Relocation outside of Okinawa is the best solution Despite a steady stream of development aid and base-related revenues, parts of Nago appear run down, dotted with dilapidated and shuttered stores. At the last tally in 2010, the town of 62,000 people had an unemployment rate of 11.2 percent. Okinawa has worked to lessen its dependence on the bases. The government estimates that parcels of land returned by the U.S. military and redeveloped are generating between 10 and 200 times more in revenue. It has also had success in luring call centers and pushing the island as a logistics hub. Okinawa will also be a key battleground for farmers opposed to Abe's move to join the Trans Pacific Partnership trade agreement. The prefecture warns that a trade deal would decimate sugar production and halve revenue from agriculture and fishing. Kazunori Hokama, a 36-year old pineapple farmer, said he had voted for an opposition candidate in last month's upper house election because Tokyo was ignoring Okinawa's views on the U.S. military presence. "I wonder if the government is ready to listen to the Okinawa people now," Hokama said. As Abe goes about tackling vested interests to implement his reform agenda he is likely to hear a similar call to be heard from competing voices across Japan. Editing by Mark Bendeich