By Elaine Lies

TOKYO (Reuters) - Japan's government is pulling out all the stops to ensure a candidate backed by the ruling party wins an mayoral election in the Okinawan city hosting a U.S. airbase whose planned move elsewhere on the island has set Tokyo and Okinawa at odds.

To help the incumbent's chances at Sunday's poll, Prime Minister Shinzo Abe's government has dangled prospects of a bigger budget for Okinawa, backing for a Disney resort and aid for impoverished children in Japan's second-poorest prefecture.

Defeat would galvanize resistance to moving the Futenma base to the less populated Henoko area as agreed with the United States two decades ago.

The opposition candidate in Ginowan, like Okinawa's governor and many island voters, resents hosting the majority of U.S. troops in Japan and wants the base off Okinawa altogether.

The controversy poses headaches for Abe, six months ahead of elections for Japan's upper house, as close U.S.-Japan ties are regarded as crucial given China's increasing assertiveness in the region and North Korea's unpredictability.

"The central government always just talks about security and the U.S.-Japan alliance, giving the sense they aren't thinking seriously about Okinawa's benefit," said Tomoaki Iwai, a law professor at Nihon University in Tokyo.

"There is a sense of money being used as a sweetener."

Tokyo said in December it would boost Okinawa's budget by 1 billion yen ($8.5 million) to 335 billion for the fiscal year starting in April, having cut it last year in reaction to the election of anti-base governor Takeshi Onaga.

Ginowan's mayor, Atsushi Sakima, has played up his ties to Abe's government, and the ruling Liberal Democratic Party has sent Shinjiro Koizumi, a telegenic lawmaker who is popular with unaffiliated voters, to campaign for him, along with the cabinet minister for Okinawa.

"The incumbent appears in the lead, but his opponent is catching up ... There is some doubt about whether the government-offered 'services' are helping," said Katsuhiko Nakamura, executive director at Asia Forum Japan, a think tank.

If the LDP's favored candidate does hold onto the mayorship in Ginowan, it won't remove all the hurdles to relocating the base.

"I don't think if the incumbent wins that it is a vote of support for the Henoko relocation, it is just a vote in favor of getting rid of the base and getting a Disneyland in its place," said Gerry Curtis, Burgess Professor Emeritus at Columbia University.

"But if the opposition wins it is a huge defeat for Abe."

To Learn More:

Okinawa Governor Halts Construction of U.S. Marine Corps Air Base (by Steve Straehley, AllGov)

Hundreds in U.S. Military Guilty of Sex Crimes in Japan got Slap on Wrist (by Noel Brinkerhoff, AllGov)

Japanese Government Agrees to Spend $3 Billion to Boot U.S. Marines out of Okinawa (by Noel Brinkerhoff, AllGov)