The resignation this month of Japanese Prime Minister Shigeru Ishiba has thrown the government into a new round of turmoil—at a point when a chaotic global order needs a stable response from Tokyo.
Ishiba said he was stepping down to take responsibility for a dismal showing by the ruling Liberal Democratic Party (LDP) in July elections for the upper house of parliament. He was following in the footsteps of numerous previous leaders, including Prime Ministers Taro Aso, who stepped down after a parliamentary defeat in 2009, and Shinzo Abe, who resigned from his first term after similarly dismal election results. Such setbacks are not permanent in Japanese politics. Abe would return in 2012 to serve for nearly eight years, making him the longest-serving prime minister in the country’s history.
Japanese leadership can seem like a revolving door, with most prime ministers out of office before other global leaders could even know who they were dealing with. But this is not a new phenomenon for Japan—and sometimes it can be a helpful one.
It has, for example, helped to ensure that the LDP has remained in power for roughly 64 of the past 70 years, since its founding in 1955, in what can be best described as consensual one-party rule. The party’s method has been to ruthlessly oust any leader who falls too sharply in opinion poll ratings. While there is no fixed number, any support level below 30 percent is considered a danger zone. Ishiba’s latest figures have ranged from 21 percent to 30 percent after the July polls.
The decision still leaves his LDP, which has dominated postwar Japanese politics, in something of a mess. The party will hold an internal vote on Oct. 3-4 with participation by LDP lawmakers, along with representation by individual party members in each region of the country. The front-runners represent the usual suspects, all of whom failed in their own bids to become leader in the 2024 elections.
Former Minister for Economic Security Sanae Takaichi leads the pack, but with strong nationalist views, she would also be the most controversial choice. She is backed by party heavyweights on the right, including Aso, and was a protégé of Abe. With this support, she ran a close second to Ishiba in the party election last September.
On the other hand, Takaichi is just as strongly disliked among the more moderate parts of the party for views such as a revisionist position on whether Japan was to blame for World War II and her criticism of official Japanese apologies made in the past. Her selection would make her Japan’s first-ever woman to serve as prime minister and an example of the “Thatcher rule”—the idea that women tend to get to the top from the right rather than the left.
The other top contender is Agriculture Minister Shinjiro Koizumi, who represents the “new generation” of LDP lawmakers. Despite this, he continues at least one traditional element: political dynasties. At 44 years old, he is telegenic and benefits from his highly popular father, former Prime Minister Junichiro Koizumi, who—along with Abe—is one of Japan’s few former leaders to have lasted beyond the two-year average term.
Shinjiro Koizumi has had a high profile as agriculture minister, taking the post in May just as the nation was hit with a sudden shortage of rice. The accompanying surge in prices added to already simmering inflation and, at an emotional level, was a shock to a nation where rice has a near-sacred role in culture.
Rounding out the top candidates are chief cabinet spokesman Yoshimasa Hayashi and party veteran Toshimitsu Motegi. The smooth and temperate Hayashi, a former foreign minister and fluent English speaker (a rarity in the Japanese elite) would represent the country club choice as a steady pair of hands. Motegi, also a former foreign minister, is more pugnacious but is also seen as the best choice to spar with U.S. President Donald Trump and his acolytes.
But there is also a view in Japan that the actual prime minister doesn’t matter all that much in a system of collective leadership where figures behind the scenes wield considerable power, mainly by heading factions within the party made up of lawmakers who are loyal to their boss. Former Prime Ministers Yoshiro Mori and Aso, who each lasted just a year in office and resigned as their support plummeted, enjoyed considerable power post-resignation despite their ignominious departures.
In addition, with political power ebbing and flowing, Japan’s senior bureaucrats have wielded considerable power that would make the supposed U.S. “deep state” envious. It was the country’s team of front-line policymakers who are credited with transforming the country into an economic powerhouse after World War II.
But the LDP is today grappling with signs that this postwar model may be at risk, with voters less willing to accept leadership from above. This was much in evidence from the July election, which was for one-half of the seats in the upper house of Japan’s parliament. While the chamber is the less powerful of the two, it is often seen as an indicator of public mood.
The poor showing left the LDP without a majority in either house, even with the added support of its religious-backed coalition partner, Komeito. The ruling coalition now has 121 of the 248 seats in the upper house and just 220 of the 465 seats in the lower house, making its grasp on power tenuous and requiring it to build some sort of cooperation deals with other parties.
At the same time, there has been something of a rise in populism with the rise of the self-styled “Japan first” party Sanseito, which now has 15 seats in the upper house, up from just two previously, with a respectable 12.6 percent of the vote for the proportional candidates in the hybrid election.
While LDP infighting has, in the past, focused largely on social and political issues, such as same-sex marriage or whether Japan should drop or weaken its pacifist position, the focus this round is clearly on the economy. As former U.S. President Joe Biden saw, a public that believes prices are rising faster than wage growth is likely to be an angry electorate.
Japan’s retail price inflation is around 2.5 percent to 3.5 percent, although the near-doubling of the price of rice due to a poor harvest and government policies to reduce previous overproduction put food inflation at 7.6 percent in July, having a very palpable impact on weekly household budgets. With 60 percent of food in Japan shipped from overseas, the sharply weaker yen (a boon to tourists from abroad) has been largely to blame.
The proposed solution is to give away money that the government doesn’t have to help cushion the blow rather than tackling the underlying issue.
The idea of cushioning people from the pain of higher prices through lower income taxes, some relief from the 10 percent consumption tax, or other types of subsidies was a key platform point for all the major parties in the July election. With one eye on Japan’s massive government debt, the LDP under Ishiba had been the most reluctant to make sweeping promises in this area, offering limited onetime cash handouts, and this was seen as a key reason for the party’s poor performance.
In response, all the candidates in the current party vote have promised some type of measures, with Takaichi, a fiscal dove, offering the most ambitious proposals. In announcing her candidacy, she said she would provide a mixture of income tax credits and cash payments, while raising income thresholds.
She was less specific on how to pay for such measures, which would put further strain on government debt levels that are already the largest among developed economies. The International Monetary Fund estimates the gross debt at 236.7 percent of Japan’s annual GDP, although this has come down from its peak of nearly 260 percent in 2020. As ever, politicians seeing some fiscal space are likely to fill it, despite the longer-term consequences.
“Increased subsidies can lead to fiscal expansion and potentially raise inflation rates. While household purchasing power may temporarily improve, this effect would likely not last long due to the entrenchment of high inflation,” said Kentaro Koyama, the chief economist for Deutsche Bank in Tokyo.
This, in turn, is likely to affect the Bank of Japan’s plans of slowly raising interest rates as part of its post-March 2024 exit from the “zero interest rate” policy that had been designed to bring the economy out of decades of deflationary pressures. While exchange rates are technically out of the central bank’s remit, a stronger yen that would likely follow higher interest rates would help alleviate some of the inflationary pressures by lowering import costs.
While strategic and defense issues are less prominent, Japan has been far from idle. Even as it has now gone through three short-term leaders since Abe’s nearly nine-year run ended in 2020, it has worked assiduously to build relationships with what Japan typically calls “like-minded” countries, a well-worn phrase that nevertheless shows that U.S. allies around the world are scrambling to forge their own networks in the face of chaos from Washington.
The most recent manifestation was the eight-month deployment to Japan and elsewhere in Asia by a British naval task force led by the aircraft carrier HMS Prince of Wales. Beyond flying the flag, the two countries are also partnered with Italy in a fighter jet program to help wean them away from U.S. military hardware dependence.
There has been a flurry of such agreements in recent years. Japan is an unofficial partner in the AUKUS project that loops together Australia, the United Kingdom, and the United States. It is also part of the Quadrilateral Security Dialogue, which brings it together the United States, Australia, and India—a grouping that has had its own share of tensions.
Japan is also helping other nations in the region, particularly the Philippines in its standoff with China. This is expected to include the possible transfer of secondhand frigates used by the Japanese Maritime Self-Defense Force in the 1980s and 90s. Japan was also the surprise winner in a tender by Australia to build a new generation of frigates, although contract negotiations are still underway.
Such strategic initiatives seldom change direction in Japan, even as administrations come and go. Despite the domestic political turmoil, Japan still offers something of a safe haven in Asia and globally. There seems little risk that a country that reveres precedence and stability will suddenly take a Trumpian detour.