Japan September update: towards a new political cycle?

As the election for the presidency of the Liberal Democratic Party (LDP) approaches, Japan’s political leadership remains uncertain. Prime Minister Fumio Kishida, weakened by a political and financial scandal and persistent inflation, has decided not to run for the presidency of the party, which still has an absolute majority in the lower chamber, leaving the race open for the internal election scheduled for 27 September. While the race appears to be dominated by former Environment Minister Shinjiro Koizumi, it remains fairly open between the nine declared candidates. The new party president and future prime minister faces a substantial challenge: after Kishida’s departure, to re-establish the political momentum around a weakened LDP with a view to the 2025 general elections, including, if necessary, by holding them as early as 2024.

After Yoshihide Suga and Shinzo Abe (who was assassinated in July 2022), Fumio Kishida has sought to steer Japan in a new direction since 2021.

Elected Prime Minister on 4 October 2021, Fumio Kishida has led the LDP with a moderate governance style, following the path of his predecessors Yoshihide Suga and Shinzo Abe. His main priorities have been the reduction of inequality, economic stimulus, economic security, the digital transition and boosting the birth rate.

Although he pursued the ‘Abenomics measures’ and the low-carbon and digital transition reforms initiated by Suga, Kishida sought to distinguish himself by promoting a ‘new capitalism’. The aim was to redistribute income more effectively in favour of the working and middle classes, while strengthening economic security, an area for which he created a specific ministerial portfolio.

Despite this effort of renewal, the Prime Minister was increasingly weakened and politically challenged.

From December 2023, he was undermined by the scandal of undeclared political funds from the sale of tickets for political rallies organised by the LDP. He failed to mitigate the political repercussions of the affair which caused his popularity to fall below 20%.

He was directly blamed for the LDP’s decline in the by-elections of 28 April 2024, which resulted in three fewer seats in the lower house and the loss, for the first time since 1995, of the conservative bastion of Shimane.

This situation is generating unprecedented concern within the LDP about the possibility of electoral defeat in the forthcoming general election in 2025, which will also see the three-yearly election of the House of Councillors, the country’s upper house, where the LDP also appears to be in trouble.

Under pressure from part of his camp to dissolve the House of Representatives in order to regain control of the agenda, Fumio Kishida vacillated. Cornered, he announced on 14 august 2024 that he would not be a candidate to become the next president of the LDP, and that he would in fact be resigning as head of government after a three-year term, to the relief of some in his camp.

The competition for the presidency of the LDP, due for election on 27 September, is intense and its outcome uncertain.

While there is no clear front-runner, former environment minister Shinjirō Koizumi is leading the polls, followed by Ishiba Shigeru –who is running in the LDP’s internal election for the fifth time.

The candidacy of former cabinet secretary general Katsunobu Kato adds a touch of unpredictability to an already challenging election, with now nine candidates – including three outgoing ministers – competing for the LDP presidency.

Meanwhile, Natsuo Yamaguchi, President of Komeito, Japan’s third largest political party and an LDP ally, surprisingly announced that he would not be standing for re-election, after leading his party since 2009.

Given this context, it cannot be ruled out that the new Prime Minister will seek to accelerate the electoral timetable by calling general elections as early as 2024. It remains to be seen whether the LDP will be able to win this election, as well as the election for the House of Councillors in 2025. Defeat in either of these elections would probably precipitate the new Prime Minister’s downfall.

In addition to internal challenges, marked by unprecedented political instability, and despite good figures for the Tokyo stock market, Japan continues to face a contraction in its economy and rising inflation. On the strategic front, the government must continue to deploy an unprecedented defence budget, amid particularly tense relations with Beijing, as well as with Russia and North Korea. In this context, as in Europe, the imminent US elections are being closely and anxiously watched, given the potential political and economic consequences of their outcome for the archipelago.

Marc Reverdin, Managing Director, mr@reverdin.eu

Hervé Couraye, Japan Expert, herve.couraye@gmail.com

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