Last Briefing of August: Personnel Season Opens, Okinawa Goes Live, and the Yen Returns to 160
Good day from Misaki, at the tip of the Yokohama peninsula. I am berthed next to the Umi-no-Eki. The sky is overcast and there are fewer people dockside than expected. A yacht race is on today though I am not joining.
We talk about the dog days of summer. The phrase is older than most of the politics we cover. The Egyptians timed their year to the rising of Sirius, the dog-star, and used those weeks to plan what came next. That is roughly where we are. Tomorrow is the last day of August. What looked like the tail of the recess was not a quiet week. Prime Minister Sanae Takaichi stayed inside the Kantei and the conversations that will shape her first cabinet reshuffle got underway. Campaigning opened in Okinawa while a cross-party group came back from Beijing with less than they had hoped for. And the yen closed Friday at 160.08.
There is a lot coming at once. The second week of September will see a tax package andthe Okinawa vote will take place on the 13th, folowed by Silver Week, the first five-day stretch since 2015, from the 19th to the 23rd. Then the reshuffle and the first UN General Assembly of PM Takaichi. An extraordinary Diet in early October will have to carry the consumption-tax cut. The Okinawa race is the peg everything else is hung on. If the LDP wins, she gets a lift into the personnel fight. If it loses, she does the same fight without one.
A Homebody Prime Minister
PM Takaichi spent the week at the Kantei and took some heat for it. She does not slap backs and is neither out drinking. Her answer is that she is working, and that staying put means the staff spend less time moving her around. She chaired the 13th meeting of the earthquake headquarters, sat emergency sessions after the Chiba rains, held the GX council, received the Kuwaiti foreign minister, and hosted a virtual meeting of the Ukraine coalition of the willing. She is also hearing, separately, from the LDP and from Ishin about reconstruction and about who gets what in September. There is no announced travel until the General Assembly at the end of the month.
The X posts continue, and so does the pushback. Too much chatter, not enough cost of living. No recent prime minister has used the platform this way, which is part of why it grates. She said she was lonely enough to befriend a cockroach. I am not sure how much of that was a joke. Nagatachō will not let it go either way. Most of her predecessors reached the public through the tabloids. She has decided to tell people herself what she is doing and what interests her. The barbs come with that, including from inside the LDP.
The last couple of weeks of polling sit in a cluster. About 49 percent approve, about 37 percent disapprove, depending on the survey. This is neither a collapse nor a mandate. The food-tax cut is softly in her favor: 40 to 45 percent for it, about 33 percent against. Two-thirds of those asked want a funding statement. Only four in ten believe the rate goes back to 8 percent after two years. Six in ten worry that social security takes the hit. Food inflation is running near 2 percent. Wages, even where they are rising, are not keeping up.
The Secretary-General’s Chair
On Tuesday she had a fifty-minute lunch with LDP Vice President Taro Aso. First meeting in two, maybe two and a half months. That evening Aso sat a longer dinner with Foreign Minister Toshimitsu Motegi. You do not need a decoder ring. Personnel season has started.
The party hierarchy is president, vice president, secretary-general. She has the first. Aso has the second. Shunichi Suzuki, Aso’s brother-in-law, still has the third. Aso’s case is the one he always makes. He has 61 members and the only faction that still functions as one. Of roughly twenty cabinet seats he has one. The vice presidency and the secretary-general’s chair are, in his telling, the balance that is owed. If she moves Suzuki and puts in someone of her own, her hand gets stronger. He will want something for it. Hajime Hagiuda is one name in the mix, an Abe-faction heavyweight who took slush-fund punishment and then won his seat back. Motegi is the other, and Tuesday night suggests he is not waiting to be asked.
Sometimes you should be careful what you wish for. We will know what those two meals cost when the cabinet list comes out.
The people she ran against last autumn are already arranging themselves around September 2027. Three of them sit in cabinet or high party office and have to keep their heads down. Taro Kono does not. She gave him nothing, so he can talk, and he has. Yoshimasa Hayashi at Internal Affairs has already said he would like to leave the cabinet so he can speak more freely. That is him putting down a marker for the next leadership race. Chief Cabinet Secretary Minoru Kihara looks likely to stay. The two of them work well together. Almost everything else is in play.
Ishin Wants a Chair Which Several Other People Want Too.
Ishin knows the bond with the LDP is coming. The LDP needs those Upper House votes and will not have more of them for another two years. Ishin wants a cabinet seat for it, maybe two, on the old Komeito precedent, plus the vice-ministerships and committee chairs that travel with a deal. Former leader Nobuyuki Baba assumed the cabinet seat was his. Then Osaka Governor Hirofumi Yoshimura, who is the party’s real center of gravity, let it be known that the top dog should take it. He is not in the Diet. He has a full-time job running Japan’s second city. The idea of him commuting into a Tokyo cabinet post is odd, and it set off a scramble. The Diet-side leadership wants the seat. Baba thought this was settled. However, that is not the case.
The LDP has, in principle, accepted Osaka as an auxiliary capital. It has also opened the door so other cities can bid. Ishin got the concept and lost the exclusivity. Baba’s answer last week was to put the other half of the bargain back on the table. The promised 10 percent cut in Lower House seats, carried over from July, has to move in the extraordinary Diet or there will be hell to pay. They stuck through the spring session, he said, and they are still standing there with their hats in their hands. The Prime Minister seems to think cabinet seats can quiet that. I am not sure one chair does it.
The Opposition Merger Dies on the Vine
The Centrist Reform Alliance was the opposition’s answer to the election she called. It held in the Lower House and failed in the Upper House, which is why she had a difficult spring session rather than an impossible one. They were supposed to finish a merger this week. The talks broke down Friday. Another meeting was set for Monday. From the press reporting, the Upper House piece is not going to close. If it does not close there, it does not close in the Lower House either, and the Alliance dies on the vine.
Komeito is having its own trouble. The Soka Gakkai binding force has weakened since the death of the organization’s leader. What happens to the people inside the Alliance is unclear. What it means for her is simpler. A unified opposition would have given her a real problem and now she doesn’t have one.
Okinawa: The Peg in the Board
Campaigning opened Thursday. Six names filed. Two matter. Denny Tamaki, 66, wants a third term, which would be twelve years. He used to be LDP, sat two terms in the Lower House, went home, and built All Okinawa. Genta Koja is 42, a former vice mayor of Naha, not high on anyone’s national list. He has the LDP, Ishin, the Democratic Party for the People, Sanseito, and Komeito.
Jiminto already holds all four Okinawa Lower House seats and has lost the governorship three times running. Henoko and Futenma are the standing argument. This race is also about the tax package and the reshuffle. A Koja win gives her something to carry into both. A Tamaki third term lands just as she is asking the party to accept new faces and Ishin a cabinet chair. That is why Nagatachō is treating a prefectural election as a national test. The vote is Sunday, September 13.
A ¥10 Trillion Hole, and No Bonds to Fill It
The consumption tax on food would fall from 8 percent to 1 percent for two years from April 2027. Cabinet approved it about two weeks ago. The Diet cannot touch it until it is sitting, which means the extraordinary session after the reshuffle, first or second week of October. The cut opens a ¥10 trillion hole over two years. PM Takaichi has said there will be no new bonds and no debt financing. The plan, she says, lives inside the budget. Spend more, make more.
That will be the opposition line all autumn. “You do not know how to pay for it. It is pie in the sky. You are spending more than you collect.” She has also held the gasoline-tax cap at ¥170 a liter past the end-of-month lapse, another small breather for households. Economic-security spending is being marked up 60 percent. The defense budget is already larger than the last one, which was the largest in history. Ministries have been told there is no cap on what they may ask for. The October requests will be enormous. The revenue story has to be as well. Selling Mogami-class frigates will not carry it.
The Yen at 160, Again
Friday’s close was 160.7, then 160.1. That is where we were when Japan and the United States intervened. The number is now public. ¥15 trillion, about $94 billion, spent over several days. Most of it Japan selling foreign exchange and Treasuries. A small slice American. They pulled the rate from 164 down toward the mid-150s. Within a few weeks it had walked back to 160. Fifteen trillion is more than the two-year tax-cut hole. It is more than the defense budget in any one year. It is 7 or 8 percent of the country’s foreign-exchange holdings, so there is room to do it again.
Bank of Japan Governor Kazuo Ueda skipped Jackson Hole and sent a deputy. He is preparing for the G20 on September 8 and the BIS meetings in Basel. The next BOJ decision comes in mid-September, the same week as the tax package and the Okinawa vote. July exports hit a record in yen terms (autos, chips, chip-making tools), but imports grew faster on energy and the cheap yen, so the trade account is in deficit for a third straight quarter. One piece of household good news: rice is 14 percent cheaper than a year ago. Last summer’s rice panic is not this summer’s. Wholesale prices are still hot on oil.
India, Jeju, and a Cool Reception in Beijing
Defense Minister Shinjiro Koizumi was in India two weeks ago with two F-2 fighters, the first time those aircraft have trained there. The Quad would like India closer than it is. India still buys Russian arms, borders China, and is a hard counterpart for a culture that runs on being on time. The joint statement was long. I am skeptical that much of it becomes action. This is a slow slog.
Freedom Shield, two weeks ago, was cut from eleven days to five after President Trump pulled back on the eve of the exercise to leave room for a conversation with Kim Jong-un. Freedom Edge is next. The United States, Japan, and South Korea start a multi-domain exercise south of Jeju from September 7 to 11: maritime, air, cyber, anti-submarine. Last on was in 2025. After skipping a year, it is back. North Korea fired a ballistic salvo on August 20. None of it entered Japan’s exclusive economic zone. Kim’s sister used the Prime Minister’s Budokan bow toward Yasukuni to call Japan a warmonger. American midterms are about sixty days out. The President would like another North Korea meeting before then.
A cross-party Diet group spent three days in Beijing and came home smaller than they went. Not a slapdown. Not the reception they wanted either. China is still angry at the Prime Minister’s remark that a fight over Taiwan would be a significant threat to Japan. They want the line taken back. Chinese visitor numbers have been down about half since she said it, some eight months ago.Although a channel opened, the policy did not move. The two countries do an enormous amount of trade and need a working relationship. Yet, history, and the present map, both sit in the way.
Historical Frame
On this day in 1590 Tokugawa Ieyasu entered Edo. It did not look like the founding of a capital. It looked like a posting. Within a generation Edo was the center of the country, and the arrangement lasted two and a half centuries. Offices get reassigned first. The fact of power follows later, if it follows.
On this day in 2009 the LDP lost a Lower House election so completely that the Democratic Party of Japan took 308 seats and ended fifty-four years of almost unbroken conservative government. Seventeen years later the same party is back in a strong position under its first female prime minister. Landslides do not last. September’s reshuffle is the first chance she has to turn last autumn’s win into a party that can survive the next fight.
Q&A Highlights
- Can the food-tax cut get through the extraordinary Diet if people still do not know how it is paid for?
- Are voters right that the 8 percent rate is not coming back?
- Yen back at 160 after ¥15 trillion. Another intervention, or a September rate move?
- If U.S. rates have to rise, where does that leave the yen and her fiscal story?
- Trump trimmed the Korea drill and left the three-country exercise standing. What should Tokyo take from that?
- What did the Koizumi trip to India actually commit either side to, once you get past the joint statement?
In Closing
September is going to arrive in a hurry. Tax package first, Okinawa on the 13th, reshuffle after that, New York at the end of the month. October’s Diet will ask whether a cut that leaves a ¥10 trillion hole can pass a chamber the coalition does not control, and whether a new cabinet can sell more spending on less revenue. Beijing has already named its price for a quieter relationship. She is not going to pay it.
Public support has stopped falling, even if it has not recovered. Rice is cheaper. July exports, counted in yen, were a record. The machine that got the spring session done is still there. The next six weeks will tell us whether that competence turns into a party she actually runs, a coalition written down on paper, and a fiscal bill the Upper House will swallow. The dog days are ending.
Thank you to everyone who joined and sent questions. We will be back next Sunday morning, September 6, 2026, at 8:20 a.m. JST.
— Timothy Langley
Langley Esquire continues to provide government relations services and independent analysis of Japanese politics, diplomacy, and economics for an international audience. Share the briefings if you find them useful.
