Political funds scandal evolves further
- First arrest related to the kickback scandal: prosecutors arrested Lower House Abe Faction member Yoshitaka Ikeda (57yo, 4x, Tokyo, former Vice Minister Education Ministry) last week just as we wrapped-up this briefing! In our previous update, I predicted 2 individuals but only one Diet Member was in fact arrested. They arrested his Policy Secretary, Kazuhiro Kakinuma (45yo), too. The Public Prosecutors explained their actions as being based on evidence that the Diet Member was observed actively moving documents and potential evidence from his Diet offices, residences and related areas. PM Kishida immediately acted on Monday to remove Ikeda from the LDP and so naturally, the Abe Faction membership diminished by one to 98 members. It had been 99+ for the last 18 months! While everyone has been on the edge of their chairs waiting for the Public Prosecutors to follow-through on other widely-identified violators… crickets. At the end of the week, in fact, recent Secretaries General of the Abe Faction (Tsuyoshi Takagi, Mirokazu Matsuno, Yasutoshi Nishimura) and the Nikai Faction (Katsuei Hirasawa) have received the most scrutiny. On Thursday, Prosecutors called Hakubun Shimomura and Nishimura in for a SECOND round of questioning.
Implications and expected political events
- Taking a barometer-reading on these developments will occur on April 28. This is when there will be a by-election to fill the vacant seat in Shimane Prefecture for deceased Speaker-of-the-House Hiroyuki Hosoda (78yo, 11x). Only one seat is currently up for grabs. However, if Ikeda resigns from the Diet (though kicked-out of the LDP), he can remain Diet Member until voted-out in an election, or voluntarily resigns). We anticipate several more seats becoming available (considering the tenor of the Public Prosecutor’s investigational scope). However, the point here is this by-election will be the first electoral opportunity that reveals (better than public-opinion polls) how the public actually feels. If Shimane elects the (as yet unidentified) LDP candidate, then the implications drawn will be interpreted one way; if Ishin or CDP candidate wins instead, a different interpretation. While minor on one-level, within the village of Nagata-cho, this will be huge. We will be reporting on this in our future Japanese politics updates.
- Also, as a point of interest and something frequently mis-understood: The arrest of Lower House Member Ikeda does NOT implicate the by-election of 4/28. This is because there are two classifications of Lower House Members. The most prestigious are Members who are elected based on their own, personal personification: they run as The Candidate. There is another group who become elected because their name is on The List of each political party. The first name on the List is likely to be elected (because voters identify with a Party). So, in the voter-box, citizens can choose from two ballots: one for The Candidate, and one for The Party (and The List is public). If your name is lower on the list, your likelihood of election diminishes. In Ikeda’s case, he ran on the Party List. When a Member from The List dies, resigns, or is removed, the name just below this Member succeeds to the vacant position. Sorry for getting into the weeds, but this is an important distinction.
- Foreign Minister Yoko Kamikawa (69yo, 7x, Shizuoka, Kishida) visited D.C., Canada, five European nations (Poland, Finland, Sweden, the Netherlands, Germany) and Turkey this last week. This is a minor precursor to the State Visit of PM Kishida to Washington, D.C. in mid-March. This will be the first State Visit of the Japanese Prime Minister since PM Abe’s visit in 2015. The timing here is critical to the PM.
The ascend of Aso continues - political developments
- LDP Vice President Taro Aso’s (83yo, 14x, Fukuoka) ascendency continues, even though after Abe, he is no longer the Vice Prime Minister. Not only is his Faction the second largest (15% of all LDP Members vs Abe’s 26%, Motegi’s 14%, Kishida’s 12%, Nikai’s 11%, Moriyama’s 2%, Independent’s 21%), but he is also the third-leg of the leadership Kishida-Motegi-Aso… Missing prominently is an Abe representative. The fact that Kishida and Motegi famously do NOT get along, the pivotal-role of Aso places him in a highly advantageous position. For example, when Kishida removed all vestiges of the Abe Faction in the Cabinet two weeks ago, Aso Faction Members received 5(!) of the vacant Cabinet portfolios, while Kishida Faction Members received 3. Importantly, the position of Internal Affairs Minister (overseeing the police, internal affairs, etc.), (formerly an Abe Faction Member’s position), went to an independent (non-Faction) LDP Member ushered in by former LDP Secretary General Akira Amari (73yo,13x, Kanto Block, Aso).
Demographic trends - marriage-less population
- 1% of unmarried adults in their 20s ~40s have “never been in a relationship with the opposite sex”. Recruit Holdings released this research in their 7th annual report on the subject this week. Of those polled: ¼ have no intention to marry, exceeding the 21.1% from 2021. Of the women who have no marriage intention, 19.4% said it was a waste of time & money, while 23.7% of the men thought the same thing. Overall, 42.5% of the men avoided commitment due to the financial strain, while 40.5% of women identified their preference on freedom and independence. Still, 46.1% stated they “eventually want to marry”: this compares to 52.6% in 2021 and 55.6% in 2017. Obviously, policy imperatives abound.
- In a related development, an ‘increase-the-population panel” established by the Prime Minister issued their first Report to PM Kishida this week. They reported several assessments and made some recommendations. They acknowledge the fact… the reality… that the current population of 124 million people will decline to 80 million by 2100. Currently, 40% of the population are 65+yo. Historically, Japan was at 63 million people in 1930 with 4.3% of the population 65+yo. This panel is well-positioned to know, and to provide recommendations: Chaired by Nippon Steel’s Honorary Chairman plus 28 highly distinguished leaders of business & academia. They predict child-fertility rate (currently at 1.26 per woman) (2.0 being ‘replacement-rate’), to reach 1.6 by 2040, 1.8 by 2o50 and hopefully 2.07 by 2060 (which would stabilize the population at that level of ~80 million). They predict even with such a decline GDP annual growth should be ~0.9%. Clearly, this means in very short order that Japan will fall from the 3rd largest global economy precipitously. They observed critically that “… GOJ and the Private Sector have failed to share sufficient public information about the gravity of rapid depopulation and the importance of preventing it…”. Further, “… measures to date have been mostly one-offs and stopgap measures which did not turn around trends…”. PM Kishida reiterated his pledge to introduce “unprecedented steps to head-off long term economic impact”. He once again pronounced his intention to dedicate in the next three budgets ¥3.6 trillion yen/year to address this issue.
Nikkei at 34-year high
- The yen closed lower this week at $/¥ 144.74 but the Nikkei rocketed to 35,000 points for 3 days-in-a-row! This was the highest in 34 years (since the bubble economy of 1990). Nikkei & TOPIX were both up 25% in 2023, BOJ yields are down 2.5 points to 0.56%. This is again signaling the intention to keep money freely available to draw-down (hopefully) inflation to the 2.0% target (10 years evasive). Wage growth slowed to 0.2% in November while it was 1.5% in October. One explanation for the stock market growth is the beginning of the tax-free NISA accounts available to all citizens. NISA (Nippon Individual Savings Account) started in January.
Cherry blossom forecast & Sumo
- On Friday, the Japan Meteorological Agency issued the first official report of when, exactly, the cherry-blossoms will emerge: “blooms will start in Tokyo on March 23, to peak on March 31”. Last year on their first official report, they ended-up being 9.1 days long, as the blooms were exceedingly early if you remember. They issue regular updates, of course, as the data becomes more refined. Last year they issued 13 updates… but STILL were off by 2 days (long). Next update in 11 days.
- The 14-day Winter Grand Sumo starts today! Televised every day on NHK.
Questions poised during about the political and policy events in the Q&A of Japanese Politics One-on-One #153
- Taro Aso long supported Shinzo Abe for so many years. How much can he be expected to cleanse the scandal now, given that the Abe Faction is so heavily implicated?
- Kono Taro seems to be very popular with the general public but not so with the politicians in the Diet. Can you place this in context, including Taro Aso’s likelihood of returning to the PM position, and that of maybe former PM Suga?
- Coming back to Taro Aso, he was in D.C. this last week. He represented not the PM or the LDP, but the Nakasone Peace Foundation and had several senior-level briefings of significance. However, he made several comments unrelated to the current situation or helping/promoting PM Kishida, but more for seemingly self-promotion. What is your perception of his designs going forward?
- Under the current circumstances, I am curious what Mr. Suga’s plan seems to be. He is non-affiliated with a Faction, the only non-affiliated Member to become PM in post-war history. Does this enhance his likelihood for a return?
- What is the update of the Unification Church? This has disappeared from the news… why? Because of the current kickback scandal? I seem to remember there were several unsettled issues at the close of the Extraordinary Session in December.
- This thing with the Unification Church and Japan’s declining population and declining rate of marriage… The Unification Church became famous for the mass-weddings, remember? Stadiums-full of people, some couples meeting for the first time, became married all at once. That was a significant way to at least get people into a marriage-relationship, and maybe consequentially also producing babies. However, is there something like this that the Prime Minister is considering? What is involved with his pledge to devote ¥3.6 trillion/year for three-years to deal with this issue?
- Getting back to Taro Aso, surely, he knew about the kickback scheme, right? Don’t you think his Faction participated in this scheme, too? I remember when this story broke, the criminal complaint named 5 of the 6 LDP factions. The heat seems to be solely on Abe Faction and Nikai Faction: noting on Kishida Faction, nothing on Aso Faction.
- Moms should be given an allowance for working and keeping the household. In addition, they should receive more money for producing children, too. Too much is being pushed onto females in Japan without much benefit being shared with them.
- I agree Japan is going to lose its #3 position in the world pretty quickly, but likewise other industrialized G-20 countries will similarly decline (precisely because their populations are also declining!).
- You mentioned Taro Kono as an “attractive candidate” for Prime Minister. What do you mean by this… attractive to who…. and why? I heard certain criticism lodged against him, so your observation is curious to me.
- Sorry (because I did not read your synopsis last week) but you reported last week that the Public Prosecutors have to wrap-up their investigation BEFORE January 28th? Did I hear you right? Does that mean that Members of the Diet cannot be arrested during the 150-day Diet Session… even if they are drunk-driving or maybe even committing a murder? What is the extent of this immunity from prosecution. Can you please explain this again?
- So besides having this limited immunity-from-prosecution, what other benefits are there to being a Member of the Diet?