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2022 In Review: Japan’s Top Political Events [Video]

Japan Politics experts Timothy Langley and Dan Harada cover the biggest political events that occurred in Japan in 2022. From the Abe assassination to the numerous scandals negatively impacting the Kishida administration, there are significant changes going on in the world of Japanese Politics.

Event Transcript

Date and Time: December 15, 2022 12:00 – 13:00 JST

Host: Kelly Langley

Speakers: Timothy Langley & Dan Harada

Kelly:

I would like to get started with the slides. We have a bit of a presentation portion to kick us off and to tee things up. So today we are going to look at Japan’s top political events of the year. We have Dan Harada and Timothy Langley joining us. So before we get started, I will introduce our speakers. 

So, Dan Harada is a top-flight lobbyist linking foreign executives and Diet members in Japan. He is an active member of the Liberal Democratic Party and is one of the few Caucasians among the 1 million Jimin ruling party members. He established the Nagata Cho Forum in 1987, has an MBA from Ecola de Commerce, and became a naturalized Japanese citizen in 1987. He has a very much familiar face in the halls of the Diet, and many Diet members recognize his face and his name as they see him. 

Timothy Langley has 40 years of experience in public affairs in Japan. He is the founder and CEO of Langley Esquire, formerly the General Counsel and Director of Public Affairs for Apple Computers Japan and General Motors Asia Pacific. He was the first foreign national to become Policy Secretary in the Japanese Diet to Nakayama Taro, who went on to become Foreign Minister. He was formerly a Far East trade and investment representative for the US. Commonwealth of Kentucky, and sits on the board and advises various companies, including Fortune 500s startups and SMEs in Japan, dealing with their challenges with regulatory issues, government relations, and the like. 

With that, we’ll dive right into the program. So, Timothy and Dan, we have a timeline of events and some of the topics that we will cover. Please go ahead. Maybe, Timothy, if you can kick us off.

 

Timothy:

Great. Thank you for that introduction. Kelly. This has been a tumultuous year. The Prime Minister, Prime Minister Kishida, has been Prime Minister for the last 14 months. He started on relatively a high note at a 55-56% approval rating. You might remember that he went through a very tough election campaign within the LDP to become nominated as the President of the LDP and thereby becoming a Prime Minister. But it was a tough race. Number two in that race was Sanai Takaichi, who will come up later in our discussions today. But what we’re focusing on is what’s happening right now, what is going to be happening in the immediate near term, and that’s really where the meat is of this presentation. So I think we can talk a little bit about the Unification Church, the supplemental budget that was just recently passed, just a really extraordinary, extraordinary session. And a lot has happened as a consequence of that and it’s just been building really incredibly over the last maybe eight weeks or so. Dan? 

Dan:

Yes, and the support ratio, depending on which newspaper you look at, is around 37, 36, even 35, which is about the level when Suga-san, the previous Prime Minister, was when he stepped down from office. 

Timothy:

Yes. I think both Mr. Abe and Mr. Suga didn’t last very long when they were in the low thirties. And in addition to that, the current Prime Minister has three cabinet resignations within a span of one month. That has not happened in recent memory, Dan. 

Dan:

That is correct, I don’t even think it ever happened. And there is another candidate to join the third one, and he was lucky because the diet closed, so it made it a little more difficult to fire a cabinet member bank. But it’s still on the lookout. 

Timothy:

Yes, it looks like the cabinet has closed on the 10th, which was Saturday, about five days ago, and it will be started on January 27. That’s a lot of time in between the closure of the diet and the start of the new diet. And there is a lot bubbling up. I mentioned Minister Takaichi and her comments in the press talking about the taxes that are being raised or promoted, about spending for the defense increases. There’s just an awful lot bubbling on, but we can focus on that later. There’s a lot of other things to cover now to bring everybody in the audience up to speed on what were the critical events that came about in the current Kishida administration. Dan, do you want to talk about the initial cabinet selections that he made? 

Dan:

Well, it was a rather standard selection with balanced and so on. Kishida’s son himself leads faction number four only, and that makes it a little more difficult for him to impose his will on the other followers. Now it’s Mr. Kishida’s Prime Minister, but it’s also with former Prime Minister Aso and the Secretary General of the party, the Trilogy, who is trying to run the show now. 

Timothy:

It’s important to kind of look at the faction affiliations that are distributed in this initial cabinet. You’ll see that Mr. Aso, who was the Finance Minister and the Vice President of the LDP, was replaced by Mr. Suzuki, who is also in the Aso faction. And Mr. Suzuki’s father was also prime minister several administrations ago. But the distribution really marks the distribution of the factions. And clearly, the Abi faction is the elephant in the room: 98, 97 members compared to number two, which is the Motegi faction, which is hovering around what, 58 or 57 members?

Kelly:

So here we would like to highlight the three ministers who were replaced. Okay, so we have the Internal affairs and communications Minister Matsumoto. We have the Minister of Justice, Saito, and the Economic Revitalization Minister Goto, who have replaced previous ministers due to scandal. We will get into this a bit deeper in a moment, but Timothy and Dan, any comments? 

Dan:

Well, there are three ministers who were fired, but the interesting thing is that they were fired for different reasons. The first one you mentioned was fired because of his links to the Church. The second one was fired because he belittled the office of the Justice Minister. And the third one was heard for more usual reasons: misappropriation of funds, transfer of money between public money and Private money, et cetera. So these were the three that went and I just mentioned earlier, there is a number four who is waiting in the wings.

Timothy:

 It’s not just that fourth minister of state. I mean, there are a lot of major politicians who are tainted with this affiliation with the Unification Church. Initially, the Prime Minister, somewhat lukewarmly addressed that issue. There was a lot of public criticism and a demand for the prime minister to deal with this and to deal with the influence of the Unification Church over the last 40 years within the LDP and primarily within the Abe faction. Although it spreads very deep and wide. We had expected there to be more of a fallout among ministers because it really was something that was deeply entrenched in Japanese politics, which was the drive of the Unification Church. So there might be other victims in the Cabinet that come up in the near term, but I think there’s so much other controversy going on. I think we will move on very quickly after that and the Kishida administration will be high on everybody’s list of something to watch very carefully. 

Kelly:

Thank you, Timothy. We already have a question, in fact, asking about who the fourth potential target may be, and we will be addressing this shortly in the slide. So if we can move on, we will be talking firstly about the approval of the Economic Security Promotion Act. 

Approval of the Economic Security Promotion Act (ESPA)

Kelly:

This is a huge bill that’s been passed with big ramifications on policy. As we know, this was enacted on May 11 and went into partial effect as of August 2022 and will reach full effect in May of 2024. The four pillars surrounding this bill are: strengthening of supply chains for critical materials, ensuring the security of core infrastructures, promoting the development of key advanced technologies, and keeping the patents on sensitive technologies that could be used for military purposes undisclosed. Now, there are huge policy implications as this impacts many sectors, including the finance sector. There’s cybersecurity strengthening, there’s a geopolitical tension that this bill has connotations on. Timothy and Dan, any comments on this bill? 

Dan:

No, I think the time is very appropriate. It’s quite good. I was listening to a speech by the minister in charge of that and she pointed out the strengthening of the supply chains for the critical material. I think it’s a well-timed bill and at least adds to the defense of the nation. 

Timothy:

Yes, I think while we look at the Kishida administration, there are a lot of things that he was able to achieve. It’s easy and it’s fun and it’s very topical to talk about the mistakes and the challenges that he has. But like Mr. Suga, who came out of the shoot after surviving Mr. Abe’s administration, he had launched the digital agency in record time. It was really a great achievement. He had hoped this would carry his administration longer than one year. It didn’t quite work out for a lot of different reasons, but when Mr. Kishida came into office, this was his crowning achievement, the Economic Security Promotion Act, which he did get it through the Diet. There are some other things with regard to the supplemental budget and the treatment of the Unification Church that he was able to achieve just by squeaking through the Diet at the last minute. But there are other kinds of clouds of change that are on the horizon as well. 

Quad Leaders’ Meeting in Tokyo

Kelly:

We also had the Quad leaders meeting in Tokyo. There’s been so much going on, I’m not sure if everyone remembers, but in May we had the Quad leaders summit with the Australia, India, Japan, and United States leaders joining. Some of the topics of note that they covered were obviously the Ukraine conflict, and the launch of the new Indo-Pacific Partnership for Maritime Domain Awareness Initiative, which his goal is to uphold a free and open Indo-Pacific. Timothy and Dan, any comments on this and what we might look forward to? 

Dan:

The concept of Indo-Pacific was the brainchild, so to speak, of Mr. Abe. And the only thing that I can say here is that it was too bad that he’s not in the picture. 

Timothy:

Yes, there are a lot of people that miss Mr. Abe’s presence, including Mr. Kishida at certain times. So the Quad was an initiative that grew out of this joining of forces of like-minded countries. And it’s not just the Quad. They’re also the two plus two initiatives that are being conducted and also the trading of military and the training of forces throughout the Asia Pacific with New Zealand, Australia, and South Korea. They had the review of naval forces, about three weeks ago. So there’s an awful lot going on in the diplomatic and the geopolitical area. There have been some successes there. It’s just this march toward what we’re going to talk about later, the increase in defense funding. 

Key Political Happenings

Kelly:

Next, we will cover a few of the key political happenings. Obviously, we had the House of Councilors election in July, and this was obviously right after the Abe assassination, which we will get into in a moment. But aside from this and key political happenings. We had the Cabinet reshuffle the second Kishida Cabinet from August 10, and we also have this resignation domino effect of some of the key ministers resigning. Any thoughts on this? 

Dan:

Well, no, we just covered it a few minutes ago. All I repeat is that the three that stepped down or were stepped down for different reasons. But it clearly creates a domino effect. And the question is who is next and when is next? 

Timothy:

I think this graph really highlights the fact that the LDP is in a coalition and is in a necessary coalition with Komeito. So it doesn’t have quite 50% of the House of Councilors that it needs a lot of people are talking about. It needs two-thirds to change the constitution. Even before we get to that conversation, there are so many other things that need to be talked about. So this reliance on Komeito the LDP is required to kind of fall back a little bit on some of the more aggressive stances it wants to take with regard to the economy, with regard to economic security, and also with regard to defense. So this balance is always shifting when we have an election. There are very few defections that occur during the Diet Sessions, but it’s something to watch very carefully when there are people in the ministries or in the Cabinet that leave. For whatever reason, it does have a big impact, and it has a reverberation throughout the entire structure that you see in front of you here. 

The Assassination of Shinzo Abe

Kelly:

Obviously, one of the key political events of this year was the assassination of Shinzo Abe. As we all know, former Prime Minister Shinzo Abe was assassinated on July 8, 2022. The suspect is Tetsuya Yamagami on the top right with motivations in the connection to the Unification Church, which led to this domino effect of scandals. On the bottom here, we have Abe’s kind of speech within one of their events. As we know, Abe was the longest-serving Prime Minister in Japan’s postwar history. He has garnered lots of respect and attention throughout the world for his achievements. Dan and Timothy, do you have any comments on this topic? 

Dan:

No, I have nothing much to add, except for one thing: Abe-san never thought he would leave as early as actually left, and he never was quite clear as to who would succeed him once he’s gone. And this is one of the, let’s call it, problem which we have currently. 

Timothy:

It is a huge problem for Seiwakai, the former Abe faction. It is still struggling to find a leader to replace Mr. Abe. So it’s ruled now by a coalition of several senior members. But Yamagami, in his act of revenge for what’s happened to him and his family, just really ripped off the lid of what’s been going on with the Unification Church and Japanese politics. It has caused just a maelstrom of activity. It has dominated this extraordinary diet and it has prevented the LDP from passing the majority of the laws that it was proposing because most of the time was spent on figuring out who was involved with the Unification Church, what kind of tactics, and what kind of damage the Unification Church has created, and should it be downlisted from a church to maybe a cult? And that conversation is going on now, but there has been a lot of damage created by the Unification Church that has just been revealed to us as a consequence of this assassination. 

Unification Church Scandal

Kelly:

So diving a bit deeper into the Unification Church scandal, as we know, a string of revelations revealed the LDP’s relationship, the Liberal Democratic Party’s relationship with this religious organization over quite some time. There’s been a few surveys that have been run that have identified these ties, and actually, the Kishida administration responded by pushing for a new bill to crack down on these types of organizations and kind of “spiritual sales tactics”, as it’s called, just this past week. Timothy and Dan, any comments? 

Dan:

Well, it’s just closing the barns door after the horses have gone, but it’s better than nothing. And I will talk after that about what’s up for the Unification Church in the very near future. 

Timothy:

Yeah, there is still a lot of discussion going on within the halls of the Diet and within the ministries who have preview over the handling of churches or these kinds of organizations. And it looks like it could be delisted, meaning it doesn’t have tax benefits as a recognized church in Japan. But this is a lot of damage that’s been done here, and more revelations come out as victims come up on television and in the newspaper to talk about their stories. So the future is not looking very solid for the Unification Church, but it also spills over to other churches-like organizations or actually churches or religions that are established in Japan. So there’s a lot of trepidation about how this law will be applied. They just passed it by hours before the Diet ended. I think it was the last bill that they passed. But since it was so rushed and so new, the repercussions and also refinement of how these things are applied to general church-like organizations are yet to be seen. 

State Funeral for the Late Prime Minister Shinzo Abe

Kelly:

Then we had the state funeral for the late Prime Minister Shinzo Abe. This followed Queen Elizabeth’s funeral in England, but this was held on September 27. And we have the Suga Yoshihide, the former prime minister that did the state funeral speech. Any comments here, Dan and Timothy?

Dan:

Well, I think it was obviously very controversial. I know that Mr. Abe was a long-serving prime minister, but there were some questions, about some of the things he did, and so on and so forth. And I think the most critical thing is that Kishida-san who went ahead by himself without considering the Diet before launching the official nationwide funeral for Mr. Abe. So it was really the way it was done. Rubbed people the wrong way. 

Timothy:

Yeah. I’d like to say two things about the state funeral. Number one, this is the beginning of the downturn for Mr. Kishida. He was on an upswing. He had just finished the election of the upper house. The LDP did well in that election. The day before voting was cast was the assassination. And within five days or four days of the assassination, the Prime Minister decided, not unilaterally, I mean, he talked with his cabinet and decided that there would be a state funeral in two months’ time to give people such as state leaders from other countries enough time to come to Japan for this state funeral. And they did in droves. So in that two-month period of time, though, a lot of other things were coming up. Who is the Unification Church? What are they doing? Why was he assassinated? And that sort of thing. 

The second thing I’d like to say is Mr. Suga, as former Prime Minister at that point in time, to do the eulogy of his friend, Mr. Shinzo Abe was so spectacular and I think it did him really well. His political capital really went up. There was a lot of jocking, a lot of people wanted to have that spotlight. But I think the fact that he did the eulogy and he did it so well stands in his good stead. He is a politician for the long term and he’s not going away just because he is a former Prime Minister. He still wields plenty of political power. 

Abe’s Faction Today

Kelly:

And now the implication of Abe’s death leads kind of a political vacuum in the Seiwa Seisaku Kenkyuukai, which is the official name of the Abe faction, still known as the Abe faction, and they’re leading with a coalition. They are the largest faction of the LDP with 99 members as of November 30th. They yield great influence in intra-party decision-making and are still a force to be reckoned with. But without clear leadership, there seems to be a bit of a struggle here. Tim and Dan. Any thoughts? 

Dan:

Yes. Recently, the confrontation between the Prime Minister and Abe faction has become more strong, and Mr. Kishida sort of mishandled the treatment of the faction. So I think the harmony which has prevailed so far between the Prime Minister and the largest group may go on to deteriorate slightly. 

Timothy:

It sure looks like that. The Seiwakai has not been able to come up with a leader. And during the election for Prime Minister, the largest faction didn’t even promote its own faction member as a contender for Prime Minister, and instead, Mr. Abe put his weight behind Sanai Takaichi, who became number two. She was the second-largest vote-getter. Mr. Kishida received the most votes and so became Prime Minister as a result. But as a consequence of that, she’s still not a part of the Seiwakai, the former Abe faction, but they also still have not selected a leader who can represent the total voice of Seiwakai. I don’t know if there is an individual that can, the way Mr. Abe did. So the question is what becomes of the Seiwakai going forward? And I think that they’re struggling with that as well.

Membership of Each LDP Faction (As of November 30, 2022)

Kelly:

Here is a breakdown of the LDP factions as of November 30, 2022. Tim and Dan, can you break this down for our audience, the different factions, and the weight that’s held as a result? 

Dan:

Well I think the slide is so good that there’s nothing very much to talk about. Again, essentially, as I said earlier, Japan Inc. is run by the Kishida faction. That’s what you have with former Prime Minister Aso at 53 and Motihisan at 56. So that’s the driving force, and you could almost now say practically against the Abe faction. But for the time being, what is on the wall here stands, and is correct. There is no former Suga faction. It’s a rather loose group, but otherwise, this graph is perfect. 

Timothy:

Yes. I think moving forward, certainly within the next three months, maybe sooner than that, I think you’re going to see a realignment. I think probably Mr. Suga will make his play, maybe formally make his own faction. I think there are going to be a lot of forces set up to promote a replacement for Mr. Kishida. With these numbers and the amount of controversy that’s going on, it’s looking awful shaky for him. Go ahead. 

Japan Begins to Open Its Borders

Kelly:

Yes. So one of the big news stories of this year and more recent in memory is the opening of Japan’s borders. So now we have a lot more foreign tourists coming in. Tim and Dan, any thoughts? 

Dan:

No, that’s correct. On the street, the scene is different. You’ve seen a lot of people who do not look Japanese, and whether it’s good or not, it’s not a question. But you’re correct. This is a very important international development for Japan. 

Timothy:

I think Mr. Kishida really put a lot of weight on this. There was a lot of controversy about opening the doors, unmasking people, or allowing people to go unmasked. But I think he weighed the continuing negative impact on the economy and just took a chance and opened the doors and allowed that to come in. This accommodated also the Yen value, which made it easier and cheaper for foreigners to come in and visit Japan. So the numbers really went up. They’re not enough. It’s believed to be like a trigger or an active for more economic development. But even though the doors have opened, the number of people have come in. You really can’t really trigger the economy without the addition of the Chinese tourists coming in. And very few of them are coming in. So we really haven’t gotten back in step. It’ll probably take another two years to do that, but it’s a good thing for the economy. Although the economy is suffering from a lot of other ailments as well. 

Prime Minister Kishida Convenes Extraordinary Diet Session

Kelly:

Okay. And as we know, Prime Minister Kishida convened the extraordinary Diet session from October 3 to December 10. The key priorities were to tackle inflation and a weaker yen, including increasing prices. There’s been a lot of discussion on raising wages and investing in growing industries. Some notable events include the approval of the second supplementary budget of the fiscal year 2022, which totaled at ¥28.92 trillion, equivalent to roughly $214 billion, the revision of the Public Office’s Election Law and the new act for providing relief for victims of the Unification Church. Any thoughts on this, Timothy and Dan? 

Dan:

No. Again, what is on the board is correct. The Unification Church law was actually passed on Saturday, which is a very unusual day for the Diet to meet. And it was not only on a Saturday, it was on the last Saturday. But I will talk about not only the past regarding the Church but the future. What is in the future for this organization. 

Timothy:

Initiating this Extraordinary Diet session was a great struggle. The opposition party had insisted on it. The Prime Minister was not so active on it, but he did need to respond about the Unification Church and who was involved. And finally, he relented and launched into the extraordinary session. Mr. Hagiuda is the Policy Affairs Chief within the LDP. He’s probably number two or number three within the LDP, which is different from the cabinet or from normal members of Parliament, but he is a heavyweight. He’s within the leadership council of the Seiwakai, the former Abe faction. He went to Taiwan just recently and came back, I think on Monday, spending two days there: a very big deal. He also said when we started the Diet that he wanted to pass 60 bills or 60 bills that were going to be promoted and discussed hopefully to be put into law. They got nowhere near that because of the controversy. So some people could look at the Prime Minister as being ineffective during this extraordinary session, but it’s been a really extraordinary last three months too, and it looks like it’s going to continue to be pretty extraordinary going into the very near term. 

Japan Set to Unveil New National Security Strategy

Kelly:

Great. And finally closing out kind of our presentation portion, we will cover the all-important discussion on the defense budget. So Japan is set to unveil its new national security strategy. This is the revision of three key security documents, including the National Security Strategy, the National Defense Program guidelines, and the Medium Term Defense Program, which will be announced shortly. And the key points refer to the extension of the mid-term defense program covering five to ten years, and the expansion of the budget to 2%, among other items. 

Challenges in the Regional Security Environment

This also dovetails into challenges in regional security, including increased tensions with China, the recent behavior of North Korea and the missiles that are increasing, and obviously the Russian conflict with Ukraine. Any comments here Timothy and Dan? 

Dan:

No, this is correct. The only thing you can see it’s the environment is getting more and more dangerous. 

Timothy:

Yeah, I think it’s really difficult for the Prime Minister. It’s like him opening a jar full of bees and sticking his hand in it. There’s just no good way around it. In some mystical way it happened, he announced that the defense budget would go from 1% to 2% up until, I mean, for the longest period of time, 2030 years, the defense budget was pegged at 1%. And to talk about it being anything else was taboo. And yet within the last I mean, it was talked about recently, but within the last three months more solidly, within the last three weeks, 2% became the policy that Japan was going to follow. I don’t remember a whole lot of discussion on that. It just kind of came up. But the whole geopolitical and national scene is shifted very considerably. Not just because of economic security and because of North Korea, but there’s a lot going on with regard to defense spending and inviting not just the Americans to be more integrated into Japan’s defense. For example, purchasing 500 tomohawk missiles, very advanced, very expensive weapons to act as defense, but also from the policy perspective to go beyond what is defensive and to say we are going to now promote counterstrike capabilities. And if you’re talking about dual-use counterstrike, it could be a defensive act. But even before you launch a counterstrike, those kinds of assets can be used on an offensive basis too. And it’s not just them, it’s submarines. It’s a lot of things that Japan is really going full forward on. When we talk about that, Mr. Kishida and his faction are more generally pacifist in nature, but the Abe faction and for a long time, in order to kind of generate this familiarity that he needed with Mr. Abe and with the Abe faction, he assumed this kind of posture to kind of meld a working relationship. And now it’s really difficult because he has decided on the 2%. He’s instructed his cabinet to come up with the numbers. The budget will be dealing with that as we move into the new year. But it’s causing a lot of controversies about how we’re going to pay for this, but it looks like it’s pretty much set in stone. Dan?

Dan:

Tomorrow it will be approved by the entire cabinet. We’ll go into the details in a few minutes, but it is on the board for tomorrow. 

Senior LDP Lawmaker Visits Taiwan

Kelly:

Finally, we have a recent development with a key leader of the LDP visiting Taiwan. So this is quite an interesting development. We have Koichi Haiguda, who is the LDP’s policy chief and former METI minister, who visited Taiwan just recently. Timothy and Dan, any comments on this recent visit? 

Dan:

Well, it was not as controversial with the Chinese as Nancy Pelosi’s visit, but it was very not well received within the LDP. Not because of any relationship with Taiwan or so on, but because Hagiuda just did it by himself without informing his peers, and he rubbed the feathers of a traditional Taiwan LDP group of factions. 

Timothy:

Yeah, these kinds of things don’t happen in a vacuum. Mr. Hagiuda, as I said earlier, is one of the chief committee leaders within the Abe faction: the Seiwakai. When we were talking about the integration and the facilitation of the Unification Church, he is one of the individuals that is always talked about because of the relationship that he has had and that’s been really pushed in the background. His power is beginning to grow. And the fact that he went to Taiwan to represent Japan, that’s a very big deal. It hasn’t been maybe twelve years since somebody at his level has visited Taiwan, and to go at this particular point in time to talk about defense and to talk about semiconductors is a very big deal. And it also kind of suggests his rising prominence within the LDP and certainly within the Seiwakai. So he’s a person to watch, and I think he could be rather controversial. But politicians like him, they don’t go away. They’re always around and have great attributes to watch. So we will be keenly watching him as well. 

Kelly:

Thank you very much, Timothy and Dan. With this, we will be moving to an open discussion portion and Q and A. But before we do, I’d like to introduce Langley Esquire’s premium membership to our newsletter.

Introducing Langley Esquire’s Premium Membership

Kelly:

We have flagship reports on Policy Radar, and Japan Politics Now, plus other exclusive content such as videos and events such as these, which we will be sharing from next year. So we have an early bird offer right now, so please join us if you would like to learn more and keep up to date with political events as they occur. 

Dan Breakfast Briefing

Kelly:

Secondly, Dan Harada does a regular breakfast briefing every month. His next one is going to be Thursday, January 12, at Capitol Hotel. He has excellent briefings, so please join him in person. Please join us. And we will certainly be going and following what Dan has to say about these issues in person. So please contact us and we will put you in touch with Dan if you do not already have contact with him already. But we look forward to meeting you in person for future events and for Dan’s political briefings. 

Open Discussion Session and Q & A

Kelly:

With that, we will go into an open discussion session. There are a few other topics I believe Dan and Timothy would like to cover and talking about the future now, we have a few Q and A here, but Timothy and Dan, anything to kick us off?

Dan:

Yes, two things from my standpoint. One thing is which happened yesterday. So the government has the right to investigate Unification Church and Minister Nakaoka filed such a request about four or five weeks ago, and yesterday she filed a second request that is actually an order for the church to open all its books. The Church has until the 6 January to actually deliver tons of papers to the ministry, and then it will be the turn for the government to decide whether it passes the baton to the judge and asking the judge to rip it off of its tax free status. So that’s number one, and it is yesterday.

Number two, and it is tomorrow. It was hinted at a few minutes ago. Tomorrow the government will formally launch the so-called five-year plan: defense Plan and strategy plan. I’ll expand on that in a few minutes. 

Timothy:

This Unification Church movement. It’s kind of like an Elon Musk moment, isn’t it, Dan? 


Dan:

Good comparison!

Timothy:

That’s right, they have to reveal, and the prosecutors will be very thorough in investigating that, the dirty laundry will come out and the people who have been invested in the Unification Church, protecting the Unification Church, helping them change their name without too much fanfare a couple of years ago, there’s still a lot of questions about that, and people are sharpening their knives. The opposition camps are unified in trying to attack the LDP and their involvement because they were the ones that really received the lion’s share of the benefit of the sunshine that was shed on them by the Unification Church over the last 50 years. 

Kelly:

And Dan, do you have any comments on the second round of questions to be taking place? Whether we go to a judge and strip the Unification Church of its status, the refund policy, or other to expect for the rest of the year?

Dan:

I’m a little surprised that there actually is a second round. I thought that the first round would be enough to go to the judge, but I’m surprised. That’s about all I can say. But until January 6, a cloud of secrecy meant the books will be open to everyone. 

Kelly:

Great. And on the three bunshou, or the three key bills to be revised considering kind of national security strategy. There’s going to be more discussion on this expected tomorrow, December 16. Dan, do you have any comments on what’s to come here? 

Dan:

No. The cabinet decision will be tomorrow. The Diet is not involved in that because the Diet is not in session and it’s not a matter for debate. But what I want to stress is that we go for 2%. We’ve been sitting at 1% for ages. We have a 43 trillion yen 5-year plan. It’s already funded, except for about 1 trillion, which is igniting the fight within Jiminto between the government and the Abe faction. And then the last thing which is important is that we call it “offense: after the fact. As timothy said earlier, once you have a missile in place, you may want to receive a missile from the enemy or you may want to start your own thing, so that’s no good. But also that the wording in the three pillars regarding China is enormous. Translating into English doesn’t make any difference, but it answers. Maybe a delicate member, but now is a threat to the entire region, so that is not to be overlooked. Timothy, what do you think? 

Timothy:

Yes, this joining of the LDP and Comato in order to get these bills passed because collectively they hold more than 50% so they can pass these bills even if the opposition opposes them. They are required to pass by both houses and the LDP and Komeito coalition is replicated in both houses. But, the farthest that the LDP wanted to go, they couldn’t because of the Komeito asking them to back off. Don’t threaten China by calling them a threat. Let’s just say it’s a challenge. They did settle on the word “challenge” rather than “threat”, but they were pushing very hard for the word “threat” in this document that will be released tomorrow. So there are some breaks in the relationship that are occurring between Komeito and the LDP. Should that happen, it could shake up Japanese politics long term, and you would find out in an election of the lower house that could happen anytime between now and in the next two years. They’re required to have an election. Their term ends in about two years, nut there could be an election, and there almost always is before that time runs out. And how this coalition, the forces that keep them together in light of the LDP’s desire to challenge China and also North Korea, and Komato’s stance on having a peaceful constitution and calming things down, let’s not spend 2%. But if you’re going to spend 2%, what’s in it for Komeito? So there’s a lot of horse trading that’s going on behind the scenes. So we will see that it will be revealed to us a little bit more gently as time goes on. But right now we really don’t know all of the details. 

Dan:

Before the diet reconvenes, probably on the 27 of January, there is a possibility that Kishida-san would reshuffle his cabinet. There are many reasons for that, but the most important one is to welcome as a minister, the head of kokuminshinto: Amagaki-san. And clearly, for Komeito this is going to be not going to be a shock, very aware of it, but it’s going to be completely redefining of the political map which we’ve had for 20 years, Komeito is about three times as large as Kokuminto for the time being. And it is not suggested that they will take their votes away from the Jiminto, but the problem is the Church, because let’s face it, the sales techniques and all approaches of the church are not limited to the church. And everybody knows that Komeito is up to it at about the same level as the church was. So you have within the Jimintou, what is now the Abe faction who was more attuned and particularly with Suga-san to a deal with Komeito. But if you take somebody like Kishida-san, if you take somebody like Motegi-san, and if you take certain somebody like Aso, who is a Christian, he cannot go on with Kometo. You have two blocks that are competing and the outlook for Komeito, I don’t think is all that bright. They have moved from 8 million votes to 6 million votes in three elections. And this was before the public is aware not so much of a Unification Church, but of the churches in general. So the future of the Committee looks pretty bleak to me. 

Timothy:

Yes, this is really something, a signal for us to really look at this because should this kind of distance grow and it’s right what you say, Dan. There is no channel of communication, as there once was between Komeito and the LDP that was pretty much dominated by Mr. Abe and individuals within the Abe faction, certain individuals. And now they don’t have that channel. And so things that happen that they don’t like, they fester, they don’t get resolved, people don’t come together to talk about them. The fact that more things are going to come up about the Unification Church and the criticism about Soka Gakkai that they did the same thing and this is how they built their political machine and they collected funds and they sold these vases full of spiritual, all sorts of power as well. It could bode very poorly for that coalition.

Kelly:

I would like to change gears a little bit because we are down to the last ten minutes of this program. We have a few Q and A in the chat. We have a good question from Mr. Eric Lenhard. It’s about new capitalism. We haven’t had a chance to talk about this too much. As we all know, the Kishida administration is putting a lot of effort into startups and new capitalism and growth and redistribution. This has changed a little bit and now we’re talking about the defense budget and increasing taxes. Timothy and Dan, can you please provide your insight and ideally keep it concise so we can hit more questions? And please feel free to drop more questions into the chat.

Timothy:

Well, did you see Dan’s eyes when the term was just mentioned? Kind of says it all. 

Dan:

Now, if your question to me is what do you think about capitalism? I have absolutely no idea. And Kishida-san has been in office for about two years and he has not been very convincing in explaining what it means. So I’m sorry, I cannot answer. I bail out. Timothy, how about you?

Timothy:

 Well, there are a couple of initiatives that the Prime Minister has talked about. For example, startups bolstering startups, sending young entrepreneurs from Japan, 1000 of them within the next five years, to Silicon Valley and places in the United States to learn through osmosis how to change this. He’s dedicated a lot of funds for the new startups, but for the new economy, it’s really not facilitated by a whole lot of information. And in fact, I think the reason why Dan rolled his eyes is because the Prime Minister is known as kentouchu. I’m thinking about it. I’m going to do it. He talks big. He went to London when he first became Prime Minister, had a beautiful speech and I think excited a lot of people. But when he came back to Japan, maybe it’s just Japanese politics that just absorbs you, but he really wasn’t able to get a whole lot of air under his wings to launch these things. And I think his administration is pretty much characterized by talking big, but not really performing very well. 

Dan:

And to trend the subject slightly, there are many people now in the media and here who said the Prime Minister prides himself. He’s finely tuned here, but he hasn’t shown it so far.

Kelly:

Yes. And moving on to our next question. We know that the yen has seen a surge close to 150 and is now kind of settled back down. It’s at 135.5. We have a question about the current BOJ Governor Kuroda whose set to stand down in 2022. And a question on the new governor candidates and interest rate directions. What can we expect from financial policy? Are there any comments here? We aren’t economists, but do you have any comments on what to expect in this space? 

Dan:

No. I’ll turn the answer over to Timothy, he’s way better qualified than I am to talk about that. 

Timothy:

Okay. Well, I can’t give any policy pronouncements, but the fact that the yen has settled down to 135, it was 136, just a little bit of change yesterday. It is settling down. Analysts predict that it will settle down further and it will become more stable. Of course, this is all dictated by what’s going on in Washington, DC. And so Japan is somewhat in a difficult place. It really can’t control that. It did try and supplement the fall of the yen, but it did it pretty much by itself. Nobody else really helped them, and they spent a lot of Japanese capital to do that. I don’t know if they’ll have to do that again, but it looks like it’s settling down. And with regard to Mr. Kuroda of the bank of Japan, I think there are three contenders. There are two that are within the bank of Japan that are colleagues of his. And then there is a third candidate who is well-spoken. He’s a professor, actually. Mr. Kuroda worked under him at the Finance Ministry. And he is being touted as also a contender. We’re not going to know until we get maybe March? But this individual will be appointed, obviously, by the Prime Minister at that point in time. 

Kelly:

Okay. And we have a little bit more time for a few final questions I’m going to wrap two into one. So we have one question: when will Japan drop its silly entry requirements? This limits tourism and international guests and events. Dovetailing that, we have Edward Yagi commenting: over the last 15 years or so, many Japanese universities have become dangerously dependent on students from China, especially graduate programs. So he points to two kinds of risks here political risk, so China could shut off its blow in part or total at any time. And there are also strategic risks in that Chinese students are shifting towards more dynamic English-speaking countries. What do you see happening regarding foreign students and foreign faculty, which is actually declining in the years ahead, particularly in some of these spaces, these high-tech and key sectors that Japan has identified under the Economic Security Promotion Act? 

Dan:

Well, I would like to answer that first, but I don’t know if you noticed what Timothy said about the successor to Governor Kuroda that is expected to be announced around the end of March. And Timothy didn’t say it will be officially appointed by Mr. Kishida, he said he will be appointed by the Prime Minister. I think that is a quite interesting nuance there. Otherwise, I’ll turn it over to Timothy, because that’s not my forte here. Timothy, what do you think? 

Timothy:

Yeah, thank you for catching that, Dan. With regard to the entry requirements, this is an issue that has plagued Japan. It is not just with teachers, it’s not just with students. It is also with high-earning people in the finance market. Governor Koike has long touted Japan as the financial center for Asia. It’s just not going to happen. People who are fleeing Hong Kong are going to Singapore and not coming to Japan because of the tax and inheritance situation here. The fact that English is still a bit of a difficulty. You’re pretty okay here in certain pockets of Tokyo, but once you get out, it’s really not that comfortable. And also to receive the kind of pay that these individuals expect really begins to cause a lot of controversy within the social and business cultures that they’re working in. But I think Japan needs to bring in more people. Japan acknowledges that, but their immigration policies are really a little bit tight. They could be getting tighter. They have the Rapidus consortium that is going to be building high end, two nanometer thick wafers, and that’s going very strong. They’ve got agreements now to help bring in people from Belgium and from England and from other countries to help them do this. They need really highly skilled technical people. So understand that it’s still chafing before it gets to that hot senior technical and executive level to hit the students and the teachers. Great question, though, Ed thank you for putting that forward. 

Kelly:

Thank you very much, Timothy and Dan, as we round out the hour, it’s unfortunate that we have to close out the Q and A portion. We got a great question on also asking about the declining population and the declining birth rate as well, which will be addressed next year with the establishment of the children’s agency. We will continue to watch this and add more commentary on this in the future on diversity, incentives, and the like. But for today, we will have to close up with this portion of the event. So thank you very much for joining us and spending your afternoon with us. As was mentioned, we have our premium newsletter launched and Dan’s next breakfast briefing is Thursday, the 12 January at the Capitol Hotel, so please feel free to reach out to us if you have any questions or concerns. Thank you very much for joining us. Thank you, Timothy and Dan. 

Dan:

Thank you. 

Timothy:

Thank you.