Japanese Politics Updates – May 5, 2024

Good morning and welcome to the 169^th Japanese Politics One-on-One update. This episode is delivered to you through the collaboration of Langley Esquire and Japan Expert Insights. Today is Children’s Day, marking the end of Golden Week in Japan. Today I am reporting from Habu Harbor on Oshima Island.  Habu is a collapsed caldera at the southern tip. You might recall that last Sunday, from Hota Port on the Chiba Peninsula, I boarded sailing vessel Garuda, a 33’ Perkinson-built yacht (45 years old). We will sail ~24 hours to Mikurajima, the furthest island in the 7 island Izu chain. From there, I have been island-hopping to other islands in the chain, gradually working my way back towards Tokyo Bay. Thus, my gruff appearance and junglelike background. Anyway, here’s what transpired over the last week:

The Tim & Dan Show

Because the Diet session ends in less than 2 months (June 23^rd), and afterwards the election for Tokyo Governor (July 7^th), the tumultuous results of last Sunday’s By-Election dictate a special briefing today. Prime Minister Kishida returns from Paris/Brazil/Paraguay today, so the plan is to give him & the situation a few days to jell. We expect fireworks, so please tune-in to this update to learn more about what is going on behind-the-scenes.

The Election Results

As you are aware, the recent By-Election losses are a heavy blow to the LDP: lost all three seats. In each battle, the Constitutional Democratic Party (CDP) emerged victorious. Adding to LDP woes, LDP coalition partner Komeito is demanding reforms in response to the kickback scandal. With the CDP gaining momentum and emerging as a truly formidable opposition, the political landscape is shifting. Ishin on the other hand, though ambitious, faces setbacks. They lost in Tokyo and in Nagasaki (did not run a candidate in Shimane in a purposeful tactic to not split-the-vote). Prime Minister Kishida must navigate not just internal tensions within the LDP while addressing important broader concerns about the direction of the country. It is not a good time to be him. The coming days promise to be decisive, with potential motions of no-confidence looming large. Stay-tuned for today’s lunchtime update (25 minutes).

What Does This Mean for the LDP, for PM Kishida?

The LDP has  been the political party in power since the post war period, except for a very brief 2-year period (when Taro Aso was Prime Minister!) where the opposition party took command, then ended following the huge earthquake in 2011 and the nuclear disaster (and then Abe took over).  Despite LDP efforts to bolster their strength (and collect/distribute more cash in the process), recent scandals and electoral defeats have left them vulnerable. The strained relationship between Taro Aso and Prime Minister Kishida adds complexity, positioning Aso as a potential kingmaker in the selection of Kishida’s replacement (which both Aso and Motegi would like enormously). 

As for PM Kishida, remaining as LDP president in September is paramount. Navigating internal politics is obviously crucial but then there is the question to retain or dismiss Secretary General Motegi. While dismissing Motegi could release him to become a potential rival, it shifts ​the By-Election blame away from Kishida. However, Motegi wants ​& believes he deserves to be PM… so it is complicated. And not to heap on Mr. Kishida but the pressure to convincingly reform the LDP (which he promised for THIS session) and to initiate Constitutional revision (THIS session) are weighing heavily upon him.

In order to become the sixth-longest-serving Prime Minister (another 300+ days!), strategic maneuvering will be evident within a very short period (thus our today’s briefing).

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Travel Schedule of PM Kishida

PM Kishida’s GW itinerary has been jam-packed with visits to France, Brazil and Paraguay. Foreign Minister Kamikawa has been equally active, touring three African nations, Sri Lanka and France. In Brazil, PM Kishida engaged in a State Visit with President Lula de Sola, who will preside over the G20. (Brazil will be replacing Japan for the next two-year term.) This visit was pivotal, with 20+ bilateral agreements on bioethanol, biomap and a large business delegation in tow. The deep ties between Japan and Brazil, particularly in ethanol imports, highlight the focus on the environment. China, though, is Brazil’s largest trading partner… so there is that. I do not have much on the Paraguay portion of the trip so please stay tuned for next week.

Constitutional Revision

When PM Kishida took office, a key promise was to tackle Constitutional revision. This seems increasingly unlikely. With less than two months remaining in this Diet session, the momentum needed for such a monumental task is lacking. Right now, his main focus is on strengthening his position to secure victory in the upcoming LDP presidency race. But the emergence of strong contenders like Mr. Izumi from the CDP, scandal-free figures within the LDP (such as Mr. Shigeru Ishiba or several prominent others) and definitely Secretary General Mr. Motegi brings lots of uncertainty.

And regarding Constitutional revision, this requires two-thirds of both Houses (House of Representatives & House of Councillors) to agree on the precise language to be inserted or edited-out. A referendum where over 50% of registered-voters approve the proposed language should follow. This is a high hurdle. With the shaky coalition between the LDP and Komeito and the possibility of losing majority status in the event of a general election, pushing for a referendum under current circumstances would be distinctly ill-advised.

Japanese Yen Intervention? 

The yen has been fluctuating significantly over the past week. It surged to $/¥ 160 yen on Monday: obviously a five-alarm fire. On Wednesday, “someone” purchased ¥3.66T worth of US dollars, i.e., $24B in the open market. Immediately and for a couple of minutes, the yen strengthened to ~$/¥156. Yet, despite the propping, the yen stabilized at ~$/¥156 (just like Janet Yellen said it would). The last time the Japanese government intervened, a similar effect occurred. This only reinforces the US Secretary’s caution that such unilateral interventions are not long-lasting and require international coordination. The true background story will be revealed when the formal report from the Bank of Japan is released at the end of the month.

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