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Japanese Politics Updates – May 12, 2024

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Welcome to the 17th Japanese Politics update, which went on air on May 12, 2024. The briefings come to you every week through the collaboration of Langley Esquire and Japan Expert Insights.

Crown Prince of Saudi Arabia to Visit Japan

The Crown Prince of Saudi Arabia Mohammed bin Salman is on schedule to visit Japan for three days. He will be arriving next Monday on the 20th. During his visit, he will lunch with the Emperor and Empress and meet with Prime Minister Kishida. This marks a significant event as it is the first post-COVID visit by a Saudi Crown Prince to Japan.

Fallout of The By-Election?

The recent By-Election results have generated significant implications for the Liberal Democratic Party (LDP) and other political entities. With the LDP losing three seats and one opposition party gaining three, there has been a notable shift in the balance of power within the Lower House. Moreover, nine out of the 27 members the Ethics Committee now belong to the Constitutional Democratic Party. These changes in the composition of the Committee, empower them to demand testimonies. Although the LDP can technically refuse such demands(together with Komeito holding 14+ Committee seats), doing so could tarnish their image. Particularly, as opposition parties push for forty-four LDP members to testify regarding their involvement in the kickback scandal, those implicated are apprehensive about the potential repercussions on their political futures, leading to reluctance to engage with the media or testify. Push is coming to shove.

Mr. Mori’s Testimony

Former Prime Minister Mori, credited with originating the concept of the kickbacks in the first place (20 years ago!), may soon face a summons to testify. However, some anticipate that Mori may cite health issues to evade testifying. Meanwhile, revelations have emerged in the trial of the Accountant for the Abe faction. He readily confessed to concealing funds as directed. Notably, under current legislation, accountants bear legal responsibility for such financial irregularities, rather than those issuing instructions or benefiting from the funds. In response to the ire this loophole generates, the Prime Minister has pledged to introduce amendments to the law addressing this matter in the ongoing legislative session. Let’s see what actually happens.

Economic Security Clearance Bill Passed the Upper House

The Economic Security Bill successfully cleared the Upper House and is poised to become law in the forthcoming fiscal year. This legislation grants the government authority to designate specific economic data as possessing security significance. It also enables them to impose restrictions on its accessibility. Are you catching this? Further, prospective individuals seeking access to this classified information will undergo a stringent vetting process, with the possibility of being denied access entirely. Consequently, the enactment of this bill heralds a substantial transformation in the handling of economic data. The implications will be far-reaching for both businesses and individuals entrusted with access to such “sensitive” information. Consider exactly who decides…

More Controversy: Defense Minister and Environment Minister Under Fire

As for unfortunate timing, this week saw the Kishida Cabinet engulfed in not just one, but two more incidents. The incidents involved the Defense Minister and the Environment Minister. Not quite rising to the level of “scandal”, the Defense Minister issue erupted following the leak of drone video depicting the deck of a revamped and classified Japanese helicopter aircraft carrier in-port. This video was captured clandestinely, then circulated and scrutinized on Chinese social media platforms, which of course sparked the highest-level of apprehension and concern regarding security and military confidentiality.

In response, the Prime Minister reprimanded the Defense Minister for the breach. Concurrently, the Environment Minister faced backlash amid an incident where, in a meeting with Minamata disease patients, the microphones of testifying patients were abruptly cut (“sorry, your time is up!”), provoking widespread public indignation. Instructed by the Prime Minister, the Environment Minister issued an apology, pledging heightened government sensitivity to the populace’s concerns. These two incidents might otherwise escape much attention. However, in the current environment, concerns beyond their immediate ramifications potentially influence the LDP’s electoral standing, especially if a no-confidence motion were to prompt an election. Obviously, the Prime Minister must have been livid.

Upcoming Race for Governor of Shizuoka

As you may know, the Governor of Shizuoka stepped down following contentious comments regarding new graduates of the Prefectural Office. His sudden resignation triggers a gubernatorial election. (You can just imagine the Prime Minister pulling-out more of his hair, “oh holy hell, what next?!?”) Specifically, in this prefecture over the last 4 years, no less than 3 LDP Lower House Members have resigned (!) due to sex & money scandals. So, whoever the LDP promotes as a candidate already has this legacy to contend with.  In any event, six contenders have entered the race, including the former mayor of Hamamatsu supported by both the Constitutional Democratic Party & the Democratic Party of the People, alongside other candidates representing coalition partners.

Most notably, the LDP has opted not to field its own candidate but is instead throwing its support behind an independent candidate, a former Vice Governor and career bureaucrat in the (don’t you just know it) the Internal Affairs Agency. Despite being considered the favorite, the LDP-backed candidate faces stiff competition from other contenders. Specifically, the CDP and DPP endorsed the former mayor, while Komeito (oh this is dangerous!) has maintained a neutral stance, perceiving little distinction between the LDP-backed candidate and the former mayor. The LDP harbors concerns (probably a stronger word is better?) over the prospect of experiencing a fourth consecutive electoral defeat. They recognize the potential damage such an outcome could inflict on the party’s reputation and level of public support. Things are really getting dicey.

Opportunities for Kishida to Remain as Prime Minister

Prime Minister Kishida faces two critical junctures to maintain his position: the upcoming LDP presidency race in late September and the potential decision to call for a snap election. Should he opt for the latter, his position as PM evaporates and, within 30 days, the Parliament selects the new PM. It is highly likely the LDP will lose 40-60 seats, thus his tenure as Prime Minister could be jeopardized. Given the possibility of an even more-dire situation by waiting until September, some pundits argue that calling a snap election represents his best chance of securing stability.

However, the legislative calendar imposes a constraint on Prime Minister’s decision, as the current Diet session concludes on June 23rd; closing-down the House requires the Diet to be in session. Moreover, with the Tokyo gubernatorial election scheduled for July 7th, closing the Diet before June 23rd could potentially align the gubernatorial election with the Lower House election, enhancing voter turnout and political dynamics. Consequently, any extension of the Diet session to finalize pending bills or conclude Ethics Committee investigations may serve as an indicator of the likelihood of a snap election. We are watching this very closely.

Privacy Policy

Yen Strengthens; Real Household Consumption Continues to Fall

Following the Bank of Japan’s intervention, which involved purchasing billions of dollars worth of Yen, the currency experienced a notable strengthening, appreciating from $/¥ 160 to 155 against the US dollar. However, amidst this currency fluctuation, Japan has been grappling with economic challenges on multiple fronts. Real household consumption has seen a decline for the past 13 consecutive months, while real wages have continued to fall for 24 straight months despite attempts to bolster earnings. Consequently, the persistent decline in real wages coupled with rising inflation has resulted in a decrease in overall wealth and financial well-being for the populace. Not a good springboard for the Administration.

New Currency for the Japanese Yen

Apologies for not covering this topic in last week’s Briefing. In July, Japan will introduce three new denominations equipped with advanced security features, including a 3D hologram, aimed at thwarting counterfeiting attempts. While the new bills will feature new ¥1,000 yen, ¥5,000 yen and ¥10,000 yen notes, the existing bills will remain valid and can be exchanged for the new currency. This initiative marks a significant step towards enhancing the integrity of Japan’s currency and ensuring continued trust in its monetary system. Some see this as a step towards eventual-reliance on predominantly digital cash for all transactions.

Potential Trilateral Meeting Between Japan, South Korea, and China

Discussions are again underway regarding a potential trilateral meeting involving Japan, South Korea, and China. However, China’s sentiments toward Japan and South Korea have been strained due to several factors, including a large delegation of Japanese DietMembers to attend the inauguration of Taiwan’s newly-elected President. Despite these tensions, the trilateral meeting is slated to take place soon, with plans suggesting it may occur before the end of this month. This meeting holds significant importance for regional diplomacy and could provide an opportunity for address existing tensions and foster cooperation among the three nations. Any step in that direction would be welcome.

Questions & Comments

  • Do other countries have interest and influence in the value of the yen? Can they act effectively to affect appreciation or depreciation of Japan’s currency?
  • As the CDP gains more seats in the Lower House, will electoral reform be on their agenda? 
  • Can you comment on whether AUKUS involvement and relations with the U.S. might impact Japanese national security?
  • Could you tell us anything specific about former Diet Member Yoshitaka Ikeda (implicated in the kickback scandal and forced to resign)?
  • How will the change in joint custody be instituted?

If you gain insight from these briefings, consider a tailored one for your Executive Team or for passing-through-Tokyo heavyweights.

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