Japanese Politics Updates – August 11, 2024

• On Monday, Japan experienced its largest market drop in history, following a significant decline the previous Friday. Then the largest improvement in Japan’s history followed on Tuesday. What a rollercoaster: stay tuned for more action here.
• The yen, which had strengthened dramatically, saw its value shift from $/¥160 to $/¥141 in just five weeks.
• Japan went through a major earthquake on Friday. This led to a nationwide alert from the National Meteorological Agency for the first time. This is pretty serious as the predictive model has improved vastly since the triple disaster of March, 13 years ago. The next two weeks will be telling (we are told).
• The LDP (Liberal Democratic Party) election committee is set to hold its second meeting on August 20th. The committee will discuss rules and movements for the upcoming election campaign. What happened in the first meeting is pretty remarkable in itself.
• The CDP (Constitutional Democratic Party) has planned its leadership election for September 23^rd. Though they have strenuously attempted to avoid the same mistake as three years ago, it seems they have craftily been maneuvered into the same being-overlooked-due-to-overlapping-LDP-election situation.  Consternation abounds.
• The Nagasaki Mayor’s decision to exclude Israeli Ambassador Cohen from the 79^th Annual Memorial Ceremonies caused a huge diplomatic stir. Huge criticism from G7 Ambassadors, saying in unison the exclusion of Israel was unjustifiable. 

So, let’s dive deeper and see what-else transpired during this dramatic week:

Japan’s Market Turbulence and Government Response

By the end of the week, the Japanese markets experienced a significant correction. On Friday (two days ago), it seemed the volatility / urgency has almost vanished. The fluctuations, however, are anything but minor, leaving many investors (and your correspondent) unsettled. 

Key Points:

• Prime Minister Fumio Kishida’s administration has been striving to encourage investments, particularly of money kept as personal savings, which generate minimal interest. His Administration’s goal is to stimulate economic activity by having this money invested more productively, particularly through stock market investments that could yield better returns for individuals and, in turn, for the national economy. Getting old dogs to do new tricks is proving to be more difficult.
• Last week’s market turmoil came as a shock to many: Following significant losses on Friday and Monday, private investor’s confidence has been understandably rattled, prompting many to withdraw from the market. This reaction runs counter to Mr. Kishida’s virtuous economic-cycle policy … less than two months before the LDP presidential election!
• Adding to the complexity: The yen had been strengthening, which brought mixed effects, mostly good and welcomed. While the stronger yen benefitted exporters by increasing the value of their goods overseas, it makes Japan a slightly less attractive destination for tourists, given the reverse in exchange rates.
• The market’s rapid oscillations were evident: It began with a 12% loss on Friday, another 12% drop on Monday, and then the largest market gain in history by Wednesday. By the end of the week, it seemed as if nothing had happened, underscoring the market’s unpredictable nature.
• Foreknowledge of the impending turmoil? Interestingly, the Prime Minister had recently met with key financial leaders, including Finance Minister Shunichi Suzuki and Deputy Prime Minister Taro Aso, in a series of dinners that garnered attention. While it might seem routine Cabinet members to meet, these particular gatherings are notable for their timing. They took place just before the market’s dramatic movements, suggesting that there might have been foreknowledge of the impending turmoil.

The Kumamoto Earthquake: Unfolding Events and Government Response

On Friday, the island of Kumamoto in southern Japan experienced a significant earthquake, registering a magnitude 7.1. This event was not catastrophic in terms of human casualties, with only 16 reported injuries and minor structural damage. It has nonetheless captured the nation’s attention due to its broader implications and the subsequent series of tremors that have followed.

Key points:

• The earthquake was somewhat anticipated: The National Meteorological Agency had detected vibrations two days prior on Wednesday and issued advisories. These advisories were more precautionary, reminding the public of safety measures during an earthquake. Then, on Friday, the tremor struck, leading to immediate governmental action.
• In response the Japanese government took an unprecedented step by issuing a nationwide alert. This is the first time authorities issued such an alert for an earthquake of this magnitude.  
• The situation is further complicated by additional earthquakes in the Tokyo area. These quakes, occurring on the same day as the Kumamoto event, registered around magnitude 4. Although they were less severe, their timing and proximity to the capital were unsettling.
• Prime Minister Kishida addressed the public: The Prime Minister, along with Chief Cabinet Secretary Hayashi, appeared on television within hours of the earthquake to manage expectations and reassure the public. The Prime Minister immediately cancelled his trip to attend a regional convention and 4-day visit to Kazakhstan, Uzbekistan, Mongolia. This stall in diplomacy is of concern against the backdrop of the Russian and Chinese successes in this region’s coalition-building.

Update: LDP Leadership Dynamics and Upcoming Election Speculations

The internal dynamics of Japan’s Liberal Democratic Party (LDP) are heating up as the party gears up for its leadership election. On August 7th, the LDP election committee held its first meeting, setting the stage for what promises to be a contentious battle for leadership. Their next meeting, scheduled for August 20th, is expected to finalize & publish these details, bringing more candidates out of hiding and into the fray.

Key Points:

• One of the key figures emerging in this landscape is Shigeru Ishiba: Although he has not officially declared his candidacy, Ishiba has continued to make significant moves indicating intentions to run. For instance, Ishiba recently published a book, essentially serving as a manifesto outlining what his administration might look like. Some interpret this move as an unmistakable prelude to his potential candidacy. 
• A strategic move from Ishiba? In fact, during the committee meeting, Ishiba proposed changes to the election rules by advocating that younger LDP members receive more weight in voting power. This proposal, while intriguing because of Ishiba’s considerable popularity among younger Diet members, was slapped-down without much debate and a little egg-on-face.
• Prime Minister Kishida revives interest in constitutional revision: Prime Minister Kishida, yet to announce his candidacy, surprised everyone by reigniting interest in Constitutional Revision last week. This is a surprising move given his well-known dovish reputation and the timing around the Nagasaki and Hiroshima memorials. But then again, everyone knows this is a hot-button for the (former?) Abe Faction and this obviously is a ploy to court them, the largest by-far of all political groupings within the LDP.
• To run for the LDP presidency candidates must secure at least 20 endorsements from party members. With 366 members in the LDP, and potentially nine candidates vying for leadership, securing these endorsements (even in better circumstances) is a challenge for some. 
• Kishida is unlikely to struggle with this requirement while Ishiba, despite his popularity, may face more difficulties, as indicated by a lukewarm response at a recent luncheon he hosted for supporters: seven showed-up.
• Taro Kono, another potential contender, finds himself in a different situation: With Ishiba likely entering the race, Kono will face tough competition in the upcoming election. He needs Taro Aso’s endorsement, which complicates his prospects. Aso appears more aligned with Prime Minister Kishida or even Secretary General Motegi, than with Kono who belongs to the Aso Faction. Curious.
• The relationship between Kishida, Aso, and LDP Secretary-General Toshimitsu Motegi is another critical element: The three have led the party together since the Abe faction dissolved. However, Kishida’s decision to ban factions created tensions. Despite this, Kishida and Aso seemingly have repaired their relationship, understanding the importance of alliances in the upcoming election. In politics, it is all about the numbers.

Poll Results: Approval Rating for LDP Candidates, The Kishida Cabinet, and Party Support

The recently released poll from July provides some insights into public opinion surrounding 9 potential candidates for Japan’s Prime Minister. 

Key points:

• Shigeru Ishiba is leading the pack with 18.7% of the respondents supporting him as a candidate for Prime Minister. This strong showing underscores his popularity, especially given his previous four leadership attempts.
• Shinjiro Koizumi comes in second at 12.5%. Despite his father, former Prime Minister Junichiro Koizumi, expressing doubts about his readiness, there seems to be significant public interest in seeing him running.
• Sanae Takaichi is third with 6.5%, while Taro Kono has seen his support drop to 5.2%. This decline might impact his decision to run, especially considering the competition.
• Fumio Kishida and Yoko Kamikawa are both at 4.7%, which is relatively low for an incumbent Prime Minister. This reflects public dissatisfaction with Kishida’s leadership.
• Toshimitsu Motegi and Seiko Noda are also both at 1%. The poll also highlights some lower-profile candidates, including Takayuki Kobayashi, a four-term Lower House member from Chiba, who garnered 0.3%. Despite his low rating, there is growing momentum behind his candidacy, particularly from younger LDP members. He is truly a dark-horse candidate if he becomes one. We rate this somewhat highly.

Regarding the broader political landscape:

• Cabinet approval ratings have increased 3.9% to reach 19.4%. However, disapproval remains high at 53%, despite its 4% decrease from the previous month.
• In terms of party support, 28.8% of respondents said they would vote for the LDP. Meanwhile 9.9% expressed support for the Constitutional Democratic Party. That is a big gap.
• The LDP remains the dominant party, but there is notable discontent: 42.7% want the LDP to continue leading the country. At the same time, nearly 30% favor a change in government.
• A large portion of voters (65.5%) remain unaffiliated with any party, highlighting the potential volatility and importance of swing voters in the upcoming elections. This swing vote is incredibly important, though fickle: thus, we get the tail-wagging-the-dog scenario.

The Evolving Political Landscape within The LDP

The political landscape within the LDP is becoming increasingly complex as various factions and power players position themselves for influence in the upcoming leadership election. Here’s a breakdown of the key dynamics:

Key Points:

• Taro Aso’s Faction: Aso, as the Deputy Prime Minister (throughout the entire Abe & Suga & Kishida Administrations), is one of the most influential figures in the party. This is not just because his faction is the only one that hasn’t disbanded. While it’s almost inconceivable that Aso will run for Prime Minister himself, he holds significant sway over the race. Aso might lean towards supporting Fumio Kishida, the current Prime Minister. This is despite Kishida’s relatively low approval ratings because sticking with the incumbent might be seen as a safer bet.
• Yoshihide Suga’s Faction: Former Prime Minister Suga harbors resentment towards Kishida, as he believes Kishida’s rise contributed to his loss of the premiership. Suga is likely to back Shigeru Ishiba or Shinjiro Koizumi. Both of them are seen as potential challengers to Kishida. Suga and Taro Kono share a political base in the Kanagawa District. This adds another layer of complexity to their relationship, glossing-over what a disaster that would be to the Kono-Aso relationship.
• Emerging Figures: Meanwhile, younger LDP members are pushing for fresh leadership. Takayuki Kobayashi, a relatively young and rising star, has garnered support from these members who are concerned about the party’s prospects in light of ongoing scandals and a recent unbroken string of election losses. Kobayashi’s backing from influential figures like Amari Akira further boosts his profile.
• Election Concerns: There’s a growing worry within the LDP about the timing of the next Lower House election. Such an election could happen anytime between the new Prime Minister’s selection and the end of the year. The LDP has struggled in recent by-elections. There’s fear that the party could lose its majority in the Lower House if an election were unskillfully held too soon.

As we move closer to September, more candidates are likely to declare their intentions. The internal power struggles will also become clearer. Key figures like Ishiba and Kishida have already signaled their candidacies. Meanwhile others, like Kono, are still to decide. Observers are watching them closely due to their strong reputations both domestically and internationally. The outcome of this race will have significant implications for Japan’s political future, and that impact will be immediate.

A Dramatic Opening Pitch: The Tokyo Governor’s Unexpected Fall

Tokyo’s newly re-elected governor, Yuriko Koike, found herself in an unexpected situation. 

Key Points:

• To celebrate her recent victory in the governor’s election: Governor Koike, at 72 years old, took to the mound at a baseball game held at the iconic Jingu Stadium in Tokyo. 
• However, the event took a surprising turn: As she threw the opening-pitch, her knee seemed to have collapsed and she lost her balance, falling to the ground. The fall was immediately concerning, and she was quickly taken to the hospital for evaluation.
• There has been no indication that the incident will impact her ability to serve as governor: However, the mishap may serve as a reminder of Koike’s age and the physical demands of her public role. Back at her office, Koike reportedly remarked with a touch of humor and finality, “That’s it for me,” suggesting that she will think twice before participating in such events again. We wish the Governor a speedy recovery.

Questions from The Audience Addresses Exclusively during the Briefing

• How do Japanese politicians communicate their “intentions” to the public? 
• Do you think there’s any possibility that the LDP might postpone the presidential election until November or even into next year?
• If Ishiba doesn’t win the LDP presidential election to become Prime Minister, which ministry should he lead in the government?
• Are PM Kishida’s actions—canceling his trip to Central Asia, meeting with unrecognized atomic bomb victims, and raising the issue of constitutional revision—part of his strategy for the LDP leadership election?
• You provided a list of potential LDP leadership and Prime Minister candidates and noted that Shinjiro Koizumi will likely not participate. Is there a sense among LDP members and top leadership that, given the younger generation’s lack of political interest, there’s an urgent need to include more younger candidates?
• With semiconductor companies like TSMC, Micron, and Samsung investing in Japan, do you think Japan could become a manufacturing powerhouse again, as it was in the ’80s and ’90s, or will the shrinking workforce hinder this comeback?
• Regarding JD Vance, known for his book on addiction and social issues, and whose wife mentioned his tolerance of vegetarianism at the Republican Convention, what is the Japanese Communist Party’s opinion of him?