Japanese Politics Updates – August 25, 2024

Welcome to the latest Japanese Politics Update. The 185th episode of the “Japanese Politics One-on-One” is has come to life through the collaboration of Langley Esquire and Japan Expert Insights.

Here are the summertime events in Japanese politics that happened during last week hot-off-the-Press!

• The dollar-yen exchange rate showed a notable improvement from our report last week: Friday’s close was $/¥146.07;
• The LDP Election Committee decided to extend the campaign period, setting the election date for the 27th of September. This allows for a 15-day campaign period for the LDP’s next president;
• The number of potential candidates for the next president of the LDP may be the largest in postwar history, with potentially 12 individuals running for the position;
• So far there are two officially announced candidates: Takayuki Kobayashi from Chiba Prefecture and Shigeru Ishiba, running for a fifth time;
• The Constitutional Democratic Party is also navigating a leadership contest. This contest has inadvertently overlapped with the LDP election (which they distinctly wanted to avoid!);
• Kenta Izumi, the current leader, faces a challenge from contenders including former CDP President Yukio Edano AND former Prime Minister Yoshihiko Noda. And there could be some other contenders as well. So who said the LDP is the only party with factions?!?;
• The Komeito party will hold its convention the day after the LDP election, politely extending an invitation to whoever happens to then be the LDP President (and soon to be PM). Just a tiny bit awkward.

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

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Update: LDP Leadership Race

LDP Leadership Race Gains Momentum

• The LDP leadership race is heating up, with two prominent figures officially announcing their bids: Takayuki Kobayashi and Shigeru Ishiba. 
• For Ishiba, this marks his fifth attempt to secure the Prime Ministership. He has had four previous bids in which he fell short (he stayed out of the last race).
• On the other hand, Kobayashi at 49 years old is making his first run, gaining attention as the first to declare his candidacy. His early entry earned him significant recognition … and positions him as a strong contender. Showed “leadership”, I thought.

A Shift from Tradition 

• The traditional factional influence appears to be waning, with Policy Study Groups assuming the forefront. 
• In previous elections, faction bosses would dictate the candidate-selection, resulting in only two or three serious contenders. 
• However, this time around, even within a single faction, multiple candidates are emerging. 
• Notably, Taro Aso’s faction might see two candidates. The Kishida faction could also have several contenders, including Yoshimasa Hayashi and Yoko Kamikawa. This is heretofore unheard of!

More Potential Candidates?

• Other potential / likely candidates include 
  • Kono Taro
  • Shinjiro Koizumi 
  • Sanae Takaichi
  • Toshimitsu Motegi
  • Seiko Noda

Strategic Benefits of Running for Prime Minister

• For politicians, entering the race is a smart and strategic move. 
• The worst-case scenario is losing the election but being remembered as someone who ran but wasn’t successful. However, the benefits of participating far outweigh the potential negatives.
• The advantages of running extend beyond the possibility of winning. They include increased visibility, the opportunity to influence policy, and the very real potential to secure a key position within the new government.

The LDP leadership race is more than just an internal party matter; it has significant implications for Japan’s future. A new Prime Minister is to take office by early October, just a month before the U.S. presidential election. This timing is critical, as the outcome of the U.S. election will profoundly impact Japan’s geopolitical strategies, military spending, and overall relationship with the United States.

To provide a deeper analysis, a special lunchtime briefing is planned for you, our audience, a few days before and a few days after the LDP leadership election to discuss the potential outcomes, the formation of the new Cabinet, and the broader implications for Japan’s political landscape. Keep an eye out for these announcements as the situation matures. See how we love you?

Leadership Struggle Across the Board: CDP and Komeito

Updates on the CDP Leadership Race

• The leadership race within the Constitutional Democratic Party (CDP) has intensified dramatically. Many expect up to five candidates to potentially enter the fray. 
• This surge of contenders is highly unusual and reveals underlying issues within the party. Ideally, a political party should exhibit cohesion, strong leadership, and a clear sense of purpose: this doesn’t. 
• However, the current situation, featuring a leadership contest between several prominent figures including former Prime Ministers and past leaders, highlights a degree of internal confusion and instability.

Updates on the Komeito Party 

• On the other hand, Natsuo Yamaguchi, who has been at the helm of the Komeito for 15 years, is contemplating whether to continue in the role. 
• If the leader decides to remain in position, it distinctly suggests a general election is imminent. Conversely, his departure will signal a strategic move to reposition the party ahead of upcoming (later) political challenges.

Bank of Japan’s Recent Challenges: Governor Ueda’s Response to Market Turmoil

Recently, Bank of Japan (BOJ) Governor Kazuo Ueda has been at the center of intense scrutiny following a controversial adjustment to interest rates. 

Key Points

• Over the past two weeks, Gov. Ueda’s decision to slightly increase rates triggered significant market reactions. It also led the Japanese stock market to experience unprecedented drops, marking its most severe declines in post-war history on both Friday and the following Monday.
• In response to the turmoil, Governor Ueda was summoned before the Diet’s Financial Services Committee. He attended critical meetings in both the Lower and Upper Houses just on Friday. 
• The hearings placed him in a challenging position where every statement was closely examined and dissected for deeper meaning. 
• Ueda has pledged to improve communication about the BOJ’s decisions and discussions to prevent the sort of panic caused by recent sudden policy shifts.

For 28 consecutive months, the BOJ has struggled to meet its inflation target of 2%. Recent data indicates that inflation rates for the past month and July have been slightly higher in comparison to the same period last year. Despite ongoing efforts to manage inflation, the BOJ’s performance in this area continues to face criticism and, thus, experimentation.

Japan Announces Historic Defense Budget Increase

Japan’s Defense Ministry announced the largest defense budget request in the country’s history. 

Key Points

• Under Prime Minister Fumio Kishida’s leadership, Japan is significantly ramping up its defense spending. The country is transitioning (as you know) from the historical allocation of 1% of GDP to a planned 2% over a 5 year period. We are entering Year 3 in 2025.
• For fiscal 2025, Japan has earmarked a substantial 8.5 trillion yen (approximately 58.9 billion USD) for defense. This ambitious expenditure is part of a broader, multi-year plan to bolster Japan’s defense infrastructure and readiness.
• This increased budget will specifically fund the development and deployment of advanced defense systems, including domestically produced surface-to-ship and submarine-launched missiles. Japan is prioritizing the expansion of its submarine fleet and equipping these vessels with advanced missile launchers capable of addressing potential threats from North Korea and any geopolitical tensions involving Taiwan and China.
• This strategic investment aims to enhance Japan’s first-strike capabilities and overall defense posture. This is a move towards aligning with broader efforts to strengthen defense cooperation with the United States and other allies. 

The ongoing transformation in Japan’s defense strategy underscores the nation’s proactive approach to addressing evolving security dynamics and regional stability challenges.

Tri-Nation Commitment: Japan, South Korea, and the U.S. Reinforce Relations

In recent developments, Japan, South Korea, and the United States are reaffirming their commitment to strengthening trilateral relations. 

Key Points

• This re-engagement comes exactly one year after the summit at Camp David where President Yoon Suk-yeol of South Korea, Prime Minister Fumio Kishida of Japan, and President Joe Biden of the United States committed to advancing their strategic partnership.
• Since that pivotal meeting, the political landscape has shifted considerably. Unfortunately in the meantime, President Yoon is now a lame-duck leader, and both Prime Minister Kishida and President Biden are at the end of their terms. 
• Given these transitions, a new summit might seem premature, especially with the anticipated changes in leadership in both Japan and the United States.

Despite these changes, the trilateral relationship remains a crucial component of regional stability and security. The dynamics between Japan and South Korea have seen various ups and downs, reflecting a complex but evolving partnership. As the political landscapes in these countries continue to evolve, many will watch the future of their alliance closely. There is considerable potential for new leadership to shape the next phase of their strategic collaboration. But still very dicy.

Update: U.S. Presidential Race

We’re also beginning to hear more developments in the US with regard to America’s own Presidential Race.

Key Points:

• This past week, Kamala Harris officially accepted her nomination for President of the United States from the Democratic Party. Harris is set to face off against Donald Trump in the upcoming election, a matchup that has generated considerable anticipation. 
• In a dramatic turn of events, Robert F. Kennedy Jr. has withdrawn from the presidential race as a third-party candidate and endorsed Donald Trump. This announcement, made on Friday, followed Harris’s acceptance speech and added a significant twist to the electoral landscape.

Questions from the Audience Addressed Exclusively During the Briefing

• How can the G7 address its declining global influence, with its global GDP share dropping from 70% to 40% … and shouldn’t it consider inviting new members like India to regain standing?
• Given that China imposed a ban on Japanese seafood a year ago due to the radioactive water release, Chinese fishing vessels continue to operate in Japan’s waters pilfering the same fish. What steps can the Japanese government take to encourage China to lift this politically motivated ban?
• With the current shifts and developments in Japanese politics, is there any reason to be concerned about the potential impact on the country’s stability or policy direction?
• When multiple candidates from the same faction run for the Presidency, it effectively creates an impression of reform. Considering that the race might be decided in a second runoff vote, how do you think this scenario will influence the candidates’ strategies and performance?
• Are some candidates strategically positioned by former faction leaders to split votes among their rivals? For instance, could Seiko Noda be aiming to divide Sanae Takaichi’s support, or Saito Ken to fragment Ishiba Shigeru’s votes? 
• Does the timing of a candidacy announcement impact a candidate’s chances of winning an LDP leadership election? Especially if, like Shinjiro Koizumi, a candidate’s intentions are leaked prematurely or if they have already secured significant support?
• It’s intriguing to see how political dynamics shift, with figures like Kono Taro seemingly losing prominence to younger candidates like Shinjiro Koizumi and Takayuki Kobayashi. Does this change suggest potential trends for who might emerge as leading candidates for the LDP presidency and premiership over the next 15 or so years?
• Given that the LDP will likely need to form a coalition to secure a majority after this election, how might their agenda shift to accommodate the demands and priorities of coalition partners?
• The CDP and JCP have reaffirmed the need for cooperation. Is there anything worth commenting on in regards to this development?
• The Kishida-Yoon-Biden trilateral dynamic has been a promising development. What steps do you think should the two countries take to ensure this trilateral relationship remains effective and influential in the long term?

 

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