Japanese Politics Updates – December 15, 2024

Hello and welcome to the 201st episode of Japanese Politics One-on-One! Here are the latest developments in Japanese politics:

• The week closed at 153.86¥/$;
• The Diet passes a ¥13.9 trillion Yen supplementary budget. LDP/Komeito was able to accommodate the opposition to get it through. Moving-on to new business for the remaining week of this Extraordinary Diet Session;
• The Lower House Ethics Committee as well as the Upper Houses’ Ethics Committee will now convene to question those Members implicated in the slush funds scandal;
• Mr. SugaIs trip to South Korea today, aiming at fostering relations that had been pretty strong but are under threat du to the current situation didn’t take place. Similarly, last week’s US Secretary of Defense Lloyd Austin’s visit didn’t happen, due to the roiling political turmoil there;
• The 2026 budget is now being prepared for presentation in the new Diet of 2025. Big-ticket issues are paying for the defense budget, the tax-free income threshold, the proposed free-education and the continuation of the gasoline & power subsidies.

Political Turmoil in South Korea: President Yoon’s Impeachment and Its Implications

South Korea is experiencing political upheaval, destabilizing its role as a key ally in the Japan-US-South Korea trilateral relationship. President Yoon Suk Yeol, initially favored by the Biden administration and credited with improving relations with Japan, has faced significant challenges. After narrowly winning his election and losing legislative majority earlier this year, he became politically vulnerable.

Efforts to impeach Yoon succeeded following a failed Martial Law attempt last week, with restrictions imposed on his international travel. His brief declaration of martial law 12 days ago exacerbated tensions, leading to escalating instability. The opposition party argues that Yoon’s impeachment is essential to restore order, underscoring the gravity of the situation.

Political Funds Reform in Japan: A Contentious Debate in the Diet

The Japanese Diet is grappling with political fund reform, an issue that has taken center stage after Prime Minister Kishida pledged to revise the Political Contributions Control Act. This promise was made in response to scandals involving undisclosed slush funds within the LDP, particularly linked to the Abe faction. The proposed reforms aim to address long-standing issues through three main pillars:

Corporate Donations: The LDP, heavily reliant on corporate donations and income from study groups (benkyokai), faces scrutiny over its funding mechanisms. Opposition parties demand greater accountability and limits on these practices, which remain the foundation of LDP’s financial support.

Transparency: One of the key reforms involves requiring reporting all political funds publicly. Historically, LDP factions used unregulated “activity funds” provided by the party, sometimes over a million yen, without obligation to disclose how the money was spent. Reforms seek to either cap or eliminate these unreported funds.

Oversight: To ensure fairness and compliance, a third-party monitoring organization is under discussion. This entity could either be formed within the Diet structure or contracted to external firms. Its role would be to audit and enforce transparency across all political parties.

Despite Ishiba’s efforts to push forward these reforms, resistance from within the LDP has been significant. While opposition parties have intensified their demands, the Diet session’s limited time—just one week remaining—makes the passage of comprehensive reforms unlikely. Concessions granted during the passage of the Supplementary Budget may ease some immediate tensions but risk postponing the issue into the upcoming ‘25 Session.

The debate underscores growing public frustration with opaque political funding practices. If the reforms fail to meet expectations, dissatisfaction could heighten, and the issue may dominate the political agenda in the months ahead. Elections for ½ of the Upper House is this summer, so maneuvering is already underway.

Trump’s Inauguration Invitation to Xi and Rising Tensions in the Taiwan Strait

President-elect Trump extended an invitation to Chinese Premier Xi Jinping to attend his inauguration in January, an unconventional gesture in U.S. diplomacy. Traditionally, ambassadors represent foreign nations at such events, not their heads of state. Xi has reportedly declined, likely due to political sensitivities. The invitation, seen as a calculated move by Trump, creates a no-lose situation for Trump: Xi’s acceptance or rejection each sends distinct messages, but Xi’s absence aligns with diplomatic norms.

Meanwhile, tensions in the Taiwan Strait have escalated. Chinese military drills have intensified, effectively blocking the strait and creating a sense of regional unease. Although this issue has been largely underreported, its strategic implications are significant. The timing of Trump’s invitation, amidst this heightened military activity, could be interpreted as an attempt to manage or mollify these tensions. However, the situation remains fraught and will likely draw greater attention in the coming weeks.

Japan’s Extraordinary Diet Session: Budget, Ethics, and Political Reform

The extraordinary Diet session has been a pivotal period for Japan’s political landscape. It began with Prime Minister Ishiba attending the G20 and APEC summits before returning to deliver a policy speech to both Diet houses. The process has since evolved through key stages, including budget deliberations, ethics inquiries, and contentious debates on political reform.

Supplementary Budget Process

A primary focus of the session was passing the Supplementary Budget, a cornerstone of this Session’s agenda. The Budget Hearings provided an opportunity for opposition and even ruling party members to challenge Ishiba and his Cabinet on various policies. Despite initial friction, this budget passed after intense negotiations, with concessions made by the LDP to secure support from opposition parties.

Ethics Committees and Slush Fund Scandals

In response to scandals involving LDP members and the existence of a substantial, long-ongoing slush fund, both the Upper and Lower House Ethics Committees are holding hearings. These sessions aim to address violations of campaign finance rules and restore public trust.

• Lower House: Fifteen implicated members will face questioning on December 17, 18, and 19. Participation is voluntary, not under oath, and proceedings are not televised;
• Upper House: Twenty-three members will answer questions, with higher stakes as many face re-election next summer. The LDP has firmly stated that members who refuse to cooperate will lose party support in the upcoming elections; about half are up-for-reelection.

Political Reform Debate

The Diet has also seen intense discussions on political reform. All 10 parties have submitted competing reform bills, reflecting deep divisions on how to proceed. The LDP has resisted sweeping changes, leading to protracted negotiations that are unlikely to yield immediate results. However, the outcomes will shape public perception and political dynamics heading into the next election cycle.

The Extraordinary Session has highlighted both progress and deep-seated challenges in Japan’s political system. The coming week will see critical developments, especially in Ethics Committee Hearings and on political reform, setting the stage for future debate.

Japanese Public Opinion Poll Results: December Update

Recent polling by Jiji Press provides a glimpse into the fluctuating dynamics of Japanese political support. Known for its critical stance on government performance, Jiji’s survey underscores declining approval ratings and the public’s general dissatisfaction with political parties.

Prime Minister and Party Ratings

• Ishiba’s Approval fell to 26.8%, a drop of 1.9 points from the previous poll.
• Disapproval increased to 41.8%, signaling growing dissatisfaction with PM Ishiba’s performance.

Support for major political parties remains tepid, reflecting public disillusionment:

• LDP (Liberal Democratic Party): 19.1% (slight decline).
• Constitutional Democratic Party: 6.7%.
• Democratic Party for the People: 5.7%, suffering a drop following leader Yuichiro Tamaki’s controversy.
• Komeito: 4.3%.
• Ishin-no-Kai: 2.5%.
• Reiwa Shinsengumi: 1.6%.
• Communist Party: 1.5%.
• Smaller parties, including Sanseito, the Conservative Party, and the Social Democrats, garnered less than 1% support.

Tamaki Controversy and Public Opinion

Yuichiro Tamaki, leader of the Democratic Party for the People, faces scrutiny due to a personal scandal. Currently on a three-month hiatus from leadership, Tamaki plans to return by March 3, 2024. Public opinion is divided. Jiji Press reports:

• 36.3% believe Tamaki should resign.
• 38.4% support Tamaki’s eventual return, viewing the scandal as minor and a temporary absence as sufficient.

These figures reflect a cautious electorate, with many voters reserving judgment and seeking tangible leadership actions before committing support. The landscape remains volatile as parties grapple with internal challenges and public skepticism.

Questions from the Audience Addressed Exclusively During the Briefing

• Both the Biden and Trump Administrations appear to be against the Nippon Steel acquisition of US Steel, what were the errors made in the approach, and how could it have been done better?
• It seems that the media sensationalized the US Steel acquisition; is this something that Japanese companies should take into account going forward? 
• Mrs. Akie Abe, Shinzo Abe’s widow, is visiting Mar-a-Largo today, potentially to meet with Trump. For PM Ishiba, doesn’t  this highlight Ishiba’s challenge in establishing his own rapport with the incoming US administration?
• There are reports that the Trump Team is proposing George Glass, former US ambassador to Portugal as the next Japan Ambassador. What are your thoughts on this?