Happy New Year and welcome to the 204th episode of Japanese Politics One-on-One! Here are the latest developments in Japanese politics:
- Week closes at 157¥/$;
- Former US President (‘77-’81) Jimmy Carter passes away;
- Diet currently not in session, formal session of 150 days begins on January 24th, ending with an Upper House election;
- Biden prohibits sale of US Steel;
- South Korean President Yoon avoids arrest after public prosecution officials are prevented from formally serving his arrest warrant;
- Cabinet approved a 9.4 percent increase in the national budget, to be debated in the next session and passed by April 1st;
- Trump presidency begins on 24th January…PM Ishiba unlikely to meet him before then.
Looking forward to the next ‘Ordinary’ Diet Session
The Japanese Diet will reconvene on Friday the 24th of January, with an opening ceremony presided over by the Emperor. This formal event will be accompanied with the usual pomp and splendor, with attendees in formal attire such as morning suits. While that Friday Opening Session will mostly consist of ceremonial activities, substantive legislative infighting is expected to commence the following Monday.
Challenges for Prime Minister Ishiba and the LDP
Prime Minister Ishiba and the Liberal Democratic Party face a challenging session due to their lack of a majority in the Lower House. The LDP is currently short of 13 seats necessary to secure a legislative majority in both houses of the Diet. This deficit is forcing the LDP to negotiate and form alliances with opposition parties to pass key legislation, a situation unconfronted by the LDP for over 30 years!
Major Issues at Stake:
Supplementary Budget and Legislative Priorities:
The Supplementary Budget process, which took 27 days, surfaced many of these unresolved issues. These include funding allocations and demands from opposition parties that could affect broader legislative negotiations. The most pressing task remains the passage of the main budget by April 1st.
State of the Opposition Parties
Democratic Party for the People (DPFP): Now holds 28/465 seats (up from 8), the DPFP is a potential ally but has been firm on its demand to raise the annual income tax exemption from ¥1.03 million yen to ¥1.78 million yen. This unresolved issue remains a sticking point in negotiations.
Constitutional Democratic Party (CDP): The CDP (148/465 seats) has pushed for increased government spending on disaster recovery, specifically for the Noto Peninsula, which suffered an earthquake nearly a year ago. While the government has agreed to a large portion of their demands, further discussions are likely.
Ishin-no-kai: With 38/465 seats, Ishin-no-kai is also a significant player. Their primary demand is for free public education through high school. The government has provided assurances to address this in the upcoming session, but it remains a key point of negotiation.
The LDP’s focus is on stabilizing its position and preparing for the Upper House election this summer, where half of the seats (124/248) will be contested. The exact election date is yet to be announced, but it will likely follow the conclusion of the Diet session on July 10.
If opposition parties unite and file a vote of no confidence, it could lead to the dissolution of the Lower House. This scenario would cause the Lower House election to coincide with the scheduled Upper House election. Although rare, such simultaneous elections have occurred in the past and can help towards streamlining campaign efforts.
Addressing LDP Funding Practices
The key political issue at the start of the year is the effort to bar members of parliament from receiving political funds in ways that enhance their party’s standing.
Opposition parties, including the Constitutional Democratic Party (CDP), are pushing to ban corporate and group donations to political parties. They argue that such funding practices unfairly benefit the LDP, strengthening its position while weakening others.
This debate is tied, albeit indirectly, to the recent slush fund scandal, which has cast a shadow over the LDP’s financial practices.
Ethics Committee Hearings:
The lingering issue of accountability for MPs who admitted to financial misconduct is set to resurface. These individuals confessed to receiving funds from their parties or factions without proper reporting, which constitutes a tax violation.
During the previous Extraordinary Diet Session, only about six MPs testified before the Ethics Committee. However, approximately 60 more are awaiting hearings. These proceedings could become a major flashpoint, potentially exposing unethical behavior and increasing public scrutiny.
Many of the MPs implicated in the financial misconduct scandal (~25/124) will be running for re-election in the upcoming Upper House election this summer. The ongoing hearings could damage their reputations and influence voter sentiment, creating challenges for their campaigns.
Opposition’s Strategy:
By emphasizing the need for transparency and fairness in political funding, opposition parties aim to weaken the LDP’s dominance and rally public support for systemic reform. Readers should expect these efforts to serve as a rallying cry for unity among opposition parties in the lead-up to the election.
The debate over political funding and the Ethics Committee hearings will likely dominate the early part of the year. These issues not only highlight systemic flaws in Japan’s political financing but also carry significant implications for the LDP’s standing and the broader dynamics of the Upper House election.
Other Opposition Party Demands
A significant issue in upcoming negotiations is the tax-free salary exemption threshold. This debate is shaping the dynamics between the ruling Liberal Democratic Party (LDP) and opposition parties, as Prime Minister Ishiba seeks to build coalitions to pass critical legislation and improve his political standing.
The LDP has proposed setting the annual tax-free salary limit at ¥1.23 million yen, but the Democratic Party For the People (DPFP), led by Mr. Tamaki, demands it be raised to ¥1.78 million yen. Tamaki remains firm on this demand, and if the LDP concedes, it could secure the DPFP’s votes.
Ishin-no-kai’s Demands
Ishin-no-kai, holding 38 seats, has made free public education through high school its central policy goal. If the LDP agrees to this, it could gain Ishin-no-kai’s support for key legislative measures.
Opposition Party Alignments:
The LDP needs 13 additional votes and must collaborate with one or more opposition parties. Allies include the DPFP and Ishin-no-kai. With 148 members, the CDP is unlikely to cooperate with the LDP and instead seeks to unite opposition parties against the ruling coalition. Aligning too closely with one opposition party could alienate others, complicating broader coalition-building efforts.
Potential No-Confidence Motion:
If the CDP, under Mr. Noda’s leadership, successfully unites opposition parties, they could force a no-confidence vote against the LDP. Such a move might destabilize the government and significantly weaken the LDP ahead of the Upper House election.
These coalition dynamics and negotiations will come into sharper focus by March, when the budget is expected to pass. Success in securing alliances will be critical for the LDP and Prime Minister Ishiba to maintain power and position themselves favorably for the Upper House election.
Upcoming Expo 2025 in Osaka
Another significant factor involving Ishin-no-kai is the upcoming Expo, scheduled to begin on April 13th and run until October 13th. With less than 100 days remaining, the event represents a critical juncture for Ishin-no-kai, carrying significant political and reputational stakes.
The Expo is a major project tied closely to Ishin-no-kai’s political identity and ambitions. A successful event could bolster the party’s reputation, showcasing its competence and effectiveness. Conversely, a poorly managed Expo could damage Ishin-no-kai’s credibility, potentially undermining its position in future political negotiations and elections.
By offering support or resources for the Expo, the Prime Minister could entice Ishin-no-kai to align with the LDP on legislative priorities.
Questions from the Audience
- In practical terms, how is coordination between the US and Japan accomplished?
- Could you comment on how the Nippon Steel acquisition of US Steel could have been better managed?
- Which of President-elect Trump’s anticipated executive orders do you think will have the biggest impact on Japan?
- What are the chances of a change of government once the 2025 budget has been passed?
- Do you think that a Trump-Ishiba meeting will have a favourable effect on Ishiba’s popularity?
- What are your thoughts on a proposed rise in corporate taxation?
Are you familiar with “Tokyo on Fire”? Episodes are available on YouTube “Langley Esquire”: excruciatingly-gained insights sifted over 40 years in-country! Entertainingly presented.
“Japanese Politics One-on-One” episodes are on YouTube “Japan Expert Insights”.
If you gain insight from these briefings, consider a tailored one for your Executive Team or for passing-through-Tokyo heavyweights.
To learn more about advocacy in Japan, read our article “Understanding the Dynamics of Lobbying in Japan.”
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