Fumio Kishida, Japan’s Prime Minister, announced that he will resign next month in response to public disapproval following several political controversies and mounting living costs, which tainted his three-year tenure. This move has instigated a race for his successor. Kishida made this significant decision with the intention of advancing political transformation, noting that “Politics cannot continue to function devoid of public faith. His statement was made public at a press meeting identifying his decision not to pursue re-election as the leader of the Liberal Democratic Party (LDP).
The LDP has planned a leadership contest in September, and the victor will potentially assume the role of Japan’s Prime Minister. Kishida’s popularity began to wane rapidly after stepping into his role in 2021, following the exposure of the LDP’s controversial association with the Unification Church. Additional scrutiny was incurred when an illicit fund of undisclosed political contributions, collected at LDP fundraiser events, was uncovered.
The public’s frustration grew due to the stagnation of wage growth amidst escalating living costs as Japan seemed to recover from years of deflationary struggles. According to Sophia University’s Political Science Professor Koichi Nakano, “a sitting LDP Prime Minister can only participate in the Presidential race if a win is guaranteed, much like the highest-ranking sumo wrestlers or yokozunas. Victory is not sufficient, it must be achieved gracefully.”
Any new leader must re-establish public faith in the LDP, address the growing cost of living, resolve escalating geopolitical issues with China, and deal with the potential re-election of Donald Trump as US President the following year.
During his tenure as the eighth-longest serving post-war leader, Kishida diverged from the previous economic policies and rejected company-centric profit-driven economics in favour of policies stimulating household earnings, with strategies including wage increase and incentivising share ownership. Kishida was instrumental in leading Japan out of the Covid crisis through substantial stimulus efforts, as well as appointed Kazuo Ueda to lead the Bank of Japan (BOJ) past the dramatic monetary stimulus strategies of his predecessor.
In July, however, the BOJ unexpectedly increased interest rates amidst growing inflation, causing volatility in the stock market and a surge in yen value. Shoki Omori, chief Japan desk strategist at Mizuho Securities in Tokyo, suggests that Kishida’s departure could result in stricter fiscal and monetary conditions, contingent on the subsequent candidate.
In summary, assets subject to risk, notably shares, are anticipated to experience the greatest impact, as stated by an analyst. A swiftly changing climate of security characterised the term of Mr Kishida as Prime Minister, influencing Japan to reconsider its characteristically pacifist approach. His tenure witnessed Japan’s most significant military reinforcement since World War II, as defence spending doubled in a bid to prevent neighbouring China from asserting its territorial intentions in East Asia through the use of military action.
Kishida, spurred on by Washington, healed Japan’s diplomatic wounds with South Korea. This allowed the two countries, in conjunction with their shared ally, the United States, to further their security collaboration as a response to the threat North Korea’s missile and nuclear weapon schemes pose. Naoya Okamoto, a 22-year-old office employee in Tokyo, expressed his regret at Kishida’s resignation, attributing it to the pressure from low public opinion and challenging circumstances.
Shigeru Ishiba, the ex-defence minister, is already positioning himself as a potential successor to Kishida, expressing his readiness to assume command if he secures sufficient backing, as per a report by the public broadcaster NHK. Yoko Kamikawa, the current Foreign Minister, Digital Minister Taro Kono, and Shinjiro Koizumi, the previous environment minister are also reportedly in the running.
According to specialists, the LDP should nominate a candidate who represents a departure from the recent controversies encircling the party in order to secure victory in the forthcoming general elections, which are expected by the end of the third quarter in 2025. Political analyst Atsuo Ito cautions against the possible severe consequences for the party if it ignores public censure concerning political funding scandals when deciding its next leader. He suggests the LDP should opt for a younger candidate without connections to the existing administration, who can introduce a rejuvenated version of the party. -Reuters
(c) Copyright Thomson Reuters 2024