Who Will Be Japan’s Next Prime Minister?

The Liberal Democratic Party (LDP) of Japan is in the middle of election for the party leader to replace Yasuo Fukuda.  This is important because the LDP leader is going to be the next Prime Minister.  Prime Minister is chosen by elections by members in each of two Houses: House of Representatives and House of Councilors.  If the two Houses disagree in their choices, a compromise is sought, but if they fail to compromise, the choice of House of Representatives dominates.  Thus, the political party who controls the House of Representatives ends up sending their party leader as the Prime Minister.  Currently, the LDP controls the majority of the House of Representatives.  Thus, the LDP leader will be elected as the next Prime Minister.

Five candidates are running for the LDP leader position, making this the most competitive election in 38 years.  Each LDP Diet member has one vote in the election, but each prefectural chapter of the LDP also has three votes.  Thus, it becomes important for the candidates to not only collect the votes from Diet members but also from local chapters.

The key issue for the election is the economy.  Japan’s GDP declined sharply in the second quarter of this year, and it seems very likely that Japan has slipped back into a recession.  Even during the recovery period of the last several years, the economic growth was not very strong, and many Japanese has expressed anxiety about the future. 

A popular argument sees the rise in economic anxiety as a result of the economic reforms that the government led by a former Prime Minister Junichiro Koizumi, which introduced competition in several areas of the economy.  Based on this diagnosis, many politicians, including most of the candidates for the LDP leader position, are trying to slow down or even roll back the economic reforms, to appeal to the voters.  They still claim continuing reforms and deregulation is important, but also stress the need to help the weak sectors, such as agriculture.

Taro Aso is considered to be leading the race.  This is his fourth candidacy for the LDP leader.  Among the five he seems most likely to roll back the economic reform to win the next House of Representatives Election (which needs to take place by the fall of 2009).  He has been one of the strongest supporters for the stimulus fiscal policy, which includes tax cuts.

Kaoru Yosano is more cautious about fiscal expansion.  He explicitly argues the need for Japan to increase the consumption tax rate soon.  As the current Minister of Economic and Fiscal Policy, he recently put together the government’s Emergency Policy Measures for Achieving Peace of Mind, which will be submitted to the next Diet session.  The policy measures stress the importance of fiscal sustainability but they also include many subsidies to small firms and farmers.

Yuriko Koike is the first female candidate for the LDP leader election in history.  As the Minister of Environment in Koizumi government, she put together the very successful “cool-biz” campaign.  Having received the endorsement from Koizumi himself, she positions herself to be the one who will continue economic reforms, although she also mentions the importance of protecting the weak.

Nobuteru Ishihara was also a minister in Koizumi government.  As the Minister of Administrative and Regulatory Reform, he worked on the privatization of four public corporations.  During the negotiation, he allowed push back from the politicians who have stakes in highway construction, which leads some to question his leadership.  To win support from the local chapters of LDP, he started to stress the importance of protecting agriculture and fishery, during this election.

Shigeru Ishiba sells himself as the expert on foreign and defense policy.  He stresses the importance of Japan to continue their contribution to the “war against terrorism.”  In terms of economic policy, he is probably the strongest supporter of agriculture and fishery.

So, of these five candidates, Koike seems to be most promising in continuing economic reforms, which the Japanese economy needs to achieve the true recovery and sustainable growth.  Given the popular sentiment among politicians that voters are suffering from economic anxiety and worsened income distribution resulted from the economic reforms, however, her chance of becoming the LDP leader does not look great.  Indeed, the backup from Koizumi, rather than helping her, may turn out to be fatal.


2 Responses to "Who Will Be Japan’s Next Prime Minister?"

  1. Mary Stokes
    Mary Stokes   September 15, 2008 at 3:16 pm

    Thanks for your informative post! What do you think are the chances the new LDP leader will call an early Lower House election (House of Representatives election)? Also, do you think the LDP will hold onto its position as the ruling party? Do you see Japan’s economic direction being heavily affected by who wins the Lower House election?

  2. Takeo Hoshi
    Takeo Hoshi   September 24, 2008 at 1:43 am

    Great questions (sorry for the late response). I think there is a good chance that a Lower House election will be called soon (certainly earlier than September 2009). Taro Aso attracted so many LDP support because he is considered to give LDP the best chance to win the Lower House election. But, it is not clear the best chance turns out to be good enough for LDP. Having said this, given LDP is headed by Aso and DPJ is headed by Ozawa, I do not see the economic policy direction depends very much on who wins.