Japan’s New Coalition Paves Way for First Female Prime Minister

Japan’s ruling Liberal Democratic Party (LDP) is set to form a new coalition with the Japan Innovation Party (JIP), creating a path for Sanae Takaichi to become the nation’s first female prime minister. The coalition agreement is scheduled to be signed later today, just ahead of a crucial vote in the lower house on Takaichi’s appointment. This announcement has led to a surge in investor confidence, pushing the Nikkei 225 index to a new record above 49,000 points.

The coalition deal was confirmed by Hirofumi Yoshimura, co-head of the JIP, who stated, “After giving it careful thought last night, I telephoned LDP president Takaichi this morning to reach a coalition agreement.” The formal signing is planned for 18:00 JST. Takaichi, a prominent figure in the right wing of the LDP, has been associated with a tough stance on China and traditional values, which has shaped her political journey.

Takaichi’s bid for premiership faced setbacks after the LDP’s long-standing coalition with the Komeito party collapsed. Komeito cited the LDP’s failure to address party funding issues following a slush fund scandal as a significant concern. Additionally, Takaichi’s past rhetoric regarding China and her visits to a shrine honoring Japan’s war dead raised alarms within the coalition.

Donald Trump is scheduled to visit Japan later this month as he attends the Asia-Pacific Economic Cooperation (APEC) summit in South Korea. His visit adds urgency to Takaichi’s appointment, as unresolved trade deal discussions between the United States and Japan remain a critical agenda item. Trump is also advocating for Japan to halt Russian energy imports and increase its defense spending.

The newly formed coalition still lacks two seats to secure a majority in the lower house, but Takaichi is expected to prevail in the upcoming vote as she needs only to garner more support than her opponent in a second-round run-off.

Investor optimism is reflected in the Nikkei 225 index’s performance, which surged by over three percent upon the announcement. Yutaka Miura, an analyst at Mizuho Securities, remarked that investors are encouraged by expectations of Takaichi’s “proactive fiscal policies.” Throughout her campaign, Takaichi has signaled support for aggressive monetary easing and increased government spending, echoing the economic strategies of her mentor, former Prime Minister Shinzo Abe.

While the coalition is positioned to influence Japan’s economic policies, it will need to navigate a challenging legislative landscape, as it holds a minority in both houses of parliament. The JIP has proposed lowering the consumption tax rate on food to zero and abolishing corporate and organizational donations. Reports indicate that the JIP will not take any ministerial roles in Takaichi’s cabinet.

Takaichi faces significant challenges beyond the immediate political landscape. Japan’s declining population and stagnant economy are pressing issues that require urgent attention. Furthermore, she must address the declining support for the LDP, which has dominated Japanese politics since 1955. The rise of smaller parties, such as the populist Sanseito, which has characterized immigration as a “silent invasion,” highlights the shifting political dynamics within Japan.

As Takaichi prepares for her potential appointment, the eyes of both domestic and international observers remain focused on her next steps and the implications of her leadership for Japan’s future.