September 2, 2021

Asia

JAPAN: Suga juggles team but struggles to charm key groups; stimulus possible

BY James Brady

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( 5 mins)
  • In a fast-changing political environment, Prime Minister Yoshihide Suga looks set to contest the 29 September party leadership contest as scheduled and may call the general election for mid-October.
  • Amid a spirited challenge from Fumio Kishida, Suga will reshuffle his deck but still needs to convince three key constituencies ahead of the party vote.
  • With talk of a fourth stimulus package rising and regular departmental budget requests reaching record levels, Japan’s longer-term fiscal health may again fall victim to LDP politics.

Prime Minister Yoshihide Suga is likely to eschew a snap Lower House election this month after briefly floating the idea and meeting resistance from within his unsettled Liberal Democratic Party (LDP). Instead, he looks set to focus on retaining his position in the 29 September party presidential election, and if successful, signs then point to him calling the general election for 17 October. Yet with new twists emerging daily, the prime minister’s future remains uncertain, and there is sure to be further developments regarding challengers and three key party constituencies in the coming days.

Fumio Kishida deserves credit for making a lot of political weather since entering the leadership race last week. The former foreign minister’s proposal to set three-year term limits on LDP office-holders other than the president plays to junior lawmakers by creating more opportunities to displace the old guard at the top. His call for another big round of economic stimulus measures was a populist pitch directed to the electorate at large, while his plan for a CDC-style health crisis management agency looks eminently sensible given the government’s disjointed handling of the current pandemic. But though the carefully spoken Kishida is relatively well-respected even beyond the 46-member party faction he leads, he is also seen as lacking grit and susceptible to influence, which is why it would be a surprise if he became the front-runner in the race.

Following Hakubun Shimomura’s withdrawal, Sanae Takaichi is the only other current contender, though she is struggling to gain even the 20 sponsors necessary to formally enter the race. A run by rank-and-file favorite Shigeru Ishiba looks unlikely but cannot be discounted entirely, while Defense Minister Taro Kono could yet shake things up if he decides to run.

Suga’s challenge

Suga’s challenge remains securing the backing of three key constituencies in the party vote — the kingmakers, the more junior lawmakers, and the prefectural members. Among the kingmakers, Suga has already banked the support of the party’s longest-serving Secretary-General Toshihiro Nikai, who is now a key Suga ally along with his 47-vote faction. In post since 2016, 82-year-old Nikai was the obvious target of Kishida’s term limit plan and volubly criticized it, so it came as some surprise when it emerged soon after that Nikai would be willingly stepping down within days.

The stratagem allows Suga leeway to reshuffle the party’s top brass and bring in fresh faces ahead of the election, with a few changes in cabinet posts also likely to result. Photogenic Environment Minister Shinjiro Koizumi and even Suga confidant Kono are among the names being touted for promotion. Nikai’s departure is also an offering of sorts to the two other party grandees Suga needs to court most, former prime minister Shinzo Abe of the 96-member Hosoda faction, and current Finance Minister Taro Aso, whose eponymous group numbers over 50. For Nikai, stepping back now allows him to avoid blame for seat losses in the forthcoming Lower House poll given that the LDP is unlikely to reach the electoral high-water mark achieved under Abe last time, and the move also draws Suga into further political debt.

However, this alone will not be enough to assuage the concerns of a second key constituency, mid- and junior-ranking lawmakers in the Hosoda and Aso factions. These politicians with shorter track records to run on fear that Suga’s dismal approval numbers would put their seats at serious risk in the general election. In addition, many of the younger cohorts want to change their party’s negative association with “money politics,” and Nikai’s continued influence is seen as a barrier to this.

Moreover, this year’s leadership vote will feature greater input from a third key group, prefectural party members, whose influence was curtailed last year by special rules in the wake of Abe’s sudden resignation. This time, the prefectural parties will have an equally weighted say to the 383 parliamentarians based proportionally on local votes, and the outcome of this constituency is harder to predict. Although Suga came top in a recent opinion poll of LDP supporters’ first preferences for the next leader ahead of Kono and Kishida, his 20% showing equally demonstrated a lack of broad appeal. Among the general public in the same poll, Suga did even worse, coming only fourth with 11%, behind Kono, Ishiba and Kishida.

Stimulus prospects

Following Kishida’s proposal, talk of another round of pandemic stimulus is also gathering pace. In 2020, there were three such packages at a total cost of around JPY 300tn (USD 2.9tn) or about 60% of Japan’s GDP, with two coming under Abe and one under Suga in December. Much of that latter package has yet to feed through to GDP, in part because Suga chose to allocate a greater share of funding to post-pandemic adjustment programs related to his pet policy themes of’green’ and’digitalization’ than to actual pandemic spending. Japan’s deficit-to-GDP ratio fell steadily from over 8% to about 3% in the ten years to 2019, leading the government to aim for a primary budget surplus by 2025, but last year’s additional spending saw it balloon again to over 12%.

This week also saw ministries’ regular budgetary requests for FY 2022 reach a record JPY 111tn (USD 1tn). If LDP party politics drives Suga or a possible successor to adopt a fourth huge spending package in just 18 months, the prospects for Japan returning to fiscal health before the late 2020s would again start to dim.

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