Can Ishiba Gain from the LDP's Upper House Losses?

Hudson Institute's Japan Chair challenges conventional international relations thinking by integrating a wide range of perspectives toward beyond-the-horizon policy issues. JAPAN Forward is pleased to amplify the voices of its experts by sharing this view of summer election expectations for Prime Minister Shigeru Ishiba and his party with our readers. 

After the Upper House Election

There's a general consensus that the Liberal Democratic Party (LDP), Japan's largest political party, and its coalition partner, Komeito, are going to lose seats in the upcoming national election for Japan's Upper House.

Despite the anticipation of more losses ahead, the Upper House election may offer a turning point for Prime Minister Ishiba and his government, assuming he can maintain power.

There's been public frustration with the LDP over the last few years following a string of scandals. This frustration has contributed to the coalition losing its majority in a national election for Japan's Lower House nine months ago. And just a few weeks ago, the coalition lost 12 of the 127 seats in a local election for Tokyo's Metropolitan Assembly.

Despite these recent losses, it's hard to place the blame entirely on Ishiba. And so, his position as the head of the LDP will likely remain, whatever the result of the Upper House.

Politics is often thought of in terms of the next election. After the Upper House, it will be three years until the next major election in Japan (not including the election for LDP President in 2027). That's three years for Ishiba to invest in a policy agenda that sets his apart from recent governments.

Focus On Economy

As recent debates in Japan's Diet have shown, tax cuts, entitlement programs, and the Japanese economy are top issues. Issues like United States-Japan trade negotiations and geopolitical unrest in the Middle East and Europe are important, but are less meaningful for voters.

Food prices have been particularly prominent in public discourse, lately, given recent spikes in rice prices.

Thankfully for Ishiba, rice prices have been moderating. His decision to replace his previous Minister of Agriculture has helped in this regard.

While it won't have much effect on this month's election, Bank of Japan Governor Kazuo Ueda also mentioned just recently that he believes food inflation will subside by the end of the year.  

But whether it's rice prices, hotel room rates, which are up due to high tourism demands, or potential energy shocks from geopolitical tensions, it goes to show Japan is not isolated from the global economy.

The Upper House election can be a turning point for Ishiba to start preparing Japan's economy over the next few years for a future when matters like inflation, foreign tourists, workforce challenges, and supply chain shocks are more common in addition to Japan's long-term issues associated with its graying population.

Economic Transformation

Japan's economy is finally going through a long-awaited transition towards growth. For the last three years, real wages in Japan have finally started increasing at a moderate rate. Tourism is also at an all-time high, bringing in billions in new spending.

However, these benefits come with their own problems. The number of citizens on fixed incomes and pensions is also rising, which is increasing inflation and its impact on people's daily lives.

It's not surprising to hear handouts and temporary tax cuts have made their way into political campaigns ahead of the election. But these are only temporary benefits that add to Japan's long-term fiscal deficit, in exchange for short-term political gain. Meanwhile, they do nothing to solve the problems associated with regional divergence and inflation.  

Growing frustration with tourism in places like Tokyo and Kyoto may be the additional boost Ishiba needs to reboot his policy of regional revitalization. But he'll need to be more creative to avoid the political shocks that come with inflation.

Moderating After Mistakes

Ishiba has always been seen as going against the tide of the LDP establishment. It was one thing that gained him popular public support in the past. It may be the reason he was the winning choice to lead the LDP last September.

Following his own political mistakes since taking over the LDP, however, and possibly anticipating an uphill battle in the upcoming Upper House election, Ishiba has moderated himself over the last year. Instead of looking for big wins in the Upper House election, he has been doing triage to help keep the coalition from losing too many seats.

Recently, Ishiba stated his goal for the election is to maintain the majority the coalition currently holds in the Upper House ー a reasonable and even possible goal.

Given Japan's Upper House elections are staggered, the coalition will keep the 75 seats it won three years ago. The question is whether it can hold on to the 50 additional seats, out of 65 up for reelection, needed for a majority of 125.

Facing the Voters Head-on

It's entirely possible the coalition holds on to its majority in the Upper House, but it will still need to deal with the reality that the coalition has lost significant influence in both houses of the Diet. And that general public support for the coalition has waned.

Whatever the result of the Upper House election, this is a time for Ishiba to become less moderate and more politically creative. It's clear that retrenching into the old coalition establishment may be a safe bet for the election, but he also needs a vision for a new policy agenda, given the coalition's political reality. This may even require new coalition-building with new political partners. Whether Ishiba can gain from the LDP's Upper House losses is up to him.

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Author: Riley Walters 

Hudson Institute Senior Fellow