What's next for Japan after PM Ishiba’s Upper House election loss?

Key Concepts:

• Upper House Election (Japan): Election for the upper chamber of the Japanese legislature.
• LDP (Liberal Democratic Party): The ruling party in Japan, leading the coalition.
• Kito: Junior partner in the ruling coalition with the LDP.
• Shigeru Ishiba: The Japanese Prime Minister.
• Sansto Party: A far-right party running on a "Japanese first" platform.
• Consumer Price Index (CPI): A measure of the average change over time in the prices paid by urban consumers for a basket of consumer goods and services.
• Sales Tax: A consumption tax imposed by the government on the sale of goods and services.
• Pork Barrel Strategy: Government spending that benefits a specific district or region, often seen as wasteful.
• Immigration Issue: Concerns related to the increasing number of foreign tourists and workers in Japan.
• US Tariff Negotiations: Trade talks between Japan and the United States regarding tariffs.

1. Election Results and Political Implications

• The ruling coalition led by the LDP and Kito lost its majority in the upper house election.
• The governing alliance secured 47 seats, falling short of the 50 needed to retain control of the 248-seat upper chamber.
• Prime Minister Shigeru Ishiba intends to remain in his post despite the loss.
• The result could have wide-ranging implications for Japan's political and economic future.
• The rise of the far-right Sansto party, which ran a "Japanese first" campaign, is notable. They are on course to secure up to 14 seats.

2. Prime Minister's Response and Challenges

• Prime Minister Ishiba described the current situation as a "national disaster," citing America's terrorist measures, rising prices, the risk of imminent disasters such as massive earthquakes occurring directly beneath the Tokyo metropolitan area or Nankai trough quake and the most complicated and challenging security environment.
• He emphasized the importance of avoiding a political vacuum.
• He faces pressure to resign due to the LDP's losses in three crucial elections: the lower house last year, the Tokyo assembly election this year, and now the upper house.
• Ishiba's close aid, Mr. Jose Akazawa, economic revitalization minister, who's been Japan's chief negotiator on US trade and tariffs, is expected to head to Washington this week.

3. Reasons for the LDP's Loss

• Public dissatisfaction with higher consumer prices, including the price of rice, which is twice as high as a year ago.
• Opposition parties called for a reduction or removal of the sales tax, while Ishiba insisted the 8% sales tax was necessary for social welfare.
• The government's response of cash handouts (20,000 yen to everyone, 40,000 yen to low-income individuals) was seen as a "pork barrel strategy" and was not well-received.
• The public did not forget the mishandling of political funds by Ishiba's party, which led to the dissolution of party factions, including the Shinszo Abbe faction.
• Growth in wages since January have gone down 3%. And the consumer price index and not including food has gone up 3%. So there's quite a net loss for consumers and that is what they're so angry about.

4. Rise of the Sansto Party

• The Sansto party gained popularity, particularly among younger voters (up to their 40s).
• The party raised concerns about immigration, fueled by frustrations over the growing number of foreign tourists and workers.
• They pushed this Japanese first platform and I have to say inspired somewhat by Donald Trump.
• The LDP has responded by launching a cross-agency "control tower" to address illegal immigration and tighten regulations on driver's licenses and land purchases for foreigners.
• Absentee ballots reached a record high of 25% of all electorates.
• Overall turnout is estimated at 58%, an improvement from the previous upper house election (52%).

5. US Trade Negotiations and Potential Impact

• Ishiba wants to see US tariff negotiations through to the end (deadline: August 1st).
• The election outcome could affect these talks, with President Trump potentially taking advantage of Ishiba's weakened domestic position.
• If Ishiba stands up to Trump on tariffs, the economy could suffer. If he doesn't, he'll be accused of being weak.
• Mr. Jose Akazawa, economic revitalization minister, who's been Japan's chief negotiator on US trade and tariffs, is expected to head to Washington this week.

6. Analysis from Experts

• Ellis Krauss, professor emeritus at the School of Global Policy and Strategy of University of California, San Diego, noted that the election results were not as bad as they could have been for the LDP.
• Krauss highlighted the pressure on the government to provide relief for consumers due to price increases.

7. Future Scenarios

• The big question is whether Mr. Shigeru Ishiba will be able to hold on to his post.
• If Ishiba is forced to resign, the LDP must hold a presidential election.
• Possible scenarios include opposition parties joining forces to elect their own prime minister or an opposition party joining the LDP-Kito coalition.

8. Key Quotes

• Prime Minister Shigeru Ishiba: "Our country is facing a critical situation which can be described as national disaster."
• Ellis Krauss: "If Ishiba stands up to Trump on tariffs, but Trump imposes the draconian tariffs he's promised to get to hit Japan with, including on their key industry of automobiles, the economy will tank or go down, and that will dissatisfy the voters. If he doesn't stand up to Trump and gets into some sort of halfway decent agreement, he'll be accused of being weak by the opposition parties who want him to stand up to Trump. So there's no way that Ishiba could win on that issue."

9. Conclusion

The Japanese upper house election resulted in a loss of majority for the ruling LDP-Kito coalition, creating political uncertainty. Prime Minister Ishiba faces pressure to resign due to public dissatisfaction with rising costs and perceived mishandling of political funds. The rise of the far-right Sansto party, fueled by anti-immigration sentiment, is a significant development. The election outcome could also impact US trade negotiations, with Ishiba facing a difficult situation regardless of his approach. The future political landscape of Japan remains uncertain, with various scenarios possible depending on Ishiba's next steps and the actions of opposition parties.