Sanae Takaichi, the leader of Japan’s ruling Liberal Democratic Party, is set to become Japan’s first female prime minister after the LDP and the Japan Innovation Party formally signed a coalition agreement on Monday, giving Takaichi enough support to be elected in parliament on Tuesday.
At the Monday signing ceremony, Nikkei reported that Takaichi said, “As we are parties sharing the same national vision, I am very much looking forward to working together to strengthen Japan’s economy and transform the country into a shape that can be responsibly passed on to future generations.”
The man who made her premiership possible, Osaka Gov. Hirofumi Yoshimura, leader of the Japan Innovation Party, said, “As a reformist party, we share the same desire to advance the reforms we have championed thus far and to improve Japan.” He said earlier on Monday that he made a phone call to Takaichi in the morning and told her, “We agree to the coalition deal. Let’s move Japan forward together.”
With the additional backing of the center-right coalition partner, Takaichi is seen as likely to win the most support in the race. An attempt by three opposition parties to stand behind a single candidate failed as Japan Innovation decided to go with the veteran LDP politician, the Nikkei writes
Yoshimura said that for the time being, the party will support the cabinet from outside without taking cabinet positions.
“A coalition government is essentially a collective of ruling parties and the cabinet,” Yoshimura said. “We aim to exert our strength in the legislature as part of the coalition government.”
The LDP and Japan Innovation by themselves will not hold a majority of seats in both the upper and lower houses of the Diet, or parliament, but will be only a few short; in the lower house, they will hold a combined 231 seats in the 465-seat chamber, and in the upper house, they will have 120 seats out of 248.
They could, however, reach a majority if they bring in other minor groupings in parliament, allowing for easier passage of bills and budgets. The LDP has already courted Sanseito, a right-wing populist party, as well as other smaller political forces.
Takaichi said the two-party coalition will be the base. “We will thoroughly coordinate policies between the LDP and Japan Innovation, and responsibly submit them to the Diet. After that, since there are opposition parties that share similar views, we will call for broad participation and carefully refine them one by one.”
Japan Innovation members will vote for Takaichi in the parliament’s prime ministerial election scheduled to take place on Tuesday after incumbent Prime Minister Shigeru Ishiba and his cabinet resign en masse. Takaichi will form her cabinet on the same day.
The election of a new prime minister will be held in separate votes in both houses of parliament. In each chamber, if no nominee wins a majority in the first round, a runoff will be held between the top two vote-getters. The choice in the lower house will prevail in the event of a split decision.
In Monday’s deal, Japan Innovation secured “nearly full agreement” on most of the 12 policy areas where it demanded change — from social security reforms to the establishment of a “second capital” to move certain government and economic functions away from Tokyo — according to the party’s co-leader, Fumitake Fujita.
“Moving forward as a coalition — although we will be straightforward in expressing our dissatisfaction — we wish to pledge our commitment to walk together as partners, determined to accomplish what we have mutually agreed upon for Japan’s revival,” Fujita told reporters after a meeting with fellow lawmakers on Monday.
The agreement states that the new government will create a government efficiency bureau to thoroughly review tax incentives and subsidies, and eliminate those deemed ineffective.
Japan Innovation’s demand to reduce the number of Diet members — something the party says is “the gateway to reforms” — was also included in the written pact. It says the parties “will aim to reduce the number of the lower house seats by 10%” during the upcoming Diet session. But the proposal has caused political ripples across political parties.
But Fujita said differences remain on exempting food items from the 8% consumption tax for two years and on banning corporate and group political donations. The two parties will establish an inter-party consultative body to continue discussions on these policies.
The LDP-Japan Innovation cooperation comes after the former’s long-term coalition partner Komeito announced it was ending their 26-year partnership, throwing Japanese politics into a state of turmoil. The decision sparked intense jockeying among parties to form a government to succeed the one led by LDP’s Ishiba.
Both the LDP and Japan Innovation are conservative, and their policy priorities align in some respects, such as on the need for constitutional reform and stressing the importance of maintaining the Imperial lineage through the male line.
In the short term, the LDP and Japan Innovation will enact a law to cut the surtax on gasoline, and pass a supplementary budget to implement measures to combat rising prices during the Diet session, which starts Tuesday and runs through mid-December.
Both sides also agreed to strengthen Japan’s intelligence capabilities by upgrading the existing Cabinet Intelligence Office to give it more authority, as well as by establishing a foreign intelligence agency.
“The agreement incorporates content previously agreed upon by parties, including the LDP and Japan Innovation,” said Takaichi. “I believe this coalition government is essential for driving Japan’s politics forward with strength.”
The market reaction was one of relief: on Monday, the Nikkei surge 337bps to a new ATH led by combination of some positive stories like physical AI-related, including SoftBank Group, recovery of sentiment in banks, raised iPhone17 production forecast. Much of the move was in anticipation of tomorrow’s key event, namely Takaichi being nominated as prime minister, which the bank says is now fully priced by investors.
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