Japanese Prime Minister Shigero Ishiba resigned on Sunday, starting a potentially long period of political uncertainty at an unstable moment for the fourth largest economy in the world.
Having just settled the final details of a trade agreement with the United States to reduce President Donald Trump’s punitive tariffs Ishiba, 68, said at a press conference that he must take responsibility for a series of devastating electoral defeats.
Since it came to power, less than a year ago, the unlikely premie has seen its ruling coalition lose its majorities in the elections to both parliament chambers amid voters in relation to the increase in living costs.
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He instructed his democratic liberal party-which ruled Japan for almost the entire postwar period-to hold an emergency dispute for leadership, adding that he would continue to perform his duties until a successor was elected.
“With the signing of the commercial agreement by Japan and the signing of the executive order by the president, we surpassed a fundamental obstacle,” said Ishiba, with the voice looking embargoed by emotion. “I would like to pass the stick to the next generation.”
Ishiba has faced requests to resign since the last defeat in an election for the upper chamber in July. The LDP scheduled a vote on the possibility of conducting an extraordinary election for leadership on Monday.
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Eye market for possible successors
Concern about political uncertainty led to a liquidation of the Japanese currency, the yen, and its government titles last week, with the 30-year-old income reaching a record on Wednesday.
Investors are focusing on the possibility of Ishiba being replaced by a more flexible fiscal and monetary policies advocate, such as LDP veteran, Sanae Takaichi, who criticized Bank of Japan interest rates.
Ishiba defeated Takaichi narrowly in the second round of LDP leadership last year. Shinjiro Koizumi, the political heir that has gained prominence as Ishiba Minister of Agriculture, in charge of trying to limit the high prices, is another possible successor.
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“Given the growing political pressure on Ishiba after the repeated LDP electoral defeats, his resignation was inevitable,” said Kazutaka Maeda, economist at Meiji Yasuda Research Institute.
“As for possible successors, Koizumi and Takaichi are seen as the most likely candidates. Although it is not expected that Koizumi will bring major changes, Takaichi’s stance on expansionist fiscal policy and his cautious approach to interest rates can attract the scrutiny of financial markets,” said Maeda.
Since the ruling coalition has lost mostly parliamentary, it is not guaranteed that the next president of the LDP becomes prime minister, although this is likely, as the party remains, by far, the largest in the Baixa Chamber.
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Anyone who becomes the next leader can choose to call a quick election to seek a mandate, analysts said. Although the opposition of Japan remains fragmented, the far-right party and anti-immigration Sanseito got great gains in the July elections to the upper timing, bringing previously marginal ideas to the main political current.
Short mandate
Ishiba, a party outsider who became a leader in his fifth attempt last September, ended his brief term by concluding the trade agreement with Japan’s largest commercial partner, promising $ 550 billion in investments in exchange for lower tariffs.
Trump fares, especially those directed to the Japanese automotive sector, which is fundamental, forced Japan to lower its already weak prospect of growth for the year.
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Ishiba said he expected his successor to ensure that the agreement would be executed and that Japan would continue to generate salary gains to alleviate voter concerns regarding the cost of living.
Yoshinobu Tsutsui, president of Japan’s largest business lobby, Keidanren, said that “there is no time to lose” with the growing national and international challenges.
“We hope the new leader will promote unity within the party, establish stable political conditions and quickly act to implement the necessary policies,” said Tsutsui.
