Here’s Who May Replace Japan’s Ishiba as Prime Minister

Sanae Takaichi, Japan's economic security minister, speaks during a news conference in Tokyo, Japan, on Monday, Sept. 9, 2024. Takaichi launched a fresh bid to become Japans first woman prime minister with a pledge to use public money to boost jobs and growth. Photographer: Toru Hanai/Bloomberg Photo by Toru Hanai /Photographer: Toru Hanai/Bloombe

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(Bloomberg) — Japan’s ruling party must decide on its future direction with a new leader following Prime Minister Shigeru Ishiba’s resignation to take responsibility for July’s dismal election result.

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Agriculture Minister Shinjiro Koizumi, a reform proponent, confirmed his entry into the race Tuesday, joining other candidates including former foreign minister Toshimitsu Motegi and Chief Cabinet Secretary Yoshimasa Hayashi. Takayuki Kobayashi, a former economic security minister, has also thrown his hat in the ring, and pro-stimulus right-winger Sanae Takaichi is expected to do so as early as this week.

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Candidates began presenting their policy goals this week, ahead of the official campaign kickoff on Sept. 22. A Kyodo public poll released Friday showed Takaichi was the most popular choice among respondents in the general public, although they won’t have a vote. In the leadership contest scheduled for Oct. 4, just over 1 million rank-and-file party members nationwide will cast ballots.

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The Liberal Democratic Party is looking to freshen up its leadership after losing control of both houses of parliament in two humiliating national elections under Ishiba’s watch. Those dismal results showed that voters were frustrated with the LDP’s inflation countermeasures, perceived corruption within the party and the influx of foreigners visiting and working in Japan.

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The new leader will need to quickly bring together a party that is increasingly divided on whether to appeal to a younger generation concerned about the growing tax burden it faces to support an aging population or to attract the right-wing voters that have deserted the LDP for the small opposition party Sanseito.

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Whoever succeeds Ishiba as the new leader, and most likely as prime minister, will face a challenging political landscape given the loss of the parliamentary majorities. To proceed with policy, he or she will need to secure sufficient support from the opposition. Most opposition parties have made demands for tax cuts that would put more pressure on Japan’s public finances, possibly generating heightened concern among investors.

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Here’s a look at the potential contenders to replace Ishiba.

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Sanae Takaichi

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Hard-line conservative Takaichi tops the list in many recent opinion polls asking voters who should be the next LDP leader. Takaichi, who cites former UK Prime Minister Margaret Thatcher as a key inspiration, narrowly lost to Ishiba in a runoff in the LDP’s leadership race last year. If elected, she would become Japan’s first female prime minister. Like Thatcher, her leadership would likely swing the country toward conservatism on a political level. But on economic policy, a Takaichi-led LDP would likely move toward continued monetary easing and looser fiscal spending, a move that may unsettle investors with concerns about Japan’s fiscal status. Still, right-wingers in the LDP have been thinned out in the last two elections as voters opted for Sanseito. For some, Takaichi might also give the impression of the party reversing back toward the policies of former Prime Minister Shinzo Abe rather than moving forward with something new.