Japan’s Ishin to Decide Today on Coalition With Takaichi’s LDP

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(Bloomberg) — Lawmakers in the Japan Innovation Party (Ishin) are set to meet this afternoon to decide whether to form an alliance with the ruling Liberal Democratic Party that would likely lead to Sanae Takaichi becoming the country’s first female prime minister.

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A gathering of Ishin lawmakers from both houses of parliament that begins at 2 p.m. in Tokyo may be followed by a meeting between Takaichi and Ishin leaders in the evening to confirm the alliance before a vote in parliament tomorrow to elect a prime minister, national broadcaster NHK reported.

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Combined, the two parties hold 231 seats in the lower house of parliament — still two seats shy of a majority — but divisions between opposition parties mean Takaichi would be all but certain to win the vote.

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Talks between the LDP and Osaka-based Ishin intensified in recent days. Ishin, which is the third-largest party in the lower house, has sought an agreement from the LDP on a temporary reduction of the sales tax on food, stricter rules on political funding and a reduction in the number of parliamentary lawmakers. Ishin’s other policy objectives include reforming Japan’s social welfare system to lower the burden on working-age people.

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“I feel that we’ve built a deep level of trust, and I can face tomorrow (Monday) with confidence,” Ishin’s co-leader Fumitake Fujita said on Sunday. “I believe both I and the other party feel this way.”

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It’s not clear whether the two parties will declare their arrangement a coalition. Among the options Ishin is considering is extra-cabinet cooperation — an arrangement in which an opposition party backs a minority government without joining the cabinet or creating a formal coalition, Kyodo news agency reported on Sunday.

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A new coalition would give the LDP a more closely aligned partner on many policies than it had with its former ally, the centrist Komeito party, which surprised many by leaving the governing coalition earlier this month, citing differences with the party. Since then, she has scrambled to find alternative sources of support, which became more essential after the LDP lost seats in a lower house election last year and an upper house election this year.

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While Takaichi is a staunch conservative on social issues, including opposition to allowing women to become emperor, her views on the economy are similar to those of former Prime Minister Shinzo Abe’s platform known as “Abenomics.” She has long advocated for government spending to boost Japan’s economic growth rate and criticized the BOJ for tightening policy.

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During her campaign for the LDP leadership she took a more moderate stance, saying she doesn’t dispute the need for fiscal consolidation and would leave the specifics of monetary policy to the BOJ, but the yen has weakened and stocks have gained since her victory due to expectations of pump-priming and pressure on the central bank.