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Japan Faces Political Uncertainty as Election Results Shake Ruling Coalition

Japan’s political landscape entered a period of uncertainty on Monday after voters dealt a blow to Prime Minister Shigeru Ishiba’s ruling coalition, leaving no single party with a clear mandate to govern the world’s fourth-largest economy.

The unexpected election outcome sent the yen to a three-month low, as analysts brace for potentially prolonged negotiations to form a government and possibly select a new leader. This instability comes at a challenging time for Japan, which is grappling with economic pressures, regional security threats from an assertive China and nuclear-armed North Korea, and the anticipation of the U.S. election in just a week.

The Liberal Democratic Party (LDP) and its coalition partner Komeito saw their seats drop to 215 in the lower house, down from 279, with voters reacting to scandals involving campaign funds and rising living costs. High-profile figures, including two cabinet ministers and Komeito’s leader, Keiichi Ishii, lost their seats. Meanwhile, the main opposition Constitutional Democratic Party of Japan (CDPJ) emerged as the night’s biggest winner, securing 148 seats—still short of the 233 needed for a majority.

As per constitutional mandate, parties have 30 days to form a governing coalition, though Ishiba’s short time in office—less than a month—leaves questions about his leadership prospects. Gains made by smaller parties mean their support could be essential for a viable coalition.

“Prime Minister Shigeru Ishiba’s future as LDP leader looks precarious. While he might remain as caretaker, his role in a new government is doubtful,” said Tobias Harris, founder of Japan Foresight, a political risk advisory firm.

Ishiba is expected to address the nation in a press conference at 2 p.m. local time (0500 GMT). Japanese media, including Jiji and Yomiuri, report that the LDP had planned to convene parliament on November 7 to confirm the prime minister.

CDPJ leader Yoshihiko Noda has expressed an interest in challenging the incumbents, though analysts believe his path to power is limited. Despite the setbacks, the LDP has largely dominated Japan’s political scene in the post-war era; however, this election marks its worst performance since losing power briefly in 2009.

Scandals and Public Backlash

Selected in a tight race last month, Ishiba called for early elections, aiming to secure a mandate. His approval ratings initially suggested potential success, but public frustration with a scandal over unrecorded donations to LDP lawmakers worked against him. Several candidates embroiled in scandals were not endorsed by the LDP. However, just days before the vote, a Communist Party-affiliated newspaper reported that funds were provided to branches led by non-endorsed candidates, causing further backlash.

“An editorial in the influential Asahi newspaper criticized the LDP for a ‘total disregard for public perception’ two days before the election,” noted a report widely covered by Japanese media.

Smaller Parties Hold Key Influence

Support from smaller parties like the Democratic Party for the People (DPP) and the Japan Innovation Party, who won 28 and 38 seats respectively, could be pivotal for the LDP. DPP leader Yuichiro Tamaki remains open to cooperation, while Innovation Party head Nobuyuki Baba has rejected the idea. Both parties support policies that could challenge the LDP’s stance, including a DPP proposal to halve Japan’s 10% sales tax until real wages increase—an initiative not currently backed by the LDP.

“It’s all about the concessions they can offer these smaller parties to gain their support,” said Rintaro Nishimura, an associate at consultancy The Asia Group.

Keidanren chief Masakazu Tokura called for stability, stating the need for an LDP-Komeito-led government to address pressing economic priorities such as energy security and wage growth.

In an encouraging development, 73 women were elected to Japan’s historically male-dominated parliament, surpassing the previous record of 54 set in 2009.

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