Here’s Who Could Replace Japan’s Ishiba As Prime Minister

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.

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.

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.

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. The array of small opposition parties have made demands for tax cuts that would put more pressure on Japan’s heavy debt load, possibly generating heightened concern among investors. 

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

Sanae Takaichi

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.

Shinjiro Koizumi

The son of one of Japan’s most famous reformist premiers, Koizumi has been the face of the LDP’s policies to bring down the price of rice — a high-profile effort with huge cultural and political ramifications. As farm minister, Koizumi released emergency stockpiles of rice to wholesalers and succeeded in bringing down costs, winning approval among some of the populace, while alienating rice farmers. Those moves weren’t sufficient to change the fortunes of the LDP in the July election, but they did offer support for the view that not only can he can talk about reform, he can also deliver it. Koizumi was one of the final three candidates to run in the LDP leadership election last year, although he ultimately lost out to Ishiba. His early lead in that leadership race lost momentum partly for his comments hinting at the need to flesh out rough guidelines for redundancy packages. At 44, Koizumi would represent a new generation that might tap into traditional LDP supporters and swing voters who see the older guard of the party as out of touch. Still, his more liberal tendencies will likely turn off right-wingers within the party.

Yoshimasa Hayashi

Currently serving as chief cabinet secretary and one of Ishiba’s closest aides, Hayashi would be a continuity candidate for the LDP and would likely cause less turbulence in markets. He’s often seen as closer to China than other party heavyweights, but has rejected the criticism he’s pro-China, saying he’s someone who prioritizes dialogue. The ruling party has frequently relied on Hayashi for damage control in the past. When previous administrations needed a replacement for short-lived ministers, Hayashi came in and calmed the waters, a record that he highlighted during his run in the LDP’s leadership race last year. Hayashi studied at Harvard University and spent most of the Kishida administration as foreign minister.

Takayuki Kobayashi

Young and conservative, Kobayashi was a longshot to assume leadership last year, but used that moment to plant himself in the minds of LDP members and voters. A former economic security minister, Kobayashi has recently been reaching out to Taiwan, and speaking about the importance of building supply chains that don’t rely on China. Kobayashi began his career in the Finance Ministry, and is a Harvard Kennedy School graduate. For the right-wing of the party he would provide a younger alternative to Takaichi that would feel less like Abenomics 2.0.

Katsunobu Kato

Finance Minister Kato didn’t get much support in the September LDP leadership race, but the fact he has good relationships with both conservatives and reformists within the party can boost his appeal as a leader who can bring lawmakers together. A former Finance Ministry official, Kato has played key roles under the last three premiers. He served as the government’s top spokesperson and helped guide Japan through the Covid-19 pandemic as health minister. In his role as finance minister, Kato has held talks with US Treasury Secretary Scott Bessent and managed to separate out discussions on currencies from the main trade talks.

Kono Taro

A former foreign and defense minister with a combative style, Kono has thrown his name in for multiple leadership races but has been unsuccessful so far. He’s also known as a former digital minister that called for ending the use of name stamps within a wider digitalization campaign. Kono has been outspoken on monetary policy in the past, urging the Bank of Japan to tighten policy as recently as last month while noting the level of inflation Japan has had in recent years. He asks that his name be written Japanese style, with his family name first.