[2024 Japan Election Issue Briefing] ② The Crisis of LDP Politics: Long-Term Rule, Political Funds, and Political Reform

I. The Structure of Recurring Crises: Political Funds, Political Reform, and Long-Term Rule

For a long time, the factions within Japan's Liberal Democratic Party (LDP) have formed a crucial pillar of the Japanese political structure, and competition and cooperation among them have significantly influenced the LDP's power dynamics. Factions in Japan are effectively like small parties within a larger party, possessing legal personhood and formal organizational structures (Chubukata Hiroshi 2017). Factions serve as key instruments for distributing major positions within the cabinet, the party, and the Diet, and are also important for mobilizing votes to win the party leadership election. Furthermore, the competitive and cooperative dynamics among factions have played a significant role in determining LDP leadership and policy direction. Against this backdrop, LDP politicians have raised political funds to operate their factions, support the election campaigns of their affiliated members, and prepare for party leadership elections.

However, the LDP factions operated with a lack of transparency in fund management, as faction leaders controlled funds centrally, creating a structure prone to corruption. Cases of secret slush funds being created and used for purposes other than their intended ones, or funds being improperly procured through collusion with specific corporations, have been uncovered. These scandals have eroded public trust in the cabinet and the LDP, periodically plunging the party into crisis. In the past, whenever a crisis arose due to political funding or other issues, the LDP would repeat the process of having the Prime Minister resign and installing a new, fresh face from a non-mainstream faction. This created the effect of a 'pseudo-regime change,' making it seem as if the government had changed, and then proceeding to elections with new figures to resolve the crisis.

In 1988, Prime Minister Noboru Takeshita resigned due to the Recruit bribery scandal, and in 1992, influential LDP member Shin Kanemaru was arrested in connection with the Sagawa Express political funding issue. During this period, demands for structural political reform, including resolving political funding problems, intensified. These political reform movements led to the emergence of a non-LDP coalition government in 1992 and the passage of a series of political reform bills concerning the electoral system and political funding (Park Cheol-hee 2010; Song Seok-won 2002).

Since then, political reforms, including the Political Funds Control Act, have been steadily pursued, but the momentum significantly waned with the change of government to the Democratic Party in 2009 and the LDP's return to power in 2012 (Hamamoto Shinsuke 2024). Under Prime Minister Abe, the LDP achieved successive major victories in national elections, solidifying a 'one-party dominance' structure that made challenges from the opposition parties seem impossible. Consequently, the sense of urgency regarding political reform, including issues of political funding within the LDP, greatly diminished.

Although there were some self-initiated reform efforts following the Unification Church controversy in 2022, the sense of crisis within the party was not high, and the reform proposals did not go beyond being ad hoc measures. Then, in 2023, it was revealed that major LDP factions had created slush funds by significantly underreporting their fundraising activities, with these funds flowing to individual lawmakers, causing shock. The offices of major factions were raided by prosecutors, and some lawmakers were arrested or resigned from their positions. These successive incidents severely eroded public trust in LDP politics, leading the public to choose to hold the LDP accountable. The LDP and its coalition partner, Komeito, failed to secure a majority of seats, facing a situation where they could not guarantee the continuation of their government.

II. The LDP in the Post-Abe Era: The Unfolding of the Crisis

1. The Unification Church Controversy in 2022 and the Response

During the transition from Prime Minister Yoshihide Suga to Prime Minister Fumio Kishida, the LDP moved towards experiencing a leadership crisis rather than recovering its diversity. The assassination of former Prime Minister Abe then brought to light the connections between the LDP and the Unification Church, which, through a series of events, triggered the current crisis. The Unification Church, founded in South Korea in 1954, began proselytizing in Japan in 1958 and forged connections with political heavyweights such as former Prime Minister Nobusuke Kishi (1924-2000) under the banner of anti-communism (Ohara Tai 2022). As the organizational strength of the LDP's traditional friendly organizations weakened, the Unification Church became an important support group, providing endorsements during election periods.

However, as it became known that the Unification Church operated in questionable ways, such as pressuring members for donations, calls for a re-examination of the relationship between the LDP and the Unification Church arose both within and outside the party. In response, Prime Minister Kishida apologized at a press conference on August 31, 2022, acknowledging that the LDP's relationship with the Unification Church had caused public distrust, and declared a severance of ties with the organization (Kim Sung-jo 2023). Concurrently, seven cabinet ministers, including Defense Minister Nobuo Kishi and Economy, Trade and Industry Minister Koichi Hagiuda, who admitted to having ties with the Unification Church, were removed from the cabinet, and a comprehensive investigation was conducted into lawmakers with connections to the Unification Church. Furthermore, the LDP established governance codes prohibiting relationships with socially problematic organizations and subsequently enacted legislation to provide relief to victims of the Unification Church issue. However, the relationship between former Prime Minister Abe, perceived as the 'mastermind' behind the LDP's ties with the Unification Church, and the Unification Church was not investigated. This was because investigating the relationship between former Prime Minister Abe and the Unification Church could provoke backlash from the 'Abe faction,' the largest faction within the LDP (Ohara Tai 2022).

2. The Factional Political Funding Issue in 2023 and the Response

In late 2023, allegations of improper reporting of political funds by major LDP factions ignited public outrage and severely undermined the LDP's credibility. Japanese laws concerning political funds require individuals and organizations purchasing 'party tickets' exceeding 200,000 yen at fundraising events to have their names and the amounts reported. However, allegations emerged that major LDP factions and their members had routinely failed to report funds collected at various fundraising events, converting them into secret slush funds. Factions imposed quotas on lawmakers and then paid amounts exceeding these quotas to individual lawmakers, while omitting these transactions from their reports. Notably, this omission of records occurred extensively and systematically within the Abe faction, the largest faction in the party. This scandal led to a sharp decline in Prime Minister Kishida's approval ratings and public distrust in the LDP, creating a situation that demanded political reform and anti-corruption measures from the ruling party.

Following the public outcry, Prime Minister Kishida replaced all four cabinet ministers from the Abe faction, the LDP's largest faction, including Chief Cabinet Secretary Hirokazu Matsuno and Minister of Economy, Trade and Industry Yasutoshi Nishimura, who were implicated in the illegal slush fund allegations. He also announced his intention to step down as the head of the Kishida faction. In 2024, a 'Political Reform Headquarters' was established to discuss these issues institutionally, including political funding. Furthermore, a disciplinary committee was convened for politicians involved in the political funding scandal, resulting in disciplinary action against 39 individuals, including a recommendation for two to withdraw from the party. Independent lawmakers such as former Prime Minister Suga and Shinjiro Koizumi raised their voices, calling for the dissolution of factions based on media reports and public opinion, and the Kishida faction, followed by the Abe and Nikai factions, announced their dissolution.

However, the LDP misjudged the severity of the crisis and initially failed to respond appropriately, even defending its lawmakers. Many lawmakers belonging to major factions resisted dissolution, arguing that factions serve as platforms for lawmakers' activities and learning. In particular, after the Kishida faction announced its dissolution, the Aso and Motegi factions refused to dissolve, and the subsequent slow pace of dissolution by other factions led to accusations of 'sham dissolutions' (Endo Shuhei 2024). Just as the LDP declared the dissolution of its factions after the Recruit scandal but failed to achieve it, public opinion doubted the LDP's commitment to reform. The resignation of lawmaker Yaichi Tanigawa, among others, led to three by-elections for the House of Representatives in April. In these elections, the LDP fielded a candidate in only one constituency, acknowledging moral responsibility, but lost, while the Constitutional Democratic Party won all three seats.

In June, the Political Funds Control Act was amended and passed under the LDP's initiative. While key LDP politicians were hesitant about amending the Political Funds Control Act, Prime Minister Kishida actively pushed for it, and the bill passed the Diet after largely accepting the compromise proposals put forth by Komeito and the Japan Innovation Party. The threshold for disclosing donations at political fundraising events was lowered from the current 200,000 yen to 50,000 yen. Additionally, policy activity funds provided by the central party to lawmakers exceeding 500,000 yen must now be disclosed. Furthermore, to prevent lawmakers from shifting blame to their secretaries or accountants in cases of political funding violations, lawmakers must now submit a confirmation statement when preparing political fund usage reports from their offices.

However, the Constitutional Democratic Party criticized the LDP's lack of reformist will, arguing that the amendments did not include provisions such as prohibiting donations from corporations and organizations, thus remaining largely unchanged. Moreover, significant rifts within the LDP became apparent regarding the scope and intensity of political reform, with Deputy Prime Minister Taro Aso and Secretary-General Toshimitsu Motegi strongly opposing the amendments, claiming that Prime Minister Kishida had made unilateral concessions (Kosaka Kazunori 2024). Deputy Prime Minister Aso's public opposition to the amended bill, stating that democracy is inherently expensive, further diluted the purpose of the legislation (Kote-gawa Taro 2024).

III. Party Leadership and General Elections: The Realization of the LDP's Crisis

1. Relationships Among LDP Elites During the Party Leadership Election

Shigeru Ishiba, a former Secretary-General running for the leadership for the fifth time, won the LDP presidential election, which saw a record nine candidates competing. While officially declared a 'faction-less presidential election' following the dissolution of factions, the underlying shifts in internal party dynamics will significantly impact the LDP's future operational methods. In the first round, Sanae Takaichi placed first, followed by Ishiba in second, advancing to the runoff. Koizumi garnered the most votes from Diet members with 75, but failed to win over local party members. With votes evenly distributed among the numerous candidates, the outcome hinged on which candidate the Diet members who supported the seven defeated candidates in the first round would back. Former Prime Minister Suga and the Koizumi faction were expected to support Ishiba in the runoff, while the Aso faction and the Motegi faction were expected to support Takaichi, led by the Deputy Prime Minister.

In this context, Prime Minister Kishida held the casting vote. His support for Ishiba in the runoff tipped the scales in Ishiba's favor. Kishida viewed Ishiba as more suitable to inherit his foreign and security policy agenda. Takaichi, as a historical revisionist who advocated for visits to Yasukuni Shrine, had a higher potential to provoke conflict with neighboring countries like China and South Korea, and she had clearly stated her opposition to the tax increases necessary for the defense spending hikes that Kishida was pursuing. From the party's overall perspective, following the Abe era, the 'Post-Abe' trend became intertwined with the political funding issue, leading to the victory of Ishiba, who had opposed Abe, rather than Takaichi, who represented Abe's legacy. Furthermore, the election of Yoshihiko Noda, a former Prime Minister, as the leader of the Constitutional Democratic Party also influenced many lawmakers to support the experienced Ishiba.

2. Election Issues: Early General Election and Public Official Issues Related to Political Funds

Immediately after winning the party leadership election, Ishiba was pressed to set a date for the general election and implement measures to reform the party's image for the election campaign. Firstly, regarding the dissolution of the Diet and the general election, Koizumi advocated for an immediate election, while Ishiba took a cautious stance. However, after winning the leadership election, Ishiba changed his position and declared an early dissolution on September 30, which was an unprecedentedly short period from his inauguration to the dissolution of the House of Representatives in postwar history. The decision for an early dissolution can be seen as a combination of internal party demands and Ishiba's calculations. Party lawmakers preferred to hold an early dissolution after electing a new leader. They believed that by newly electing the party leader, cabinet members, and party executives, and then entering the general election with a reformist attitude, they could leverage the pseudo-regime change effect and gain an advantage in the election. Conversely, if the dissolution were delayed, a parliamentary budget committee session involving all cabinet ministers would be held, where the opposition parties would intensely question them about the political funding issue, potentially forcing the LDP and the cabinet into a defensive position during the election. Ishiba also urgently needed a general election victory to consolidate his power, given his weak internal party support base, having won the leadership election by a narrow margin. However, media criticism was high that the early dissolution was chosen as a means to avoid opposition attacks, and this decision backfired (Yoshida Kiyohisa 2024).

Secondly, Ishiba's administration began with an approval rating of 28%, the lowest since the 2000s, necessitating a change in atmosphere during the election campaign.[1]To this end, Ishiba took disciplinary action against lawmakers implicated in the slush fund scandal that shook the LDP. Depending on the severity of the offense, 12 individuals were excluded from nominations, and 34 were prohibited from running as concurrent proportional representation candidates. However, these measures fell far short of public expectations. Many candidates who lost their official nominations ran as independents, and the LDP refrained from fielding candidates in those constituencies, effectively paving the way for their return. Furthermore, the LDP even provided election funds to the local party branches to which these candidates belonged under the guise of activity expenses, and when this fact was revealed through media reports, public doubt about the LDP's commitment to reform intensified.

Meanwhile, these disciplinary measures were largely concentrated on the Abe faction, becoming a source of internal conflict within the party. While the LDP argues that this was a natural consequence given the severity of the political funding issues within the Abe faction, members of the Abe faction expressed dissatisfaction, claiming that these measures were overly strict and that Prime Minister Kishida was unilaterally pushing forward with the amendment of the Political Funds Control Act and other reforms without internal consultation. They voiced their discontent, arguing that Ishiba is overtly trying to weaken the Abe faction's power, given that the Abe faction systematically supported Takaichi in the close race against Ishiba in the LDP presidential election and still represents the largest bloc.

IV. Conclusion: Crisis Response and Internal Party Dynamics After the General Election

The LDP's operational methods and the progress of political reform after the general election will significantly influence the number of seats secured by the LDP and the extent to which Abe faction members are re-elected. Overall, the LDP secured only 191 seats and Komeito 24 seats in the general election, falling far short of the electoral goal of 'achieving a majority with the LDP-Komeito coalition.' Consequently, Ishiba's position within the LDP will be considerably weakened. On the other hand, the Abe faction, which harbors significant dissatisfaction with the Ishiba cabinet, has also been considerably diminished. Many Abe faction members were prohibited from running as concurrent proportional representation candidates or ran as independents due to the political fund reporting omissions, and a significant number of them lost their seats. Counting the successful LDP candidates by faction, the former Abe faction had 22 successful candidates, resulting in a success rate of 44%. In total, the Aso faction had 31 successful candidates, the former Motegi faction had 27, the former Kishida faction had 26, the former Nikai faction had 22, and the former Moriyama faction had 7.

Although the Abe faction has been significantly weakened, Sanae Takaichi has refused to participate in the Ishiba administration and has been campaigning to support the lawmakers who backed her in the presidential election, thereby demonstrating her influence. Following the amendment of the Political Funds Control Act and the presidential election, the Aso and Motegi factions have also taken a stance against Ishiba. In this situation, calls for accountability are being raised against Secretary-General Hiroshi Moriyama and Prime Minister Ishiba. Media reports suggest that the Prime Minister could be replaced at any time, and with the Upper House election scheduled for July next year, voices demanding a change of prime minister are likely to intensify by March next year, when the budget for 2025 is expected to be passed.

Ishiba faces the difficult task of stabilizing the coalition government, appeasing internal dissent, and continuing the reform agenda simultaneously. Securing coalition partners will be a critical challenge, as the Tsutomu Hata cabinet, formed in 1994, collapsed after only 64 days. Furthermore, Ishiba intends to lead the nation by appointing conciliatory figures within the party, including successors for the ministers who lost their seats, seeking cooperation from the opposition parties, and passing the supplementary budget. Additionally, demands for political reform, including further amendments to the Political Funds Control Act, will persist, primarily from the Constitutional Democratic Party. It remains to be seen how Prime Minister Ishiba and the LDP will respond to these complex challenges. ■

References

Kim Sung-jo. 2023. “Japan 2022: The Kishida Administration and Japanese Politics and Diplomacy in the Post-Abe and Post-Pandemic Era.” *Asiatic Studies* 66, no. 1: 109-136.

Park Cheol-hee. 2010. “The Emergence, Diffusion, and Institutionalization of Ideas for Political System Reform: Focusing on Electoral System Reform in Japan.” *Journal of Japanese Studies* 32: 35-61.

Song Seok-won. 2002. “Dynamics of the Japanese Political Process in the 1990s: Focusing on the Issue of 'Political Reform'.” *Journal of Citizen Politics* 5: 124-144.

Endo Shuhei. 2024. “Reasons Why LDP Factions Have Not Officially Dissolved Yet: Accusations of Sham Dissolution.” *Mainichi Shimbun*, April 20.https://mainichi.jp/articles/20240419/k00/00m/010/201000c(Accessed October 22, 2024)

Kosaka Kazunori. 2024. “Prime Minister Fumio Kishida's 'Broken Triangle': The Future of a Polygonal Regime in Distress.” *Yomiuri Shimbun*, July 1.https://www.yomiuri.co.jp/column/politics01/20240627-OYT8T50029/(Accessed October 20, 2024)

Kote-gawa Taro. 2024. “Mr. Aso: We Must Avoid Reforms That Leave Future Woes, Implicitly Criticizing the Prime Minister? Regarding the Revised Bill on Political Funds.” *Asahi Shimbun*, June 8.https://www.asahi.com/articles/ASS6825FMS68UTFK001M.html(Accessed October 24, 2024)

Ohara Tai. 2022. The Historical Significance of Prime Minister Kishida's 'Declaration of Severance from the Former Unification Church'. *Toyo Keizai*, September 6.https://toyokeizai.net/articles/-/615973(Accessed October 6, 2024)

Chubukata Hiroshi. 2017. *The Liberal Democratic Party: The Reality of One-Party Dominance*. Chuo Koron Shinsha.

Nagahara Shingo. 2024. “Mr. Ishiba Wins in a Runoff in the Presidential Election, Defeating Takaichi, Who Was Supported by the Former Kishida Faction; Reasons for Victory: Legacy Overturned.” *Sankei Shimbun*, September 27.https://www.sankei.com/article/20240927-swlzxovb2flebik65omnqaf5kq(Accessed October 24, 2024)

Hamamoto Shinsuke. 2024. “15 Years of Sustained Reform and 15 Years of Stagnation: Understanding the Slush Fund Scandal Through the History of the Political Funding System.” *Asahi Shimbun*, April 9.https://www.asahi.com/articles/ASS4K351XS4KULLI009M.html(Accessed October 24, 2024)

Yoshida Kiyohisa. 2024. “The Face of the Party is Decided, and Now for Dissolution and the General Election... What Will Happen? The Common Name for Dissolution.” *Yomiuri Shimbun*, October 1.https://www.yomiuri.co.jp/column/henshu/20240927-OYT8T50028/(Accessed October 25, 2024)

[1]The results above are from a public opinion poll conducted by Jiji Tsushin from October 11-14.

■ Kim Sung-jo_Professor, East Asian International Studies, Yonsei University.

■ In Charge and Edited by: Park Han-soo_EAI Research Fellow

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