[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

Factions within Japan's Liberal Democratic Party (LDP) have long formed a crucial pillar of Japan's political structure, and competition and cooperation among them have significantly influenced the LDP's power dynamics. Factions in Japan are formal organizations with legal personhood, effectively resembling small parties within the larger party (Nakakita Koji 2017). They serve as key instruments for distributing major positions in the cabinet, party leadership, and parliament, and are also important for gathering 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 elections of their affiliated members, and prepare for 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 secretly raising political funds, using them for purposes other than their intended use, or improperly obtaining funds through collusion with specific corporations have been exposed. These scandals have eroded public trust in the cabinet and the LDP, periodically bringing about crises for the party. In the past, when crises arose due to political funds, the LDP repeatedly managed the situation by having the Prime Minister resign and appointing a new, less prominent, and fresh face as Prime Minister. This created the effect of a 'pseudo-regime change,' making it feel as if the government had changed, allowing them to contest elections with new figures and resolve crises.

In 1988, the Recruit bribery scandal led to the resignation of Prime Minister Noboru Takeshita (1924-2000), and in 1992, the Sagawa Express political funding issue resulted in the arrest of Shin Kanemaru, a senior LDP politician (1914-1996). During this period, demands for structural political reform, including resolving political funding issues, 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 funds (Park Chul-hee 2010; Song Seok-won 2002).

Since then, political reforms, including amendments to 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 consecutive major victories in national elections, solidifying a 'one-party dominance' system where challenges from the opposition seemed impossible. Consequently, the sense of urgency regarding political reform, including issues of political funds within the LDP, greatly diminished.

Although some self-initiated reform efforts were made 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 ad hoc measures. Then, in 2023, it was revealed that major LDP factions had created slush funds by significantly underreporting income from fundraising events, which were then distributed to lawmakers, causing shock. The main faction offices were raided by prosecutors, and some lawmakers were arrested or resigned from their posts. The succession of these events 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

In the transition from Prime Minister Yoshihide Suga to Prime Minister Fumio Kishida, the LDP moved towards experiencing a crisis of leadership 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 in turn triggered the current crisis through a series of events. The Unification Church, founded in South Korea in 1954, began proselytizing in Japan in 1958 and established connections with political heavyweights such as former Prime Minister Nobusuke Kishi (1896-1987) 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 clear that the Unification Church had operated in inappropriate ways, such as coercive donation demands, calls to re-examine ties with the church emerged both within and outside the LDP. 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). He also removed seven cabinet ministers, including Defense Minister Nobuo Kishi and Economy, Trade and Industry Minister Koichi Hagiuda, who had admitted to having ties with the Unification Church, and conducted a comprehensive investigation into lawmakers who had connections with the church. Furthermore, the LDP established a governance code 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 to the Unification Church, and the church was not investigated. This was because investigating the relationship between former Prime Minister Abe and the Unification Church could provoke backlash from the LDP's largest faction, the 'Abe faction' (Ohara Tai 2022).

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

In late 2023, allegations of improper reporting of political funds by major LDP factions surfaced, provoking public outrage and significantly eroding the LDP's credibility. Japanese law requires individuals and organizations purchasing 'party tickets' exceeding 200,000 yen at fundraising events to have their names and amounts reported. However, allegations arose that major LDP factions and their members had routinely failed to report funds collected at various fundraising events, converting them into secret funds. Factions had imposed quotas on lawmakers and then paid amounts exceeding these quotas to individual lawmakers without reporting them. Notably, this omission of reporting 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.

As the scandal became public, Prime Minister Kishida replaced all four cabinet ministers from the Abe faction, the LDP's largest faction, who were suspected of illegal slush fund creation, including Chief Cabinet Secretary Hirokazu Matsuno and Minister of Economy, Trade and Industry Yasutoshi Nishimura. He also announced his intention to step down as chairman of the Kishida faction. In 2024, a 'Political Reform Headquarters' was established to discuss these issues institutionally, including political funds. Furthermore, a disciplinary committee was convened for politicians involved in the political funds scandal, resulting in disciplinary action against 39 individuals, including a recommendation for two to leave the party. Unaffiliated lawmakers such as former Prime Minister Suga and Shinjiro Koizumi raised their voices, calling for the dissolution of factions themselves 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 slow pace of dissolution by other factions led to accusations of 'sham dissolution' (Endo Shuhei 2024). Just as the LDP declared the dissolution of its factions under a general framework for political reform after the Recruit scandal but failed to achieve it, public opinion doubted the LDP's commitment to reform. The resignation of lawmaker Yaichi Tanigawa led to three by-elections for the House of Representatives in April. In these elections, the LDP fielded a candidate in only one district, taking moral responsibility, but lost, while the Constitutional Democratic Party won all three seats.

In June, the Political Funds Control Act was amended and passed in the Diet, spearheaded by the LDP. While key LDP politicians were passive about amending the Political Funds Control Act, Prime Minister Kishida actively pushed for it, largely accepting the compromise proposals put forth by Komeito and the Japan Innovation Party, allowing the bill to pass the Diet. The threshold for disclosing donations at political fundraising events was lowered from the current 200,000 yen to 50,000 yen. Policy activity funds paid by the central party to lawmakers exceeding 500,000 yen must also be disclosed. Furthermore, to prevent politicians from shifting blame to their secretaries or accountants in cases of political fund violations, lawmakers are now required to submit a confirmation statement when preparing political fund 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, making them no different from the current situation. Moreover, within the LDP, serious divisions emerged regarding the scope and level of political reform, with Deputy Prime Minister Taro Aso and Secretary-General Toshimitsu Motegi strongly opposing the bill, claiming that Prime Minister Kishida had made unilateral concessions (Kosaka Kazunori 2024). Deputy Prime Minister Aso's public opposition to the bill, stating that democracy is inherently expensive, further undermined the purpose of the legislation (Kote-gawa Taro 2024).

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

1. Relationships Among LDP Elites During the Party Leadership Election

In the LDP leadership election, which saw a record nine candidates competing, former Secretary-General Shigeru Ishiba, on his fifth attempt, emerged victorious. While officially declared a 'faction-less leadership election' following the dissolution of factions, the shifts in internal party dynamics that occurred behind the scenes 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 received the most votes from Diet members with 75, but failed to secure enough votes from local party members. With votes evenly distributed among the numerous candidates, the outcome hinged on where the support of the seven candidates who lost in the first round would go. Former Prime Minister Suga and the Koizumi faction were expected to support Ishiba in the runoff, while the Aso and Motegi factions, led by their respective faction leaders, were expected to support Takaichi.

In this situation, 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. Takaichi, as a historical revisionist who advocated for visits to Yasukuni Shrine, had a high 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, the 'post-Abe' trend following Abe's death became intertwined with the political funds issue, leading to the victory of Ishiba, who had opposed Abe, rather than Takaichi, who represented Abe's successor. Furthermore, the election of Yoshikiko Noda, who had prime ministerial experience, as the leader of the Constitutional Democratic Party also contributed to many lawmakers supporting the seasoned Ishiba.

2. Election Issues: Early General Election and Public Official Accountability Regarding Political Funds

Immediately after winning the party leadership election, Ishiba was pressed to set a date for the general election and to implement measures to refresh the party's image with a reformist atmosphere during the election campaign. Firstly, regarding the dissolution of parliament and the general election, Koizumi advocated for an immediate general election, while Ishiba took a cautious stance. However, after winning the leadership election, Ishiba changed his position and announced an early dissolution on September 30, which was an unprecedentedly short period from his inauguration to the dissolution of the House of Representatives for a post-war prime minister. 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 electing new leaders, cabinet members, and party executives and then entering the House of Representatives election with a reformist attitude, they could achieve a pseudo-regime change effect comparable to an actual change of government, thus gaining 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 scrutinize the political funds issue, potentially forcing the LDP and the cabinet into a defensive position during the election. Ishiba, who had won by a narrow margin in the leadership election and had a weak base of support within the party, desperately needed a general election victory to consolidate his control. However, the media's criticism of choosing an early dissolution as a means to evade opposition attacks was high, and this decision backfired (Yoshida Kiyohisa 2024).

Secondly, Ishiba's administration was launched 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 had shaken the LDP. Depending on the severity of the offense, 12 individuals were excluded from nominations, and 34 were prohibited from running as overlapping candidates in proportional representation. However, these measures fell far short of public expectations. Candidates who were stripped of their official nominations largely ran as independents, and the LDP refrained from fielding candidates in those districts, effectively leaving a path 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 doubts about the LDP's commitment to reform intensified.

On the other hand, these disciplinary measures were largely concentrated within the Abe faction, becoming a source of internal conflict. 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 had unilaterally pushed forward with them without internal party consultation, such as amending the Political Funds Control Act. They voiced their discontent, arguing that Ishiba is overtly trying to weaken the Abe faction, which systematically supported Takaichi in the final stages of the LDP leadership election and remains the largest faction.

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 be significantly influenced by the number of seats secured by the LDP and the extent to which Abe faction lawmakers are re-elected. Firstly, looking at the overall picture, the LDP secured only 191 seats and Komeito 24 seats in this general election, falling far short of the electoral goal of 'achieving a majority for the LDP-Komeito coalition.' Ishiba's position within the LDP will be significantly shaken. Meanwhile, the Abe faction, which harbors strong dissatisfaction with the Ishiba administration, has also been considerably weakened. Due to the underreporting of political funds, many Abe faction lawmakers were prohibited from running as overlapping proportional representation candidates or ran as independents, and a significant number of them lost. Counting the successful candidates by LDP faction, the former Abe faction had 22 successful candidates, resulting in a success rate of only 44%. Overall, the Aso faction had 31 successful candidates, the former Motegi faction 27, the former Kishida faction 26, the former Nikai faction 22, and the former Moriyama faction 7.

Although the Abe faction has been considerably weakened, Takaichi has refused to participate in the Ishiba administration and has been campaigning to garner support from the lawmakers who backed her in the leadership election, thereby asserting her influence. The Aso and Motegi factions have also taken a stance against Ishiba, following the amendments to the Political Funds Control Act and the leadership election. In this context, 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 moment, and with the Upper House election scheduled for next July, voices demanding a change of Prime Minister are likely to grow by next March, when the 2025 budget is expected to be passed.

Ishiba faces the difficult task of simultaneously stabilizing the coalition government, appeasing internal party dissent, and continuing the agenda of reform. Securing coalition partners will be a critical challenge, as the Tsutomu Hata cabinet, established in 1994, collapsed after only 64 days. Furthermore, Ishiba intends to lead the nation by making conciliatory appointments within the party, including successors for the ministers who lost their seats, and seeking cooperation from the opposition parties to pass the current supplementary budget. Additionally, demands for political reform, including further amendments to the Political Funds Control Act, will continue, 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.” *Asiaticus* 66, no. 1: 109-136.

Park Chul-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 Government in Distress.” *Yomiuri Shimbun*, July 1.https://www.yomiuri.co.jp/column/politics01/20240627-OYT8T50029/(Accessed: October 20, 2024)

Kote-gawa Taro. 2024. “Aso Criticizes Prime Minister? 'We Must Avoid Reforms That Leave Future Woes': Regarding the Revised Bill.” *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)

Nakakita Koji. 2017. *The LDP: The Reality of One-Party Dominance*. Chuokoron-Shinsha.

Nagahara Shingo. 2024. “Mr. Ishiba's Comeback Victory in the Runoff of the Party Leadership Election, Avoiding Takaichi Who Was Feared by the Former Kishida Faction: The Reason for Victory is Turning the Legacy Upside Down.” *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 Backroom Deal Scandal Through the History of the Political Funds System.” *Asahi Shimbun*, April 9.https://www.asahi.com/articles/ASS4K351XS4KULLI009M.html(Accessed: October 24, 2024)

Yoshida Kiyohisa. 2024. “With the Party Leader Decided, Towards Dissolution and the House of Representatives 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] Les résultats ci-dessus sont ceux d'un sondage d'opinion mené par l'Associated Press du 11 au 14 octobre.

■ Kim Sung-jo_Professeur, École des études internationales d'Asie de l'Est, Université Yonsei.

■ Responsable et éditeur : Park Han-soo_Chercheur, EAI

    Contact : 02 2277 1683 (poste 204) | hspark@eai.or.kr