(Bloomberg) -- Japanese Prime Minister Shigeru Ishiba this month stripped support from a dozen members of his ruling party in a bid to turn the page on a slush fund scandal. After Sunday’s election, he may need them to shore up power and keep his job.
Opinion polls this week indicate that while the Liberal Democratic Party is expected to win the most votes, it is likely to lose a majority it has held by itself in the more powerful lower house of parliament since 2012.
The LDP would then need to lean on its junior partner Komeito to secure the combined 233 seats it needs to maintain a majority for the ruling coalition, an outcome Ishiba has set as a goal of success or failure in this election.
If it falls short of that figure, a possibility due to anger over the slush fund scandal, Ishiba will be scrambling to form a stable government and survive as leader. And that could lead him right back to some of the lawmakers that he sought to punish in an effort to clean up the party’s image.
“If that happens, the easiest option for Ishiba would be to cooperate with the ousted LDP members, but that’s a tricky situation,” said Hideo Kumano, an economist at Dai-Ichi Life Research Institute. “I think the public will never forgive the party over the kickback issue.”
Ishiba took the helm of the LDP last month as the party looked to make a clean break from the scandal that sapped the popularity of former Prime Minister Fumio Kishida.
Of 12 LDP members stripped of official backing in the election, 10 are still standing as independent candidates. The lawmakers include former trade ministers Koichi Hagiuda and Yasutoshi Nishimura and former education minister Hakubun Shimomura, all of whom had sway within the party before news of the slush funds broke. It is not clear how many of the 10 will win re-election.
Bitterness persists within the LDP over its handling of the scandal and a loss in the election is likely to damage Ishiba’s credibility as its leader.
“There is an internal war going on,” said Mieko Nakabayashi, a professor at Waseda University in Tokyo and a former lawmaker, on Bloomberg TV Friday. “It’s really fragmented. Therefore, after the election we don’t know how they can come back together and help each other.”
The scandal centers on the illicit channeling of money generated at party fund-raising events into the pockets of lawmakers. Combined with a cost-of-living crunch generated by the strongest inflation in decades, the scandal has drained support for a party that has only been in opposition for four years since 1955.
The biggest and second largest opposition parties say they wouldn’t join an LDP-led coalition. While there may still be scope to cooperate on an issue-by-issue basis, Ishiba may prefer to reach out to smaller parties such as the Democratic Party For the People if he needs to expand the ruling coalition to stabilize his government.
The DPP is likely to boost the number of its seats from the current seven, the polls indicate. The party split from the LDP’s main opposition rival the Constitutional Democratic Party. The DPP’s leader has also indicated the party wouldn’t join a coalition with the LDP, but may be willing to cooperate on some issues.
Working with other parties would mean Ishiba would have to listen to their needs and, more broadly, stick to voter-friendly policy measures with more public spending, rather than his own agenda.
The new administration has already pledged to make an upcoming economic package larger than last year’s. That package was funded by a ¥13 trillion ($87 billion) extra budget.
The DPP pledges in its manifesto to boost people’s tax-free income allowance to ¥1.78 million from ¥1.03 million and reduce the sales tax to 5% from a maximum of 10% now. Lowering tax revenues may not be a palatable option for Ishiba given his spending package promise and the need to fund a ramped-up defense budget.
Gaining support from LDP heavyweights hoping to regain their standing in the party might be an easier option in the shorter term, though it may further erode support for the party over the longer-term, with an upper house election due next year.
To be sure, the LDP is projected to win the most seats among all the parties and likely to lead any administration after the election.
Polls taken by the Mainichi newspaper, FNN/Sankei and the Asahi newspaper show that as many as two-fifths of respondents are still yet to decide their vote. The FNN/Sankei poll forecast the ruling coalition may lose roughly 70 seats and fall short of a majority. The Mainichi survey also signals waning support for the coalition with both LDP and Komeito projected to lose seats.
A Nikkei newspaper poll published on Thursday night also showed it remains to be seen whether the ruling coalition will keep a majority as support dwindles. Both the CDP and DPP were expected to gain seats.
The only time the LDP has failed to win the most votes in a lower house election was in 2009, when it won only 119 seats.
There is a precedent for the LDP to win the most votes but not form a government. The party won the 1993 lower house election but several opposition parties united on the issue of electoral reform patched together a coalition that ousted the ruling party.
Analysts see little chance of that happening again if the LDP performs badly, given the lack of a similar unifying issue for opposition parties.
