Japan in rare post-election uncertainty after ruling coalition loses big in snap vote

The makeup of Japan’s future government was in flux on Monday after voters punished Prime Minister Shigeru Ishiba’s coalition in a snap election over the weekend, leaving no party with a clear mandate to lead the world’s fourth-largest economy.

The uncertainty has sent the yen to a three-month low as analysts prepare for days, or perhaps weeks, of political wrangling to form a government and a possible change of leader.

That comes as Japan faces economic headwinds, a tense security situation fueled by a strong China and nuclear-armed North Korea, and a week before American voters head to the polls in another surprise election.

“We will not allow even a moment to stand still as we are facing very difficult security and economic situations,” Ishiba said at a press conference on Monday, pledging to continue as prime minister.

The Ishiba Liberal Democratic Party (LDP) and its junior coalition partner Komeito took 215 seats in the lower house of parliament, down from 279, as voters punished the incumbents over a funding scandal and cost-of-living deficits. Two Cabinet ministers and Komeito leader Keiichi Ishii lost their seats.

Support from smaller parties, such as the Democratic Party for the People (DPP) or the Japan Innovation Party (JIP), which won 28 and 38 seats respectively, could now be key for the LDP.

The night’s biggest winner, the opposition Constitutional Democratic Party of Japan (CDPJ), won 148 seats, up from 98 previously, but still fell short of a majority of 233.

DPP chief Yuichiro Tamaki and JIP leader Nobuyuki Baba both said they would not join a coalition but were open to short-term cooperation on certain issues.

Ishiba followed through on his words, saying “for now we are not expecting an alliance” with other opposition parties. The LDP will hold talks with other parties and perhaps adopt some of their policy ideas, he added.

Record number of women legislators

A vote on who will take over as prime minister could be held at a special session of parliament on November 11, multiple ruling party sources told Kyodo News on Monday.

It is still uncertain whether Ishiba – who became Prime Minister less than a month ago – will survive the intoxication. Small groups have also benefited and their role in negotiations can be important.

“It looks like it won’t [Ishiba] he will survive to lead a new government as prime minister … although he may stay as a caretaker,” said Tobias Harris, founder of Japan Foresight, a political risk consultancy.

CDPJ leader Yoshihiko Noda said he would work with other parties to try to oust those in office, although analysts see this as too far-fetched.

The LDP has governed Japan for almost its entire post-war history and the result marked its worst election since it briefly lost power in 2009 to the CDPJ’s predecessor.

Ishiba, who was nominated in a close race to lead the LDP late last month, called the election a year ahead of schedule in an attempt to gain public authority.

His initial ratings suggested he could capitalize on his popularity, but like his predecessor Fumio Kishida he was set back by outrage over his handling of a scandal involving unrecorded donations to LDP lawmakers.

In one bright spot, a record 73 women were elected to Japan’s male-dominated parliament, up from 54 in the 2009 election.