In an unexpected move, the nationalist governor of Tokyo Shintaro Ishihara resigned on Thursday and announced that he will form a national political party to compete in the lower house elections that are expected to take place early next year. The wily eighty year-old politician, running with a populist message, could emerge as an important power broker and force a new political realignment in Japan.

During his news conference, Ishihara repeated his call for revising Japan’s pacifist constitution which he views as unacceptable because it was written while Japan was occupied by the United States after World War II. He also said that he wants to reform Japan’s bureaucracy “that has continued since the Meiji era” and reinstitute military conscription in order to toughen up the youth. This in addition to his controversial views on Japan’s island disputes with China and South Korea.

The two major parties, the Democratic Party of Japan and the Liberal Democratic Party, are not expected to have outright majorities after the upcoming elections and will need the support of smaller parties to form a government. Ishihara’s party could garner enough support to put it in a position to play a role in determining who assumes power in Japan’s closely contested elections. As such, Ishihara will have leverage and an opportunity to shape national policy.

Ishihara’s influence on national politics could well have profound ramifications on Japanese foreign policy and signal a shift to a more hardline stance in its relations with China and to a lesser extent South Korea. But it would also raise eyebrows with the country’s major allies in the United States.

A change to the Japanese constitution that gives the Japanese Self Defense Forces more authority to take offensive actions if necessary would undoubtedly cause concern among its neighbors who still with dread recall the Japanese occupation across Asia during the 1930s and 1940s. The United States have supported Japan taking a more proactive role in its security but would most likely oppose the army adopting a more aggressive posture in the region over fear that it will upset relations with China.

The former Tokyo governor is no stranger to controversy. His announcement last spring to purchase the Senkaku Islands from their Japanese owner in order to safeguard them and build a fishing harbor caused outrage in China. China also lays claim to the islands where they are known as the Diaoyu Islands. The Japanese government stepped in and nationalized the islands with the belief that it would be less likely to antagonize the Chinese than Ishihara’s planned purchase.

Anti-Japanese demonstrations sprang up in dozens of Chinese cities nevertheless, resulting in Japanese businesses curtailing operations and even closing their doors. Chinese surveillance ships have in turn been said to be routinely violating what Japan considers its territorial waters off the Senkakus.

Regarding South Korea, after President Lee Myung-bak made an unprecedented visit by a sitting president to the uninhabitable Takeshima Islands in August (known as the Dokdo Islands to Koreans), Japan-Korean relations have been strained.

In his announcement, Ishihara said that he would “like to offer my last service to this country.” He has been in politics for 44 years, having won a seat in the upper house in 1968 at age of 35 for the Liberal Democrats and then served in the lower house in 1972 before becoming head of the Environment Agency and transport minister. He has been Tokyo governor since 1999 as an independent.

The success of Ishihara’s new party and its populist message will be an important barometer of the direction that Japan’s government takes. The environment is ripe for a leadership change in the country as it is occurring under the backdrop of a weak economy and increasingly difficult foreign relations.

Japanese prime minister Yoshihiko Noda shared with opposition lawmakers on Thursday his intention to call snap elections in November.

While the outlook is uncertain as to what party will come out on top given the public’s disgust with politics as usual, it is clear that the ruling party is in for a tough election.

The Democratic Party of Japan has suffered especially weak approval ratings since it increased the country’s sales tax in June. There is also a general perception that it has failed to follow through on its pledges to change the way politics is done in Japan.

Noda secured the support of the Liberal Democratic Party and New Kōmeitō during negotiations in early August to get his consumption tax bill through the upper house of the Diet. The conditions were that he would call elections soon though no timetable was given. (more…)

The powerful former president of the ruling Democratic Party of Japan, Ichirō Ozawa, resigned from the party on Monday, along with 49 of his followers, in protest to the consumption tax hike that was passed in the lower house of the Diet last week.

The defections seemingly deal a blow to Prime Minister Yoshihiko Noda’s hold on power but in fact they may allow him to get further economic reforms through parliament because the Ozawa coalition turns out to be weaker than expected.

Ozawa earned the nickname “the destroyer” from his history of orchestrating party resignations over policy disagreements and power plays. There is evidence that the Japanese public and the policymakers in his coalition have grown tired of his tantrums however.

In a poll taken by Kyodo News last week, after the consumption tax bill was passed, nearly 80 percent of respondents said that they do not have high expectations of any party that Ozawa forms if he splits from the DPJ. 60 percent did not understand why Ozawa and his followers chose to rebel in the first place.

Surveying the immediate post revolt parliament, the defections did not result in the DPJ losing its ruling majority. In the lower house, the party remains in a coalition with the conservative Kokumin Shinto (People’s New Party). In the upper house, the DPJ is still in the majority.

Moreover, after looking at the defections more closely, they show more evidence of Ozawa’s fading influence. Thirty-eight of the defections came from the lower house and twelve from the upper house, making up only about half of the Ozawa loyalists in the party. To lower house members who originally resigned changed their mind, saying that they could be more effective influencing tax policy within the ruling party.

This does not mitigate the threat ahead to Noda and the DPJ majority. The same Kyodo poll showed only 30 percent approval of the Noda government. The possibility that the government collapses is still real if there are additional resignations. Noda could try to govern more from the center in order to appeal to a broader coalition but in so doing he needs to be mindful of not alienating the remaining Ozawa supporters.

If the government can survive this turmoil and buck the trend of revolving door prime ministers since 2006, Japan will have a chance to enact must needed economic and quite possibly political reforms.

Noda has argued that Japan must enact legislation to face up to its rising financial problems and avoid a crisis. Its debt to gross domestic product ratio is the highest in the developed world at around 200 percent. Japan’s credit rating was recently downgraded two notches to A+ from AA by Fitch.

The passing of the sales tax bill was meant as a first serious step toward addressing Japan’s fiscal woes. Polling indicates that the Japanese public agrees, just not now. Amid a global economic crisis, the East Asian country is still struggling to recover from last year’s devastating earthquake and tsunami. Regardless, Noda is wagering his political future on the bill with the possibility of additional reforms coming later.

The stakes are high. Assuming that there are no other defections, Noda’s DPJ and the opposition will have the opportunity to pass game changing reforms that could reinvigorate Japan’s paralyzed political system and economy.