Why Japan's Government is on the Brink of Collapse (Again)

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Japan's government finds itself in another precarious position as Prime Minister Shigeru Ishiba's approval ratings plummet to record lows amid a fresh money scandal, economic challenges, and looming elections. With net approval hovering around minus 30%, Ishiba faces the very real possibility of becoming the latest casualty in Japan's notorious "revolving door" of prime ministers.

The Gift Voucher Scandal

At the center of the current crisis is what's being called the "gift voucher scandal." Earlier this month, it emerged that Prime Minister Ishiba had distributed gift vouchers worth 100,000 yen (approximately $660) to 15 new lower house lawmakers from his Liberal Democratic Party (LDP) during a dinner meeting at the Prime Minister's office in March.

While this might seem minor compared to other political scandals, the context is crucial. Ishiba's predecessor, Fumio Kishida, resigned following a major financial scandal involving LDP factions diverting campaign funds into slush funds. That scandal was so damaging it resulted in the LDP losing its parliamentary majority in last October's election.

Ishiba, who positioned himself as an outsider untainted by recent scandals when he took office, has now found himself embroiled in exactly the type of financial impropriety the LDP was trying to distance itself from. Although he maintains he broke no laws and used his personal funds, the public isn't buying it. Recent polls show that over 70% of Japanese citizens see the gift voucher incident as problematic.

Economic Pressures Mounting

The political crisis couldn't come at a worse time. Japan faces significant economic challenges that demand focused government attention:

1. Rising Inflation: After emerging from a long period of deflation, Japan is now grappling with price increases, including record-high prices for rice, the country's staple food.

2. Trump's Trade Wars: U.S. President Donald Trump's decision to impose 25% tariffs on imported cars beginning April 2nd threatens to devastate Japan's automotive sector. Japanese car exports to the U.S. totaled $40 billion in 2024, making them Japan's largest export category to America. The Japan Research Institute estimates these tariffs will lead to a 4.3% decline in Japanese passenger car production.

3. Budget Battles: Ishiba's minority government is struggling to pass a budget before the April 1st deadline, with the gift voucher scandal diverting crucial attention from these negotiations.

Will Ishiba Survive?

Despite the scandal and plummeting approval ratings, Ishiba may yet survive in the short term for several reasons:

1. Public Sentiment: While disapproving of the gift vouchers, approximately 60% of Japanese citizens don't believe Ishiba needs to resign.

2. Opposition Disunity: A no-confidence motion seems unlikely as the largest opposition party, the Constitutional Democratic Party (CDP), fears it could lose its status as the main opposition in an early election.

3. LDP Stability Concerns: Replacing Ishiba would mean installing Japan's fifth prime minister in five years, potentially making the LDP appear even more unstable ahead of the upcoming July upper house elections.

However, if the LDP performs poorly in those elections, perhaps even losing its majority, the party may move against Ishiba. Japan analyst Tobias Harris notes that "opinion polls will shape public and intra-LDP narratives about the prime minister's viability" and that "a lot of LDP lawmakers have a lot of questions about whether Ishiba can pull through this scandal."

For now, Japan's government remains in crisis mode, trying to navigate multiple challenges while its leader struggles to maintain political legitimacy. The coming months, particularly the July upper house election, will likely determine whether Japan's revolving door of prime ministers continues to spin.