Japan's struggling PM Suga steps down, sets stage for new leader

Japanese Prime Minister Yoshihide Suga said on Friday he would step down, setting the stage for a new premier after a one-year tenure marred by an unpopular COVID-19 response and rapidly dwindling public support.

Suga, who took over after Shinzo Abe resigned last September citing ill health, has seen his support ratings sink to below 30% as the nation struggles with its worst wave of COVID-19 infections ahead of a general election this year.

Suga did not capitalise on his last major achievement - hosting the Olympics, which were postponed in 2020 due to the pandemic months before Suga took office as coronavirus cases surged.

Suga's decision to not run in a ruling Liberal Democratic Party (LDP) election in September means the party will choose a new leader, who will become prime minister.

Before Abe - Japan's longest-serving prime minister, with an eight-year tenure - the country had gone through six prime ministers in as many years, including Abe's own troubled first one-year tenure.

Japan’s Nikkei average futures jumped 2% immediately after media reports that Suga would not run, while the broader Topix Index extended its gains and hit its highest levels since 1991 following the news.

Japan’s Prime Minister Suga to drop out of party election as nation battles wave of Covid infections. Courtesy: Reuters

"I want to focus on coronavirus response, so I told the LDP executive meeting that I've decided not to run in the party leadership race," Suga told reporters.

"I judged that I cannot juggle both and I should concentrate on either of them," Suga said. He added that he would hold a news conference as early as next week.

The address ended a rollercoaster week in which Suga pulled out all the stops to save his job, including suggestions he would sack his long-term party ally, as well as plans to dissolve parliament and reshuffle party executive and his cabinet.

Ruling LDP officials said Suga would stay on until his successor is chosen in a party-wide election slated for Sept. 29.

The winner of the contest is all but assured of being premier because of the LDP's majority in the lower house. The government has been considering holding the general election on Oct. 17.

Race for leader

Suga's decision opens up the party chief race, as there is no clear favourite to replace the outgoing leader.

Fumio Kishida, a soft-spoken former foreign minister, is one of the only two lawmakers who have so far declared their candidacy. On Thursday, he criticised Suga's coronavirus response and urged a stimulus package to combat the pandemic.

"Kishida is the top runner for the time being but that doesn't mean his victory is assured," said Koichi Nakano, political science professor at Sophia University.

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Nakano said popular Administrative Reform Minister Taro Kono could run if he gets backing of his faction leader, Finance Minister Taro Aso, while former defence minister Shigeru Ishiba could also run but looks at a disadvantage.

Kono has led Japan's rocky vaccination rollout but remains high on the list of lawmakers voters want to see succeed Suga.

The former foreign and defence minister, Kono is popular with younger voters after building support through Twitter, where he has 2.3 million followers - a rarity in Japanese politics dominated by men in their 60s or older.

Ishiba is a soft-spoken former defence minister and rare LDP critic of Abe when the latter was in office.

Abe's stance will be closely watched given his influence inside the two largest factions of the LDP - his own Hosoda group and the second-largest faction led by Finance Minister Taro Aso - as well as among the conservative MPs, experts say.

Unlike last year, grassroots LDP members will vote along with the party's members of parliament, which makes the outcome of the party leadership race harder to predict.

The LDP-led coalition is not expected to lose its majority in the powerful lower house, but forecasts suggest that the LDP could lose the majority that it holds on its own, an outcome that would weaken whoever is leading the party next.

"Stock prices are rising based on a view that the chance of LDP's defeat in the general election has diminished because anyone other than Suga will be able to regain popularity," said senior economist at Daiwa Securities Toru Suehiro.

Suga's image as a savvy political operator capable of pushing through reforms and taking on the stodgy bureaucracy propelled his support to 74 percent when he took office.

Initially, populist promises such as lower mobile phone rates and insurance for fertility treatments were applauded.

But removing scholars critical of the government from an advisory panel and compromising with a junior coalition partner on policy for healthcare costs for the elderly drew criticism.

His delay in halting the "Go To" domestic travel programme - which experts say may have helped spread coronavirus around Japan - hit hard, while the public grew weary of states of emergency that hurt businesses.