Coalition government negotiations advance, Sanae Takaichi is just one step away from becoming Japan’s Prime Minister.

Media reports indicate that the likelihood of Sanae Takaichi, President of Japan’s Liberal Democratic Party, becoming Prime Minister is rising. As policy talks between the LDP and Japan Innovation Party progress, a decision on whether the two sides will form a new coalition government is expected by this coming Monday.

The LDP and the Osaka-based Innovation Party have confirmed that their positions align on most major policy issues. However, one key disagreement remains unresolved: the reform of political donation rules. This was also the core issue that led to the end of the LDP’s coalition with the Komeito Party after a quarter-century last week.

LDP Policy Research Council Chair Takashi Kobayashi stated:

“We have confirmed that the LDP and Innovation Party share basic positions on core parliamentary policies, including the constitution, imperial succession, diplomacy, security, and energy policy.”

“However, there are still some issues that require further discussion and coordination.”

Media reports say that Kobayashi's remarks, along with similar comments from Innovation Party co-representative Fumitake Fujita, indicate that the two sides are getting closer to an agreement — which could pave the way for Sanae Takaichi to become Japan’s first female Prime Minister.

The two parties are currently continuing discussions on 12 policy issues proposed by the Innovation Party, with the main unresolved points being political donation rule reform and the possibility of cutting the food sales tax to zero within the next two years.

Hopes of Opposition Alliance Diminishing

These negotiations have also stalled another round of political talks. Previously, after the Komeito Party exited the coalition, public expectation was that three major opposition parties might unite to nominate a challenger against Takaichi, such as National Democratic Party’s Yuichiro Tamaki. But if the Innovation Party joins the coalition government, hopes for such a unified opposition front will be greatly reduced.

Fumitake Fujita stated that the decision to join a coalition government will be based on a “comprehensive judgment,” and whether “sufficient mutual trust” can be built between the two parties.

“I feel I share many values, understandings of the current situation, and visions for Japan’s future with President Takaichi. Today’s meeting made me feel our mutual trust has deepened.”

Fujita also stated that so far, no member of the Innovation Party’s parliamentary group has openly opposed forming a coalition government with the LDP, and the final decision will be made by the top leadership within the party.

However, Fujita emphasized that the party's stance regarding political donations will not change.

Innovation Party Secretary-General Hiroshi Nakatsuka said that this Friday would be the key point for determining the direction of talks with the LDP. He made this statement after meeting with colleagues from the Constitutional Democratic Party (the largest opposition) and the National Democratic Party.

If the Innovation Party joins the coalition, it will give the LDP 35 more seats in the House of Representatives — though still two short of a majority, it will be a clear advantage over any opposition bloc and help maintain stable government.

For the Innovation Party, joining the coalition will help expand its national influence outside Osaka. And its generally conservative stance may further strengthen the rightward policy orientation of a Takaichi government.

LDP, Innovation Party’s Policy Positions Similar

The LDP and Innovation Party have cooperated before, and their policies are relatively close on Japan’s political spectrum. However, some existing Innovation Party proposals (such as lowering the consumption tax) would require fiscal spending significantly greater than current LDP policies.

On this year’s national budget, the Innovation Party supported it after reaching commitments with the LDP on “free high school education” and “lowering social security fees.” The Innovation Party is pushing for reforms in the social security system, and has already reached agreements with the LDP and Komeito to adjust the scope of medical insurance drug reimbursement.

The party also advocates for a “second capital” plan, proposing Osaka as an alternative administrative center outside of Tokyo to address risks like natural disasters. Innovation Party co-representative Hirofumi Yoshimura stated Wednesday that Takaichi supports this plan. Additionally, the Innovation Party aligns broadly with the LDP on foreign affairs and security policies.

Reforming political donation rules is a thorny issue the LDP has faced in recent years. Previously, the party was embroiled in a “black money” scandal, severely damaging support both inside the party and among the public. The Innovation Party advocates for banning corporate and group political donations, which clearly diverges from the LDP’s stance favoring retention of the donation system with increased transparency.

As for National Democratic Party’s Yuichiro Tamaki, after the Innovation Party announced it might join the LDP, he seemed prepared to “stand aside.” Tamaki commented during a YouTube livestream Wednesday:

“If the Innovation Party joins the ruling coalition, there’s really not much point in us joining.”

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