The ruling Liberal Democratic Party and opposition Nippon Ishin (Japan Innovation Party) formally signed a coalition agreement on Oct. 20, marking the final step toward creating a joint administration led by Sanae Takaichi.

Takaichi, the LDP president, and Nippon Ishin leader and Osaka Governor Hirofumi Yoshimura signed the agreement at the Diet building.

“As a party that shares a national vision, I sincerely appreciate (Ishin’s) engagement in long and serious policy discussions,” Takaichi said at the beginning of the meeting. “I look forward to working together to reshape Japan in a way that we can responsibly pass on to future generations.”

Yoshimura said: “We share the same national vision and the desire to strengthen Japan. As a reformist party, we want to push forward the reforms we’ve advocated so far.”

In the extraordinary Diet session that will be convened on Oct. 21, LDP and Ishin lawmakers will write “Takaichi” in the first round of voting for prime minister.

This cooperation means Japan is nearly certain to have its first female prime minister.

However, the combined number of seats held by the LDP and Ishin does not reach a majority in either the Upper House or Lower House of the Diet.

That means a minority ruling coalition will continue to govern Japan even after Takaichi replaces Shigeru Ishiba as the nation’s leader.

Still, buying orders dominated financial markets on Oct. 20 as political uncertainty eased. The Nikkei 225 index rebounded sharply, closing at a record high 49,185.50 on Oct. 20, 1,603.35 points, or 3.37 percent, higher than the closing price on Oct. 17.

Last week, following Komeito’s withdrawal from the LDP-led coalition, concerns over political stability spread through the financial markets, causing stock prices to fluctuate wildly.

CABINET POST DECISIONS

On Oct. 20, Takaichi began full-scale considerations of her new Cabinet lineup.

In forming the coalition government, the LDP had asked Ishin to provide a list of possible Cabinet ministers.

But Ishin is leaning toward declining the offer.

Instead, Takashi Endo, Ishin’s Diet Affairs Committee chair, is expected to be appointed special adviser to the prime minister.

Takaichi has already decided to appoint former Defense Minister Minoru Kihara as Chief Cabinet Secretary, a key position in government operations.

To promote unity within the LDP, she plans to appoint former Secretary-General Toshimitsu Motegi, who ran against her in the leadership race, as foreign minister.

She also intends to give Cabinet posts to election rivals Shinjiro Koizumi, the current farm minister, and Yoshimasa Hayashi, the current chief Cabinet secretary.

During the party leadership race, Takaichi expressed her intention to appoint many female lawmakers to Cabinet positions if she became prime minister.

Attention now is focused on whether the number of female Cabinet members will exceed the previous record of five.

According to multiple party sources, Satsuki Katayama, former regional revitalization minister, who supported Takaichi in the leadership race, and Midori Matsushima, a former justice minister, are being considered for Cabinet appointments.

Another question is whether Takaichi will appoint lawmakers who have been implicated in the LDP’s political funding scandal.

Since the scandal came to light, Prime Ministers Fumio Kishida and Shigeru Ishiba have refrained from appointing such lawmakers in their Cabinets.

But Takaichi has stated that the “scandal will not affect personnel matters.”

In the earlier LDP personnel changes, Koichi Hagiuda, former chairman of the Policy Research Council who was implicated in the scandal, was named acting secretary-general.

However, opposition parties are stepping up their criticism that the LDP has disregarded concerns about “politics and money.”

POLICY AGREEMENTS

Takaichi and Yoshimura on Oct. 20 also signed an agreement document on policy points.

In response to Ishin’s request, the agreement includes passing legislation during the extraordinary Diet session to cut the number of Diet members by 10 percent and to reduce social insurance premiums.

It also states that the two parties will work together on the “secondary capital concept” to provide a backup for Tokyo’s functions in the event of a disaster or other emergency.

But the parties differed on whether to cut the consumption tax and on whether to abolish corporate and organizational political donations.

They postponed decisions on these matters until the end of Takaichi’s LDP presidential term in September 2027.

CDP GIVES UP PLAN WITH DPP

Following Ishin’s decision to form a coalition government with the LDP, Jun Azumi, secretary-general of the main opposition Constitutional Democratic Party of Japan, said the CDP will vote for its leader, Yoshihiko Noda, in the prime ministerial election in the Diet.

The CDP had explored the possibility of uniting behind Democratic Party for the People leader Yuichiro Tamaki in the vote but has now abandoned that effort.

“We were unable to go as far as defeating the LDP in the prime minister nomination election,” Azumi said.

He said the CDP plans to call on other opposition parties, such as Komeito, Reiwa Shinsengumi and the Japanese Communist Party, to vote for Noda.