Japanese Prime Minister Fumio Kishida says he will step down next month

SEOUL, South Korea — Japan’s Prime Minister Fumio Kishida said he will step down next month, signaling possible political uncertainty ahead for one of the closest U.S. allies in Asia.

Kishida’s announcement came as the Japanese were observing the traditional Bon holiday.

He told a press briefing that he would not run for reelection next month as president of the ruling Liberal Democratic Party, or LDP.

“It is necessary to clearly demonstrate to citizens that the LDP is changing,” he told reporters. “The first and most obvious step to show this is for me to step down.”

Kishida’s term as LDP president ends in September. The party will elect a new leader, and the nation’s parliament, where the LDP holds a majority in the lower house, will vote the new leader in as premier.

Kishida’s approval rating has been languishing at 25%, but he has insisted that he would continue in office.

Many Japanese were dissatisfied by what they felt was his indecisive handling of an LDP fundraising scandal, as well as his party’s long-standing ties to the Unification Church, founded by South Korean Rev. Sun Myung Moon.

Kishida tried to regain public trust by breaking up powerful internal factions within the LDP, including his own.

But that may have alienated some politicians whose support Kishida had been counting on.

“There's a lot of bitterness towards Kishida and a lot of resistance to supporting him again,” says Tobias Harris, founder and principal of the political risk consultancy Japan Foresight, LLC. According to Harris, Kishida may have realized that he “was not going to be able to reassemble the coalition that won him the premiership in 2021.”

Harris says that while several LDP politicians have expressed their intention to compete with Kishida for the LDP presidency, none have a broad appeal across the whole party. “It looks like a wide-open race,” Harris adds. “There’s not an odds-on favorite by any means.”

Kishida has spent more than a thousand days in office, making him Japan's eighth-longest-serving prime minister since World War II. His resignation raises the prospect of a return to the “revolving door” parade of prime ministers, many of whom have only lasted a year in office.

Another complication is that a huge asset bubble that has ballooned for the last two years has imploded. Japan’s stock prices last week registered their biggest single-day point-drop since 1987.

Tobias Harris predicts a rising chorus in Japan of “calls to really think about limitations on spending, and that's going to have consequences downstream for what Japan is willing and able to do.”

Kishida’s decision to dramatically increase defense spending, including acquiring offensive weapons, has delighted Washington. But Harris notes that Kishida has not clearly stated how Japan’s heavily indebted government will pay for it.

With nudging from Washington, Kishida also moved to mend fences with another key US ally, South Korea, putting aside historical disputes to focus on current security threats.

“The U.S.-Japan alliance is a beacon to the entire world,” President Biden said during Kishida’s state visit to Washington in April.

But in the future, the U.S. may have to factor in an increasing number of Japanese domestic political and economic constraints.

“You can’t assume,” Harris says, that future Japanese governments are “going to have the political strength and wherewithal that they’ve had for the past decade.”

Chie Kobayashi contributed to this report in Nagano, Japan.