The nation experienced a series of events that considerably changed the political scene in 1998, including the resignation of a prime minister.
The year started with the official dissolution of Shinshinto, which was formed by Ichiro Ozawa three years before as a grouping of nine opposition forces to counter the political might of the ruling Liberal Democratic Party.
On Jan. 1, six parties were born from the ashes of Shinshinto, including the Liberal Party, led by Ozawa; Shinto Heiwa (New Peace Party), formed by Lower House members backed by Soka Gakkai, the nation’s largest lay Buddhist Organization; Shinto Yuai (Amity Party), formed by former members of the now-defunct Democratic Socialist Party; and Kokumin no Koe (Voice of the People), led by Lower House member Michihiko Kano. These small parties and other non-Communist opposition forces then tried to gather together in an attempt to retain their influence.
Six parties, including the Democratic Party of Japan; Shinto Yuai; Kokumin no Koe; the Taiyo Party, led by former Prime Minister Tsutomu Hata; and From Five, led by former Prime Minister Morihiro Hosokawa, formed the parliamentary group Minyuren before the 1998 regular Diet session convened later in January. Kokumin no Koe, the Taiyo Party and From Five later formed Minseito (Good Governance Party).
To wage a stronger campaign for the Upper House election in July, forces in Minyuren agreed with the DPJ to merge into a larger DPJ with popular lawmaker Naoto Kan as its head and Hata as secretary general. The ruling coalition at the time, made up of the LDP, the Social Democratic Party and New Party Sakigake, split up in May after four years of cooperation when the SDP and Sakigake left to prepare for the Upper House election.
The administration of then Prime Minister Ryutaro Hashimoto appeared to have a strong hold on power thanks to the turmoil in the opposition camp. But his administration was constantly rocked by uncertainty in the nation’s financial sector, a series of bankruptcies and a worsening recession.
Hashimoto finally gave up his fiscal austerity policy and allowed his pet legislation to be revised. The policy shift did not gain public support, however, and Hashimoto’s LDP suffered a humiliating setback in the July 12 Upper House poll, prompting him to step down.
The DPJ considerably increased its strength in the poll. More impressively, the Japanese Communist Party logged historical gains by attracting voters who were becoming increasingly dissatisfied with politics. Contrary to expectations of voter apathy, voter turnout increased to 58.8 percent, up 14 percentage points from the previous Upper House election.
On July 24, Keizo Obuchi was elected president of the LDP to replace Hashimoto, easily defeating two rivals — former Chief Cabinet Secretary Seiroku Kajiyama and then Health and Welfare Minister Junichiro Koizumi.