As discussions over political reform intensify ahead of Thursday’s opening of the next session of parliament, the handling of corporate donations is poised to emerge as a major battleground between the parties.

While they might be able to find middle ground over other items in the agenda, deep-seated bipartisan divisions over the handling of corporate donations suggest the road to a compromise on this topic before the end of the year remains difficult at best.

The ruling Liberal Democratic Party — weakened after it lost its majority in the Lower House in the Oct. 27 general election — has displayed strong resistance toward long-standing opposition calls to abolish the endowments. The party has long maintained that an abolition of corporate donations would significantly curtail the political freedom of the private sector.

The party’s recent blueprint for an amendment to the political funds control law — potentially the second one this year, after the law was amended in June in the aftermath of the party’s slush funds scandal — contained no reference to political donations.

Speaking to reporters after a party meeting last Thursday, Prime Minister Shigeru Ishiba, who also serves as LDP president, expressed his hopes for a lively debate in parliament and reiterated his eagerness for the law to be amended over the next month.

“There are many different views on who should bear the cost of our democracy,” Ishiba said. “I don’t think all parties see eye to eye on this specific issue.”

Ishiba has repeatedly expressed his skepticism over an abolition of corporate donations. In support of his position, he has often referred to a Supreme Court ruling dating back to 1970 in which judges determined that private stakeholders have the right to make donations to fulfill their social responsibility.

Since its foundation in 1955, the LDP has boasted close ties with the private sector. In 2022 alone, the party received approximately ¥2.4 billion ($15.6 million) in donations from private companies, by far the highest amount among all parties.

Meanwhile, opposition parties have long decried the outsize influence of companies in political decision-making, framing the abolition of corporate donations as the “cornerstone” of true political reform — and indirectly as a means to erode the LDP’s dominance.

Constitutional Democratic Party of Japan (CDP) leader Yoshihiko Noda, in a news conference on Friday, described the proposed abolition as “homework” left to politicians from the season of political reform of the early 1990s, and condemned the LDP’s decision to keep the matter out of its latest draft of the amendment.

“I am extremely skeptical of the fact they didn’t even consider this issue in their internal discussions,” Noda told reporters.

In the aftermath of the Recruit insider trading scandal of the late 1980s — in which dozens of politicians, bureaucrats and businesspeople obtained valuable shares of a subsidiary of the company before its initial public offering — a fierce debate on political reform gripped the political center of Nagatacho.

After years of bipartisan discussion, alongside the public financing of political parties and a new electoral system, stricter regulations to limit the influence of private companies on political parties were introduced. In 1994, both the ruling and opposition parties agreed to abolish corporate donations within five years, but eventually failed to follow through on the agreement.

While corporate donations to individual politicians were later banned, contributions to political parties, their local branches or affiliated political organizations remained legal, albeit capped according to the company’s capital.

Nowadays, a legal loophole allows companies to financially support a politician by buying tickets to fundraising parties — with the company’s donation disclosed only when the sum exceeds ¥50,000.

In October, the CDP submitted a proposal for an outright ban on corporate donations and a prohibition on companies from purchasing tickets for fundraising parties. Measures to promote donations by individuals also made it into the proposal.

In the upcoming weeks, the CDP will seek the backing of other opposition parties such as Nippon Ishin no Kai and the Japanese Communist Party to pressure a weakened LDP into accepting its proposals. The LDP’s junior coalition partner, Komeito — whose political support comes from the lay buddhist group Soka Gakkai — doesn’t receive any corporate donations.

However, similar to the case with an economic stimulus package approved by the Cabinet last week, the Democratic Party for the People (DPP) will likely throw its support behind the ruling LDP-Komeito coalition again.

The DPP has been ambiguous about its position on corporate donations so far, voicing skepticism toward an opposition-led debate but keeping the door open for cooperation with the CDP — provided that the CDP meets certain demands of the DPP and the proposed amendments do not result in any legal loopholes.

In a Nov. 19 news conference, DPP leader Yuichiro Tamaki alluded to potential loopholes in the CDP proposal, adding they might leave room for misunderstanding in the long run.

“We need to find a common way to block these loopholes,” Tamaki said. “If we want to submit a law, we need to make sure that, from that moment, the LDP doesn’t receive a single penny from any private companies.”

In a refrain often heard among LDP politicians, Tamaki has repeatedly inferred that he doesn’t want to oversimplify things and portray corporate donations as evil and individual donations as virtuous.

The DPP — whose support base consists of unions in the energy, textile and automotive sectors — said it had received only ¥280,000 in political donations in 2022.

Without the DPP’s support, the opposition doesn’t have the numbers in the Lower House to approve an abolition of corporate donations.

Should the LDP strike another last-minute agreement with the DPP for support of its blueprint for amending the political funds control law, the chances of a united opposition front emerging in next year’s session of parliament would be significantly diminished.

Meanwhile, the public appears to be in favor of an abolition of corporate donations. Over 67% of respondents to a recent Kyodo News survey said such donations should be banned.