Isrealis View War
The Middle East continues to be at the centre of world attention, while the unending war in Israel has brought a window of opportunity for rewriting the regional geometry. Meanwhile, Japan's government has announced a record-shattering ¥115.5 trillion ($732 billion) budget for the fiscal year starting April 2025, reflecting far-reaching changes in the geopolitical and domestic environment of the two countries.
Record Budget by Japan
The budget for 2025 in Japan is 2.6% higher than in the current year. Financed mainly by an expected ¥78.4 trillion in tax revenues, it also includes a 19% cut in the issuance of government bonds. But this ambitious plan has created political obstacles for the coalition government headed by Prime Minister Shigeru Ishiba.
Since his coalition lost its majority in the lower house last October, Ishiba has had to use negotiations with opposition parties to get policies through. The small but influential Democratic Party for the People has leveraged that position to seek tax reforms in exchange for supporting the economic stimulus package. A key point of contention has been the tax-free income ceiling, which has yet to be resolved and could lead to opposition parties withholding support for next year's budget.
Balancing Political Alliances
To avoid possible resistance from the DPP, Ishiba is likely to reach out for votes from the Japan Innovation Party, or JIP. The Osaka-based party has called for policies such as free high school tuition and lunches for all students—ideas the coalition has indicated it is willing to consider.
An upper-house election next July casts a dark cloud over Ishiba's future. Public opinion polls disclose growing discontent: his disapproval rate is now overtaking his approval rate. Internationally, too, Ishiba has come under fire amid perceived diplomatic gaffes-including failing to reach out to President-elect Donald Trump, who only this week gave an olive branch of saying he wanted to meet him.
Japan's budget underlines the government's emphasis on social security and defense spending, respectively:
- ¥68.2 trillion is the general spending.
- A record ¥8.5 trillion for defense, which is a 9.7% increase.
- ¥38.3 trillion for social security, up from ¥37.7 trillion in 2024.
- Debt servicing rises 4.5% to ¥28.2 trillion.
Revenue sources include ¥78.4 trillion in tax income, which is helped by inflation and the abolition of an income tax cut, while new bond issuance would reach ¥28.6 trillion.
Outlook
Ishiba is likely to face a test of political acumen when parliament resumes in January. It would be striking a balance between the opposition's demand and the people's discontent that will determine whether his government gets enough support for the budget.
Japan's fiscal strategy is about how to balance its economic stability with domestic challenges. However, the prime minister can only forge unity among various political factions and deliver promises that will shape the future course of action in the coming months.
Meanwhile, the geopolitical changes in the Middle East create a rude awakening to the ever-changing global landscape. Both regions offer invaluable lessons in leadership, diplomacy, and resilience in the face of adversity.