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Shigeru Ishiba campaigning in Tokyo

Japan’s next Prime Minister Shigeru Ishiba campaigning in Tokyo on Sept. 26. (Toru Hanai/Bloomberg)

Japan’s next Prime Minister Shigeru Ishiba is a self-proclaimed policy wonk on defense matters whose friends consider him to be an “oddball.”

His surprise win at the fifth attempt to become leader of Japan’s ruling party hands the reins of power to a political moderate who is popular with the public and wants to tackle rural economic decline without resorting to radical reform.

He will also focus on cleaning up the ruling party’s image and forming closer security ties with Asian partners including the prospect of forming an “Asian NATO.”

The 67-year-old Ishiba won a run-off Friday against Sanae Takaichi for the LDP leadership after garnering surprisingly strong support from other LDP lawmakers. Parliament is expected to confirm Ishiba as prime minister in a vote slated for Oct. 1.

Ishiba’s victory was followed by a sharp strengthening in the yen as investors switched back on their bets that Takaichi would win and slow the pace of central bank rate hikes.

But at the last minute LDP members opted for the eternal outsider Ishiba as the best way forward for a party looking to renew itself at a gradual pace rather than turn the clock back to the stimulus experiment of Takaichi’s mentor and Ishiba’s rival, former Prime Minister Shinzo Abe.

“He’s a bit of an oddball among politicians,” said Takeshi Iwaya, an LDP lawmaker in charge of Ishiba’s election campaign. Iwaya described Ishiba as fundamentally studious, but also happy to sing songs from the 1970s at karaoke sessions.

For the time being, his victory largely means continuity on economic policy. In a post-election briefing, Ishiba pledged to continue efforts to keep prices rising and fuel growth in the economy. He also vowed to accelerate attempts to deliver a fairer form of capitalism that spreads wealth to the middle classes as initiated by outgoing Prime Minister Fumio Kishida.

“We must make sure that deflation is completely defeated,” said Ishiba. “I want to make sure wage growth remains above inflation.”

Ishiba, who describes himself as a “defense nerd,” used many of his speeches during the campaign to advocate for a collective security arrangement in Asia similar to NATO to provide stronger deterrence against powers such as China. The U.S. has repeatedly said it’s not looking to create a version of NATO in Asia, but has backed the leaders from countries such as Japan and South Korea attending summits of the North Atlantic Treaty Organization.

Ishiba is supportive of his country’s security alliance with the U.S. but has said it should be reviewed to ensure it’s fair for Japan, which houses the largest U.S. military presence in a foreign country and pays most of the costs for hosting.

He has served in several senior roles previously, including defense minister and regional revitalization minister. The shelves of his office display models of military aircraft and ships.

Ultimately, Ishiba’s image as a humble, more-honest-than-most politician may have been his biggest asset.

Fairness has been a broad theme during his campaign, including a pledge to reform the LDP after a series of scandals undermined public trust in the party and led to Kishida’s decision to step down. Ishiba is less driven by ideology than some of his rivals, which may have helped him finally achieve his goal of leading a party in need of a reset.

While he has long had strong support among the public and grassroots party members, he had struggled to win the broad backing of fellow lawmakers. This time around he triumphed, with a 215-194 victory in the final tally of votes.

Ishiba, who represents the rural prefecture of Tottori in parliament, has long championed the cause of Japan’s ailing countryside, which has been hit hard by depopulation and economic decline. He announced his candidacy for the leadership race in front of a shrine near his ancestral home, where he grew up as the son of a powerful father who served as home affairs minister.

During the campaign, Ishiba said a core reason that many young Japanese people from rural areas move to cities like Tokyo is the problem of finding suitable partners with whom to settle down. He pledged to provide incentives to persuade people in the countryside to stay put.

His track record suggests he may struggle. After Ishiba lost to Shinzo Abe in the 2012 LDP leadership race, he served as minister of regional revitalization with a list of promises to create jobs in rural areas to keep young people from moving to the cities. Depopulation continued to worsen.

Although he has had senior roles in the LDP, he represents a polar opposite to many of those within the party like Takaichi who advocate building up Japan’s international status and power. Ishiba’s emphasis on humility, including in relations with Asian neighbors, has often been out of sync with large parts of the party, leaving him spending time languishing on the outskirts.

He also has a unique delivery. When speaking, Ishiba tends to adopt a stare, which he has acknowledged can be intimidating. His speaking style is to slowly enunciate each word.

Ishiba won his first seat in parliament in 1986 following his father’s death, with encouragement from Kakuei Tanaka, a scandal-tainted but charismatic premier in the 1970s who spearheaded efforts to spread economic growth into the regions. Ishiba rose through the LDP’s ranks, eventually holding senior positions and building expertise in farming and defense policymaking.

Ishiba’s victory will likely be welcomed by regional partners such as South Korea and the Philippines. Japan’s defense ties have been expanding with such countries and Ishiba appears to want to deepen cooperation, although his idea for an Asian-style NATO may be hard to achieve given the complex nature of ties with China among countries in the region.

Unlike Takaichi, Ishiba has said he wouldn’t go to Yasukuni Shrine in Tokyo, a source of friction with some Asian countries because of its links to Japan’s past militarism.

What Bloomberg Economics Says...

“Ishiba’s immediate task is likely to be to prepare for a lower house election, which he suggested he would call at an early stage of his tenure if elected.”

Taro Kimura, economist

Early challenges for Ishiba will include fraying relations with China after the fatal stabbing earlier this month of a Japanese schoolboy there, and after a Chinese military aircraft made an unauthorized entry into Japanese airspace for the first time last month. Ishiba has said Japan should consider warning shots against foreign aircraft that intrude into the country’s airspace — but he has also long advocated dialogue with Beijing.

He’s shown he’s willing to speak frankly about the alliance with the U.S., including annoyance at claims by Washington that an attempt by Nippon Steel Corp. to buy United States Steel Corp. raises security risks.

“What on Earth are the security concerns?” he asked earlier this month during the campaign.

With assistance from Yuki Hagiwara, Jon Herskovitz and Brian Fowler.

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