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Japan’s Liberal Democratic Party leadership election has been extensively viewed, domestically. However, the wider world has also been watching the crucial contest closely too, not least G7 allies in the West given the importance of Tokyo to this club of industrialized nations.

The word historic is often overused, but this contest genuinely met that high benchmark. This is not least because the victor Sanae Takaichi, announced on Saturday, is now widely expected to become the nation’s first female prime minister.

As the LDP and coalition partner Komeito have recently lost their majority in both houses of parliament, which has increased the risk of political instability in Tokyo, new LDP leader Takaichi will need to win, with agreement from legislators of other parties, a vote to secure the premiership.

The stage would then be set for a potential snap general election. Or a potential new coalition, or a looser arrangement that would allow a minority government to secure the support of one or more other parties on confidence votes and the budget.

Important as this leadership transition is for Japan, the wider world is watching events closely in Tokyo too. This includes long-standing allies in the Americas and Europe who have an increasingly close relationship with the Asian economic giant.

Since the end of the Second World War, the transformation of Tokyo’s world role has stemmed, in part, from its phenomenal postwar business success, which led to growing calls for it to match its economic power with commitment to international relations too. Today, Japan remains one of the world’s three largest economies, and it will be critical to helping drive a new wave of global, sustainable growth in coming years.

Japan is also a key member not only of the G7, but also the US-led Quadrilateral Security Dialogue (Quad) with Australia and India too. While this forum began as a security-driven initiative, commerce and industry ministers now meet and the agenda includes health security, food security, clean energy, and quality infrastructure.

On the economic front, Tokyo and Washington agreed in July a tariff deal that sees a 15 percent levy on Japanese goods in exchange for a $550 billion package of US-bound investments and loans.

In Europe too, the longstanding partnership with Japan has assumed greater importance. The EU and Japan recently held their 30th annual summit in July, attended by European Commission President Ursula von der Leyen and outgoing Japanese Prime Minister Shigeru Ishiba.

At the big event, the two powers launched a new Competitiveness Alliance focused on trade, green and digital innovation, plus economic security. Priorities include strengthening supply chains for raw materials and batteries, regulatory cooperation, and joint industrial efforts in hydrogen, liquified natural gas, offshore wind, and semiconductors.

The new competitiveness initiative stems from the broader deepening of Japan-EU economic ties under the bilateral Economic Partnership Agreement, or EPA, plus other forums such as the EU-Japan Green Alliance, the Partnership on Sustainable Connectivity and Infrastructure, and the bilateral Digital Partnership. EU firms already export about 70 billion euros in goods and 28 billion euros in services to Japan annually, and bilateral trade has increased significantly since 2019.

As part of the new competitiveness alliance, Japan and Europe agreed to intensify their collaboration against “economic coercion” and “unfair trade practices.” Von der Leyen highlighted growing geoeconomic challenges and geopolitical tensions, from Ukraine to the Asia Pacific.

Japan’s Western allies are closely watching the leadership transition in Tokyo. A new era of cooperation is hoped for, but the risk of further political instability is recognized.

Andrew Hammond

Europe and Japan have, potentially, significant shared weight together on this agenda with their collective economies accounting for about a fifth of global GDP and a market of about 600 million people.

Von der Leyen highlighted that the next steps on the EPA were discussed at the Sixth EU-Japan High Level Economic Dialogue last May. This forum pledged to deepen cooperation in areas such as trade, supply chain transparency, diversification, security; sustainability, trustworthiness, reliability and resilience, promotion and protection of critical and emerging technologies, industrial policy, plus investment promotion.

While no European countries are part of the Quad, many regional politicians increasingly see the relationship with Japan in a broader strategic context. This is a key change from when relationships in the past were centered around economics.

Ishiba’s predecessor, Fumio Kishida, was the first Japanese prime minister to attend a NATO leadership meeting. There is speculation too about Tokyo being invited into wider Western intelligence forums such as the “Five Eyes” alliance of the US, Canada, Australia, New Zealand, and the UK.

A good example of this deepening security relationship is the 2023 UK-Japan Reciprocal Access Agreement, which is the most significant defense agreement between the powers since 1902. The deal allows UK and Japanese armed forces to be deployed in one another’s countries. It builds from the post-Brexit UK-Japan trade deal, and the UK’s entry into the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, or CPTPP, which accounts for well over 10 percent of global trade and has a combined population of about 500 million.

Tokyo and Brussels also announced that a new Defense Industry Dialogue will be launched in 2026. This will promote collaboration on advanced and dual-use technologies with broader cooperation spanning areas including cybersecurity, maritime, and space security.

These developments show the wisdom of Western decision-makers, back in the mid-1970s, when Japan was formally brought into the G7 club. A similar far-sighted, strategic approach is now needed around a half century later in the very different context of the mid-2020s.

One example is von der Leyen’s hopes of deeper EU trade cooperation with CPTPP. The Japanese government was one of the strongest supporters of UK accession to this economic club, and Tokyo is keen for closer EU engagement with the bloc.

Taken together, this is why Japan’s Western allies are closely watching the leadership transition in Tokyo. A new era of cooperation is hoped for, but the risk of further political instability is recognized.

• Andrew Hammond is an associate at LSE IDEAS at the London School of Economics.