When Fumio Kishida declared earlier this month that he would not seek re-election as leader of Japan’s ruling Liberal Democratic Party (LDP) and was stepping down as prime minister, the announcement was abrupt, but not a shock.

Kishida, who took office in October 2021, was struggling with record-low approval ratings over the rising cost of living and corruption scandals in the LDP.

Given that most Japanese prime ministers have survived only a year or two in the job, Kishida’s three-year term remains the eighth longest in Japan’s post-war history.

But marred by controversy, he said stepping aside was a chance for a reset.

“I made this heavy decision thinking of the public, with the strong will to push political reform forward,” he told reporters on August 14.

The extent of that reform will become visible next month, as the LDP elects its next leader. Beyond deciding Japan’s next prime minister, the outcome of the leadership race looks set to define the direction of the governing party and Japanese politics for years to come.

Kishida said it was important for the party to have “transparent and open elections and free and vigorous debate” in the contest to “show the people that the LDP is changing and the party is a new LDP”.

For much of the past year, the party has been embroiled in a corruption scandal – in which members of one of its powerful factions were accused of failing to declare campaign money – that has undermined the LDP’s traditional power structures.

The scandal has also fuelled a desire for change, priming September’s leadership race as a contest between the old guard and a younger generation, according to Rintaro Nishimura, an associate in the Japan practice at the Asia Group, a Washington-based strategic advisory firm.

“There’s a desire within the party to see a fresh face. Not just in the sense that they need someone new at the top of the ticket, but someone who can really show the public that the LDP is changing,” he told Al Jazeera.

“A lot of the attention seems to be on the fact that this is going to be a generational battle between the elder and younger candidates.”

Strife at home

Kishida was elected for a three-year term as LDP president in September 2021, before winning a general election one month later.

The 67-year-old enjoyed success on the international stage during his tenure, improving relations with South Korea, forging closer links with NATO, and deepening United States-Japanese ties amid China’s increasingly bellicose stance on Taiwan, a democratically ruled island claimed by Beijing.

In 2022, Kishida instructed his cabinet ministers to increase Japan’s defence budget to 2 percent of the gross domestic product (GDP) beginning in 2027. He also responded decisively to Russia’s invasion of Ukraine that year, imposing sanctions on Moscow, providing security assistance to Ukraine and inviting Ukrainian President Volodymyr Zelenskyy to the 2023 G7 summit in Hiroshima.

In April, Kishida signed more than 70 defence pacts with Washington, a move US President Joe Biden described as the “most significant upgrade in our alliance since it was first established”.

But for all of Kishida’s achievements abroad, domestic politics has proved far more challenging.

The LDP was first rocked in the wake of the assassination of Shinzo Abe in July 2022, when it emerged that Abe’s killer had targeted Japan’s former prime minister over his ties to the Unification Church. The man blamed the organisation for bankrupting his family, claiming it coerced his mother into making excessive donations.

The church is thought to raise about 10 billion yen (about $69m) a year in Japan and has faced accusations of being a cult and financially exploiting its purported 100,000 members.

Abe’s assassination exposed the scale of the religious movement’s relationship with several top LDP politicians. In October 2023, Kishida requested a court order revoking the church’s legal status and tax exemption, also telling party members to cut ties with the movement and offering legal redress to its victims.

But public trust was eroded further when, in November 2023, it emerged that members of a powerful conservative faction in the LDP once led by Abe had failed to report more than 600 million yen (about $4.15m) in campaign money, storing it in illegal slush funds.

Ten LDP lawmakers and their aides were indicted in January, accused of violating Japan’s Political Funds Control Law. In June, Kishida pushed through amendments to the law, lowering the threshold for sums that must be declared in a crackdown on political donations.

Critics, however, said he did not go far enough and left loopholes that could be exploited.

“Kishida was hit with two scandals that converged during the three years he was prime minister,” Nishimura said. “He was unable to deal with these two problems properly and so that ended up destroying his political longevity.”

Political factions, the grouping of lawmakers in political, voting, and funding blocks, were also seen to be at the heart of the slush fund scandal. A mainstay of the LDP and Japanese politics more broadly, factions have also faced accusations of being opaque and unaccountable.

“Factions functioned as parties within parties,“ Mikitaka Masuyama, a political science professor at the National Graduate Institute for Policy Studies, told Al Jazeera. “But after the scandal, many people said the factions are bad. They said they are the reason why we had this money scandal and called for the factions to be abolished.”

Kishida did just that, announcing his own faction would disband on January 23 in a move necessary to “restore trust”. By the end of that month, three of the LDP’s other main factions had declared they would also be dissolving.

‘A kind of chaos’

The destruction of the factions has created unprecedented uncertainty around who will be the LDP’s next leader, as candidates embark on a 15-day campaign starting September 12.

Running three days longer than the standard 12-day period, the LDP’s election committee chief, Ichiro Aisawa, said this was to improve transparency and rebuild trust by giving the public more time to study the candidates’ policies.

The poll, in which LDP parliamentarians and its 1.1 million paying members can cast their ballots, will be held on September 27. If any one candidate fails to secure more than 50 percent support in the first round, a run-off between the top two candidates will be held immediately. As the LDP and its smaller coalition partner, Komeito, control Japan’s two-chamber parliament, whoever wins will become prime minister.

Aisawa urged candidates to take “into consideration the public criticisms over money and politics” and conduct frugal campaigns. Nishimura said it was crucial for the LDP that changes take place before Japan’s general election, which will be held by October 31 next year.

“There’s a sense that the LDP really needs to change its ways or they’ll lose the general election if they continue like this,” he said.

Takayuki Kobayashi, Japan’s former economic security minister, became the first to officially announce his candidacy on August 19. Two others have followed suit: former LDP secretary-general and defence minister, Shigeru Ishiba, and Digital Transformation Minister Taro Kono.

About a dozen politicians are expected to enter the race in total. Mikitaka described the situation as a “kind of chaos”, saying it has become more like an “American primary race for the president” due to the number of candidates.

“This situation is very unusual. It used to be that factions functioned as the mechanism to select candidates, so usually it’s only those politicians who rank high or have become factional leaders,” he said. “But factions have lost the mechanism to coordinate competition for leaders, so now we have many candidates seeing whether they have a serious chance of being elected.”

Freed from the restraints of factions, among those trying their luck are candidates like Kobayashi and Environment Minister Shinjiro Koizumi who are both in their 40s, relatively young for Japanese politicians.

“It’s an opportunity for these younger members to come out and actually do stuff, instead of the elder members running everything,” Nishimura said. “There are two candidates in their 40s who will be running this cycle. Usually, that’s nearly impossible in an LDP presidential election.”

But the factional collapse and the flood of candidates means there are also no strong favourites in the race. Several polls place Ishiba as the public’s most popular candidate, but even so, his approval ratings stood at just 18.7 percent in an early August opinion poll.

Even so, Kotaro Tsukahara, a research fellow at the Japan Institute of International Affairs, says he believes Ishiba “has the potential to win”.

“He has kept his distance from Shinzo Abe, and I think he has the potential to handle the slush fund issue,” he told Al Jazeera. “For Japanese politics as a whole, I think Koizumi is also a possibility. Although he is probably not yet competent to be [LDP] president or prime minister, I think it’s not a bad idea for him to gain administrative experience while he’s still young.”

In that same August poll, Koizumi, the son of popular former Prime Minister Junichiro Koizumi came a distant second with 12.5 percent. Takaichi was third with 6.5 percent, and Kono on 5.2 percent.

With three of the LDP’s female veterans, Takaichi, former Gender Equality Minister Seiko Noda, and current Foreign Minister Yoko Kamikawa also in the running, there is also the slim possibility that Kishida’s successor might also be Japan’s first female prime minister.

None of the female or younger candidates currently command robust support, but Mikitana says he believes LDP lawmakers may prefer someone from these demographics to lead the party in next year’s general election. Especially those in more vulnerable seats.

“The LDP can send a message to the public that it’s changing from an all-male dominant organisation to younger or female politicians,” Mikitana said. “It’s a way to change the image of the LDP without necessarily changing the content.”

Mikitana added that even if young reformers like Koizumi or Kobayashi were selected as the LDP leader, they would face “enormous challenges” in practice to enact change.

Analysts also caution a female or younger candidate is no guarantee of change.

Tsukahara notes that while a woman prime minister would be “significant in that it sets a precedent”, all three are considered conservative establishment figures, so even if they were successful, there would not be much change “in terms of politics”.