Briefing: Japan in turmoil as prime minister steps down

Opposition Democrats call for election after resignation of Liberal premier whose government was rocked by 12 months of financial scandals

Japan's Prime Minister Shinzo Abe abruptly announced his resignation last week throwing his party – the ruling Liberal Democrats (LDP) – into chaos and leaving the world's second-largest economy rudderless. The party will select a successor next weekend.

Why did the PM go?

Politically, Mr Abe has been a dead man walking since his party's mauling in July's upper house elections, the LDP's worst defeat in half a century. Last month, he made a half-hearted attempt to resuscitate his flat-lined career with a cabinet reshuffle, but then lost yet another agriculture minister (the third under his watch) to scandal. By Monday, the embattled leader was clinging to political life, ostensibly to fulfil a pledge that he would push controversial anti-terror legislation through parliament.

Then came that shock resignation speech. The revelation that he had been suffering from stress and diarrhoea for several months satisfied some who queried the timing, but not everybody. Rumours continue to circulate that he feared exposure for failing to pay tax on inherited income.

What happens next?

The LDP lost control of the upper house to the Democrats (DPJ) in July, but still controls the more powerful lower chamber. This dominance means that technically, all it has to do is elect a new party president who will automatically slide into Mr Abe's job. But the party is almost bereft of leadership talent and, after 12 months of non-stop scandal, the electorate is now deeply suspicious. The DPJ is demanding another general election and may get it. Thus looms the nightmare scenario for the LDP losing control of both houses, heralding what in Japan would count as a political revolution.

Who are the contenders?

So far the competition boils down to two men. LDP Secretary General Taro Aso, 66, a hawkish nationalist who is cut from the same political cloth as Mr Abe. He has a history of controversial bon mots and a family background steeped in some of the darker episodes of the Second World War. Taro is the grandson of former Prime Minister Shigeru Yoshida. Yasuo Fukuda is older at 71, less abrasive and is known as a dove on foreign policy issues. While serving as chief cabinet spokesman under Mr Abe's predecessor, Junichiro Koizumi, when he publicly criticised his boss for visiting the Yasukuni war memorial, where convicted war criminals are buried. So far, it looks as though Mr Fukuda has the upper hand, but because he has been out of the political limelight for some time, he has yet to be quizzed deeply on what will be one of the key election issues: where does he stand on Japan's support for the US "war on terror"?

What are the biggest problems facing Japan's next premier?

His first priority must be to show that he has his eye back on the ball. Mr Abe quickly earned a reputation as an ideologue driven by personal obsessions, chiefly revising the war-renouncing constitution and teaching patriotism in schools. While he fiddled with issues of little interest to most ordinary Japanese, problems piled up. The most serious was when bureaucrats lost 50 million pension records which he ignored for months. Meanwhile, a growing wealth gap meant that few people felt the benefits of Japan's long-awaited economic recovery. The new PM must convince the electorate that Mr Abe's failures are his alone and not – as many suspect – those of a sclerotic party thrashing about in the last hours of political life.