Yukio Hatoyama had come to power after his Democratic Party of Japan's spectacular landslide victory last year but his time in office was marred by corruption scandals and broken promises.
Yukio Hatoyama resigned after days of speculation
It was with tears in his eyes that Yukio Hatoyama told members of his party that he and the party secretary-general Ichiro Ozawa were stepping down. He thus became the fourth Japanese leader in the space of four years to resign. He had not even been in office for a year.
He and his Democratic Party of Japan had made history with their landslide election victory last year after a campaign promising to change how Japan was governed. But Jeff Kingston from Temple University Tokyo said that the government disappointed the voters.
"Hatoyama's approval ratings sank from 70 percent in September to 17 percent last week. He lost the trust of the people - people feeling disappointed that he had promised that there would be no more "politics as usual and he was going to hit the reset button and bring in a new era of Japanese politics," Kingston said.
"What they saw was that the prime minister and the secretary general of the party were embroiled in campaign financing scandals that suggested that they really more or less like the others."
Thousands of protesters came out earlier this year to call for the US base on Okinawa to be shut
Brought down by corruption and Okinawa
One of the scandals involved the prime minister's mother, who gave large donations to the party. A criminal investigation led to a close aide being given suspended jail terms. Three of secretary-general Ozawa's aides meanwhile have been indicted for their involvement in corruption.
The biggest broken campaign promise, however, concerned the US Marine Corps base on the southern island of Okinawa. Hatoyama had pledged to move the base elsewhere if he were elected to appease locals who have complained of noise and pollution, as well as crime linked to the base for decades. However, as prime minister, he failed to find an alternative location and did a U-turn.
This backtracking was outrageous to Okinawans as well as to Hatoyama's pacifist coalition partners, the Social Democratic Party, which then quit the ruling coalition last Sunday, weakening the government considerably.
The US Marine Corps base on Okinawa is unpopular because of noise, pollution and crime
Finance minister is frontrunner for the job
"The party leadership believed that a change of leadership was necessary to improve the party's chances in the upcoming Upper House elections next July," explained Kingston.
The Democratic Party of Japan is expected to vote for a new leader on Friday. He or she will then be voted in by parliament as prime minister on the same day. The current deputy Prime Minister and Finance Minister Naoto Kan is considered as the frontrunner.
Jeff Kingston thinks this would improve the party's chances considerably and that he is the right man to fight debt and deflation. "He's a much more savvy politician. He brings to the table fresh leadership, he's a better communicator and he's been reaching out to the business community trying to downplay concerns that his party is anti-business."
Finance Minister Naoto Kan is widely expected to succeed Hatoyama
Other observers fear, however, that the political turmoil will cause investor confidence to fall amid worries that the Japanese political situation will never change.
"Hatoyama was first leader to raise hopes of Okinawans"
Whoever wins the leadership, Kingston thinks they are unlikely to repeat Hatoyama's mistake and will try to downplay this matter.
"The two governments (Japan and Washington) have achieved an agreement about the relocation. The real problem is that Hatoyama aroused the hopes of the Okinawan people. He was the first Japanese political leader that actually seemed like he listened, like he cared but at the end of the day he betrayed them."
However, the agreement will be difficult to implement because of strong local opposition to the base. The new Japanese prime minister might find it difficult to keep the tense relations with the US on track.
Author: Anne Thomas
Editor: Disha Uppal