If You Ask Me August 2013

Has the Revolving Door of PMs Now Closed?

Japan’s voters—at least the 36% who bothered to turn out in July’s House of Councillors (upper house) election—have spoken: Prime Minister Shinzo Abe now has control of both chambers in the Diet.

Victory for the Liberal Democratic Party (LDP) and their coalition partner, New Komeito, brings to an end a situation that has frustrated seven administrations since 2007, when Abe himself lost control of the House of Councillors at the end of his disastrous one-year stint as prime minister.

Although the House of Representatives (lower house) is considered the more powerful, the House of Councillors can effectively block legislation.

Since September 2007 it has done just that, adding considerably to the woes of successive governments struggling to cope with Japan’s flagging economy and a global economic crisis.

Contested in the election were 121 seats (half the total, with the remaining half to be decided in three years) and the coalition needed just 63 votes to obtain a majority. In fact, they easily secured more than 70.

The opposition, the Democratic Party of Japan, suffered heavy losses, while the Communist Party and the controversial Japan Restoration Party made small but significant gains.

This suggests a swing to the right in Japanese sentiment; something that is congruent with indicators in other parts of the world and, perhaps, to be expected in the face of difficult economic times.

On the Monday morning following the election the economic indicators were positive. The Nikkei rose more than 1.5% with a corresponding increase in the strength of the yen.

The hope is that, having secured his victory, Abe can now press on with his promised economic reforms. The first two arrows in the Abenomics quiver appear to have worked.

Having won last year’s House of Representatives election, Abe immediately embarked on an ambitious public spending programme worth some 2.6% of GDP. Now he has a mandate to forge ahead with the third, final and more difficult arrow: his pledge to introduce further drastic economic reforms.

The question is, does he have the stomach to go through with what really needs to be done? The much-needed hike in consumption tax, from 5% to 8% by April 2014, is bound to be unpopular, although attempts by opposition campaigners to use this move appear to have made little impression on the voting public.

A much sharper nettle to grasp will be the liberalisation of Japan’s agricultural sector. The agricultural lobby has traditionally been a strong supporter of the LDP, and any moves to allow inroads by foreign competition are likely to be fiercely resisted.

Yet Abe has made it very clear that he believes there is no alternative. He is in favour of the Trans-Pacific Partnership agreement, which is generally expected to expand Japan’s economy 2.5%.

But it is here where Abe is likely to face the most resistance, and not only from those on the opposition benches. There are many in his own party (and some in New Komeito) who fear the implications of large-scale deregulation and are almost certain to oppose elements of it.

Further, it is by no means sure that the prime minister has the mettle that allowed former prime minister Junichiro Koizumi (2001–2006) to stand up to his fellow party members over his commitment to privatise the post office.

If there is a general sense of confidence in Abe’s ability to restore Japan’s economic health, it is also true that there are other areas that give rise to serious concern.

At the domestic level, he is committed to restarting the country’s nuclear reactors, virtually all of which have been shut down since the 2011 Tohoku earthquake and tsunami.

He has said that resuming their operation is essential if Japan’s economy genuinely is to recover. Yet public opinion polls suggest that well over 50% of the population oppose the reopening of the power plants.

During the recent election campaign some of the opposition parties used this argument. But the reality is that there is no coherent anti-nuclear movement in Japan, or a consistent argument against the prime minister’s position that the country needs the relatively inexpensive power produced by the plants to drive a re-emerging economy.

At the international level, there will also be concern over Abe’s promise to revisit the thorny issue of the country’s post-war constitution, with a view to revising it. In particular, he is intent on revoking Clause 9, in which Japan forever renounces its right to go to war.

It should be remembered that it was under Abe’s short-lived watch as prime minister in 2006 that the Japan Defense Agency was renamed the Ministry of Defense, and the Self Defense Forces were effectively given full military status.

Whether this is genuinely a cause for concern is debatable. Some argue that a revision would put Japan in a better position to support its major ally, the US, in the event of a conflict in the region. For neighbours such as China and South Korea, however, it is natural that there is apprehension over the prospect of a truly militarised Japan.

As for UK–Japan relations, there is nothing to suggest that the election results will change anything in this vitally important partnership, save a hint that the UK’s withdrawal from the EU could have a detrimental impact on Japanese investment in the UK with the loss of jobs.