Japan Chair Platform: Abe?s Challenges Ahead

By Jeffrey W. Hornung

?Prime Minister Shinzo Abe of Japan has a lot to be happy about. In the recent Tokyo Metropolitan Assembly election, his Liberal Democratic Party (LDP) crushed all others, winning 59 seats to become the dominant party. This is important because it provides Abe and his party with a tailwind going into this month?s House of Councillors election in which the entire nation will have a chance to rate Abe?s performance after six months in office. If history is a guide, he should be optimistic. When the LDP won a landslide in Tokyo in 2001, it went on to win the House of Councillors election that followed. Similarly, the Democratic Party of Japan (DPJ) won big prior to the 2009 House of Representatives election. Currently, all polls indicate the LDP can expect a smashing victory. Yet, though the LDP?s victory will eliminate the ?twisted Diet? that befuddles Japanese politics, Abe should not expect smooth sailing come August. The issues on Abe?s agenda and the current state of affairs in the LDP mean that Abe?s next six months in office (and beyond) will be far tougher than his first.

Constitutional Revision
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Consider constitutional revision. When Abe was previously premier, he advocated revision. This is largely because Japan?s constitution was written at the hands of American occupiers and lacks many elements that Abe believes lie at the heart of reviving Japan. Due to the short duration of his first administration, he was unable to act. This time, with a majority in the Lower House and an expected majority in the Upper House, Abe will finally have the votes to act.
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Yet, revision generates uneasiness among the Japanese public, particularly because some of the areas targeted for revision are controversial. These include stipulating the emperor as the head of the nation, symbol of the nation and the people?s unity; allowing Japan to participate in collective self-defense; changing the name of the Self-Defense Forces to the National Defense Military; and deleting an article that guarantees human rights. Uneasiness does not end with the public. Many parliamentarians, including some within the LDP and coalition member New Komeito, also are hesitant. While many share the desire to revise an American-written document, the actual content of these revisions vary widely.
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As a necessary first step forward, Abe advocated revising Article 96, which stipulates that any amendment to the constitution requires a two-thirds majority in both Diet chambers and majority support in a public referendum. Abe sought to require instead a simple majority in both Diet chambers because of known opposition within the LDP and New Komeito. While a simple majority would certainly make Abe?s job much easier in the Diet, it could possibly spark public outrage. Roughly one-fourth to one-third of the public supports Article 96 revision (34 percent in a June Yomiuri Shimbun poll; 25 percent in a May JNN poll). As such, if Abe pushes Article 96 revision, he can expect severe public opposition and possible failure.
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Yet, if Abe does not revise Article 96, constitutional revision actually becomes more difficult. Until a few weeks ago, Abe was seeking ways around expected internal opposition by courting the Japan Restoration Party. But after its party leader Toru Hashimoto made off-color comments regarding comfort women and U.S. soldiers? need to frequent brothels in Okinawa, Hashimoto became persona non grata in Japan. It will be impossible for Abe to ally with Hashimoto for votes, meaning that obtaining two-thirds approval from parliamentarians will be a challenge.
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In other words, if Abe seeks the easy way in the Diet, he angers the public. If he heeds public sentiment, his job in the Diet becomes difficult. Neither option is easy.
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Nuclear Power
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Similar to constitutional revision, Abe has chosen to tackle the sensitive topic of Japan?s nuclear energy policy. Japan currently maintains 50 functioning reactors, all but two of which remain idle. Previous DPJ administrations committed Japan to phasing out nuclear power by the 2030s, but Abe changed that. Since coming to power, he has not only advocated the restart of the idled reactors, but expressed his desire to build new plants and export nuclear technology. Toward this end, the Nuclear Regulation Authority announced an overhaul of the country?s nuclear safety guidelines, effectively starting a process that could allow some of Japan?s idled reactors to be restarted next year.
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Yet, because of ongoing problems at the Fukushima Daiichi nuclear power plant, the Japanese public remains anxious about nuclear power. A June Asahi Shimbun poll showed that 59 percent oppose Abe?s plan to restart nuclear plants. Meanwhile, the Yomiuri Shimbun conducted a poll in February asking to what extent Japan should depend on nuclear energy. The largest response of 53 percent said that Japan should reduce its dependency below pre-March 11 status (which was around 30 percent). The public is even hesitant to export Japan?s nuclear technology abroad. A June JNN poll showed that 59 percent oppose these exports, mirrored by 58 percent opposed in an Asahi Shimbun poll the same month. This sentiment is reflected in public demonstrations as well. For example on March 10, more than 10,000 Japanese took to the streets of Tokyo (in addition to about 300 similar events throughout Japan) to protest nuclear power and Abe?s pro-nuclear agenda. Last month, more than 60,000 rallied in Tokyo against Abe?s intent to restart idled reactors. Importantly, this opposition to nuclear power is not limited to the public. There are many in the Diet, including the LDP, who oppose restarting idled plants. This was reflected in the LDP?s campaign promise to prioritize the development of renewable energy sources over nuclear power.
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At the same time, Abe faces considerable pressure from the power industry, business community, and many within his LDP to restart the idled plants or, at the very least, export nuclear technology abroad. This is because Japan?s current energy shortfall requires a surge in energy fuel imports that have led to a trade deficit. Because of the weakened yen, this has meant a surge in import costs that, in turn, hurt the economy. As a means of pursuing economic stability, Abe has been pressured to restart the idled plants and provide non-fossil fuel-generated power.
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With strong opposing sentiments, Abe will find it incredibly difficult to placate the desires of the business community and maintain strong public support. There is no win-win option for Abe.
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Abenomics
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Perhaps no other issue has dominated Abe?s agenda as much as economics. Rightly so, given that Japanese voters consistently cite economics as their top concern. Dubbed Abenomics, Abe has shot ?three arrows? (i.e., policies) to end deflation and kick-start economic growth: (1) fiscal stimulus; (2) monetary stimulus; and (3) structural reform. To its credit, Abenomics has achieved short-term success (e.g., a weakened yen, growth in the Nikkei, growth in manufacturing output, increased exports). All this translated into a 4.1 percent annualized gross domestic product growth rate from January to March.

Still, Abenomics is not without controversy. Recent weeks have seen erratic fluctuations in stock prices. A few weeks ago, the Nikkei stock average plunged, marking a reversal of the surge begun in April. The currency market shows similar volatility. Despite weakening to more than ?100 against the dollar, the yen recently began to strengthen. At one point, it even broke ?94. Similarly, despite massive monetary easing with the aim of reducing long-term interest rates, interest rates have increased. Most worrisome of all is the fact that Abenomics depends on large amounts of fiscal and monetary easing. Because Japan is already the most indebted country in the world (as a percentage of GDP), some experts worry that Abenomics will end in nothing but more bad debt.
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Abe?s challenges are twofold. First, whether people will accept that short-term volatility and Abenomics actually generates long-term growth. This growth is to come from the ?third arrow? of structural reforms in areas such as labor, health care, agriculture, and energy. All of these industries have strong protective interest groups that Abe needs to overcome (along with bureaucrats and fellow LDP members) for his reforms to succeed. But simultaneously, he needs to rely on for his party?s victory in this month?s election.

Second, Abenomics? short-term success for businesses hurts the average Japanese consumer. While the yen has weakened and benefited export-oriented business, the price of imports has increased. People feel this in increased energy prices. For example, Japan?s 10 major power companies and 4 major city gas companies will raise their rates this summer because the prices of imported liquefied natural gas (LNG) and crude oil are increasing. Similarly, people are facing higher interest rates on securing loans. Unless salaries increase (which usually takes a long time to occur), consumer spending will slow, as the public feels its disposable income increasingly pinched. If Abe follows through on the consumption tax hike scheduled for April 2014, consumers will be hit hard and spending could stall. Yet if he postpones the increase, his commitment to fiscal discipline will be questioned.
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Once again, Abe has no good choice. He has to depend on interest groups for victory this month but then face them in opposition for his long-term growth plans to succeed. Similarly, the success of his short-term plans may hurt consumers, which would hamper Abenomics? long-term viability.
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The LDP
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The aforementioned issues pose significant challenges for Abe, but his biggest challenges will be from his party. The first is his political base. Public support for Abe has remained high. In June, in Japan?s two major newspapers representing both sides of the political spectrum, his approval stood at 59 percent in the Asahi Shimbun and 67 percent in the Yomiuri Shimbun. Because a popular premier translates into popularity for the party, these numbers provide Abe a strong political base within his party. As long as Abe?s popular support remains high, perhaps somewhere above 50 percent, Abe?s remains invincible. Yet invincibility is not immortality. If Abe missteps on constitutional revision or nuclear power or if Abenomics runs into trouble, Abe?s popularity could swing violently downward, weaken his political base, and thus make him vulnerable. At that point, Abe would be forced into survival mode instead of focusing on his agenda. Managing an administration under siege would effectively kill Abe?s political agenda and, in most likelihood, his administration. To avoid this scenario, Abe has to properly prioritize his political agenda and conduct plenty of nemawashi (consensus building) with the public, interest groups, and his own party. In other words, go slow and spend political capital wisely.
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But even this is not enough. Ironically, the success the LDP has enjoyed under Abe is his biggest challenge. There are close to 300 LDP Lower House members. Depending on the size of this month?s electoral victory, the LDP could grow to close to 400 members in both Diet chambers. This is an incredibly large party similar to the LDP?s heyday. This means the LDP is home to a wide array of opinions across the political spectrum. In other words, it is not a united party. In the past, the LDP was able to remain together because the faction system awarded key party/administration posts to members of each faction on a fairly regular basis, thereby making everyone happy. This spoils system no longer exists. While factions still exist, their power is negligible. What is more, by some accounts more than 120 LDP members today are not affiliated with any faction.
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This is perhaps the biggest challenge for Abe. Currently, the LDP is united behind him as they head to the election. Dissent is minimized, especially because of his high approval rate. Yet, after the election when Abe is expected to reshuffle his cabinet and party posts, over 300 members of his party will not be able to enjoy a party/administration position. This will sow the seeds of dissatisfaction among many in the LDP, which could bear fruit if Abe?s approval rating sinks. Worse, as Abe tackles the contentious issues of constitutional reform and nuclear energy, opposing voices will begin to emerge. And this is only the start. Looking ahead, Abe?s calendar is filled with contentious issues that will cause real arguments in the LDP. This includes Trans-Pacific Partnership negotiations, social security reform, and the final decision on the April 2014 consumption tax hike. Keeping the LDP united in the coming months will be Abe?s greatest task.
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Conclusion

Everyone is expecting that after this month?s election, when the LDP is expected to win big, the ?real Abe? or ?true Abe? will finally show his face. That is usually taken by the media to mean he will have full authority to pursue a rabid nationalist agenda that will poke China and South Korea in the eyes. What is being argued here is that Abe has other pressing challenges that are more important, so he will be forced to go slow on his agenda or risk his survival as premier. These challenges will most likely be domestic, meaning that while Abe?s views on history or territorial issues may anger his neighbors, they will probably have minimal consequence on his administration?s long-term survival. Winning the election is easy; governing Japan for the next three years is not.

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Jeffrey W. Hornung is an associate professor at the Asia-Pacific Center for Security Studies in Honolulu, Hawaii, and an adjunct fellow with the Office of the Japan Chair at the Center for Strategic and International Studies in Washington, D.C. The views expressed in this article are those of the author and do not reflect the official policy or position of the Asia-Pacific Center for Security Studies, the U.S. Pacific Command, the U.S. Department of Defense, or the U.S. government.

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Japan Chair Platform is published by the Office of the Japan Chair at the Center for Strategic and International Studies (CSIS), a private, tax-exempt institution focusing on international public policy issues. Its research is nonpartisan and nonproprietary. CSIS does not take specific policy positions. Accordingly, all views, positions, and conclusions expressed in this publication should be understood to be solely those of the author(s).

? 2013 by the Center for Strategic and International Studies. All rights reserved.

Source: http://csis.org/publication/japan-chair-platform-abes-challenges-ahead

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