Abenomics Is Failing. So Why Is Abe Poised to Win Big in Japan's Elections?

 
 

The upcoming Upper House election in Japan resembles a popular referendum on the three and a half year-old Abenomics policies. After running on the slogan “there is no other way to economic recovery” in 2014, Prime Minister Shinzo Abe has been promoting promising prospects for the Japanese economy through the three arrows of Abenomics. Yet his trademark economic reform vehicle at heart is not a new idea and is in fact potentially damaging for long-term growth.

The effects of the first arrow of Abenomics have mainly been limited to higher stock prices on the Tokyo Stock Exchange and the drastic depreciation of the Japanese yen in foreign exchange markets. Lamentably, companies deriving a windfall from the depreciation of the yen have yet to reciprocate by spending in a way that could stimulate growth and increase employment. In addition, the surprise resignation of Abe’s economy minister, Akira Amari, in regards to a bribery scandal, had sent shock waves through the Liberal Democratic Party’s political elite. Given Amari’s primary role as a key mastermind behind Abenomics and the main figure spearheading the enormous Trans Pacific Partnership (TPP) trade pact, the resignation has considerably tarnished the administration’s whole economic agenda, even if it spared Abe further political trouble.

Ironically enough, although voters are well aware that the much-touted economic reforms are at stake, it is obvious that the LDP will carry the day in the Upper House elections. Abe’s party is even expected to gain a single-party majority in the Upper House for the first time since 1989. Recent opinion polls have shown a rise in Abe’s popularity and it is evident that Abe will tighten his grip on power at least until September 2018.

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According to a survey conducted by Kyodo Wired News on January 30-31, when asked about the resignation of Amari, 50.1 percent of people did not think that Abe should be blamed for appointing Amari as minister of economic revitalization, while 46.3 percent of respondents said Abe should be blamed. Meanwhile, 53.7 percent of respondents approved of Abe’s administration despite the scandal, an increase of 4.3 percentage points compared to the survey in December 2015.

This raises the question: why have all the headwinds facing Abenomics not brought Abe’s popularity to a new low? How did Abe reassert and consolidate his power amidst arising domestic opponents?

Lessons Learned

Abe’s return to office rode a wave of remarkable momentum – an emerging geopolitical challenge from China, devastated economy, and the political instability caused by the former government all called for strong leadership. To seize this momentum, Abe applied a valuable lesson from his first prime ministership, from 2006 to 2007. During his first term, Abe devoted much time and energy to controversial issues, primarily regarding constitutional revision. With less focus on the economy, he eagerly appointed a blue-ribbon panel chaired by Shunji Yanai, former Japanese ambassador to the United States, to assess four possible scenarios for Japan’s security role. Moreover, in 2007, instead of formulating a set of economic policies, his government unexpectedly pushed through legislation establishing the procedures for a national referendum on a constitutional amendment proposal if one were to pass the Diet in the future. This misplaced focus resulted in greatly disappointed voters.

In contrast to 2006-2007, this time around Abe has showcased a deft and pragmatic touch in the implementation of new policies, especially in the realm of security. During the first year of his administration, Abe primarily focused on the much-touted Abenomics in order to stiffen his party spine on more contentious issues, such as a nationalistic agenda of constitutional and historical revisionism, in the future.

Accordingly, although the first and second arrows of Abenomics have not lived up to expectations, the rhetorical appeals appear to meet an intangible benchmark set by Japanese voters. The main opposition, the Democratic Party of Japan (DPJ), was seen to have left Japan in disarray after its stint in power, so that it could be years before voters trust it again. Thus, a vote for Abe does not necessarily mean standing for Abe nor rewarding the LDP with a positive endorsement. Many Japanese voters simply supported the government’s efforts to dramatically improve Japan’s economic trajectory through vigorous leadership and clear goals such as Abenomics.

Abe himself has also opportunistically acknowledged this as well. While prioritizing his campaign’s economic promises, he has also been taking a strong lead in tackling a range of contentious issues better than the erratic and uncoordinated DPJ did in the past. The first cabinet reflected a strong LDP; all factions were in a cooperative mood to offset a myriad of challenges by paying attention to economic recovery rather than security issues or constitutional revision. Abe also gave appointments to the leaders of key powerful factions within the LDP as a means of setting up a strong and unified government, and thereby impeding any open challenges to his leadership. One of the most notable examples was the appointment of Shigeru Ishiba, Abe’s long-standing political rival and former defense minister, as the regional revitalization minister. Being in the cabinet would lessen Ishiba’s intention of focusing on the LDP presidential elections and challenging Abe’s policy.

Another runner up, Seiko Noda, also failed to challenge Abe’s uncontested reelection to the LDP’s top spot due to an uphill battle to secure the necessary endorsement from 20 lawmakers. Abe himself allegedly insisted on eliminating the challenge to his reelection as lawmakers close to Noda were reportedly dissuaded from supporting her. Eventually all the LDP’s factional groups are suggested to have pressured their members not to support Noda. Abe’s iron grip has resulted in a cohesive administration, which to a great extent satisfied voters who had previously wrestled with the confusion of a series of DPJ governments under a succession of prime ministers from 2009 to 2012 (Yukio Hatoyama, Naoto Kan, and Yoshihiko Noda).

Another point worth noting is that Abe’s cabinet is ideologically on the same footing, whereas former cabinets have historically been selected based on balancing intraparty factions. For Abe’s administration, Japan’s economic reform is not an end in itself, but a means to an end — namely restoring Japan’s power. The vast majority of Abe’s cabinet belongs to Nippon Kaigi or the Japan Conference. Nippon Kaigi is an ultranationalist nonparty organization with around 38,000 dues-paying members and a network that reaches deep into the government. It calls for preserving Japan’s “beautiful traditional national character” by praising the Imperial family, revising the pacifist Constitution, promoting nationalistic education, and supporting parliamentarians’ visits to Yasukuni Shrine. According to Asahi Shimbum, the Nippon Kaigi Discussion Group of the Diet has 289 members, mostly conservatives from LDP – occupying 40 percent of the entire Parliament. About a third of the Diet and 15 of the 19 members of Abe’s first Cabinet are also staunch supporters of Nippon Kaigi while Abe is its “special adviser.”

Still scarred by the political chaos of the previous DPJ rule, voters this month are likely to flock to the LDP, which is regarded as the party representing stability. Although full-throated skepticism about Abenomics largely remains, ironically, there is decreased appetite to abandon it halfway through. First, voters greatly recognize that the upcoming third arrow holds the key to a sustained Japanese economic revival; hence they want to wait and see if the policies can bear fruit. This is also arguably the main reason for Abe’s landslide victory in the December 2014 elections, as he succeeded in persuading the electorate to stay the course with slogans like “Abenomics is progressing” and “there is no other way to economic recovery.”

Moreover, by positioning his policy as a means to “fix” all the DPJ’s mistakes, a canny Abe made the DPJ into a scapegoat. He has repeatedly claimed that a weaker yen would strengthen the Japanese economy and that Japan should not wish to return to the high yen era of the previous DPJ-led government, which has impacted exporting companies’ competitiveness in overseas markets. On the other side, although the opposition seems determined to challenge Abe’s policy, they have not gained much traction so far. The Democratic Party (DP), the result of a merger between the Democratic Party of Japan (DPJ) and the Japan Innovation Party, has not accentuated any nuances that make them different from the previous DPJ and thus has failed to convince voters that they are serious about revamping Japanese economy through a more viable alternative to the LDP’s plan. Instead, they have wasted all their efforts and energies in criticizing Abe’s high-handedness. Recently, they criticized Abe’s decision to postpone the tax hike as proof of the failure of Abenomics — but without offering any alternatives. The opposition party will erode its reputation and continue to marginalize itself due to an inability to go beyond “just saying no.”

Second, though the economy is weak, owing to the rise of nationalistic overtones, voters tend to blame China’s slowdown rather than Abe’s policies. The logic of Abenomics and its trickle-down approach might end up only helping the privileged and well-connected business while leaving the nation as a whole worse off than before. However, Abe’s pragmatism and continuing hints of shifting Japan rightward have allowed him to echo nationalistic tones in a bid to consolidate public support for himself as a strong leader that can be trusted to exert appropriate and effective reforms to revive the Japanese economy. Moreover, the hysteria of Brexit also likely helps Abe in the next Upper House election, as it will provide excuses for the sudden appreciation of yen. He can also put the blame on Brexit for the economic slowdown that Japan experiences and will continue to experience.

Third, Abe understands very well that in times of turmoil, Japanese voters would always opt for stability. Although Amari’s departure might leave a void in Abe’s cabinet and hamper the effort to pioneer further Abenomics policies, Abe has handled the scandal skillfully. He still insists on full commitment to the remaining arrows of Abenomics even without Amari, though he will postpone the tax hike until late in 2019. The appointment of new minister, Nobuteru Ishihara continues the “buddy cabinet,” which ironically increased the government’s approval due to the resulting stability.

In sum, the July 2016 Upper House election will undoubtedly bring a big win for LDP. Afterwards, Abe and his party can flex their muscles in the parliament, advance the broader agenda of Abenomics, and eventually “restore Japan’s power.” Despite reservations, in the name of stability, the public would still vote yes for Abe.

Trissia Wijaya is currently a MEXT Scholar in the Graduate School of International Relations at Ritsumeikan University, Kyoto, Japan. Prior to coming to the Ritsumeikan, she was a research assistant in the Centre for Strategic and International Studies at Jakarta. 

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