Japan's New Political Landscape

January 16, 2013

Professor Gerald Curtis
, Burgess Professor of Political Science, Columbia University; Member, Board of Directors of Japan Society

Alicia Ogawa
, Adjunct Associate Professor, School of International and Public Affairs; Senior Advisor, Center on Japanese Economy and Business, Columbia Business School

On January 16, 2013, three weeks after Shinzo Abe took office in his second round as prime minister, Columbia University professor Gerald Curtis visited Japan Society to share his thoughts on how the new government would navigate the challenges ahead in the economy, politics and global relations.

The DPJ victory in August 2009 was "the first real transition of power in postwar Japan," Professor Curtis began. Yet "three years and three prime ministers later—Mr. Hatoyama, Mr. Kan and Mr. Noda—the public said, 'Enough of the DPJ.'"

The "extraordinary wipeout" in the December 2012 election reduced the DPJ to a mere 57 seats. And it wasn't based on the DPJ's positions, which were not all that different from those of the LDP. "It was just the sense that you didn't know what this party stood for... that these people don't know how to govern."

Abe has a comfortable 295-seat LDP majority and, with coalition partner Komeito, a two-thirds majority in the lower house. But on election night, Abe said, "This is not a vote of confidence in me. This is simply the public saying, 'We want the DPJ out.' Now we have to prove to the public that we’re worthy of their trust."

His modesty struck the right note; "almost daily, the enthusiasm for this government has gone up. You have to give Abe a lot of credit for having so far brilliantly carried out what clearly was a well-thought-through strategy."

In a conversation with Prime Minister Koizumi some time after Abe's first term ended, Professor Curtis noted, Koizumi told him, "'Abe’s big mistake was to focus on issues that you couldn’t do anything about in the short term,' changing the constitution in particular. But what voters want to know is 'What are you going to do this month? What are you going to do this year? What are you going to do for me?' Abe learned that lesson."

In the Short Term, Growth
Abe knows that his focus now has to be getting the economy to grow, Professor Curtis said. His strategy has two major elements: One, implementing a big stimulus package that's largely public works spending—"nothing new" for the LDP, but popular in many quarters including the Japanese public and the securities markets—and two, prodding the Bank of Japan to act in "much more aggressive" fashion to produce a modest level of inflation, 2 percent or so, and to depreciate the yen.

"Abe understands that this will work only as long as the markets and the public in Japan believe he is credible. That is, he cannot blink. He can’t vacillate. He is sticking to his line.... People believe that he's serious, and so the response has been very positive."

The goal is to spend enough of the stimulus money to raise growth to around 3 percent by the July elections, Professor Curtis said. This won't be easy. A big slice is allocated for reconstruction in Tohoku, but labor shortages and other problems will complicate the process.

In October, there will be a decision point on the consumption tax. If the economy has not picked up and Abe decides not go forward with the consumption tax increase, the market reaction would be very severe. The debt-to-GDP ratio is already 240 percent or more; "the idea that fiscal discipline is being thrown to the wind... may change some of the optimism that is so widespread right now about this government." Almost certainly the cabinet will approve the tax increase.

Structural Reform
Without structural reform, "what you will have is what you had for 20 years until Koizumi became prime minister," Professor Curtis continued.

Consumer Spending. Will stimulus spending bring back a shop-and-spend mentality among consumers? "Yes in the short run but there has to be meaningful structural reforms for it to be sustained," he said.

Workforce Reforms. Immigration isn't being talked about. Nor is it clear that there are going to be bold initiatives taken to help make it easier for women with children to work. With Japan's aging demographics, "how do you get a bigger workforce if you don’t have people either that you bring in from the outside or making it possible for women who are married and have children to work—not only work in full-time jobs, but work in full-time, well-paying jobs being treated equally to men."

Deregulation, including "making it easier to encourage foreign direct investment in Japan," is another subject that is talked about but about which there is so far little in the way of specific, meaningful reforms on the table, "at least not yet."

Nuclear Energy. "Abe wants to restart nuclear power plants. He can't for two reasons," Professor Curtis explained. The public is fearful because of the Fukushima nuclear accident. And at the new regulatory agency—whose independence from METI is a definite accomplishment on the DPJ's part—scientists are blocking sites from reopening because they are suspected of lying on active earthquake fault lines.

A Hail-Mary Pass, and What's Next
"My point here is that there is something really interesting and exciting and different going on in Japanese politics. There’s now a government that has impressed the public and the foreigners interested in Japan and the Japanese economy that it has a strategy. And it’s a clear strategy. To use a football analogy, I think of this as Abe’s Hail-Mary pass strategy," he said.

Abe's got the backing of old-style LDP politicians, "the vested interest that supports them," and Koizumi liberals, though this won't last; "you can't satisfy them all."

"Traditionally, cabinet ministers tend to think they are the boss of whatever ministry portfolio they have. Those issues that they are in charge of, they say whatever they want to say. No. Abe is keeping a pretty tight rein. And he has brought in Mr. Koizumi’s media manager, Mr. Iijima, to help him with his media strategy."

"What Abe is passionate about is constitutional revision, historical revisionism, making Japan stand tall in the world, and having a stronger military"—all issues to which Prime Minister Kishi, Abe's maternal grandfather, was devoted. Yet Abe and his grandfather "are both very pragmatic politicians. What Abe would like to see, and what he thinks is realistic, given the realities of the world, I think are very different."

There is something of a struggle between the pragmatism and realist approach in Abe’s head and the emotional rightwing ideology in his heart. Pragmatism is likely to win out since it is the only way for him to succeed. But if he were to make public statements disavowing apologies for Japanese wartime behavior and voice his revisionist views of Japan’s wartime history the government "would have a crisis with South Korea and with China," and it would "create a harsh reaction in the United States as well."

China. The other potential problem is the relationship with China, which "is bad and dangerous, and little sign that it's going to get better," he said.

For one thing, "the Chinese education system is trying to inculcate this anti-Japanese sentiment among young people." Then there's the complicated issue of the Senkaku, or Daioyu, Islands. Den Xiaoping's solution regarding the islands was to "put it [the issue] on the shelf," and that's the right solution in Professor Curtis's view.

"I have been meeting with the Chinese recently and saying, 'If you want a real right-wing government in Japan, one that will revise Article 9, become a major military force, keep on doing what you’re doing now. That’s the recipe.' So, if the Chinese understand the Japanese situation, and as long as the United States stands firm with Japan, I think this can be managed."

"We’re entering a new era in Japanese politics. It’s hard to see how successful it’s going to be on the economic side. You have to hope that policies work. At least you have to give Abe credit for changing the mood and changing expectations."

"On the foreign policy side I think we will continue to see a pragmatic, cautious leadership. But it’s not just in Japan’s hands. A lot depends on what China does, on how U.S. policy evolves, and the rest," Professor Curtis concluded.


Alicia Ogawa of Columbia University, who presided, asked the first questions:

What do you think is the short-term future for the U.S.-Japan relationship under Abe?

"This relationship is basically very strong. It’s very healthy. It will stay that way, unless... the Japanese lose confidence in the American commitment to Japan’s defense and to maintaining a position of strength in East Asia," and/or "a more right-winged Ishihara Shintaro group of people" gain greater influence, resulting in "a big push to make Japan into a much stronger military power and a weakening of the alliance. Very unlikely to happen."

The Abe government probably won't be able to relocate the U.S. military forces in Futenma, but "is that going to ruin the alliance? No. It gets people irritated, but you live with irritation. It’s like a typical marriage. You get over it."

What about trade? You mentioned earlier the bad feelings about TPP and what Abe is demanding being left out of the discussion, and the U.S. won’t even consider sugar, and so on.

There's been no big push from President Obama on TPP, Professor Curtis said. "I don’t think this issue is going anywhere very fast."

"If the TPP is successfully concluded, I won’t say in our lifetime, but if it’s successfully included in any foreseeable period of time, I will be quite surprised. But this relationship doesn’t hang on the TPP. And there is a depth to the U.S.-Japan relationship that can’t be undone by a military base in Okinawa called Futenma, or by an acronym that half the world doesn’t even know what it means, TPP."

The audience joined in the Q&A:

Will the naval planners focus on changes in naval strategy, either because they're in a better position to see the American influence declining, or to send a message to the Chinese that there are alternatives?

"Already, even in the supplemental budget, there is money for developing anti-submarine capabilities and some other equipment," Professor Curtis responded. "The navy is becoming a major focus of defense budget spending increases." Still, "the Japanese defense budget has declined every year for the past 11 years. It will go up this year under Abe, but the increase is pretty modest."

Japan's "naval strategy has clearly shifted to the south, to being able to protect sea lanes away from Japan with China. That’s going to happen. Right now the Japanese military and the American military are working very closely together—a lot of interoperability."

"I think that’s fine if Japan does more in developing its defense capabilities, especially naval and air defense capabilities.... But a dramatic military buildup would only raise tensions in East Asia and would complicate relations not only with China, which in a sense is not as worrisome as with South Korea, and that is something we want to avoid."

The Senkaku Islands belonged to China since the Ming Dynasty in 1400, and during the Japanese occupation in Taiwan, the Senkakus belonged to Taiwan. Isn't there actually a three-way dispute over who owns them?

"There is no way to solve this issue, but there sure is a way to make it much worse, and that is basically a Chinese decision," Professor Curtis responded. "I don’t think [Abe] is going to do anything to provoke the Chinese. What he said about putting people on the islands, which he said he would do during the campaign, now he says that when he talks with the Chinese that is one of the options that he will discuss with them. In other words, he wants to use it for bargaining leverage. That makes perfectly good sense."

—Katherine Hyde

Topics:  Policy

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