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Abe will survive, but will Abenomics?

Japanese prime minister is predicted to win upcoming elections. But even if he does, economic reform may stall

December 12, 2014 2:00AM ET

On Dec. 14, Japanese voters will have a referendum on Prime Minister Shinzo Abe’s government, which came to power two years ago promising to reinvigorate a country hobbled by two decades of economic stagnation and reeling from the 2011 earthquake, tsunami and nuclear disaster.

Abe has delivered some encouraging results during his two years back in office. Japan appears to be escaping deflation, and stock prices are up dramatically, thanks in large part to aggressive monetary easing adopted as part of his economic platform, commonly known as Abenomics. However, the Japanese economy slid into recession in the third quarter of 2014, unable to withstand the effects of a consumption tax hike that took effect in April. This has dented Abe’s economic track record: Consumer confidence has slid below where it stood when he entered office, the yen has weakened dramatically without triggering a commensurate acceleration in exports, and in a stark contrast to stock prices, Japanese real disposable incomes have fallen under his tenure.

Despite the political risk from these disappointing economic figures, Abe chose on Nov. 21 to dissolve the lower house of parliament, declaring that snap elections would provide a renewed mandate for Abenomics.

Clinching that mandate won’t be easy. Abe’s public support has declined considerably since he returned to office (after a brief stint in 2006 and 2007). In the early months of his tenure, he typically saw approval ratings upward of 60 percent. More recent polling has him at 40 to 50 percent, with disapproval often edging higher than approval. Polls show that Japanese citizens would prefer a parliament in which his Liberal Democratic Party (LDP) is checked by a more vigorous opposition.

Nonetheless, most projections have Abe winning a significant victory, perhaps even securing nearly two-thirds of the seats up for grabs. To be sure, these projections may be too optimistic. A major scandal or slip of the tongue could shift the outcome dramatically. But it is still puzzling that an increasingly unpopular prime minister governing a country sliding into recession faces such favorable odds entering national elections. How is this possible?

There are three main reasons for Abe’s optimism. The first is the utter disarray of Japan’s opposition parties. The Democratic Party of Japan (DPJ), which held power from 2009 to 2012, was decimated in the previous elections and is unprepared for these. The DPJ is fielding only 198 candidates. In the highly unlikely event that all DPJ candidates are elected, it would fall short of a parliamentary majority. Still, the DPJ is relatively well positioned among opposition parties and will likely pick up a few seats at the expense of even more hapless opposition parties such as the Japan Innovation Party, Party for Future Generations and People’s Life Party. 

The most important political question for Japan’s long-term future is whether Abe will be able to implement growth-enhancing structural reforms, the so-called third arrow of Abenomics.

Second, Abe is relying on the Japanese public to largely sit out these elections. His ruling coalition has a support base that votes very consistently. The LDP tends to draw strong support from organized interest groups in sectors such as agriculture and construction, and its coalition partner, the New Komei party, relies on voters affiliated with the Sokka Gakkai, a religious movement. When overall turnout is low, these groups tend to deliver consistent votes for the governing coalition. Even if Japanese voters are unenthusiastic about Abe, his party will win decisively as long as they are also unenthusiastic about other parties. In addition, many speculate that he chose to hold the elections in December, a busy month when parts of the country will be covered in snow, to further suppress turnout.

Third, the justification for the elections is Abe’s decision to postpone the next consumption tax hike, which was scheduled to go into effect in October 2015. The consumption tax is deeply unpopular in Japan, although most economists see the policy as necessary for making Japan’s public finances sustainable. His government chose to implement the first hike as scheduled in April 2014, but the authorizing legislation was put in place by the previous DPJ government in 2012. This allowed him to sidestep the April consumption tax hike and its consequences as a political issue. The DPJ, fearful of being portrayed as the pro-consumption-tax party, quickly fell in line.

In effect, Abe is on course to cruise to a decisive victory thanks to a weak opposition, voter apathy and shrewd political calculation. However, this still leaves the question of why he bothered calling elections at all. His governing coalition already held a two-thirds majority in the lower house, and the elections will likely weed out weak opposition parties, positioning the DPJ as a more credible challenger for the next round.

The answer lies in internal politics of the LDP. Abe’s sliding poll numbers and Japan’s weakening economy raised the specter of conflict within the LDP. The powerful Ministry of Finance, which vigorously supports raising the consumption tax, lobbied LDP members aggressively to prevent Abe from postponing the next hike. To pre-empt opposition in his own party — particularly while he was overseas in early November — Abe privately signaled that he intended to call elections over the consumption tax, adeptly changing the conversation.

In other words, don’t be fooled: These elections are primarily about murky internal LDP politics, not any significant public policy issue. The most important political question for Japan’s long-term future is whether Abe will be able to implement growth-enhancing structural reforms, the so-called third arrow of Abenomics. Ironically, a decisive victory in these elections may very well make these reforms more difficult. In 2005 then–Prime Minister Junichiro Koizumi of the LDP campaigned on a reform platform, expelled traditionalists from the party and rode to a decisive victory as inspired voters flocked to the polls. In contrast, for the second consecutive election, Abe will rely on voter apathy and the mobilization of the LDP’s traditional base among interest groups. This is far from a political coalition interested in structural reforms. In all likelihood, the Japanese people will deliver for themselves a government to match their apathy and fatalism. 

Phillip Lipscy is an assistant professor of political science at Stanford University, where he is the Thomas Rohlen Center fellow at the Freeman Spogli Institute for International Studies’ Shorenstein Asia-Pacific Research Center. He is an expert on international relations and political economy, with a focus on East Asia. 

The views expressed in this article are the author's own and do not necessarily reflect Al Jazeera America's editorial policy.

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