Will the Japanese PM be able to win ‘Abenomics’ poll test?

Japan is going to the polls again on December 14 at a time when the House of Representatives has not even completed half of its tenure. Prime Minister Shinzo Abe’s decision to opt for a snap election is definitely extraordinary though not unprecedented. His ostensible objective is to make this election a “referendum” to get the approval of the voters on his proposal to postpone the contemplated consumption tax hike by 18 months from October 2015 to April 2017. Earlier his government had announced that the consumption tax would be introduced in two phases. The first instalment of the raise from 5% to 8% was implemented from April this year and the second was to follow from October 2015. Mr Abe had said, “Since I have decided to postpone the planned consumption tax hike by 18 months thereby making a grave change in the tax system, I believe I have to call an election.”

Media reports, however, point out that the focus of the election debate has widened significantly to include other aspects of his economic revitalisation policy known as Abenomics. In addition, there is also a deep suspicion that the real objective of Mr Abe is to ensure that he stays in power for a fairly long time to implement his political agenda that includes sensitive subjects like Japan’s right to collective self-defence, constitutional amendment, resumption of nuclear reactors, and the future of US bases in Okinawa. To realise all this, many believe, he finds it politically expedient to face the electorate now rather than two years later when the political environment could change and the opposition parties could regain strength and pose a serious challenge. Right now , they are in a state of disarray and the main opposition party — the Democratic Party of Japan ( DPJ ) – is not even in a position to field its candidates in all the single member constituencies.

Many commentators in Japan and abroad have called it an unnecessary election. The ruling Liberal Democratic Party (LDP) enjoyed a massive numerical strength of 294 out of the total 480 seats in the just dissolved House of Representatives. In addition, its political ally the Komeito Party had 31 seats and together their strength exceeded the two thirds majority in the House. They also enjoy a comfortable majority in the Upper House. This phenomenon of a ruling coalition enjoying majority power in both houses of the Japanese Diet was quite rare in recent years. In fact, a sharply divided Diet created prolonged political instability during 2005-12 leading to a series of short-lived cabinets. Japan had six prime ministers in as many years.

However, no one can question the prerogative of the Prime Minister to opt for the dissolution of the House and go in for fresh elections whenever he thinks it is politically appropriate to do so. One can cite two prominent instances when such dissolutions took place in the past. In 1986, Prime Minister Yasuhiro Nakasone opted for a snap election by abruptly terminating the tenure of the House. More recently, Prime Minister Junichiro Koizumi took the nation by surprise by opting for election in 2005 on a single issue concerning the postal privatisation. On both these occasions, the ruling Liberal Democratic Party (LDP) scored impressive victories.

The ruling LDP-Komeito coalition needs to win at least 266 out of the total of 475 seats (reduced by five seats) to control the House as well as all its standing committees. Opinion polls conducted by the major Japanese media like the Asahi, Yomiuri, Mainichi and the Kyodo News Agency have reported that the ruling combine may even surpass the two thirds majority in the Lower House. This forecast should be soothing to Mr Abe who is keen to consolidate his position and look for a long period of unquestioned leadership in the party and the Diet. Media reports also predict that the Komeito Party, the junior partner of the LDP, is also likely to increase its position from its present 31 seats.

In analysing the reasons that determined Mr Abe’s decision, one has to understand his economic and political compulsions. As for the economic rationale, it is well-known that when he started his second tenure in December 2012 following his resounding success in the election, he attached great importance to the need for revitalising the Japanese economy. He also clearly understood that unless the Japanese economy was put on a robust growth trajectory, Tokyo would not be in a position to wield much influence in international politics. His economic programme known as Abenomics has three major elements or “three arrows” namely- fiscal stimulus, monetary easing and growth strategy. The first two arrows worked fairly well in the initial year of his administration and produced some positive impact. In 2013, the Japanese economy grew by 1.5 % and it is believed that public demand and private consumption contributed to that growth. Abenomics could take considerable credit for this positive development as the government undertook fiscal stimulus in the form of public spending. Bank of Japan’s flexible monetary policy contributed to the weakening of the Japanese yen which led to a boost in corporate profits and Japanese equity prices. The increasing equity prices accompanied by better job opportunities contributed to greater private consumption.

But after the introduction of the first phase of the consumption tax from 5% to 8% in April 2014, consumer spending took a steep downward trend which also severely affected the Central Bank’s target of raising the inflation rate to 2% by 2015. Mr Abe has prepared a number of measures for boosting his growth strategy the so-called third arrow. But these measures could not be effectively implemented. Further, the second and third quarters of this year saw the GDP of the country falling rather sharply. There are complaints that Abenomics has failed as it has helped only some sections of the society and neglected the middle class people and the small scale companies. Under these circumstances Mr Abe thought that it would not be wise to go ahead with the second phase of increasing the consumption tax from 8% to 10 %. But many critics wonder why Mr Abe should opt for a snap election instead of making appropriate changes in his economic strategy.

It is only in this context that they also see certain political compulsions behind Mr Abe’s action. He has a fairly heavy political agenda before him. The first and foremost is his firm resolve to introduce constitutional reforms. Soon after assuming office in December 2012, he wanted to simplify the procedures for amending the Constitution as stated in Article 96. But seeing a strong adverse public reaction, he changed his position and decided to reinterpret the Constitution on the question of Japan’s right to collective self-defence. Now a series of related legislative measures will come up for discussion at the Diet soon after the election. Other issues he will be called upon to address include the resumption of nuclear reactors, decision on the relocation of US military bases in Okinawa, Japan’s negotiations on the TPP, and the revision of Japan-US strategic guidelines.

All these issues will consume a great deal of time and Mr Abe, if returned with a big majority, would have bright chances to get re-elected as the president of the LDP in September 2015 and stay at the helm for three more years.

(Prof K.V. Kesavan is a Distinguished Fellow at Observer Research Foundation, Delhi)

Courtesy: ORF