Japan’s Abe Proposes Foreign, Monetary Policy Changes

Shinzō Abe returns the Liberal Democrats to government with a resounding victory.

Prime Minister Shinzō Abe of Japan visits NATO headquarters in Brussels, Belgium, January 12, 2007
Prime Minister Shinzō Abe of Japan visits NATO headquarters in Brussels, Belgium, January 12, 2007 (NATO)

Japan’s conservative party won in convincing fashion on Sunday in parliamentary elections for the lower house, according exit polls. The elections took place against the backdrop of increasing tensions with China over disputed islands in the East China Sea, a stagnating economy unable to reinvigorate growth and a rancorous debate over the reliance on nuclear power after the 2011 Fukushima disaster.

The Liberal Democratic Party won between 275 and three hundred seats of the 480 seat lower chamber, according to preliminary polls conducted by the national public broadcaster NHK. If the results stand, it will prove to be a big increase from the 118 seats the party held before the elections. Along with the 27 to 35 seats expected to be won by their allies in the New Kōmeitō Party, the Liberal Democrats will have gained the two-thirds majority needed to override bills passed in the divided upper house.

The Liberal Democratic win means that former prime minister and right leaning Shinzō Abe is expected to get a second stint as premier. He would be the country’s eighth in the last seven years.

Until its surprise defeat in 2009, the Liberal Democratic Party was the dominant force in Japanese politics, having been in power for over fifty years.

The incumbent Democratic Party of Japan coalition is expected to win only 67 seats, down sharply from the three hundred odd seats it won in 2009 when it was swept into power in a landslide. Back then, a new era was said to be at hand in Japanese politics.

The results are a stinging rebuke to the ruling party and Prime Minister Yoshihiko Noda’s government. Voters were upset with the party that doubled the consumption tax and failed to follow up on various campaign pledges from reforming government expenditures to relocating 8,000 United States Marines from the military base on Okinawa to Guam.

Abe is expected to push for a change in Japan’s pacifist constitution which forbids it from waging war. A big adjustment in Japan’s military posture is not seen as imminent, however, as the Japanese public has on previous occasions rejected radical changes to the Constitution that would have seen the military rearming. A more likely scenario, analysts say, would be for Abe to push for a closer alliance with the United States in the case of hostilities in East Asia.

Abe has talked of more public spending and called for a more activist policy from the Bank of Japan to simulate growth. His proposed monetary policy could result in a change to the traditional independence enjoyed by the central bank. Specifically, Abe would like to adjust the inflation target from 1 to 2 percent and increase the central bank’s interventions in the currency market to weaken the yen and stimulate exports.

The Bank of Japan has taken steps like increasing its asset purchases in recent months to reverse the deflation that has afflicted the Japanese economy since the early 1990s but its domestic critics, frustrated with the nation’s economic malaise, complain that it has not done enough.

Abe and the incoming Liberal Democrats have also talked about adopting a tougher tone with China as relations have grown rockier in the last year over disputed claims to sovereignty over the Senkaku or Diaoyu islands in the East China Sea.

China has gradually upped the ante by increasing the incursions by its maritime surveillance ships which many believe it is using to change the status quo of Japanese control over the islands. Recently, Japan scrambled fighter jets after a Chinese aircraft was detected entering Japanese airspace over the islands, widely seen as an escalation and the first time that aircraft were employed in the dispute. With Japanese business hurting on the Chinese mainland from anti-Japan protests, Abe will need to balance his tough talk with the need to maintain economic relations with China.

Finally, the Liberal Democrats are expected to embrace nuclear power more than the Democrats did to meet Japan’s domestic energy needs.

After the earthquake, tsunami and nuclear accident at Fukushima last year, the Democrats said that they would phase out nuclear power sometime in the 2030s. Abe has called that plan unrealistic. There remains deep ambivalence in Japanese society over nuclear power following Fukushima with many voters wanting Abe to adopt a policy like before the crisis and others in favor of what they see as safer sources of domestic power production.

Turning the economy around will be the new government’s top priority, in addition to strengthening the American alliance. Abe says he wants to improve relations with China too but it seems that the islands dispute will need to be resolved in order for that to happen.

Final election results are expected on Monday.