The House of Councilors election will be held within three months, and the focus is on whether the split in the Diet — where the two chambers of the legislature are controlled by different camps — will finally be mended.
The radical changes in global politics and economics are producing a wide range of potential campaign issues for Prime Minister Shinzo Abe. But he is likely to focus on three areas — economic policies to generate sustained growth in Japan after two “lost decades,” participation in the Trans-Pacific Partnership talks, and constitutional revision — part of his Liberal Democratic Party’s policy platform.
Prices on the Tokyo Stock Exchange, a leading indicator of the economy, are still rising under Bank of Japan Gov. Haruhiko Kuroda’s shift in monetary policy from interest rates to liquidity.
The Nikkei average hit 14,607.54 on Friday — the highest since June 2008 — and has climbed roughly 42 percent since Abe took the government’s helm in December. But the uptrend still appears to reflect investors’ high expectations for the LDP-led government after being disappointed by the recently ousted Democratic Party of Japan.
Whether the uptrend will continue will depend on whether Abe, whose first “arrow” delivered monetary easing of a “different dimension” via Kuroda, can follow up with concrete fiscal and economic policies in the second and third arrows of “Abenomics.”
The G-20 finance ministers and central bankers who gathered in Washington from April 18 to 19 said that Japan needs to “define a credible medium-term fiscal path.” It won’t be easy to come up with and implement economic, fiscal and tax measures while trying to improve the nation’s fiscal health over the medium term.
Japan’s money supply grew by ¥9 trillion under the BOJ’s aggressive monetary easing policy, hitting ¥155 trillion at the end of April. Still, some in the BOJ are worried that bad side-effects will emerge from the excessive liquidity. It remains uncertain how this liquidity glut will affect the real economy, or how increasing prices will improve people’s lives. Abe and his team have the duty to explain to the public how that will happen.
The TPP is a free-trade arrangement originally launched in March 2010 by Singapore, New Zealand, Chile and Brunei. Its newer members — the United States, Australia, Peru, Vietnam, Malaysia, Mexico and Canada — are now trying to unite on establishing a comprehensive pact for high-level trade liberalization in the Asia-Pacific region.
During their Feb. 22 talks in Washington, Abe and U.S. President Barack Obama confirmed that:
1) Both Japan and the U.S. have certain “sensitive” areas in bilateral trade, including Japanese farm products and certain U.S. industrial sectors.
2) The final outcome will be determined by the negotiation process.
3) A country will not be required upon entering the negotiations to unilaterally promise elimination of all import duties.
Japan is expected to join the TPP talks in full in July, at the earliest, but it will likely face some hardships, given that the talks will involve sensitive issues. Still, Japan’s participation will benefit all participants because the scope of the free-trade pact will substantially expand. I hope the parties will strive to find a way to compromise.
The third issue Abe will likely give priority to during his Upper House campaign is revising the Constitution. Draft plans for changing the Constitution have already been aired not only by the LDP, but also by a newspaper and other bodies. It hasn’t been revised since it took effect on May 3, 1947, even though international circumstances have radically changed.
Meanwhile, Japan has struggled to give a coherent account of the contradictory reality it is chasing, such as owning “a military without force.” This explanation is mostly confusing the international community.
As the first step toward constitutional revision, Abe is targeting the official procedure spelled out by Article 96, which states that a revision must be initiated by two-thirds or more of all members of the Diet and then ratified by a simple majority in a popular vote.
Some people are asking why the Constitution must be changed now, but the necessity for a revision is obvious when we read the preamble.
The preamble says the Japanese people “have determined to preserve our security and existence, trusting in the justice and faith of the peace-loving peoples of the world.”
We cannot call ourselves an independent nation if we are going to rely on other countries for our own security and existence, and it hardly needs repeating here that the world today is not in a situation where the “justice and faith” of other countries can be trusted.
The sovereign power of the nation rests with the people, and it is the people’s negligence that has caused this situation to linger for decades. It is the people’s duty to push for revisions that correspond to changes in global circumstances.
Teruhiko Mano is an international economic analyst.