The Group of Seven summit meeting last week in Ise, Mie Prefecture, chaired by Prime Minister Shinzo Abe, has raised suspicions about Japan’s political agenda.
A small group of Abe’s aides might have secretly revised Japan’s official view of the world economy and helped Abe achieve his own domestic political goal.
During the G-7 session on the world economy held May 26, Abe reportedly showed four charts to other G-7 leaders in a bid to portray the world as facing a looming economic crisis.
During a news conference at the conclusion of the two-day summit, Abe insisted other world leaders were in agreement over his concerns about the world economy.
He then declared he will consider postponing the unpopular consumption tax hike that was set for April—and all of this ahead of next month’s Upper House election.
Yet only three days before the start of the summit, the government’s own official monthly economic report contradicted Abe’s warning: The world economy “is gradually recovering as a whole,” although “some signs of weakness are seen,” according to the report prepared by the Cabinet Office.
Senior officials from the Cabinet Office, the Foreign Ministry and the Finance Ministry have all denied a role in preparing the presentation material Abe used.
Daisuke Namioka, a senior official at the Foreign Ministry’s economic policy section, even said he didn’t know about the graphs until “right before” the G-7 meeting.
This is extremely unusual, as the Foreign Ministry is in charge of coordinating all the government’s views and topics to be discussed at the G-7 summit or at any other important diplomatic event.
“The government’s view of the world economy changed overnight, to say that the situation is similar to the one right before the 2008 Lehman shock. How did this happen?” asked Yuichiro Tamaki, a Democratic Party lawmaker, during a meeting with government officials on May 27.
“If Abe used the G-7 summit for his own political ends to make a pretext to postpone the consumption tax hike, this is terrible. This kind of thing is unheard of,” argued Kazunori Yamanoi, another lawmaker from the DP, the largest opposition party.
In fact, Abe would need a global economic “crisis” to break his own earlier promise to raise the unpopular consumption tax in order to cover swelling social security expenditures to support the country’s aging society.
Abe has repeatedly stated in public that he will carry out the tax hike unless Japan faces major economic shocks comparable to those from the 2008 global financial shocks or the 2011 Great East Japan Earthquake.
Three of the four charts illustrated the recent sharp falls in commodity prices, decreasing investments in emerging economies and rapid fund outflows from those countries. The final table was for growth predictions for developed and developing countries quoted by the International Monetary Fund.
The presentation material concluded that those figures looked similar to the ones immediately before and after the 2008 global financial crisis, which was triggered by the collapse of U.S. securities firm Lehman Brothers Co.
According to the Mainichi Shimbun newspaper, the presentation slides were distributed to certain senior Japanese bureaucrats only two days before the summit kicked off, which badly upset Finance Ministry officials in particular because, deeply concerned over the nation’s ballooning public debts, they had strongly pushed for implementation of April’s planned tax hike as scheduled.
According to the Mainichi, Finance Minister Taro Aso was enraged at the sight of the graphs, which were apparently prepared by Abe’s close aides.
Apparently due to a lack of advance coordination, the other G-7 leaders didn’t buy the abrupt pitch of Abe’s crisis theory during the session.
Abe’s argument was not included in the joint G-7 communique issued on May 27—a humiliating setback for Japanese diplomacy.
According to media reports, Aso, who is deeply concerned over the possibility of a domestic fiscal crisis, met Abe during the evening of May 28 and urged him to carry out the planned tax hike as scheduled.
“This is a choice for you to be a populist or (esteemed) prime minister,” Aso told Abe, according to another daily, the Asahi Shimbun.
Still, during a news conference Wednesday in Tokyo, Abe formally announced his decision to delay the tax hike from April next year to October 2019, which is widely seen as a sweetener for voters ahead of July’s Upper House election.
During the news conference, Abe insisted that the G-7 leaders agreed to cope with “downside risks” of the world economy and Japan should take every possible measure to cope with them based on that consensus.
Abe, meanwhile, admitted that Japan is not facing a major economic shock anywhere as serious as the 2008 global crisis.
“It’s true we haven’t seen any impacts comparable to the Lehman shock, nor a great earthquake disaster,” Abe said.
“This is a new judgment of mine,” Abe said, asking the people for an endorsement of his decision through the Upper House election on July 10.
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