Editorials

Now Abe must set his priorities

With the re-election of Prime Minister Shinzo Abe to a third — and final — three-year term as president of the ruling Liberal Democratic Party, he could remain in office through September 2021, well on course to become Japan’s longest-serving prime minister. His easy win over his sole opponent in the race, former LDP Secretary-General Shigeru Ishiba, reaffirms his unrivaled grip on power in the party. The LDP-Komeito alliance retains a solid majority in the Diet in the absence of a powerful opposition force. The question now is what agenda Abe will spend his dominant political resources on in the final years of his administration.

In his LDP campaign, Abe reiterated his goal of submitting the party’s draft to amend the Constitution — including changes to the war-renouncing Article 9 in order to clarify the legal status of the Self-Defense Forces — to the Diet as early as this fall. Revising the postwar Constitution has long been on Abe’s political agenda, and last year he effectively set a target of accomplishing this by 2020. The two-thirds majority that the ruling coalition (plus its pro-amendment allies) holds in both chambers of the Diet — a condition needed for proposing a constitutional amendment for approval in a national referendum — presents a rare opportunity for Abe to try to achieve his goal.

Still, amending the Constitution, which has never been revised since its promulgation 71 years ago, remains a divisive issue. A recent Kyodo News poll showed that nearly half the respondents opposed Abe’s plan to submit the LDP draft amendment this fall, versus 37 percent who supported it. A separate survey of the LDP’s rank-and-file members and its supporters showed the opposite result — half the respondents endorsed the plan and roughly 30 percent opposed it. But even among the LDP members and supporters, the economy was the top priority they expected the new LDP chief to focus on, followed by pensions, medical and nursing care services, diplomacy and national security, and fiscal reconstruction — with a constitutional amendment trailing far behind.

The economy has in fact been high on the Abe administration’s agenda since he returned to the government’s helm at the end of 2012 — five years after his first short-lived stint in power. He made reviving the economy a priority, pledging to pull the nation out of the state of deflation that had gripped it since the 1990s with the “three arrows” of his Abenomics policy: aggressive monetary easing policy; flexible fiscal spending; and structural reforms. And indeed, the economy is now considered to be in the midst of the second-longest boom cycle in the nation’s postwar history. The positive performance of the economy has been a key factor that shored up popular support for his administration.

Under the Bank of Japan’s unprecedented monetary stimulus program, consisting of massive asset purchases by the central bank to inject more money into the economy, share prices on the Tokyo Stock Exchange have more than doubled since the onset of the administration as major companies, aided by the yen’s depreciation and brisk overseas demand, post record-breaking profits. Employment conditions have improved and the job market is the tightest it’s been in four decades. But consumer spending remains weak and uneven as growth in disposable income continues to stagnate.

During the LDP campaign, Abe indicated that the BOJ’s monetary stimulus program could not continue forever, suggesting that he will take steps to normalize the bank’s monetary policy during his remaining tenure. In contrast to the first arrow of aggressive monetary easing, the third arrow of structural reforms — deregulatory measures to generate new avenues of growth — is widely deemed to have not made enough progress to drive the economy forward. Efforts to address many of the structural problems that hinder economic growth — including the nation’s rapidly aging and declining population and the shrinking economies of rural depopulated areas — remain slow.

Abe has pledged to implement far-reaching reforms of the social security system in the next three years, including employment practices for elderly workers such as mandatory retirement as well as the pension scheme and medical services. That alone would be a massive task going forward. Clearly, formidable challenges remain ahead for Abe’s economic agenda.

With a fresh mandate from his party, the prime minister needs to set the priorities for his final term. Abe defeated Ishiba by 553 votes to 254 in Thursday’s election. But while he won the support of more than 80 percent of the LDP’s Diet members, the race was much closer when it came to the party’s local rank-and-file members and supporters: Ishiba garnered about 45 percent of their votes. The prime minister should reflect on what lies behind the gap in the votes by the Diet members and local votes as he sets his policy priorities.