The current prime minister, Fumio Kishida, is going to have to make some key decisions affecting the future of the country.
The assassination of Shinzo Abe on 8th July left Japan reeling from the shock. Such violence jars with a peaceful democracy where firearms are under strict control. Above all, apart from his influence he had over the LDP which remains at the center of power in Tokyo, Shinzo Abe occupied a special place in Japanese political life because of his long service, his flamboyant style and his avowed ambition to put an end to the post-war regime so as to enable his country to take up the challenges of the 21st century.
After 1945, Japan rebuilt itself on the basis of a command democracy and economy – partially liberalized from the 1980s onwards – and founded on pacifism as laid down in Article 9 of the 1946 Constitution, and on its alliance with the United States.
Japan’s great success, based on the power of its industry and exports, was weakened in the 1990s by a succession of disruptions and crises: a diminishing and ageing population (125 million inhabitants – a fall of three million over ten years); the after-effects of three decades of deflation and the Fukushima disaster; the 2008 crash, which weakened globalization; the destabilization of American democracy and strategy; the affirmation of China’s imperial ambitions, and an increasing amount of provocation from North Korea.
As prime minister from 2006 to 2007 and from 2012 to 2020, Shinzo Abe broke with the usual smooth tongue and technocracy of the Japanese political classes and imposed his vision of a radical modernization for Japan, harking back to the Meiji period. He had three priorities. Firstly, Abenomics, an economic policy based on creating money, fiscal stimulus and structural reforms to put a stop to deflation. Secondly, revising the Constitution so as to begin rearmament. Thirdly, to contain China by tightening the alliance with the United States, promoting the Indo-Pacific concept, and asserting Japanese presence and status in the world, as symbolized in the 2020 Tokyo Olympic Games which had to be postponed and truncated because of the Covid epidemic.
In the aftermath of the Fukushima tragedy, Abe managed to breathe his dynamism and optimism into a population that had been deeply traumatized, and he was wise enough not to suddenly reject nuclear power, which has turned out to be a major asset in the present energy crisis. The amount of liquidity shelled out by the Bank of Japan, which holds nearly half of the public debt – 257% of GDP – has not sufficed to stop the deflationary spiral. On the other hand, the Constitution was given a different interpretation in 2015 in order to authorize investment in defense, and Japanese diplomacy became very active in curbing China’s ambitions, from saving the Transpacific Partnership after Donald Trump had decided to withdraw the USA from it, to constituting the Quad with the USA, India and Australia.
The Covid epidemic, then Russia’s invasion of Ukraine, against a background of a strategic partnership between Beijing and Moscow, have underlined Japan’s vulnerability.
They have proved that Shinzo Abe was right in wanting to strengthen the Japanese state so as to ensure its security and prosperity when up against increasing economic and geopolitical threats.
The present prime minister, Fumio Kishida, can bank on public opinion changing in favor of defense, and on the two-thirds majority that he holds in Parliament after the LPD’s clear victory in the senatorial elections of 10th July, in order to revise the Constitution. The disappearance of his powerful predecessor also gives him more leeway in making changes, particularly concerning the Abenomics unsuited to stagflation. Japan was emerging slowly and belatedly from the Covid epidemic when it was hit with full force by the global crisis caused by the war in Ukraine. Tokyo has associated itself with the international sanctions imposed on Russia. It has no major dependency on Russian and Ukrainian agricultural exports, but a significant dependency in the field of energy since Moscow supplies 4% of its oil, 9% of its gas and 11% of its coal. The Japanese economy, suffering from the massive rise in the price of energy and raw materials, has dropped into stagflation, with a 0.2% fall in activity in the first quarter and inflation at 2.5%. The Bank of Japan, unlike the Fed and the ECB, is maintaining its expansionist policy based on negative interest rates, as well as on massive purchases of public debt. But the falling yen, at its lowest point for over 20 years against the dollar and the euro, makes imports more expensive, eats away at competitiveness, and nurtures free ridership, whilst the population don’t take easily to price rises after thirty years of constant price decreases. This is not the time for devaluation, but for competitive revaluation.
Therefore, Fumio Kishida is going to have to make some key decisions affecting the future of the country. He has already decided to strengthen Japan’s self-sufficiency with regard to energy and industry by reviving nuclear reactors with new security regulations, providing for the construction of three new power stations, and investing in supply chains and in the production of essential goods, from semi-conductors to healthcare. He will determine whether Abenomics will continue to be followed or will be realigned when he chooses who will succeed Haruhiko Kuroda as head of the Bank of Japan. He will continue to defend the principle of a free and open Indo-Pacific, but will have to take a position on support for Taiwan, the main cause of rivalry between China and the United States. Above all, he will have to arbitrate over the revision of the Constitution, which is indispensable in order to meet the announced objective of aligning with NATO regulations that stipulate hat 2% of GDP must be give over to defense. Shinzo Abe died at a time when the Japanese were coming round to his vision of a stable, strong and efficient nation, able to defend its sovereignty in an Asia that has become the most prosperous and most dangerous region in the world. There is a paradox in all this: everything he fought for can only materialize because of Vladimir Putin, and will have to be implemented by Fumio Kishida, whose conception of politics and style are poles apart from his.
(Column published in Le Figaro,18th July 2022)