Japan’s Snap Election: a Risky Game for Abe and Abenomics

Posted on Wednesday, December 3, 2014 by Kota Takahashi


(Image Source: EPA)


By Kota Takahashi

On 18 November, Japanese Prime Minister Shinzo Abe announced that he will hold a snap election for the lower house of the Diet following his decision to postpone the increase of a consumption tax originally scheduled for April 2015. Very few observers, if any, anticipated an election just a few weeks ago; there was no national election scheduled until 2016, and the ruling coalition between the Liberal Democratic Party (LDP) and New Komeito held majorities in both houses of the Diet. Taking these conditions into consideration, two factors help explain the rationale behind Abe’s decision to hold a snap election.

Intra-party Power Struggle within the LDP

The LDP has dominated post-war Japanese politics for all but four years since it was founded in 1955. Absent a competitive opposition party capable of challenging the LDP’s rule, political competition took place among various factions within the LDP for decades. Though the influence of factions has waned over recent years, such traditions still remain in the LDP. In the case of a leadership transition, it would be more likely for Abe to be thrown out of power by other LDP politicians than by opposition parties, given that the election for the LDP president—i.e. the prime minister—is coming up next fall.

The most threatening rival for Abe is Shigeru Ishiba, former Minister of Defense and currently the Minister for Vitalizing Local Economy. Though he lost against Abe, Ishiba overwhelmed him in the initial voting of the previous LDP presidential election in September 2012 by attracting support from local voters. Since then, Ishiba effectively bolstered his inner-LDP power base during his previous tenure as the Secretary-General of the LDP (de-facto head of the party) and continues to enjoy high public popularity. It is widely believed that Ishiba might challenge and possibly defeat Abe in the 2015 LDP presidential election.

Another intra-party concern for Abe is posed by the fiscal hawks within the LDP. This group, who emphasize the importance of maintaining a balanced budget and pressured Abe into raising the consumption tax as scheduled, include influential factional czars of the LDP such as Taro Aso (current Deputy Prime Minister and Minister of Finance and former Prime Minister) and Sadakazu Tanigaki (current Secretary General of LDP and former President of the LDP). Abe has significantly raised the risk of losing his intra-party support by rejecting their demands.

Facing these challenges from within his own party, it was urgent for Abe to rebuild his political foundation within the LDP by gaining strong public backing for his economic initiatives. Indeed, he framed his justification of the tax-hike delay as one of the key agendas of the election, which is, with the exception of LDP fiscal hawks, supported by most Japanese politicians.

Abenomics

Another factor contributing to Abe’s rationale for calling a snap election is the shortcoming of the so-called "Third Arrow” of Abenomics. The other two “arrows” of Abe’s three-pronged economic policy—monetary easing and fiscal stimulus—succeeded in boosting the Japanese economy, but analysts agree that the “Third Arrow” of structural reforms is essential for maintaining long-term growth of the Japanese economy.

Despite its initial optimism, the Abe administration has so far failed to fulfill its economic promises vis-à-vis the “Third Arrow.” One of the reasons is the intransigent bureaucracy, such as the Ministry of Health, Labor, and Welfare’s resistance against labor reforms and restructuring of the Government Pension Investment Fund. Abe’s reform plans have also been blocked by interest groups, most notoriously by the JA-ZENCHU (Central Union of Agricultural Co-operatives) which opposes domestic agricultural reforms and Japan’s participation in the Trans-Pacific Partnership (TPP).

Abe’s initial plan to push through reforms lost momentum after his popularity declined due to other unpopular policies and cabinet member scandals. His branding of this snap election as “the referendum on Abenomics” signifies that Abe is seeking a mandate from voters to implement the critical agenda of his economic policy.

Looking Ahead

Given the disarray of opposition parties and the relatively high popularity of the LDP, the ruling coalition is unlikely to be forced out of power in this election. However, this does not directly translate into a decisive victory for Abe. Any substantial loss of seats, especially if the ruling coalition were to lose the absolute majority (two-thirds of total seats), can lead up to a movement within the LDP to overthrow Abe in next year’s LDP presidential election. Even a decisive electoral victory cannot guarantee a smooth implementation of Abe’s reform policies as the landslide victory in the 2012 election accomplished little in this regard. Either way, the stakes are very high for both Abe and Abenomics.


Implications for the U.S.-Japan Alliance

Diplomacy and security policy are not high on the voters’ agenda; in a recent poll, only 7% answered that diplomacy and security policy are high on their checklist, compared to 30% for economic policy. However, there will still be repercussions to the U.S.-Japan alliance. Abe recently suffered a defeat in Okinawa’s gubernatorial election in which a candidate opposing the relocation of Futenma Air Base to Henoko prevailed over the pro-Abe incumbent, and any election results that can be interpreted as a lack of public support for Abe can pose further challenges to the central piece of U.S.-Japan alliance. The same can be said about legislation amendments to implement the new constitutional interpretation on collective self-defense, which is scheduled early next year. On the positive side, TPP negotiation might see a breakthrough in the difficult issue of Japanese agriculture if Abe can propel his economic reforms with this election. All issues being vital elements of the U.S. “Rebalance to Asia,” the success of American Asia policy is arguably at stake in this election.

China’s Friendship Treaty: a Distraction from South China Sea Diplomacy

Posted on Monday, November 24, 2014 by David Gitter

(Image Credit: AFP)
By David Gitter

As China once again offers ASEAN states billions of dollars and promotes another treaty for "Good Neighborly and Friendly Cooperation" (which sounds an awful lot like the Treaty of Amity and Cooperation), Southeast Asian nations should consider how China perceives ASEAN and what goals it hopes to gain from its interactions with it. By and large, China has maintained a favorable view of ASEAN since opening relations with it in 1991. Two factors contributing to Beijing’s positive perception of the Association include its flexible and non-binding “ASEAN Way,” and its openness to Chinese win-win overtures that help Beijing secure its territorial ambitions in the South China Sea (SCS). Given China’s exploitation of these characteristics in pursuit of its expansionist goals, ASEAN should seriously consider whether it wants to sign on to another vague deal when diplomatic capital might be better spent on alternative frameworks.    

Perhaps unexpectedly, China finds ASEAN a favorable diplomatic partner in part because its diplomatic style is compatible with China’s. American criticisms that are directed at both ASEAN forums and the US-China Strategic and Economic Dialogue are remarkably similar, describing both bodies as talk-shops that lack substance and are at times largely symbolic. However, these very characteristics of the “ASEAN Way” offer Beijing a non-confrontational, consensus-based mechanism for addressing regional issues that is in stark contrast to the expectations levied on Beijing in Western diplomatic forums. Like ASEAN, China’s own diplomatic style has traditionally tended to focus more on form than on substance.[1] Although the ASEAN Way may frustrate western governments that seek to achieve concrete decisions after attending the Association’s many meetings, [2] Chinese diplomats likely find ASEAN diplomacy preferable for its comparatively ambiguous, hard to enforce agreements. This inclination mirrors the Chinese Communist Party’s (CCP) domestic preference for guidelines and regulations versus detailed, enforceable laws that could threaten to control Party actions.[3] In the SCS, this preference is reflected through Beijing’s vocal support for vague and easily circumvented agreements such as the Treaty of Amity and Cooperation (TAC) and the Declaration of Conduct on the South China Sea (DOC), and its relative lack of enthusiasm for a Code of Conduct on the South China Sea (COC). Beijing has even less regard for the SCS plan of the only other non-ASEAN claimant, Taiwan’s East China Sea Peace Initiative, which Taipei asserts is applicable to the SCS and has successfully guided the island’s diplomacy towards maritime dispute resolution with Japan and the Philippines.

In addition to its predilection for amorphous agreements such as TAC and the DOC, Beijing finds ASEAN receptive to its win-win diplomatic framework, which allows China to slowly consolidate its territorial claims in the SCS in exchange for economic gain. China seems to have first adopted this view during the Asian Financial Crisis of 1997, in which China wasted no opportunity to publicize its leadership and responsibility by highlighting its decision not to devalue the RMB at “a big price” to itself. Chinese leaders seem to assess that the crisis showed ASEAN that strengthening mutually beneficial cooperation and regional economic integration was the route that both ASEAN and China must take to achieve common development and prosperity. China now has an FTA agreement with ASEAN and is the Association’s largest trading partner, with a total of 443.6 billion USD in trade in 2013. In fall 2013 Xi Jinping announced his plan for a new commercial route dubbed the “Maritime Silk Road”, in recognition of ASEAN and China’s “shared destiny” that enables ASEAN to benefit from China’s development. Additionally, China believes that its new Asian Infrastructure Investment Bank can become an important source of financing for ASEAN as it strives to meet its massive infrastructure needs. The ongoing theme seems to be that Southeast Asian countries can once again benefit from China’s development and wealth as it did centuries ago. 

Nevertheless, if Beijing’s message of co-prosperity and development is the carrot of China-ASEAN relations, then economic isolation and coercion is the stick. China maintains that the SCS is not an issue between ASEAN and China. When the Philippine’s challenged Beijing over their bilateral territorial dispute, it found its fruit exports blocked and a “safety” ban enacted that stopped Chinese tourism to the archipelago. President Xi Jinping and Premier Li Keqiang made a point to skip the Philippines on their fall 2013 Southeast Asia tour, where the leaders signed lucrative business deals and set ambitious trade targets. Likewise, recent Chinese maps of China’s Maritime Silk Road show its path conspicuously bypassing the Philippines as it winds from Southeast Asia all the way to Venice. Now even as Premier Li pushes for a "Treaty of Good Neighborly and Friendly Cooperation between China and ASEAN Countries", China continues its land-reclamation activities in the SCS and is currently building an island large enough to hold an airstrip. Clearly Beijing’s message is not lost on ASEAN, which has yet to publicly unite against China’s gradual territorial gains even at its own expense.


In consideration of Beijing’s efforts to leverage the ASEAN Way and win-win diplomacy to advance its territorial goals, ASEAN states should think twice before signing on to China’s treaty of friendship and cooperation. They should recall that the TAC, DOC, and the ASEAN-China joint statement on DOC in South China Sea have yet to moderate China’s actions in disputed waters; there is little reason to believe a new friendship treaty will incentivize Beijing to restrain itself. ASEAN should instead seriously consider Taiwan’s East China Sea Peace Initiative, which the US Republican Party (now in control of both houses of Congress) strongly advocated for through a Resolution Supporting Taiwan’s Peace Initiative in the South China Sea. If a united ASEAN can leverage stronger US support to shield it from Chinese indignation, the initiative may prove a preferable diplomatic platform for joining ASEAN and Taiwan against creeping Chinese expansion in the SCS.   




[1] Shambaugh, David. "China's Global Diplomatic Presence." In China Goes Global, 45-120. New York:
     Oxford University Press, 2013.
[2] Sutter, Robert. "Security Trends and Issues in Southeast Asia and the Broader Regional Order."
     Lecture, George Washington University, Washington, DC, October 29, 2014.
[3] Shambaugh, David. “The Government: State Council, National People’s Congress, & CPPCC.” Lecture,                 George Washington University, Washington, DC, November 3, 2014

Modi's Visit to Tokyo: A Snapshot of Japan-India Relations

Posted on Thursday, October 30, 2014 by Kota Takahashi

(Image Source: AP)


By Kota Takahashi

Japanese Prime Minister Shinzo Abe has been working fervently to strengthen ties with countries outside of its direct neighborhood while relations with China and South Korea remain cool. A recent highlight of his diplomacy is newly-elected Indian Prime Minister Narendra Modi’s five-day visit to Japan from 30 August to 3 September. This visit was significant in multiple ways. Not only was it the longest visit by an Indian leader to Japan in years, but it was Modi’s first visit to states outside of its direct neighborhood since his elevation to Prime Minister in May. Prior to his visit, Modi’s official Twitter account even tweeted in eloquent Japanese, which received warm responses from the Japanese public. These episodes symbolize India’s willingness to reach out to Japan and underscore the mutually beneficial relationship between the two countries. However, a closer look at what came out of Modi’s visit shows that the reality is not so simple; there is a significant gap in the extent of bilateral cooperation in economics and security.

Modi’s visit brought about important outcomes to facilitate the underdeveloped economic relationship between Tokyo and New Delhi. According to the Japan External Trade Organization, bilateral trade between Japan and India amounted to only about 5% of that between Japan and China, and Japanese direct investment to India was only about one-fifth of that to China.  Abe’s announcement of his intention to pour in a total of USD$32.4 million in public and private investment and financing to India in the next five years was targeted to boost this lagging interaction.  Another important accomplishment in the economic dimension is investment projects directed to Indian infrastructure. India’s poor infrastructure—in which half of all roads are unpaved and 300 million people (roughly the same size as the U.S. population) live without access to electricity—is estimated to cost India as much as 2% of its GDP annually. On the flipside, accelerating the export of infrastructure has been the central agenda of Japan’s economic growth strategy, as seen in its ambitious goal of tripling infrastructure export totals by 2020. This match of supply and demand resulted in the agreement in which Japan will transfer USD$463.3 million to the India Infrastructure Finance Company Limited, along with around USD$144.6 million for the Guwahati Sewerage Project in Assam.

Compared to these accomplishments in the economic sector, progress in the strategic and security dimensions remained at best symbolic. Though its negotiation was reignited in May last year, a nuclear cooperation deal between Japan and India is still yet to be signed. The bilateral framework between Japanese and Indian foreign and defense ministers (2+2) was not elevated to the ministerial level from the current vice-ministerial level. After months of prolonged negotiations—one Indian media source reported that “Japan is close to signing an agreement to supply amphibious planes to India” as early as May last year—talks about the Indian purchase of ShinMaywa US-2 amphibious aircraft from Japan remain inconclusive.

One of the rationales behind this is the difference between the two states in their relations with China. Japan’s relationship with China has been rocky due to territorial rivalry and historical animosity, so much so that their heads of state have not had a summit since they both came to power about two years ago. On the other hand, despite Modi’s swipe at China prior to meeting with Abe, New Delhi has few reasons to frustrate Beijing by forming an anti-Chinese coalition with its regional rival. Beijing was quick to grasp the opportunity to improve China-India relations, sending its Foreign Minister to India promptly after Modi’s electoral victory. Though India and China had a border spat in the same region last year, their relationship was relatively stable at the time of Modi’s trip to Japan. There has been little development in the Chinese “String of Pearls” strategy that some in the defense industry argue is intended to militarily encircle India. And most significantly, since Japan cannot unilaterally satisfy all of India’s investment demands, India needs stronger ties with China to accelerate economic development further. In short, there is a significant disparity between the two countries in how they assess the Chinese threat and its economic power.

Of course, this does not mean that Japan and India cannot cooperate to achieve their national interests or that their ties are insignificant. There are numerous issues where the goals of both countries overlap and there is no doubt that Modi’s visit was a positive development. But the fact that both countries share certain values and interests does not directly translate into a strong political coalition between Japan and India, especially on critical and sensitive issues such as their relations with China. In this context, the recent standoff between India and China in the disputed region near Aksai Chin could work as a catalyst for bolstering Japan-India relations, but it remains to be seen how that will play out. 

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