Abe’s Return

by Andrew DeWit, Alex Doherty

Following the recent general election defeat of the centre-left Democratic Party of Japan (DPJ) and the return of the conservative Liberal Democratic Party (LDP) to power, Andrew DeWit of Rikkyo University spoke to NLP's Alex Doherty on the domestic and foreign implications of the LDP victory.

How do you interpret the landslide victory for the conservative LDP party and the return to power of Shinzō Abe? What can we expect from a second Abe administration?

Let's look at the things we know. One is that the LDP won a massive majority with a nearly 10% drop in voter participation, as the turnout this time was a record postwar low of 59.32 percent. The vote in the 2009 election was 69.28 percent, and the gap indicates that this was not a pro-LDP vote but rather a thorough route of the DPJ for incompetence. The DPJ thus lost 80% of the 308 seats it took last time. The LDP's candidates actually got 2 million fewer votes this time than in 2009, but because there were over 10 million more abstentions this time, the LDP share of the vote in single-member districts improved from 38.7% in 2009 to 43% this year.

The LDP leadership is well aware that the election was a referendum on the DPJ rather than a vote for the LDP. The leadership is thus going out of its way to avoid hubristically blowing it now that they're in office and confronting an Upper House election in the summer. New PM Abe lost the summer 2007 Upper House elections, which is one reason he was pushed into resigning. So the cautious start is understandable. The question is whether caution can survive when you have such a massive majority in hand and the opposition is seeking to slow down Diet operations and embarrass you (as the LDP did to the DPJ).

Another thing we do know about the new cabinet is that its scope for action is powerfully constrained by fiscal, economic, geopolitical, demographic, and other realities. These constraints are far more salient than they were just five years ago. The LDP is almost certain to stumble repeatedly over these constraints, because the party did little apparent rethinking of its policy options and preferences in the wake of the 2009 electoral loss. In this respect, Abe seems the perfect prime minister because - and this comment is only partly a snide remark - his only evident effort to come to grips with his forced resignation in September of 2007 was in securing new medicine to keep his colonic troubles at bay. His resignation was rooted in failure to understand and deal with economic troubles, and instead to privilege right-wing issues in education, constitutional reform, and the like. These positions were completely divorced from the reality of voters' concerns about their pensions, their jobs, and other real-world matters. The challenges have got only tougher since. With Japan in even more straightened circumstances now, effective economic policy is all the more urgent. But the evidence so far indicates that this new LDP regime may prove itself even more out of touch than the government that failed five years ago and then went on to lose to the Democratic Party.

In a recent interview Abe remarked that: "I have not changed my view from five years ago when I was prime minister that the biggest issue for Japan is truly escaping the postwar regime." What did he mean by this and what can we expect regarding Japanese foreign policy?

The Japanese right has long seen the postwar regime as being composed of an unequal relationship between Japan and the United States, based on the former's legal-constitutional constraints. They have pointed in particular to the restrictions in the American-inspired Constitution, whose article 9 forbids the maintenance of a military. This is why Japan's military, which it most undeniably is, is called the “self-defense forces.” The nationalist right-wing portrays these constraints as having led to an emasculation of the national polity, as we see in their arguments about a lack of patriotism, lack of global presence, subservience to the American hegemon, diffidence in the face of rising China, and the like. These tropes are routinely rolled out to explain socioeconomic troubles as well as what needs to be done in order to build a foundation for the country's independent action in the global order.

The institutional structures that make this nationalist rabble-rousing possible and politically attractive centre on the interrelated fact of American military presence (some might say protection) and the lack of regional institutions. The nationalists are for the most part old men who've built careers on poking sticks at their Asian neighbours, and see no reason to stop now. Former Tokyo Gov. Ishihara Shintaro, now head of the Restoration Party, referred to Asians with derogatory racial epithets and argued that their nationals constitute a dangerous element within Japanese society. One is hard-pressed to identify a similar case to the governor of Tokyo, the world's largest urban conglomeration, casually throwing off insults at the country's largest trading partner. It would simply stun observers to see, for example, New York Mayor Bloomberg point the finger at nonwhite residents as a threat to the social order. Because of Tokyo's subservient position to Washington, observers have simply let these exhalations pass on largely unnoticed in the global public debate. But now we have a concentration of nationalist political representation in Japanese party politics coupled with a considerable more serious game of chicken at the Senkaku islands.

Shortly after the election, Abe moved to tone down some of his more provocative rhetoric. For example, he pulled back from sending civil servants over to the Senkaku Islands. One thing to watch over the coming several months is whether Ishihara and others will seek to compete with the Abe regime by pointing to these strategic retreats from campaign commitments. Competition on the rightward end of Japanese party politics may limit the political order's capacity to respond creatively to the constraints of geopolitical reality. Not a few American observers are concerned that this prospect of right-wing competition in Japanese party politics is encouraged by the American military's commitment to come to Japan's aid in the event of trouble. The Americans want to pivot into a new role in Asian security matters, and that role depends on credible commitments. But keeping to those commitments also includes the risk that Abe and other Japanese actors can pull the Americans into a confrontation they would clearly rather avoid.

The election of the Abe regime was, of course, not greeted with cheers elsewhere in East Asia. No one welcomes the wild-card of resurgent Japanese nationalism, especially as interparty competition, in the context of rising angst concerning the country's decline, presents a range of risky scenarios. Regional governments were thus quick to greet Abe's post-election soft-pedaling of a number of provocative commitments on territorial and other disputes. It remains to be seen whether economic and resource developments over the ensuing months allow for these frictions to be kept at bay. Japan's Upper House elections in the summer possibly afford a check on rabble-rousing in place of credible economic policy, since the LDP is fully aware that they won the Lower House elections by default and need to prove themselves. But on the other hand, the multiplicity of parties on the left and centre-left means that the constraints on the LDP are weak. And if anything, Abe has to watch his right as the Restoration Party has a powerful incentive to deploy nationalist themes in an effort to enlarge its electoral appeal.

What are the energy policies of the LDP regarding Japan's now severely discredited nuclear power industry and more generally?

The energy issue in Japanese politics may prove to be central to developments this year. Japan has only two of its 48 nuclear reactors in operation. The monopolized utilities and their supporters in the big business community want as many restarts as rapidly as possible. Abe is himself clearly sympathetic with this position. But the newly established (from September) nuclear regulatory authority is keen to create institutional credibility for itself. It has signaled that summertime may be the earliest that restarts can be undertaken, and its investigations of seismic faults and other safety-related matters suggest that this is going to take some time. The question is whether the monopolized interests within the power sector have that kind of time. We have already seen the nationalization of Tepco, and its recent assertions that it needs even more help from the public sector to deal with compensation and decommissioning in Fukushima and other areas. Other utilities (eg JA Power) are under severe stress as they watch nuclear assets possibly scrapped by seismic investigations even as they import massive volumes of fossil fuels in order to generate power.

The expenses from these fossil fuels have undermined the utilities' economic viability. They are seeking rate increases in order to pass on the costs, but the more they do this the more they incentivize their customers to seek alternatives. Public-sector customers, business customers, and households are thus bailing out on the utilities wherever they can. They are contracting with independent power producers, installing their own power production, and ramping up their installations of gear for efficiency and conservation. These latter includes the further diffusion of LED lighting, green curtains, green roofs, and other efforts to cut power demand. All of these initiatives serve to reduce the size of the market for the utilities, subtracting from the income streams they hope to recapture by substituting nuclear assets they have already built for fossil fuels they have to purchase in the present.

The government clearly has to come up with a new regulatory structure for the power economy, and in fact the Ministry of economy trade and industry has already come down in favor of deregulation of the market as well as separation of power generation and transmission [which is the norm among OECD countries]. However, the utilities don't want to hear anything about deregulation and the separation of generation and transmission, as those reforms are inimical to their monopolized position within the lucrative power sector, the world's third-largest (at about YEN 16 trillion in sales). Were the utilities not under significant stress, the government might be able to get away with simply finessing this issue for a while. The trouble is there are indications–as in the case of Japan Atomic Power–that a crisis of viability may arise in the near future. The government will then be confronted with the choice of dribbling in assistance in order to maintain the unsustainable status quo, or moving to restructure the power economy. The latter approach is the only way to get the country's power economy into the front ranks of what is clearly an ongoing global revolution in power sectors. The we did see this revolution in the rapid diffusion of distributed power, the deployment of smart grids and smart meters, the rise of the industrial internet and its implications for efficiency, and other accelerating developments. At the same time, increasing constraints of the so-called water-energy nexus are driving developments globally, in a way Japan seems at present poorly equipped to capitalize on.

Whether the Abe government will see restructuring of the power economy as an opportunity to foster a growth regime remains unclear. But its sentiments would appear to be strongly oriented towards protecting the status quo rather than opting for potentially disruptive change. This in spite of the fact that one of the key problems highlighted in the Japanese political economy, by theJapanese bureaucracy among others, is the ossification of industrial structures due to the potency of vested interests. In an aging and shrinking economy, one dominated by large and politically well-connected interests, the capacity to encourage creative destruction is very limited.

Perhaps the most realistic hope in the Japanese case is that the Abe regime will seek to find a compromise between the polarization over renewable energy versus the restart of nuclear assets by stressing efficiency and conservation. The international energy agency's chief economist Fatih Birol tells us that we have only a few years in which to ramp down emissions in the energy sector and thus avoid catastrophic climate change.

Birol and his agency place overwhelming emphasis on radical efficiency, and Japan may be perfectly positioned to champion this. But that will require overcoming the reluctance of the energy vested interests and their allies in big business, who are clearly reluctant to move on this front, even though it is the route to potentially lucrative export opportunities in the burgeoning smart city and other related markets. As is always the case, private sector interests need to be shaped by smart government regulation. Just as they opposed strict fuel regulations and other measures in the 1970s, regulations pertaining to the ozone hole and etc, they do the same with rules enforcing radical efficiency in lighting, heating and other markets in the present. The Abe people have a huge majority and a powerful bargaining position vis-a-vis business, so could play a very important role at this juncture. We shall also have to see whether the Abe government's promised explosion of public works projects is shaped by a framework of investments in district heating, passive houses, and other areas where Japan is behind and could make significant progress, greatly reducing its energy costs and thus affording an attractive payback on public-sector investment. That this approach to economic recovery is almost certainly not going to happen is an indication of how divorced most mainstream debates remain from the increasingly severe constraints posed by resource costs, climate threats, and other phenomena. But if the Abe people do move smart on this front, they could carve out a leadership role for Japan in the midst of an expanding shift towards smart adaptation, a shift now driven by Hurricane Sandy's hit on the heart of contemporary capitalism, the increasing pressure from re-insurers and other investments, the prospect of developing countries' leapfrogging the old centralized utility/power generation model, and a myriad other developments.

Andrew DeWit is Professor of the Political Economy of Public Finance, Rikkyo University and an Asia-Pacific Journal coordinator. With Kaneko Masaru, he is the coauthor of Global Financial Crisis.

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First published: 07 January, 2013

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