Abe's underwhelming victory

Abe Shinzō's LDP-led coalition with Komeitō got its wish Sunday, winning enough seats to retake control of the House of Councillors for the government and ending the "twisted" Diet for at least the next three years. With five seats still undecided, the LDP and Kōmeitō have secured 134 seats, comfortably over the majority threshold of 122 seats.

But it is difficult to declare Sunday's results an strong mandate for Abe and his program.

First, the LDP fell short of winning an outright majority. The LDP is once again the largest party in the HOC, but it will still need to secure the votes of Kōmeitō to pass legislation in the upper chamber. It is unclear what threats Kōmeitō can wield to modify the government's behavior — I doubt whether it can credibly threaten to leave the coalition — but since they wield the deciding votes in the HOC, they will be in a position to influence the government's agenda, which will likely have consequences for nuclear energy and constitution revision. One could argue that Kōmeitō was the real winner on Sunday.

Second, the pro-revision parties fell short of a supermajority. The pro-constitution revision parties needed to win at least 162 seats to be in a position to pass constitutional amendments in the HOC. Given that the pro-revision parties don't even share the same vision for the constitution, the road to revision is no less steep today than it was before the HOC election. That doesn't mean Abe won't try to cobble together some kind of revisionist alliance in the HOC, but I think the pattern I outlined in May will hold:

At the very least, we're probably seeing the emergence of what will likely be a persistent pattern should Abe remain in power. Abe and his lieutenants will talk about the need to revise the constitution, Kōmeitō will express its unease about revision, what's left of the left wing will sound the alarm, public opinion polls will reveal skepticism about revision, LDP grandees will suggest backing down...and rinse and repeat.

It is difficult to view the HOC election as public endorsement for a shift to the right.

Instead, we should view the HOC election as a sign that the Japanese political system is not "stable" or healthy. There is an emerging narrative that because the Abe government looks durable, the Japanese political system has achieved some stability after years of turmoil and ineffectual governments.  Abe may well be in a position to last, although we won't really know until he actually has to make a controversial decision (about, say, TPP or nuclear power or the consumption tax). But the election returns suggest that these will be trying years for Japanese democracy. The DPJ has more or less imploded, and seemed to spend more time during the campaign fighting amongst itself than against the government. The Communists soaked up anti-Abe protest votes and won eight seats, including three district seats, but the ability to win protest votes does not necessarily make for an effective opposition party. As Michael Cucek noted before the election, none of the opposition parties has anything constructive to say about the problems facing Japan. Abenomics is winning public support at least in part because it's the only policy program on offer. Kōmeitō is basically left being the opposition-in-government. I think there are votes for a center-left program, but no party or leader has articulated one in simple, easily understood terms. Whether a coherent, effective large party can emerge from the DPJ's wreckage is one of the most important questions in Japanese politics in the years to come.

Finally, policy challenges remain. With control of both houses, Abe has no excuses. He cannot hide behind the "twisted Diet" any longer. He is going to have to deliver results and make decisions with the potential to trigger major public opposition. The media, of course, will be waiting to pounce at the first sign that the government is slipping — to say nothing of Abe's rivals within the LDP. The public is still opposed to nuclear restarts and is still opposed to raising the consumption tax next year. While the public as a whole supports Japanese participation in TPP, the LDP still includes an unwieldy mix of representatives from across the country, suggesting the possibility of a postal privatization-like confrontation between the urban and rural wings of the party.

In short, the HOC election was not nearly as transformative as it may seem. By failing to win an independent majority in the HOC, the LDP will continue to depend on Komeitō to pass legislation. But by winning a majority for the coalition, Abe will now be expected to use his political power to follow through on his pledge to revitalize Japan's economy — with the public, the media, and rivals within the LDP ready to turn on him should he falter.

Will nuclear restarts derail Abe? (Probably not.)

Say what you will about the LDP, but the party has been fairly open about its preference for nuclear energy and restarting Japan's idled reactors as soon as possible.

The party may be about to get its wish.

On July 8th, four regional power companies will apply to the Nuclear Regulation Authority to begin compulsory inspections as a first step towards restarting their reactors. It will be months before the inspections will be concluded and plants reopened, but Monday appears to mark the beginning of the reintroduction of nuclear energy to Japan's energy mix in a significant way.

The NRA is central to the LDP's and Abe's soft-pedaling of the nuclear issue. Lest the Abe government be faced with this...

Source: Asahi Shimbun, Asia & Japan Watch, 30 June 2012

the LDP and the prime minister have repeatedly said that they will defer to the judgment of the authority when it comes to restarting reactors, including the pledge in the party's manifesto last year and again this year.

As long as the authority was not yet reviewing applications to restart reactors, deferring to the authority was an easy position to take. But now both the authority and the Abe government will be tested. For the NRA, it will be tested to show its independence from political decision makers, who have said they will respect the authority's decisions but have made no secret in wanting reactors put back online as soon as possible. For Abe, the pledge to defer to the NRA's judgment will be equally tested, especially if the authority rules against fast restarts for some reactors.

Perhaps the best outcome for both parties would be for some reactors to be restarted and others rejected for the time being, thereby allowing Abe to show his willingness to respect the NRA's decisions while still pocketing the political benefits of less dependence on imported energy. It might also defuse some of the political opposition — preventing demonstrations like those seen above, for example — by showing that the government really did defer to the regulators. It may also defuse some of the opposition from Komeito, the LDP's coalition partner. The latest Asahi polling, discussed here, shows that the public is still opposed to restarts by a considerable margin (29% in favor, 53% opposed), but the issue is a second-tier issue and it is by no means certain that Abe would face the kind of demonstrations his predecessors faced, especially if Abe can pass the buck for restarts to the NRA.

Meanwhile, by rejecting some applications for early restarts, the NRA could show its independence and demonstrate that it actually has some regulatory clout.

Mind you, it is beyond my expertise to say what the inspections actually will produce. (This NHK article [jp] has a decent rundown of the new regulations upon which inspections will be based.) But it does seem that, while the public is firmly opposed to restarts, there is a way for Abe to avoid taking a serious political blow from the nuclear question.

Pinpointing public support for Abenomics

With the upper house election campaign in full swing — Michael Cucek has the campaign numbers breakdown here — there is no shortage of public opinion polling to wade through. Because the outcome of the election is more or less a foregone conclusion, not much of it is very interesting.

However, it is still worth looking at if only to understand how the public is evaluating Abe's performance and what their priorities are as the campaign trucks fan out across the country.

I've been paying particular attention to several questions in Asahi's national tracking poll pertaining to public assessment of Abe's economic policies. In addition to tracking the headline approval rating, I've been looking at one question which asks respondents to assess whether they approve of his economic policies (previously whether they believe Abenomics holds promise for growth), and another which asks whether they believe Abe's policies are linked to increases in wages and employment.

In the latest Asahi poll (jp), conducted a week after the previous one, public support for Abe's economic policies improved slightly, rising to 55% approval from 51%, and, more importantly, disapproval fell from 31% to 23%.

Source: Asahi Shimbun

Abe also saw a slight shift in his favor when it comes to whether the public believes his policies are connected to improvements in wages and employment.

Source: Asahi Shimbun

Finally, this latest poll introduced a new question, asking respondents which policy they would like to see debated more during the upper house election campaign. The poll is consistent with those dating back years: the public is most interested in economic growth and social security, followed by issues like the consumption tax and energy, and finally TPP, foreign policy, and the constitution. 

Source: Asahi Shimbun, 7 July 2013

The fluctuations in support for Abenomics a few points one way or another probably don't mean much in the scheme of things, not least because last week's and this week's polls have had relatively small sample sizes compared to polls conducted earlier in the year. After getting responses from between 1500 and 2000 households for most of the year, the last two polls have had fewer than 1100 respondents (1039 last week and 1084 this week). By comparison, the June 11th poll that showed a twelve-point drop in support for Abe's economic policies had 1781 respondents. With approximately 51.8 million households in Japan, 1084 respondents gives us a margin of error of ± 3% at 95% confidence.

Thankfully, a Yomiuri poll (jp) in late June found nearly identical results with more respondents (1821) when it asked whether respondents approved or disapproved of Abenomics: 54% approval, 31% disapproval.

Thus we can say with a reasonable amount of confidence that public support for Abenomics remains at just above 50%.

That, ultimately, is the most important number to watch. Because public support for the Abe cabinet rests so much on public support for its policies in the areas that matter most to Japanese citizens, i.e. the health of the economy, as long as the public supports Abenomics, they will support Abe. At the same time, if and when the public turns against Abenomics, Abe will be in trouble to the extent that growing unpopularity will create space for critics within his own party to undermine his program.

At which point Abe will be pressed to show just how much he believes in the slogan he has lifted from Margaret Thatcher (jp): There Is No Alternative.

Public support for Abenomics cools slightly, but the LDP will win anyway

With the campaign for the July 21st upper house election set to begin officially on Thursday, the Asahi Shimbun has released the results of its latest opinion polling on the Abe government.

The poll contains good news and bad news for Abe Shinzō.

The good news for the PM is that there remains no doubt that the LDP will win big. When asked who they will vote for in proportional representation voting — which elects forty-eight legislators from national lists — 44% said LDP, 7% each for the DPJ, JRP, and Your Party, Communists 5%, Komeito 4%, Socialists 3%, and People's Life 1%. Another 19% said they were still undecided. If we assume that the undecideds will break along the same lines as the decideds and that approximately 54 million votes will be cast in proportional balloting (roughly the number of votes cast in the 2007 and 2010 elections), the LDP will win twenty-nine seats, the DPJ, JRP, and YP four seats each, the JCP three seats, and Komeito and the Socialists two seats each.¹

To reach the UH majority threshold of 122 seats, the LDP will need to win forty-two of seventy-three district seats, which, given the above figures, should probably be doable. The DPJ happens to be defending forty-two seats, the beneficiaries of its 2007 victory over the Abe-led LDP. The party recognizes it will come nowhere close to that total and will run no more than a single candidate in each district. Reaching the two-thirds threshold of 162 seats, necessary for constitution revision, is probably out of reach, certainly for the LDP by itself since it would fall short even if it were to win all seventy-three district seats.

The bad news is that the Abe government's headline approval rating continues to head the wrong direction. His approval rating fell another four points, to 54%.

More significantly, the Japanese public is no more enthusiastic about Abenomics than it was in early June. In response to the question whether they approve of Abe's economic policies, 50% said yes, while 31% said no, virtually identical to last month. (Although this time the poll asked whether respondents approve or disapprove, whereas earlier polls asked whether they thought Abe's policies were promising for growth.) Meanwhile, there was a slight uptick in the percentage of respondents who did not believe that Abe's policies are linked to higher wages and employment, 48% compared to 32% who believe they are.

Meanwhile, when it comes to two of the biggest questions facing the Abe government — whether to restart nuclear reactors and whether to raise the consumption tax rate on schedule in April 2014 — the public remains firmly opposed to both. Only 29% support restarting the reactors, with 53% opposed, a slight decrease from last month, but without a corresponding increase in support. 51% of respondents said they opposed raising the consumption tax, with 37% in favor. The public also remains opposed to revising Article 96 of the constitution, with 47% opposed and 34% in favor.

There are a couple bright spots for Abe — nearly 50% approval of foreign and security policies, 50% in favor of Japanese participation in TPP —but on the whole the impression is that public excitement about Abenomics has cooled. The public will give Abe a majority in the Upper House this month, but the days of unbridled enthusiasm about the Abe program have passed. Perhaps that shouldn't be too surprising, given that recent economic gains may not have reached Japanese households yet. Abe's overall support numbers may get a bump from the election, but it is increasingly clear that the important number to watch are public attitudes to Abenomics, which seem to determine the strength of Abe's public support.

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1 PR seats are apportioned using the D'Hondt method. I made these estimations using this calculator.^↩

Why don't Japanese take to the streets?

The Eurasia Group's Ian Bremmer has an op-ed in the IHT in which he argues that despite widespread pessimism among Japanese regarding their country's future, things may not be so bad. Basically he suggests that the DPJ may well be learning to get along with business elites and bureaucrats, Japan and the US may be rebuilding their relationship after a remarkably bad year for the alliance, and, finally, the Japanese people have not taken to the streets in opposition to their government.

I'm not sure I buy his argument, at least not entirely. His first two arguments are more or less acceptable, although I find little to praise in how the Kan government prevaricated and ultimately failed to lead on the issue. And I don't think Japan's foreign relations follow the "China down, US up" pattern Bremmer suggests — the Kan government is no less committed to fixing relations with China than it is committed to maintaining a healthy relationship with the US, consistent with the DPJ's position that Japan is not in a position to choose between the US and China.

What I'm interested in is Bremmer's argument about the relative stability of Japanese politics as measured by the lack of demonstrations, riots, and rallies with people carrying signs likening the country's leader to various twentieth-century dictators. In this superficial sense he's right: over the past two decades Japan has seen none of the upsurge in extra-parliamentary politics that one would expect a country in dire economic straits to experience. Bremmer's argument — that two decades of stagnation — is perfectly reasonable. It is difficult to see how a deflationary economy would lead people to take to the streets, particularly without the benefits cuts that have produced demonstrations and riots in Western Europe. 

Would Japanese continue to abstain from extra-parliamentary politics if, say, the Kan government pursued austerity with the same zeal as the Cameron government? And if they would continue to stay out of the streets, why? What's so different about Japan that the Japanese people seem content to express their dissatisfaction in public opinion polls and in the voting booth (which they have done regularly for decades, for despite the LDP's success in general elections there is a history of the LDP being punished in local and upper house elections)? I don't know the answer, and I certainly can't hope to come up with the answer in a blog post. However, the decline of Japanese extra-parliamentary politics since the 1960s, particularly compared with other rich democracies, is one of the more interesting puzzles in postwar Japanese politics and I don't think this puzzle has an obvious answer.

Is it political culture, for example the lack of an anti-government subculture like in the United States? If so, what changed since the 1960s? The decline in the kind of organizations that might facilitate collective action (student groups, unions, etc.)? The lack of the kind of welfare benefits that, when cut, can cause to demonstrations in defense of the status quo? The result of a half-century of LDP rule, which habituated citizens and interest groups to a certain approach to politics that left little room for public demonstrations? 

If Japan is in fact more stable than other rich democracies, it would be helpful to understand why, not least because if Japan were to pursue benefit cuts in order to shrink the deficit, it might enable us to predict whether Japanese politics will continue to enjoy "relative domestic tranquility."

Selling free trade

Bogged down by an unfavorable political situation in Tokyo, the Kan government has few avenues for policy innovation. In recent weeks, however, it seems that the Kan government has decided to consider joining the Trans-Pacific Strategic Economic Partnership (TPP), a multilateral free trade agreement that currently includes only Chile, New Zealand, Singapore, and Brunei, but which the United States, Australia, Peru, Vietnam, and Malaysia are negotiating to enter.

The DPJ sent mixed signals on trade during the 2009 campaign: the initial draft of the party's manifesto stated that the party would "conclude" an FTA with the United States, but, criticized by farmers' groups, the party softened its proposal to "begin negotiations with the United States" and added a clause that it would only conclude an FTA with the US if domestic agricultural production could be safeguarded. Since the DPJ took power, trade has more or less vanished from the agenda — until now.

Following Kan's declaration in his policy speech that his government is considering TPP, Maehara Seiji, the foreign minister, has emerged as the government's leading advocate for greater trade openness, arguing in his speech earlier this month at the Foreign Correspondents' Club of Japan that since Japan's foreign policy is only as effective as its economic strength, diplomacy that enhances Japan's economy should be the government's top priority. (To make the point he pointed to South Korea's superior competitiveness as something that Japan should emulate.) To that end, he outlined a three-pillared approach that included (1) building a free trade system, (2) diversifying sources of food and natural resources as a hedge against risk, and (3) ensuring that Japan has the technology and infrastructure necessary to export.

When it came to concrete proposals to expand free trade, however, Maehara balked. He said that taking steps to join the TPP would be a test for Japan, but did not promise anything. He talked about trade negotiations with the US either bilaterally or within a multilateral framework, but offered little in the way of specifics. Given the thorny politics of free trade in Japan, Maehara's circumspection comes as little surprise, and the debate that has occurred within the government since his speech has been similarly tentative. To this point the government is still collecting opinions on the matter and has not decided whether it will pursue negotiations to join the TPP. Genba Koichiro, head of the national strategy office, said that the government will make its decision late next week. It has the support of Maehara and Kaieda Banri, the minister for economic and fiscal policy, as well as Sengoku Yoshito, the chief cabinet secretary, who said that TPP could be coupled with measures to support farmers harmed by imports (the logic behind Sengoku arch-rival Ozawa's income support plans). But these advocates are of course opposed by the ministry of agriculture, forestry, and fisheries — and by Nokyo, the peak association for agricultural cooperations, whose chairman has declared the TPP will mean the destruction of Japanese agriculture. The PNP, the DPJ's partner in government, and the Social Democrats, its erstwhile partner, have also come out against TPP, and Hata Yuichiro, chair of the DPJ's upper house parliamentary strategy committee, has said that he opposes joining the trade agreement "at this time."

Given the opposition arrayed against TPP, it is perhaps wise that the Kan government has not committed to the policy and is instead floating trial balloons. However, I wonder if there will ever be a good time for a Japanese prime minister to pursue an ambitious trade agenda. By proceeding cautiously now, did the government simply give its opponents time to mobilize and thus ensure that once again the issue will be postponed? It strikes me that if Japan is ever to participate in an ambitious free trade agreement like TPP (or the hypothetical US-Japan FTA), the only way it will ever get done is if the prime minister owns the issue, building a coalition in favor of free trade and selling the policy to the public in the same way that Koizumi sold postal reform. As the political economist Helen Milner once wrote (I'm paraphrasing), for economists, the puzzle is why states would ever done anything other than free trade — for political scientists the puzzle is why states would ever practice anything but protectionism.

If the government decides next week to make joining TPP a priority, it better be prepared for a three-pronged fight: among political parties in the Diet (remember that the government needs to cobble together upper-house majorities to pass legislation), among interest groups, and in the court of public opinion. The trade agreement will not sell itself. The government will have to commit to it fully. Anything less and the government is likely to suffer yet another defeat.

After the showdown

Japanese Prime Minister Kan Naoto and Wen Jiabao, his Chinese counterpart, have met briefly in Brussels on the sideline of the ASEM summit, marking an end to the bilateral standoff following the collision between a Chinese trawler and Japanese Coast Guard vessels in the vicinity of the disputed Senkakus.

As expected, Japan and China reiterated the importance of the strategic, reciprocal partnership initiative. High-level talks and cultural exchanges will resume. All in all, it is difficult to say what has changed strategically as a result of the dispute. That China will fiercely resist any perceived change to the status quo in its maritime disputes? That China has greater leverage at its disposal? That countries — not just China — don't like having their nationals held by other countries, particularly when, Sourabh Gupta argues, there may have been little basis for Japan's holding the Chinese fishermen in the first place? 

Meanwhile, the conventional wisdom that the US is the biggest winner from the dispute is probably overstated. The allies will not find it any easier to resolve the Okinawa dispute, which continues to loom over the alliance. More importantly, however, the dispute appears to have merely reinforced the DPJ government's basic approach to China: having little choice but to forge a working political relationship with its neighbor, Japan will redouble its commitment to building constructive relations with China. In short, the dispute, rather than signaling that Japan must change course entirely, may simply lead the Kan government to try harder. 

The basic idea that has animated foreign policy under the DPJ from the day it took office — that Japan, living in a region dominated by a rising China and a declining but still powerful US, needs to find a way to navigate between and live with both power — remains intact.

That being said, the dispute with China has obviously had consequences within Japan, not least for the Kan government's public approval ratings. Despite having received a remarkable bump in his support after defeating Ozawa — nearly twenty percent in some polls — Kan's numbers are back to around fifty percent thanks to his government's perceived mishandling of the dispute. Peter Ennis makes a strong case that the Kan government actually handled the issue well, getting the assurances it needed out of the US while resisting Chinese pressure long enough for the government to claim that the captain's release was the result of a decision by the prosecutor's office in Naha and not the central government. But the Japanese people apparently do not see it the same way. In Yomiuri's poll, for example, eighty-three percent of respondents were not convinced by the prime minister's claim that there was not political intervention. The same poll found a ten-percent increase in the number of respondents who said foreign and security policy should be a top priority for the Kan government; in early August only four percent said it should be a top priority. Whether this change in the public mood is more than temporary remains to be seen, but the drop in the government's approval ratings give Kan that much less room to maneuver as the prime minister tries to coax the opposition parties to cooperate with the government.

Indeed, the LDP has rushed this issue to the top of the agenda as the autumn extraordinary session of the Diet begins. The party has declared that the "abrupt" release of the captain was the worst foreign policy failure in postwar history. The LDP is sure to build its response to the Kan government around this issue, together with the latest Ozawa indictment, meaning that the largest opposition party has two tangential issues with which to attack the government — with the sanction of the public, thanks to the public opinion polls showing that these issues matter — and put off talk of cooperation on an economic agenda. The LDP will of course get an assist from the Japanese media, particularly its more conservative precincts, which appear to have found their voice again after a dismal couple of years during which their issues vanished from the agenda as the global financial crisis unfolded and then the LDP was unseated by the DPJ.

The dispute with China not only has given ammunition to an LDP desperate to obstruct the Kan government and force an early election — it has also provided an opening for dissent within the DPJ, stirrings of which could be found in the petition signed by forty-three DPJ members, including Nagashima Akihisa, and submitted to Sengoku. The petition goes out of its way to soften its criticism of the government, but it does suggest that China policy could create some space between the government and the ruling party. However, since Kan's cabinet has been united on the issue, grumbling within the DPJ can be safely ignored for now.

So did Kan lose? I cannot agree with Ennis entirely that the government handled the dispute well. The government's biggest mistake was stressing that it was a matter for the Japanese legal system to handle. This stance may well have contributed to China's raising the stakes on the issue (because it could not accept this stance without tacitly acknowledging Japanese sovereignty) but it also ensured that the rule of law would be tarnished in the event of a Japanese climb down. If the Japanese government was indeed prepared to allow the legal process to run its course I suppose this position would have been acceptable, but I doubt that Tokyo really was prepared to wait that long (unless the Kan government was actually caught off guard by Beijing's response). The Kan government should have treated the issue like the diplomatic dispute it was from the very beginning instead of staking the credibility of Japanese institutions on the outcome. That it did so at least partially explains the public's opposition to the government's handling of the issue.

By holding out for as long as it did Japan may well have forced China to think twice about how hard it will push Japan in the future, perhaps won Japan more support from other countries locked in disputes with China, and provided an opportunity for Japan and other countries to take steps to mitigate China's economic leverage (as in the case of rare earth elements), but these gains may have come at the expense of Kan's credibility at home. Without public support, the prime minister, already the head of a de facto minority government, will find it that much more difficult to move an agenda centered on fixing Japan's economy, which in turn is critical to maintaining Japan's influence in the region (as argued by Maehara Seiji, Kan's foreign minister, at the Foreign Correspondents' Club of Japan Tuesday). Whatever the medium-term benefits to Japan from the dispute, it may not have been worth the short-term costs for Kan.

Kan presses the reset button

Having successfully fended off Ozawa Ichirō's challenge to his leadership of the ruling Democratic Party of Japan — indeed, having defeated Ozawa by an unexpectedly large margin, not only winning the vote among Diet members but also receiving the support of 249 of 300 district-level party chapters and sixty percent of the vote among local representatives — Prime Minister Kan Naoto finally has an opportunity to govern. After all, since succeeding Hatoyama Yukio in June Kan has spent much of his time focused on elections, first with the House of Councillors election in July and then the showdown with Ozawa.

Perhaps it should come as no surprise that within days of his victory Kan reshuffled his cabinet and the DPJ leadership. I am generally skeptical of the efficacy of cabinet reshuffles. Doling out cabinet and sub-cabinet posts is, of course, one of the more important tools in a party leader's toolbox as he tries to induce good behavior on the part of backbenchers. But too much turnover at the head of ministries can stymie policy change. Every change of minister comes with a period of inactivity as the minister learns the job; reshuffle too frequently and by the time the minister is ready to lead, he will be on the way out. This problem was characteristic of LDP rule in particular.

During its first year in power, the DPJ avoided a wholesale reshuffle, despite its declining popularity (the usual time for a reshuffle) — even Kan held off when he took over from Hatoyama. However, having secured his control of the DPJ, giving him a two-year term as party leader during which the government will not have to face the electorate if it doesn't want to, I suppose it is only natural that Kan would want to appoint a cabinet of his own making. And the DPJ certainly benefits from more party members getting experience in government, giving that virtually none had any experience of power before the DPJ won last year.

The new cabinet is being billed as a "non-Ozawa" cabinet. No member of Ozawa's group received a cabinet post, although Kaieda Banri, who, while not being a longtime Ozawa associate, supported Ozawa's challenge, was appointed as economy minister. There will be little turnover in the cabinet's most important positions. Sengoku Yoshito stays on as chief cabinet secretary and Noda Yoshihiko will continue to serve as finance minister. With Okada Katsuya's becoming DPJ secretary-general, Maehara Seiji, formerly responsible for transport and Okinawan affairs, will move over to the foreign ministry. Kitazawa Toshimi stays on as defense minister, ensuring a degree of continuity as far as Futenma is concerned. Renhō and Genba Koichirō will stay on the cabinet's administrative reform posts. The cabinet also includes former Shimane governor (and non-MP) Katayama Yoshiro as minister of internal affairs and communications, with an additional portfolio for regional revitalization and Kano Michihiko as agriculture minister (a post he held in 1989 in the Kaifu government).

Kan has presented his new cabinet as a cabinet that will "make good on its promises." That remains to be seen, as the prime minister has a difficult road ahead.

Kan spent his time on the campaign trail talking about "jobs, jobs, jobs." But talking about employment is one thing — doing something about it is a different matter entirely. The rising yen has triggered more hollowing out in the manufacturing sector, as businesses relocate to cheaper countries within the region. A recent METI survey found, for example, that forty percent of manufacturing sector respondents would move factories overseas were the yen to continue to rise. In the immediate aftermath of the DPJ election the Bank of Japan did intervene in foreign exchange markets, which has at least temporarily halted the yen's rise (although Felix Salmon suggests that since the BoJ did not sterilize its intervention this time, it could have anti-deflationary effects).

But as Richard Katz argues in the Financial Times, intervention to weaken the yen is little more than a temporary fix. He notes that a weak yen does nothing to help wean Japan off export-dependent growth, and cannot reverse the long-term trend towards a stronger yen. (And if Japan's is but the first in a series of competitive devaluations with its trading rivals in the Eurozone, it is hard to see what Japan will gain from intervention.)

The problem for Kan is that the path from short term to long term is perilous. In the short term, economic success will depend on the traditional export-led model, meaning that when a survey reveals that Japan's manufacturers will accelerate offshoring if the yen continues to strengthen, a government focused on economic recovery has little choice but to pressure the BoJ to intervene. But over the longer term, Japan needs to revitalize the service sector to produce a more balanced growth model (while trying to put the government's finances on a healthier trajectory).

This objective, easily the overriding purpose of the Kan government and its successors, would be difficult enough in the best of political circumstances. These are not the best of political circumstances.

First, although Kan has a new mandate as DPJ president, he still has work to do consolidating his control of the party. Whether Okada will be able to help him in the post as secretary-general remains to be seen — as Michael Cucek notes, Okada may not be the ideal man for the job, seeing as how his appointment to the post was not uncontested. The main problem within the party may still be Ozawa. While Kan's margin of victory may silence Ozawa for the moment, it remains to be seen how Ozawa will react to Kan's decision to exclude Ozawa's lieutenants from the cabinet and party leadership. I do not expect Ozawa to leave the party, not least because it is far from certain that he would get many to follow him out, especially now that the Kan government has a bit more buoyancy in the polls. Having failed to unseat Kan, Ozawa may recede into the kind of role I thought he might take earlier, that of an elder statesman, periodically declaiming on or critiquing the government's decisions but not actively organizing an intra-party opposition.

But while Ozawa may be less of a problem, Kan will still have to contend with backbenchers unhappy with the direction taken by the government, as Kan implicitly acknowledged by suggesting that he will have a "cabinet of 412" (referring to the number of DPJ legislators). The inclusion of DPJ MPs in policy deliberations is unavoidable as the Kan government tries to revise or scale back the party's promises in the 2009 manifesto, but it need not be cumbersome if the prime minister is able to take control of the policy agenda.

Whether he is able to will depend on the opposition. Kan still has to find a way to coax the opposition parties to support his proposals, without which they will die in parliamentary proceedings. That the Kan's approval ratings have shot up to the same level as when he took over should help him — if he does not squander public support through indecision or inaction. Arguably the only way Kan can succeed is by doing what Koizumi did: appealing to the public directly in order to break the resistance of opposition parties and opponents within his own party. But to bring the public along Kan has to offer something in the first place. The challenge for Kan, then, is to develop an economic program that includes macro- and microeconomic policies, that attacks wasteful spending, includes deregulation and tax reform, and promises something better for the public. If the government is incapable of developing this program internally, Kan should take a page from the playbook of prime ministers past and convene a blue-ribbon advisory council headed by Kan and composed of prominent figures from business, labor, academia, the bureaucracy, and the political opposition. The commission would have to be as much a public relations exercise as a policymaking exercise, regularly issuing statements and drafts that reveal the emerging program and allowing the process to dominate public discussion.

The turn to advisory-group policymaking would be at odds with the DPJ's professed desire for cabinet-led policymaking, but at this point I'm not sure that the Kan government has much choice. I've lost count of the number of "growth strategies" the DPJ-led government has issued over the past year, but whatever the number, it's too many. The public is willing to give Kan and the DPJ another chance, but it is clear that what they have been doing isn't working. 

If Kan is unable to bring the public along with him, the outcome will be easy enough to predict: low public support, opposition obstructionism, and unrest within the DPJ, the same cycle that has brought low every prime minister since Koizumi.

Previewing the DPJ election

I was on CNBC Asia again today to preview the Kan-Ozawa showdown.


In case you're wondering why I've been silent during this campaign, the reason is simple. The DPJ scheduled its election the same week as my doctoral exams (how rude! - ed.) and so I have not been able to follow this electoral campaign to anywhere near the degree I would have liked. Apparently appearing on TV to talk about Japanese politics is how I unwind after a day spent writing.

Ozawa's last stand?

"All political lives, unless they are cut off in midstream at a happy juncture, end in failure, because that is the nature of politics and of human affairs." — Enoch Powell

Returning to his familiar role as Ozawa Ichirō's trusty factotum, former Prime Minister Hatoyama Yukio announced Thursday that he will be supporting Ozawa in a bid to unseat Prime Minister Kan Naoto in next month's DPJ party leadership election. Ozawa himself has yet to make an official announcement, but much like when Hatoyama was DPJ secretary-general under Ozawa, Ozawa conveyed his intentions to Hatoyama, and Hatoyama revealed them to the public. Naturally Hatoyama's backing Ozawa after earlier indicating his support for Kan is an insult to the prime minister.

I have held off from commenting on the possibility of an Ozawa run at the party leadership and premiership because the idea struck me as patently absurd (for reasons that Michael Cucek captured well here and here).

And yet here we are, with Ozawa on the brink of entering the ring once more. I suppose on the plus side, at least he's competing for a public post, one that would force Ozawa to assume public responsibility instead of hiding out of sight.

There is no shortage of speculation about Ozawa's motives for running, having to do with his tenuous legal position, his desire to reinsert himself into the policymaking process by running, losing, and then bargaining for an important post, or his genuine desire to, in Hatoyama's words, "to risk his life on behalf of the country." I have long since given up trying to read Ozawa's mind and am willing to believe that any, or all, or none of these reasons is the real reason for Ozawa's decision.

Whatever his reasoning, the consequences could be dramatic. The best-case scenario would be that Ozawa is simply unable to muster enough support and goes down to an embarrassing defeat that is a prelude to his departure from politics. It is unclear just how much support from the party's parliamentary caucus Ozawa can count on — for my part, I have always thought that the media has exaggerated the extent to which Ozawa can rely on an "army" of young MPs indebted to him for his assistance. Even more unknowable is the extent of Ozawa's support among the party's rank-and-file members, who will also be voting in the party election. Given the near-universal public disapproval (including DPJ supporters) of Ozawa, it is worth asking whether there are still enough pockets of support for the former party leader to make his candidacy viable.

And if he were, somehow, to defeat Kan and take the premiership? Many seem to think that Ozawa's becoming DPJ leader would be the catalyst for the long-awaited political realignment (although Your Party's Watanabe Yoshimi insists that the DPJ will break regardless of what Ozawa does). It is easy enough to see how Ozawa could trigger the realignment. Remember the "purge" of Ozawa loyalists that marked the transition from Hatoyama to Kan? Presumably the "magistrates" who opposed Ozawa and have occupied important positions under Kan would have little to look forward to under Ozawa, and would have two options outside of the cabinet: build anti-mainstream "factions" within the DPJ to challenge Ozawa, thereby completing the LDP-ization of the DPJ, or leave the party altogether to join with Watanabe or form yet another new political party. 

The reality is that while at another point in his career Ozawa might have been able to deliver a miracle, untwisting the Diet by encouraging members of other parties to defect or hammering out a new governing coalition, there is good reason to believe that Ozawa is out of miracles. As Kan has found as he has tried to coax the opposition parties to cooperate, with the DPJ reeling the opposition parties have the upper hand. The DPJ will pay a steeper price than the opposition parties for inaction, particularly as the economy worsens. Add Ozawa's unpopularity and his notoriety as a living symbol of the bad, old politics and the opposition's advantage grows. And if a Prime Minister Ozawa were the head of a nominally united but fractured DPJ his bargaining power would be undermined even further. Whoever wins the party election will still face a miserable political situation. Having Ozawa as prime minister would only make the DPJ's situation even more difficult.

It is ultimately for that reason that I suspect that Ozawa will provide another demonstration of Enoch Powell's maxim, adding a final defeat to a lengthy political career that has seen its share of defeats along with extraordinary victories, arguably none more extraordinary the DPJ's victory a year ago next Monday. Ozawa simply does not have a compelling case for why he should take charge of the government at this juncture — and I think that the party's voters know it.

The politics of Kan's apology

"I would like to face history with sincerity," said Japanese Prime Minister Kan Naoto in a statement issued on 10 August, the 100th anniversary of Japan's annexation of Korea. "I would like to have courage to squarely confront the facts of history and humility to accept them, as well as to be honest to reflect upon the errors of our own."

In what is now being referred to as the Kan Statement, the prime minister acknowledged the suffering caused by Japan's "colonial rule" and apologized to the Republic of Korea, and also pledged to return the remains of Koreans as well as cultural artifacts removed to Japan during the annexation.

Cynics will undoubtedly be quick to note that this is only the latest in a lengthy list of apologies issued by Japanese leaders for Imperial Japan's behavior — and one need not be a cynic to ask what value one more apology will have for Japan's relationship with South Korea or its standing in the region more generally. Japan's conservative ideologues, never shy in their opposition to what they see as "masochistic" behavior on the part of Japan's leaders, have vociferously opposed the statement. In a lengthy editorial published the day after the statement, the Sankei Shimbun, a revisionist right-wing daily, criticized the government for "imposing" a "one-sided view of history," denigrating the achievements of Meiji Japan in the process. The paper stressed that it is necessary to balance the "shadow" of Japanese rule with the "light," which came in the form of education and railroads.

In its coverage, Sankei also raised questions about the procedure by which Kan secured cabinet approval for his statement, claiming that Kan foisted the statement on his cabinet and the ruling DPJ, over the objections of party members.

Two days after the statement an "emergency citizens' meeting" met in central Tokyo to demand the withdrawal of the apology. Headed by Odamura Shirō, a leading conservative figure who was involved in opposition to the infamous "comfort women" resolution passed by the US House of Representatives in 2007, the meeting passed a resolution calling for a bilateral relationship based not on feelings of moral superiority for one party and guilt for the other and questioning the legitimacy of prime ministerial apologies. (Of course, the resolution also called attention to the role played by Japan in triggering Korea's economic development.)

The revisionist right's reaction to Kan's statement has less to do with South Korea, however, and more to do with the right's program for Japan. Its reaction is, above all, narcissistic: what does Japan lose by apologizing to those harmed by Japanese imperialism? As Kan himself noted, there is nothing cowardly about frankly acknowledging one's transgressions without hedging or equivocating. And while the list of apologies to Japan's neighbors is lengthy, it is precisely because conservatives question the legitimacy of those apologies — most notably the Murayama statement — that prime ministers are compelled to keep issuing new ones. The revisionist right believes that a "proper" and "truthful" historical perspective are critical for national pride, which it believes to have been corroded by the left-wing academics and media personalities and pusillanimous politicians. While they claim to be interested only in historical fact, their selective reading of history belies a blatantly opportunistic approach to Japan's imperial past that belittles the claims of Japan's victims and presents a blatantly self-serving (and at least in this telling contradictory) narrative in which Japan was not a colonizer, and even if it was, it was a benevolent one that hastened the demise of those wicked European empires.

Japan's revisionist right, of course, is not the only political group that propagates a self-serving account of its past that explains away inconvenient enormities (cf. the United States and Hiroshima, among other examples). But the revisionist right's attitude has persistently placed a stumbling block in the path of better relations with South Korea and China. As Kan makes clear in his statement, a good relationship with South Korea is critical in the years to come. While I do not doubt that Kan's apology is sincere, it also comes with strategic benefits, as President Lee Myung-bak appears no less interested in building a close relationship with Japan. Since taking power last year, the DPJ has steadfastly worked to build closer bilateral relationships throughout the region. This latest apology is but another step in that program.

And so the battle over Kan's apology pits two very different world views against each other. For Kan and members of his cabinet, Japan's future is in Asia, which means maintaining partnerships with important countries in the region. If apologizing to South Korea again strengthens Japan's position and clears the way to closer and deeper exchanges not just with Koreans but other Asian peoples, it is an exceedingly small price to pay. For Japan's revisionists, any unambiguous admission of Japan's guilt is evidence of "masochism" and an indication that Japan's leaders are simply not up to the challenge of competing with China for predominance in Asia. If Kan's view is strategic (although, again, not only strategic), the revisionist right is absolutist, and were it embraced by those in power it would result in an ignoble and ultimately self-defeating isolation for Japan in the region.

Of course, there is actually little risk of the revisionist agenda being implemented. Even Abe Shinzō, the most unabashedly revisionist conservative prime minister Japan has had in recent years, recognized the value of strong relationships with both South Korea and China and was willing to make concessions on the history issue, whatever his personal beliefs. Since Abe's downfall in 2007 the revisionists have been increasingly marginalized in Japanese politics, their influence virtually non-existent under the DPJ despite having sympathizers within the party. Indeed, their influence may be inversely proportional to the amount of noise they are capable of generating through various media outlets.

As Jun Okumura suggests, it is now up to South Korea to accept Kan's apology in good faith. That, of course, points to the central problem with apologies between nations: no matter how sincere the apology (and the acceptance of the apology), it is difficult for one leader to bind the hands of his successors. Nevertheless, by building a closer bilateral relationship, Kan and Lee can do their part to minimize the harm that can be done by political actors in both countries who wish to exploit history for political gain.

What can the Yakuza explain anyway?

Having read and enjoyed Jacob Adelstein's Tokyo Vice, it was with considerable interest that I read his article "The Last Yakuza" in the World Policy Journal (h/t to Corey Wallace).

Like Wallace, I have no particular expertise with which to assess the role played by the Yakuza in Japanese society. But also like him, I am skeptical about what political outcomes we can actually attribute to organized crime.

In brief, Adelstein argues that after decades of deep ties to the LDP — which organizations didn't have deep ties to the LDP when it was Japan's hegemonic ruling party? — leading Yakuza organizations have shifted their allegiances to the DPJ as it took control of the upper house in 2007 and then the lower house and with it the cabinet in 2009.

The main consequence of this shift, Adelstein suggests, is that the Hatoyama cabinet included Kamei Shizuka, head of the People's New Party, who is known to have links to organized crime. Without questioning those links, I think there is a far simpler explanation for Kamei's presence in the Hatoyama government, an explanation that does not require any reference to the Yakuza. Wanting to streamline decision making in the new coalition government, the DPJ included both Kamei and his SDPJ counterpart Fukushima Mizuho in the cabinet and created a special cabinet committee to coordinate policy among the ruling parties. Kamei, I think, was there so as to concentrate coalition negotiations within the government. The ease with which Kan Naoto cut Kamei loose once he challenged the new prime minister suggests that repaying the Yakuza was low on the DPJ's list of priorities when it came to Kamei.

But this case raises the larger question asked in the title of this post: what does the Yakuza explain anyway? What political outcome over the past half-century or so of Japanese politics is different because of the influence of the Yakuza in Japanese politics?

The most obvious answer is that the pervasive influence of the Yakuza explains the impunity with which gangsters have been able to act since the end of the war (which makes the 1992 anti-organized crime law mentioned by Adelstein a puzzle worth explaining).

But what about bigger questions? The durability of LDP rule? The rise and fall of prime ministers? Foreign policy and relations with the U.S.? What is different because of the Yakuza's power? What can the Yakuza explain that other theories cannot? I suspect not much. It's possible that gangsters may have influenced the outcome of LDP leadership elections during the former ruling party's heyday, given the shady pasts of some leading LDP politicians and the wholly opaque manner in which the LDP selected its leaders for much of its history. If it were possible to identify prime ministers who came to power only because of Yakuza support, it would perhaps be possible to identify indirect consequences of Yakuza influence, but as Adelstein's own career shows, becoming a Yakuza expert requires time, energy, and no small risk to one's person — all for exploring what may be nothing more than an auxiliary explanation.

That's not to say that the Yakuza are of no interest to political scientists who study Japan. One question worth addressing is why the Yakuza are so pervasive in the first place, at which point attention naturally turns to Italy, that other Axis power occupied by and then allied with the United States (which failed to purge and in fact developed links with far-right elements) and governed by a hegemonic conservative party for the duration of the cold war. Additionally, it may be fruitful to study the Yakuza in comparison with other interest groups that had long supported the LDP only to watch their fortunes wane during the lost decade(s). After all, Yakuza groups are interest groups, of a sort: interested in the regulation of organized crime. Like other interest groups, they had to adjust their political strategies in response to uncertain political and economic environments.

As such, while the Yakuza are an unlikely explanation for major political outcomes in Japan, they are a part of the landscape and observers should be cognizant of their role. For that we are lucky that Adelstein is working so hard to expose the inner workings of Japanese organized crime.

What next for the LDP?

With the exit polls suggesting that the LDP will edge out the DPJ in this election and recover some of its strength in the upper house, it is worth asking what will be the consequences of victory for the LDP.

Most obviously, LDP leader Tanigaki Sadakazu will have a new lease on his position, delaying generational change within the LDP for a bit longer. 

Generally speaking, the LDP's old guardsmen will be able to use this vote as vindication for their resistance for anything more than superficial reform to the party. If the Diet does indeed remain twisted — if the DPJ is not able to cobble together a coalition that would swing control back to the government — the LDP will be sorely tempted to use the upper house's powers to harass the government instead of focusing on internal reform and revitalizing the party's policies.

Of course, an electoral victory against a hobbled DPJ is by no means a vindication of the LDP's approach. The party's reformers may have been better off had the LDP lost.

Twisted again

The various newspapers are reporting that according to exit polls, the DPJ won somewhere between forty-three and fifty-one seats, falling short of the total needed to preserve control of the upper house.

Once again the Diet is "twisted," barring the formation of a new coalition that enables the DPJ to retake control of the upper house.

Adamu is living blogging the returns at Mutantfrog here. I won't necessarily be live blogging, but I will be updating intermittently.

Is Ozawa back?

If there is one lesson that this upper house campaign has taught us, it is a lesson that we all should have already learned: there is no stopping Ozawa Ichirō. Despite what looked like a marvelous coup by Hatoyama Yukio in getting Ozawa to step down as DPJ secretary-general, Ozawa has been a public critic of the Kan government throughout the campaign.

However, is Ozawa's criticism of the government — he's been particularly harsh about the Kan government's comments about raising the consumption tax to 10%, which he argues with plenty of justification that the government has made life more difficult for DPJ candidates — the prelude to Ozawa's being a thorn in Kan's side after the election (as Yuka Hayashi suggests in this post at the Wall Street Journal's Japan Realtime)?

It is tempting to see Ozawa's remarks as the beginning of an Ozawa-led anti-mainstream within the DPJ that will force the Kan government to make further concessions to party backbenchers when it comes to policymaking, particular if the DPJ falls short of a majority on Sunday.

Working in Kan's favor, however, is that he has government and party leadership united behind him. United in their opposition to Ozawa's influence, Kan's leadership team already looks more effective than the Hatoyama-Ozawa team, missteps regarding the consumption tax notwithstanding. More importantly, Kan has already made concessions to the party's backbenchers, giving them a vehicle for having their voices heard by the cabinet. Ozawa's concerns about the government's abandoning last year's manifesto would carry more weight if the Kan government had not already begun working on a mechanism for incorporating the concerns of backbenchers into government decision making. Furthermore, there are few signs that Ozawa is any less unpopular now than he was before resigning as secretary-general — or that MPs are keen on preserving every piece of the 2009 manifesto. While there are still concerns that Ozawa stands at the head of a proto-faction that could number more than 100 members, I wonder how many members Ozawa can actually count on to back him. How many backbenchers would be willing to buck the new party regime to stand with Ozawa? It is worth noting that few senior party members have echoed Ozawa's critique of the Kan government.

That's not to say that party members are happy with how the government has handled the consumption tax issue over the past month. The understandable desire to give the voters a chance to render judgment on the Kan government's new approach to the consumption tax likely forced the government to roll out the proposal before properly vetting it with party members, which in turn led the government to back away from its initial position, ironically damaging the position of the government and the DPJ even further.

But backbencher dissatisfaction does not automatically translate into support for Ozawa. Far from signaling the beginning of an Ozawa-led anti-mainstream, Ozawa's behavior during the campaign could signal a new role for Ozawa as an internal critic, concerned less with vying for control of the party than with keeping the party on what he sees as the right path. It seems to me that the Kan government could live with Ozawa's moving into this role.

Facing constraints in the alliance

Prime Minister Kan Naoto had his debut on the world stage at the G20 meeting in Toronto this week. While in Toronto he had his first meeting with US President Barack Obama.

As Reuters notes, Kan met with Obama for a half-hour, considerably more time than Hatoyama got when he visited Washington in April (when Hatoyama was infamously described as "loopy"). The two leaders apparently discussed their shared love of matcha ice cream, and the Japanese media looked for signs that the two were becoming pals, looking for evidence that the relationship between the US and Japan was back on track after the Hatoyama government "strained" the bilateral relationship.

Meanwhile at gatherings in Washington to commemorate the "fiftieth anniversary" of the alliance (depending on when one chooses the date the birth of the alliance), the mood, according to Peter Ennis, was relatively upbeat following Hatoyama's decision to embrace a version of the status quo regarding Futenma and his subsequent resignation. Ennis says that the theme was "emphasize the positive."

All well and good, but as far as I can tell the alliance is right back to where it was 2007-2009, with the only difference being that the Japanese government is openly confronting the problems surrounding the implementation of the 2006 roadmap.

As I've argued before, the collapse of the Abe government in 2007 was more than just a spectacular reversal for the LDP — it marked the end of the bilateral "project" that grew out of the Nye Initiative in the mid-1990s to build a stronger, closer US-Japan alliance. After rewriting the guidelines on defense cooperation, securing (token) Japanese contributions to the Afghanistan and Iraq conflicts, and develop a new "shared values" rationale for the alliance, the project ran squarely into the wall of political realities in Japan and in the region.

Regarding the former, when faced with a government that was dead set on constitution revision, it turned out that the Japanese public was not all that interested in it, no matter what years of Yomiuri Shimbun polls said (although revisionist politicians apparently missed the polls that showed that very few felt that constitution revision was an issue deserving of the attention of national leaders). More than that, there are few signs that the Japanese public is interested in anything but the status quo as far as security policy is concerned. In other words, the status quo in which Japan spends less and less each year on defense while playing host to forward-deployed US forces. While public opinion polls are at best ambiguous regarding Japan's former refueling mission in the Indian Ocean or its ongoing anti-piracy mission off the Horn of Africa, the public isn't exactly clamoring for a more expansive role abroad for the SDF. Nor does there seem to be much support for collective self-defense, another remaining piece of the project.

Now, of course, it's the job of the government to lead — indeed, dating back at least to the early 1990s the idea behind the administrative reforms at the heart of the DPJ's program was that it would produce more decisive leadership, especially in foreign and security affairs. But realistically speaking, it is unlikely that a government committed to a controversial fiscal retrenchment agenda will simultaneously pursue a foreign policy agenda that would if anything be more controversial, especially in light of the domestic agenda.

The result is an unusual parallel to the Yoshida Doctrine, which, incidentally, Ambassador Katō Ryozō, who before serving as ambassador to the US for the whole of the Bush administration was deeply involved in the project to strengthen the alliance, recently declared had "completed its mission." Today Japan finds itself in a position where it needs an alliance with the US based on the forward deployment of troops not to free up resources for re-industrialization but so that it can weather its demographic plight and economic decline. The resulting arrangement looks the same, but the underlying logic is strikingly different — and remarkably fragile, resting as it does on the strength of the US commitment to Asia, the willingness of the Japanese taxpayer to provide host-nation support (and Okinawan and other communities to host US forces), and the restraint of the People's Republic of China.

In fairness, policymakers in both countries seem to recognize that this arrangement is less than ideal. For example, two years before he became known within US-Japan circles for issuing a warning to the Hatoyama government not to challenge the 2006 agreement, US Secretary of Defense Robert Gates delivered a speech in Tokyo calling for a review of the alliance that would seek to answer basic questions about its raison d'etre. 

But no one has taken up Gates's call, perhaps in large part because there are no easy answers to the challenges that face the alliance. Japan's domestic political environment shows no signs of changing (at least as far as the alliance is concerned), and the political environment could even worsen if the ruling parties fall short of a majority in the upper house. While China occasionally acts in ways that could trigger a shift in Japanese public opinion, on the whole China has been restrained, meaning that Japan will continue to seek a constructive partnership with China. There are no signs that the US commitment to regional security is wavering, but given the state of the US economy it is impossible to rule out an isolationist turn (fears of which naturally lead Japan and other countries in the region to consider their options).

In other words, the new project for the alliance is learning to accept and make the best of these constraints. As leaders of both countries say, the alliance continues to play an important role in providing peace and security in the region, but the idea that the alliance could be something more than a "passive" or negative force for peace (what, after all, could be more passive than oxygen, Joseph Nye's commonly used metaphor for the US presence in Asia), that it could play a creative role in promoting US values or reshaping the regional security environment appears to be increasingly fanciful. The alliance may well survive for decades to come, but its survival — and the form it takes — may depend less on decisions made in Washington and Tokyo than on decisions made in Beijing.

The meaning of the Upper House election

On Thursday campaigning for the House of Councillors election scheduled for 11 July begins, as 440 candidates vie for 121 seats. (Michael Cucek has the breakdown here.)

The significance of this election has been thrown into clear relief since Kan Naoto took over from Hatoyama Yukio as prime minister and head of the DPJ. What once looked to be a referendum on the leadership of Hatoyama and DPJ secretary-general Ozawa Ichirō — a referendum that polls suggested that the DPJ would not win — is now an election on the future of Japan, perhaps to an even greater extent than last summer's historic House of Representatives election. If the DPJ can retain control of the upper chamber, it will have three years before it will have to face the voters again in an election, provided that no snap election is called in the meantime. Those are three years that the government can use to make tough political decisions that a government with a shorter time horizon might be less inclined to make, like, say, a consumption tax increase.

And so this election is critical for Japan's future. For the Japanese people, there's not much of a choice. Under the DPJ Japan now has a prime minister who is everything that his predecessor was not: Kan is clearly willing to take a position, stick to it, and make his government follow along. He is devoted to clean politics and dynamic political leadership, and under his watch the DPJ once again looks like a party capable of bringing substantial change to how Japan is governed.

Much of the discussion during the campaign will focus on the government's plans related to the consumption tax and deficit reduction more broadly. But once again this election is less about the competing policies offered by the DPJ, the LDP, and the smaller parties than about how Japan is governed. The choice is between unified DPJ government that will face few institutional checks as it attempts to introduce sustainable growth, sustainable government finances, and sustainable social security and a divided system in which the government will have to cobble together working coalitions in order to pass legislation in the upper house (or use its lower house majority to pass legislation over the upper house's objections).

In other words, voters have to decide whether they're willing to tolerate an "elective dictatorship" for the next three years as the Kan government sets to work implementing the DPJ's modified but still ambitious political program or whether they would prefer that the LDP, Your Party, Komeitō, and the other parties retain a perch from which to challenge the government and retard its progress.

Mr. Kan's Third Way

The Third Way has, belatedly, arrived in Japan.

The style of politics popular in advanced industrial democracies during the 1990s among center-left leaders keen to reconcile their left-wing parties to the rise of neo-liberalism and the onset of austerity after the 1970s had heretofore failed to surface in Tokyo. But with the ascendancy of Kan Naoto, Third Way politics may get another lease on life in Japan.

In his maiden policy speech as prime minister on 11 June, Kan explicitly spoke of a "third way" to the reconstruction of the Japanese economy. Rejecting the first way, what he identifies as the ideology of the construction state (shared prosperity through public works), and the second way, "extreme market fundamentalism" focused on supply side reform at the expense of public welfare, Kan proposed a third way that would target the budget deficits that he says have produced ongoing stagnation and eroded confidence in the social security system. In short, he is trying to break what I've described elsewhere as an impossible trinity of deficit reduction, renewed, balanced, and low-carbon-emitting growth, and robust welfare provision.

What follows is a set of policies intended to create a "Strong Economy," "Strong Government Finances," and "Strong Social Security." 

His proposals on the first point are a reiteration of the DPJ's prevailing position on the economy: the need to balance external and domestic demand, to be realized through a combination of intra-Asian trade, tourism, Green technology, and support for families and the elderly.

On the second point, Kan alluded to the specter of Greece — an allusion that will be repeated in other times and places in the coming years — to make the case for aggressively attacking Japan's bloated national debt with efforts to cut wasteful spending and fundamental tax reform, which would undoubtedly include a consumption tax increase. Naturally he appealed to the LDP to cooperate with the government on this issue.

Finally he turned to social security, identifying a secure social security system as critical for economic growth. Effectively he argued that a shaky social security system in an aging society triggers hoarding on the part of middle-aged and senior citizens concerned about their well-being in retirement.

The similarities with the Third Way politics of Blair and Clinton are not accidental. Kan, a veteran of Japan's reformist, pragmatic left, is at once trying to unleash and humanize Japanese capitalism. He praises Koizumi's supply-side reforms for promoting the restructuring of Japanese businesses, but despairs of their impact upon Japanese society in the form of unemployment and persistent deflation.

While Kan arguably speaks more fluently about economic policy than any prime minister since Koizumi — his speech was largely free of the airy fairy rhetoric that characterized Hatoyama's pronouncements — it is difficult to see Kan's Third Way having any more success than the Anglo-American Third Way, which in retrospect seemed to do little more than promote the Casino Capitalism that produced the financial crisis that has arguably wiped out whatever gains were made to the state's role in welfare provision and plunged both countries ever deeper into debt. The point is not that Kan is foolish for trying to reconcile what appear to me at least as irreconcilable political goals: the political environment demands that the government addresses all three, not least the problems in the social security system. Instead, it seems likely that over time Kan will be forced to focus on one goal at the expense of the others — and that the privileged goal will be deficit reduction.

Even without Kan's embrace, it is likely that deficit reduction would become the government's primary goal with Greece serving as "focusing event," with Kan's government full of deficit hawks, and with the finance ministry still a potent force in policymaking. But with Kan himself having embraced the issue in strong terms, there appears to be little doubt that his government will prioritize deficit reduction above all else, to the point of the DPJ's including a pledge to increase the consumption tax in its manifesto for next month's upper house election (perhaps not a bad move politically with a Yomiuri poll showing sixty-six percent support for a consumption tax increase). Kan has also stated that within the month his government will establish 2020 as a goal for restoring the government's primary balance to surplus.

The question, however, is whether deficit reduction will lead to sustainable growth and secure social security spending. For example, I find it difficult to believe that the government will able to promote greater domestic demand, let alone sustain existing domestic demand while taxing consumption at higher levels. Deficit reduction is undoubtedly valuable in its own right, it's just difficult to see how the Kan government will be able to make good on the totality of its economic program. Can the government really cut enough waste and raise enough tax revenue to shrink its deficits while expanding programs to promote economic growth?

I think that the pursuit of deficit reduction will have implications for Japan's foreign and security policies. The first challenge, however, is figuring out exactly what has changed: Yomuiri sees a new realism in the DPJ's latest manifesto (discussed here at Twisting Flowers), but the reality is that apart from the new government's emphasis on rebuilding relations with the US and the call for defense transparency in China, the DPJ is putting in words what it has already been doing since taking power, especially in its focus on stronger bilateral ties with South Korea, Australia, and India. And really, the Hatoyama government was not nearly as soft on China — or as opposed to the US-Japan alliance — as the contemporary wisdom in Washington held.

Moreover, the Kan government's overtures to the US can be overstated: even the formulation of support for the alliance voiced in Kan's address last week was more like former LDP Prime Minister Fukuda Yasuo's, in which the alliance is viewed largely in terms of its role in providing stability in Asia, than the vision of the alliance as resting on a foundation of shared values and dedicated to the promotion of democracy in the region. Like Fukuda, Kan recognizes that stable, constructive relations with Japan's neighbors, China most of all, are essential, and that the US-Japan alliance is valuable insofar as it contributes to Japan's Asia policy aims.

But in the Kan government's unflinching support for last month's agreement on Futenma, the new government is clearly interested in bolstering the US pillar of Japan's foreign policy. What I wonder is whether the DPJ's renewed interest in the security relationship is a function of its focus on deficit reduction. As the government looks to reduce spending, DPJ officials may increasingly be coming to the realization that austerity combined with regional uncertainty means that for the foreseeable future Japan will be dependent on US deterrent power. While the new government is quietly hedging against the possibility that the US commitment to Asia might weaken through its focus on bilateral cooperation with regional powers and its growing acceptance of the need to loosen restrictions on arms exports (which would lower the cost of bolstering Japanese's own conventional capabilities), the DPJ clearly accepts that for the foreseeable future it will be necessary to maintain a constructive security partnership with the US, even if the party continues to hope for an "equal" partnership.

It is open to debate whether austerity is leading the Kan government into a more enthusiastic embrace of the US (or even whether the embrace is more or less enthusiastic than the Hatoyama government's or any LDP government's for that matter). The DPJ may simply be free or cheap riding irrespective of concerns about austerity in the future. Or it may sincerely believe that the status quo is more or less the best option for Japan when it comes to coping with the rise of China.

However, I think the proposal to relax the three arms-exporting principles is a sign that the DPJ is sensitive to the costs of defending Japan and, therefore, that while the alliance may provide the most cost-effective means of national defense (provided measures are introduced to lessen the domestic political costs of US bases on Japanese soil), the government should look for ways to reduce the costs of Japan's providing its own defense in due time.

In short, at home and abroad the DPJ is performing balancing acts, pursuing multiple and at times conflicting goals that require flexibility on the part of the government — precisely the reason why Ozawa and other politicians have called for a stronger Westminster-style executive over the past two decades. Whether the government will be up to these challenges even with reform remains to be seen.