Japan’s election on July 10, 2016 for the House of Councillors, the Upper House of its parliament the Diet, saw yet another decisive election victory for the conservative Liberal Democratic Party (LDP) of Prime Minister Shinzo Abe, making him one of the most successful leaders in the democratic world. The governing LDP won 56 seats, and an Independent Diet member has since joined the ruling party, giving the LDP a simple majority of 122, the first in its own right in the 242-member Upper House for 27 years. The LDP’s coalition partner, the Komeito Party (KP) won 14 seats, raising their numbers to 25.

With the support of other conservatively-aligned small parties and independents, the Abe government can now expect to command 165 votes, exceeding the two-thirds figure of 162, in favour of constitutional reform to ease restrictions on Japan’s use of military force. The constitution has remained unchanged since it was delivered under the postwar US occupation, and can only be amended after a two-thirds majority in both houses of the Diet approves a public referendum, which then needs to be passed by a simple majority.

The main opposition party opposing constitutional change, the centre-right Democratic Party (DP) lost 14 seats, falling to 49 in the Upper House. The Japanese Communist Party (JCP) gained four seats, rising to 14. The Social Democratic Party (SDP) and the People’s Life Party (PLP) lost one each, both falling to two. Of the other smaller parties, which are likely to support constitutional revision, Initiatives From Osaka (IFO) won seven, rising to 12; the Party for Japanese Kokoro failed to win any seats, remaining at three; and the Assembly to Energize Japan (AEJ) similarly remained at two. There are 12 Independents, an increase of four. Members of the Upper House of the Diet serve six-year terms, so staggered elections for half of its seats are held every three years.

The voting age was lowered from 20 to 18 last year, so this was the first election where young people in this demographic had their chance to vote. Their turnout was around 40%, lower than the average turnout of 54%, (slightly up from the previous election, at 53%), and most favoured the LDP, according to exit polls, confounding predictions that younger votes would be more inclined to support more left-wing parties. As well as being favoured by the low voter turnout, the LDP was also assisted by a continuing vote-value disparity, particularly for the 146 Upper House seats that are based on representing prefectural districts (the 96 others are decided on proportional representation of the vote). The more conservative-leaning rural and regional districts have long had a weighting of nearly five times the value of each of their votes, compared to urban districts, which favours the LDP’s representation.

The DP is, therefore, still in a fragile state since losing power in 2012, lacking a clear alternative policy focus to challenge the Abe government. To attempt to improve its prospects, the DP merged with the more neoliberal Japan Innovation Party (JIP) in March. This was after the weakened JIP had suffered a series of policy and leadership splits, resulting in the departure of its former populist leader Toru Hashimoto, until recently the Mayor of Osaka. Dissident JIP members aligned with Hashimoto broke away to form the Initiatives From Osaka party. However, the DP (which renamed itself from the Democratic Party of Japan – DPJ, after the merger), is still in a weak position, as it still lacks the ability to successfully present any kind of clear alternative policy focus, to challenge the LDP-KP government.

The DP had coordinated its campaign for the first time with those of the JCP, SDP, and PLP, fielding mutually-decided single candidates in all 32 of the single-seat constituencies up for election. Backed by the main confederation of labour unions, the DP campaigned on reforms to labour regulation. This aimed to encourage reversing the trend away from casual employment of workers, now at 37%, back to more secure permanent positions, and to reduce overlong working hours and unpaid overtime. The four opposition parties also campaigned together on overturning the security bills passed in September last year, which now allows the Japanese Self-Defense Forces (SDF) to participate in collective self-defence. However, this failed to capture the allegiance of the electorate. Following the DP’s poor performance, party president Katsuya Okada announced he will not recontest the leadership in September, opening the possibility of succession to the party’s more charismatic deputy leader Renho Murata, who would be the first female leader of the DP.

The major issue of the LDP’s campaign was to again delay increasing the consumption tax rate from 8% to 10% until October 2019, instead of April 2017. This will be well after Abe completes his term as LDP President in September 2018. The last such increase April 2014 saw the economy tip into recession, as consumer demand fell sharply. The Japanese economy has been in a state of fairly weak recovery ever since. Economic growth for the first quarter of 2016 was only 0.5%, following a -0.4% contraction the previous quarter, with the annual rate now at only 0.1%.

The uncertain state of the global economy, including the impact of ‘Brexit’, and particularly the slowing growth in China, Japan’s largest trading partner, is reflected in Japan. Consumer demand remains stagnant, due to stalled wages growth. Business investment is also parlous, as large corporations hoard their profits, rather than grant the wage rises that would boost aggregate demand. Public sector investment via record deficit spending, the first ‘arrow’ of Abenomics, is the only stimulus factor keeping the Japanese economy out of recession at present.

Despite a recently rising yen, lower international commodity prices, particularly in energy, and record numbers of tourists has at least allowed Japan to enjoy trade surpluses recently; from January to June 2016, the trade surplus was 1.8 trillion yen, the first half-year surplus since 2010. Unemployment has steadily, gradually declined to a 21-year low of 3.1%; but this is largely due to the shrinking pool of available labour, in the steadily ageing and declining population, now falling below 126.3 million.

The decision to delay the consumption tax increase will see the government forgo an estimated 5.6 trillion yen in additional revenue, much of which was earmarked towards social security payments. Following the election, Abe announced a record stimulus spending package of 28.1 trillion yen for the next financial year, with increased spending on rail and port infrastructure, child care, and health and welfare support for the elderly. The original target of Abenomics was to get the government’s budget back into surplus and grow the economy to 600 trillion yen by 2020. These unrealistic goals have long become unattainable, when around 30% of all government spending is now funded by debt.

The second arrow of Abenomics has been the massive Quantitative Easing (QE) program pursued by the Bank of Japan (BoJ), where at least an extra 80 trillion yen has been pumped into the money supply each year. Last January, the BoJ implemented negative interest rates, at -0.1%, an extraordinary attempt to encourage an increase in liquidity. This still failed to prevent the return of worsening deflation: from -0.1% for March, -0.3% for April, and -0.4% for both May and June. To attempt to break this decline, the BoJ decided last week to marginally increase QE further, by doubling the purchase of exchange-traded funds, to 6 trillion yen per annum.

Having claimed a mandate in the July election to delay the consumption tax hike, and continue stimulus spending, the Abe government hopes restored economic growth will boost revenues from higher company earnings. This will allow social security spending to be maintained, without increasing net public debt, which is now rising over 229% of GDP, the highest level in the OECD. Abe is also committed to ratifying the Trans-Pacific Partnership (TPP) in the Diet’s autumn session, as part of the ‘third arrow’ of Abenomics, restructuring various sectors and areas of the economy. However, Abe’s commitment to seeing this process through remains in doubt, particularly due to the opposition of the farmers’ lobby, a traditional base of support for the LDP. They will be hoping growing opposition to the TPP in the US will scupper fulfilment of the multilateral trade pact.

The LDP’s other main support base, the ultranationalist and historically revisionist Shinto organization Nippon Kaigi, of which Abe and most of his Cabinet are members, are firmly behind the deliberately understated agenda to alter Japan’s pacifist constitution, and inculcate more ‘patriotic’ values into Japanese society. Abe has been successful so far in carrying out the most far-reaching transformation in Japan’s post-war defence profile, by implementing the right to pursue collective self-defence with allies, primarily the US. Despite recent controversies over crimes committed by US personnel in Okinawa, Abe and the LDP remain firmly committed to the US alliance.

The SDF has also just reinforced its UN peacekeeping mission in South Sudan, via its overseas base in Djibouti. As regional tensions and territorial disputes with China are also ongoing, Japan will increase its cooperation in maritime security with ASEAN states, particularly the Philippines and Vietnam, indicating the more robust defence posture of the Abe government is set to continue. At the recent ASEAN-related meetings in Laos, Foreign Minister Fumio Kishida joined with his partners in the Trilateral Security Dialogue, US Secretary of State John Kerry, and Australian Foreign Minister Julie Bishop, to issue a statement opposing China’s island-building activities in the South China Sea. The latest annual Defence White Paper released this week, also pronounced Japan’s ‘deep concern’ over Chinese ‘coercion’ in the region.

As Japan prepares for the Tokyo 2020 Olympics (and the 2019 Rugby World Cup), domestic security is also becoming an increasing worry. This is especially so in the wake of recent terrorist attacks and mass murders in the US and Europe, but has particularly become a public concern after the recent mass murder at a care facility outside Tokyo of 19 disabled people, and the wounding of 26 others, by a former facility worker. While large-scale crimes have occasionally happened in Japan, this mass murder, the worst in its postwar history, has shocked Japanese society, where the crime rate is relatively low. The deaths of seven Japanese in a terrorist attack in Bangladesh last month has also raised fears that Japan is at increased risk from terrorism.

Despite its resounding success in the Upper House election, the gubernatorial election in Tokyo on July 31 exposed some tensions in the LDP. A former Defense Minister in Abe’s first government, through slick and colourful campaigning, Yuriko Koike soundly defeated candidates backed by the LDP, and by the opposition parties. Koike ran in defiance of the LDP, to become the first female Governor of Tokyo. This places her in a prominent position to re-enter the Diet after the Tokyo Olympics, and possibly contest the LDP leadership once Abe departs. The nationalistic Koike is also a member of Nippon Kaigi.

As the July Upper House election was possibly Abe’s last, speculation has already begun over his succession as LDP leader in 2018, either before or after the next Lower House election, which is due to be held that year. This has been sparked after Abe reshuffled his Cabinet on August 3, appointing eight new ministers. Likely contenders for the post-Abe leadership include Shigeru Ishiba, a former LDP Secretary-General, who declined to take a position in the new cabinet, stepping down from the portfolio for population growth and economic revitalization in regional areas. Ishiba established his own faction within the LDP this year, and choosing to move to the backbench is another clear indication of his leadership ambitions. Foreign Minister Kishida is also another potential candidate, as he also leads his own faction, a prerequisite for any future leadership contest. Kishida’s profile and prospects have been particularly on the rise, following the widely positive reception in the wake of President Barack Obama’s historic visit to Hiroshima last May. Kishida kept his portfolio in the reshuffle, as did Deputy Prime Minister and Finance Minister Taro Aso, and Chief Cabinet Secretary Yoshihide Suga.

One of Abe’s most loyal supporters, the hawkish and austerity-favouring Tomomi Inada, may also be in contention to be the first female Prime Minister of Japan, after being appointed Defense Minister in the post-election cabinet reshuffle. Formerly the LDP’s Policy Chief, Inada suggested on a weekend TV talk show before the election that the LDP could change its leadership rules, to allow Abe to extend his term as LDP president. This would allow him to oversee the delayed increase in the consumption tax increase in October 2019. Such a controversial proposal would certainly spark serious division within the LDP, as it would be firmly opposed by Abe’s prospective factional successors, such as Ishida and Shigeru. It would certainly be a distracting issue for the 2018 election campaign, should Abe be unclear about his future plans. However, such a proposal seems to be gaining momentum, as it has also been taken up by the new LDP Secretary-General, Toshihiro Nakai, and may be implemented before the end of the year.

While Abenomics has failed, so far, to lift Japan out of its deflationary stagnation, Abe’s strong election result will enable him to continue to pursue his legacy for the remainder of his term in office, as one of the most politically successful Prime Ministers of the postwar era. His most desired goal, of finally altering the constitution to allow Japan to exercise military force as a ‘normal’ sovereign country, now draws ever closer.

Image | Dick Thomas Johnson