Japan's PM Wows Voters with 'Abenomics'
Shinzo Abe, Japan's political Lazarus, has burst from his grave at an almighty sprint.
In the month since the nationalist prime minister reclaimed the office he lost in 2007 amid scandals, an election defeat and a debilitating bowel ailment, Mr Abe has been unstoppable. It is as though he fears that, should he slow down, political rigor mortis could set back in. He may be right.
So far, Mr Abe has wowed financial markets and extended his popularity with voters with "Abenomics", an onslaught of fiscal and monetary stimulus aimed at reviving the economy and ending nearly two decades of deflation. He has launched one of the largest pump-priming exercises in a history chock-full of them, a Y13.1tn supplemental budget, and browbeat the Bank of Japan into setting a 2 per cent inflation target.
In foreign policy, he has steered Japan in a more hawkish direction while simultaneously (if more quietly) reaching out to China to try to end a dangerous stand-off over islands in the East China Sea. A whirlwind alliance-building (read: anti-China) tour of Southeast Asia and the first increase in the defence budget in 11 years have been offset by the dispatch to Beijing of a pair of friendly proxies - Yukio Hatoyama, a dovish former prime minister, and Natsuo Yamaguchi, the leader of a junior coalition party.
It is easy to see why a Japanese prime minister would feel the need to hurry. The last six have served a shade longer than 12 months on average; proportionally, the rebooted version of Mr Abe has already passed the 100-day mark of a four-year US presidential term.
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Mr Abe's decision to make the economy his top priority suggests he has learnt from the failures of his first stint in office. Then, he wasted energy on pet nationalist causes while the public worried about a fraying pension system. After a drubbing in upper house elections and the onset of a possibly stress-aggravated case of ulcerative colitis, he quit.
(Read More: Japan Factory Output Up, Firms Expect Recovery)
This time round, he has been rewarded by an 8 percent rise in the Nikkei and a six-point jump in his poll ratings since he took office on December 26. Yet it hasn't escaped notice that several big, pressing issues have been buried under the avalanche of stimulus - including nuclear policy, trade, and taxes. Mr Abe's opening address to parliament this week elided all of them, and was duly panned by the Japanese press.
The reason for his vagueness has been widely surmised: he wants to win an election for the upper house of parliament this summer. That would take back the chamber he lost in 2007 and consolidate the comeback of his Liberal Democratic Party. Until then, he needs to stay away from issues that strain what polls show is a big ideological gap between his rightwing party and voters. Almost all LDP lawmakers favor removing anti-war provisions from the constitution, for instance, versus half of the general population.
Will the strategy work? That depends in part on the impact of Mr Abe's stimulus efforts. Economists have raised their growth forecasts and corporate profits are expected to rebound, in part thanks to the fall in the yen that has accompanied the recent moves. Yet companies are determined to hold down wages and there is already talk that Mr Abe could launch a second stimulus package closer to the election - a risky move if voters balk at the obvious ploy and its implications for Japan's huge public debt. "Another stimulus would be scary," says one economist close to Mr Abe.
Six months is, in any case, a very long time in Japanese politics. Mr Abe's colitis appears to be under control (he is taking newly available medications, he says) but his skill in picking and managing allies remains open to debate. His first government was prone to gaffes and his new team has already produced its first. Taro Aso, the voluble finance minister, suggested last week that the government needed to address the fiscal burden of healthcare for the elderly by "enabling them to die off quickly". He later sought to explain himself, but the incident was, at best, a reminder that his well-known gruffness can veer into recklessness.
Mr Abe's challenge is to make sure his administration does not take the minister's advice to heart.
