Japan's coalition government faces a key test at parliamentary elections on Sunday as Prime Minister (PM) Shinzo Abe seeks support for constitutional reforms.
Also known as the House of Councilors, the upper house is one of two chambers in the Diet, as the parliament is known in Japan, and half of its 242 seats are up for election.
The ruling coalition, made up of Abe's Liberal Democratic Party (LDP) and the New Komeito Party, already holds more than two-thirds of the seats in the lower house, also called the House of Representatives, allowing it to overrule any objections in the upper house, Societe Generale chief Japan economist Takuji Aida observed in a recent note, implying the election itself isn't a threat to Abe.
So while the coalition is widely expected to maintain a majority on Sunday, the key focus is by how much. Two-thirds of the upper house is needed for Abe to start the constitutional amendment process, set to be one of his key legacies alongside Abenomics—the PM's flagship set of economic policies consisting of structural reforms as well as fiscal and monetary support.
"The election results have more important political implications than an economic one," economists at investment bank Natixis in a report this week.
Last year, Abe proposed controversial legislation that would significantly alter the nation's pacifist stance, which was adopted post-World War II. His new policies would allow military forces—called the Self-Defense Forces (SDFs)—to be dispatched abroad without pre-approval from parliament and expand the parameters for engaging in military action under the doctrine of collective self-defense.
"For the pro-amendment parties (the ruling coalition and some in the opposition) to gain the needed two-thirds majority in the upper house, they will need to win 78 seats of the 121 seats up for re-election," said Aida.
But that could be a hurdle as Abe's reforms are deeply shunned among most citizens, who have taken to the streets in recent months to protest the changes.
"The results of the July Upper House election are uncertain for PM Abe," Natixis said. "Abe has been quiet on the unpopular constitutional revision during the election campaign. In fact, the public considers pension and health care and Abenomics more important than the constitution."
The ruling coalition understands this and has thus refrained from promoting constitutional reforms in their policy agenda, leaving voters' judgment of Abenomics as the main campaign issue, stated Aida.
But Abenomics' spotty success rate is another obstacle. In the more than three years since the policies have been operational, the radical program has yet to lift the country out of deflation. Data last week showed May consumer prices and household spending falling on an annual basis.
Natixis believes the coalition will secure a half majority, at the very least, on Sunday.
"Because the election campaign lacks a focus, a large number of the public may not even vote. This could be a tailwind for the coalition, because the 'undecideds and don't knows' are unlikely to vote against them. Hence, coalition is anticipated to win at least 45 seats, which would secure a 1/2 majority."
For Abe, the ideal scenario would be for the LDP to win a single-party majority.
His term as LDP president ends in 2018 and under current rules, he will be unable to run for re-election. But there's room for those rules to change, Aida pointed out.
"If the LDP wins a single party majority in this upper house, it will strengthen his standing within the LDP and likely increase the probability of him remaining LDP president via changes in the party rules."