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Referendum on 'Abenomics'

Julian Ryall, TokyoNovember 24, 2014

Prime Minister Shinzo Abe has effectively turned the upcoming vote into a referendum on his economic reform measures. Experts say Abe wants to secure another four-year term before the economy declines further.

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Shinzo Abe PK Parlament Auflösung Neuwahlen 21.11.2014
Image: Reuters/Y. Shino

Depending on their political persuasion, the Japanese public has decided that the announcement by Abe on November 21 that he was dissolving the nation's parliament and calling an election on December 14 - fully two years before its projected date - is either "selfish" and eye-wateringly expensive or a stroke of political genius.

The one thing that both sides agree on, however, is that the prime minister is almost certain to once again win the vote. And Abe caught the opposition relatively unprepared, even though there had been hints about the PM's intention.

Although the opposition parties' relative weakness was one key consideration for Abe, the larger issue at stake was his battery of measures - dubbed "Abenomics" - designed to pull the Japanese economy out of recession. Despite starting out positively in the early days of his administration, Abenomics has increasingly faltered, particularly on the issue of structural reforms.

Consumption tax

A key component of efforts to get the economy back on track was the decision to raise the consumption tax from 5 percent to 8 percent on April 1, with a second hike - to 10 percent - scheduled for October 2015.

But that plan was shattered by surprisingly poor figures released on November 17 which showed that Japan's GDP for the July-September quarter had contracted 1.6 percent on an annualized basis, the second consecutive quarter that the world's third-largest economy has shrunk.

The first tax hike has had a far more damaging impact on the national economy than was anticipated, and Abe had little choice but to postpone the second phase of the hike. In a televised news conference, the PM announced that the increase was being put off until April 2017, although he vowed that the hike would "definitely" be introduced then.

He used the press conference to also announce that his government will draw up an extra budget designed to encourage the Japanese public to spend - a potential vote-winner - and vowed that he would step down as leader of the Liberal Democratic Party (LDP) if his coalition government failed to win the upcoming election.

Falling support

In a recent poll by the Yomiuri newspaper, Support for Abe's cabinet slid to 41 percent, the lowest since he won the general election in December 2012. And while the government's support may have fallen, it is still well ahead of a fragmented and fractious opposition.

Polls put the support for Democratic Party of Japan at around 14 percent, while the corresponding figure for as many as nine other minor parties - including the Japan Communist Party, the Japan Innovation Party and Komeito - is in single digits.

"This is an expedient and selfish dissolution without a cause, aimed at resetting everything, including the stalled economic policies of Abenomics," said Tatsuo Kawabata, chairman of the Democratic Party of Japan's Diet Affairs Committee. Sakihito Ozawa, a member of the Japan Innovation party, told the Mainichi newspaper that the prime minister was carrying out an "autocratic dissolution."

'Already a failure'

Makoto Watanabe, a lecturer in communications and media at Hokkaido Bunkyo University, said that the prime minister has stated very clearly that this election "is simply a yes-no vote by the public on Abenomics."

"But I would say that the public has already realized that Abenomics has been a failure; GDP is down, deflation has not been beaten, wages are not rising and now people have stopped spending," he told DW.

"Abe therefore just wants to secure another majority for another four-year term as early as he can because it is very likely that the Japanese economy is going to continue to decline and his popularity will go with it," Watanabe added.

Jun Okumura, a visiting scholar at the Tokyo-based Meiji Institute for Global Affairs, agrees with this view, but from a different perspective. "This is politics; it's not a matter of policy," he said. "The people who oppose Abe will say it's a huge waste of money, but those who support him will say it's a political masterstroke," the expert told DW. "I believe it is a smart decision as Abe has called an election when he has a good chance of winning," he said.

Potential pitfalls

The only possible risk that analysts can foresee for Abe is the possibility that the public has become disillusioned with his economic measures to the point that while they don't vote for the opposition, they abstain from voting.

Japan Wirtschaft Symbolbild
Japan's GDP for the July-September quarter had contracted 1.6 percent on an annualized basisImage: AP

Election experts in Japan say they anticipate a very low turnout on December 14, a factor that could help the opposition, particularly if a good number of Japan's young people vote.

"More than 40 percent of people responding to the polls say they support no party, which gives those floating voters the final say in who gets elected," said Watanabe. "If they use their votes wisely, then things can change."

The LDP took 294 of the 480 seats in the lower house of the nation's parliament in the December 2012 polls, and the party also retains a healthy majority in the upper house. Although analysts expect Abe's party to win the elections, they believe its majority in the lower house will decline.