Japan’s Shinzo Abe will struggle to recover from ministerial scandal

Trade minister Yuko Obuchi resigns from her post. EPA/Kimmasa Mayama

In a country that has had nine leaders since 2000, Japan’s prime minister Shinzo Abe appeared to have found the recipe for longevity. But the resignation of two ministers from his government has left him in serious trouble.

The two ministers – Yuko Obuchi, the minister for trade, economy and industry, and the justice minister Midori Matsushima – stood accused of misusing campaign funds and have now formally left their posts.

Since his election in December 2012, Abe has carved out a distinct economic policy for Japan, known as Abenomics. Abe had appointed Obuchi and Matsushima in part to help him persuade the electorate to accept further tax rises and to permit the reopening of Japan’s nuclear power plants.

Abenomics on the rocks

Abenomics is a three-pronged approach, covering monetary easing, fiscal policies – such as an increase in consumption tax – and broader structural reform. It did lead to a temporary boost to the economy but growth ultimately stood at -6.8% in the second quarter of 2014.

This led to accusations that currency depreciation had not been supported by necessary reforms. Many argue that these should include removing the built-in protection of sectors such as agriculture and financial services; tackling vested interests and making it easier for foreigners and women to play an active part in growing Japan’s economy.

This latter policy, dubbed “womenomics” seeks to redress the gender imbalance in business and politics and was met with a rise in Abe’s poll ratings. Obuchi and Matsushima were key figures and their demise suggests genuine reform remains to be implemented.

Losing energy

Obuchi’s departure has been seen as a significant setback for many reasons. The daughter of a former prime minister, she had been regarded as a contender to become Japan’s first woman prime minister in the future. But in the more immediate term, she was central to Abe’s energy policy.

Energy costs exacerbate the obstacles to Japan’s economic recovery. Historically, 80% of its energy supplies are imported, making the country vulnerable to overseas market fluctuations and security threats. As such, the disaster at the Fukushima nuclear plant in 2011 was not only a national tragedy but a major blow to economic growth. All but two of Japan’s nuclear reactors were shut down in the aftermath of the catastrophe.

The government declared in July 2014 that two nuclear reactors in Sendai were safe enough to be restarted but the public lacks trust in officials and has become suspicious of nuclear power. Abe was hoping that a charm offensive from Obuchi could ease the way back towards regaining the 30% of national electricity supplied by nuclear power.

All at sea

Alongside domestic woes, there are concerns on the international front. Abe has controversially committed to constitutional reforms that would end Japan’s long-held “pacificism”. In July this year, he said he wanted to enable Japanese troops to use force overseas to defend Japan’s allies, even if Japan itself is not under attack. This would mark a significant shift in Japan’s foreign policy, which was developed in the wake of World War II.

Washington has consistently encouraged Japan to play a more proactive security role and the Japanese government has long been eager to keep the US on side in its dispute with China about ownership of the Senkaku/Diaoyutai Islands. But consolidating Japan’s treaty commitments to the US is a risk, as it could further antagonise China.

Abe is indeed under pressure – and he has been here before. His 2006-2007 administration was rocked by resignations and he eventually stepped down, citing ill health. In Japan, the fall of prime ministers is a relatively frequent event and it remains to be seen this time whether Abe can strengthen his hand once again. To last, he needs to stabilise the economy, push through difficult reforms and energy initiatives, and balance key foreign policy objectives.

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