Abe Takes an Electoral Beating

On July 1 this year, the ANA InterContinental Tokyo hotel was the site of a policy debate between Prime Minister Abe Shinzô, the head of the Liberal Democratic Party, and his counterpart Ozawa Ichirô from the opposition Democratic Party of Japan. The prime minister spoke forcefully to the audience: "What this election is asking is which one of us—Mr. Ozawa or me—the people of Japan think is more fit to be prime minister."

At this point the National Diet had just completed its ordinary session, and the campaign for the upcoming House of Councillors election was effectively already underway. Public opinion polls showed that support for the Abe cabinet had been plummeting since mid-May, when it was revealed that the Social Insurance Agency had lost track of some 50 million pension payment records. The LDP was fighting an uphill battle at this point, and Abe must have figured that by framing the choice in these terms, he could convince the Japanese people to vote for his party in the coming contest. But public opinion only grew harsher toward the LDP in the days and weeks following the July 1 debate. Defense Minister Kyûma Fumio resigned on July 3 in the face of an uproar over his June 30 comment that the atomic bombing of Nagasaki had been something that "couldn’t be helped," and just a few days later a financial scandal emerged involving Minister of Agriculture, Forestry, and Fisheries Akagi Norihiko.

It was against this troubled backdrop that Abe’s party headed into the House of Councillors election on July 29. The result was a decisive defeat for the LDP, which won only 37 of the 121 seats—half the total in the house—up for election. This was the party’s worst trouncing in an upper house election since 1989, when it took just 36 seats. The New Kômeitô, the LDP’s partner in the ruling coalition, performed similarly poorly, winning just nine contests. By way of comparison, the DPJ leapt ahead in its upper house standings, taking 60 seats. Added to its total not up for election, this made the DPJ the largest party in the House of Councillors, and the LDP, for the first time since its formation in 1955, lost its top position in that chamber. Though it is still firmly in control of the powerful House of Representatives, the LDP-Kômeitô coalition now holds just 103 seats in the upper house, where the opposition parties are now the majority.

When the LDP suffered its historic loss in 1989, Prime Minister Uno Sôsuke stepped down to take responsibility for his party’s drubbing. Prime Minister Hashimoto Ryûtarô did the same in 1998, when the LDP took a disappointing 44 of the seats up for election. This precedent had created the expectation that Abe might be driven to resign if the LDP won fewer than 45 in this summer’s upper house vote.

After the polls closed and the projected results started rolling in, all media organs began predicting that the LDP would end up with a number of wins somewhere in the high thirties. At LDP headquarters, however, these same reported results were met almost immediately with an announcement by Prime Minister Abe, who said: "I’ve only just started work on my nation-building program. In order to press ahead with reform and create a new Japan, I must continue to fulfill my duty as prime minister."

Abe went on to speak about the basic policy course set forth by his cabinet to date: "I believe that most of Japan’s people understand and support my basic policy line." To respond to this support, he went on, he intended to reshuffle his cabinet at an early date. (In fact he waited until August 27 to do so.) The prime minister’s announcement that he intended to remain in office was met by opposition from a small number of politicians in his party, but most of the influential members of the LDP expressed their support for a continuation of his administration.

In the end, the July 29 House of Councillors election proved to be unusual in three respects. First, the Liberal Democrats were soundly defeated. Second, Prime Minister Abe stayed on in his post even though previous leaders from his party had stepped down after similarly severe losses. And third, the LDP became the number-two party in the upper house, a majority of which is now in the hands of the opposition.

Below I will explore some of the reasons that these unusual situations came about, following this exploration with some modest predictions about the way the Japanese political scene is likely to unfold from here on out.

MONEY AND PENSION PROBLEMS

The main reasons that the LDP went down to its historic defeat are undoubtedly the string of scandals involving the public pension system and the shady ties between politics and money that hit the news from mid-May on. (On the day after the election Japan’s four leading newspapers—the Asahi Shimbun, the Mainichi Shimbun, the Nihon Keizai Shimbun, and the Yomiuri Shimbun—all cited these two factors as causes of the LDP’s losses.) The pension scandal refers to the government’s slipshod record keeping, as a result of which it lost track of 50 million contributions into the National Pension system. This sloppy management means that some people may receive smaller benefits than they are entitled to; in extreme cases, participants who dutifully paid their contributions may end up receiving nothing at all. This disaster became the focus of public attention beginning in May, when DPJ legislators hammered on the issue in Diet deliberations. Public distrust of the nation’s management of its pension schemes skyrocketed, along with criticism of the Abe administration and the LDP.

The political money scandals, meanwhile, arose from the murky accounting by some cabinet members of their use of political funds. State Minister for Administrative Reform Sata Gen’ichirô stepped down from his post in late December 2006 after he was found to have booked fictitious office expenses. The furor died down for a while, but it was reignited toward the end of May when Agriculture Minister Matsuoka Toshikatsu, who had been under a stream of criticism for claiming millions of yen for his office’s utility bills, committed suicide. Matsuoka’s replacement, Akagi Norihiko, was soon accused of unclear accounting too; he refused to provide receipts for millions of yen in expenditures claimed for a nonexistent office. The period running up to the election turned out to be one filled with nonstop accusations that the Abe cabinet and the LDP were hopelessly enmeshed in illicit ties between money and politics.

All of this had a brutal effect on Abe’s image in the public eye. Asahi Shimbun polls tracked support rates for the Abe cabinet falling from 44% in the middle of May, when these stories began hitting the press, to as low as 28% at one point.

SIDE EFFECTS OF STRUCTURAL REFORM?

Were the twin scandals detailed above the root cause of the LDP’s defeat in the upper house election? News coverage has noted other contributing factors. Some newspaper reports have stressed that the negative side of reforms carried out by Prime Minister Koizumi Jun’ichirô has surfaced during the administration of Abe, his successor. (The Asahi Shimbun and Yomiuri Shimbun emphasized this point in their July 30 reports.) Observers focusing on this area describe two main connections between Koizumi’s reforms and the LDP’s 2007 upper house defeat. First, the structural reform efforts harmed the interests of groups that were traditionally strong supporters of the Liberal Democrats, causing them to withdraw support from the party and hamstringing its election chances. Second, the reforms gave rise to gaps in economic well-being between the wealthy and poor and between different regions of the country; this built antipathy toward the ruling party and contributed to its poor showing at the polls. The Yomiuri Shimbun noted in an editorial on July 30 that if Abe had worked to visibly separate his own administration from the areas where Koizumi’s policies had gone too far, he could have escaped being painted with the same brush as his predecessor.

In truth, though, the negative aspects of structural reform are being overemphasized as factors in the Liberal Democrats’ defeat. Even while Koizumi was still in office, his reform measures were attracting plenty of opposition from traditional supporters of the LDP. Even so his cabinet was able to maintain a generally high level of popular support, and he led his party to a historic victory in the September 11, 2005, House of Representatives election. If the old-school LDP supporters were not strong enough to hold down Koizumi’s poll figures or prevent the 2005 victory, it seems unlikely that they can have significantly swayed the results of this year’s election.

What, then, of the issue of economic gaps? There is no denying that many Japanese people feel that recent years have seen a widening of such gaps, and this perception may well have contributed to the election results to a certain extent. It is less likely that this public perception was a truly deciding factor in the contest, though. One public opinion survey conducted by the Asahi Shimbun on July 30–31 asked respondents to choose the main cause for the poor LDP showing from among just three options: the pension problem, the cabinet ministers’ scandals, and the growing wealth gap. Only 12% of respondents picked the last item.

Any discussion of the issue of economic inequality must pay heed to one important fact: To view these gaps as a problem facing Japan is not the same as viewing them as a reason to put an end to structural reform efforts. An Asahi Shimbun survey conducted on August 26–27, 2006, toward the end of Koizumi’s time in office, makes it clear that most people do understand this difference. While fully 73% of respondents stated that inequality was on the rise, only 22% supported calling off the reform drive.

THE RETURN TO THE OLD LDP

An examination of the reasons for the LDP’s upper house defeat must look beyond issues like economic inequality and other effects of structural reform to focus on a far more important factor: the growing belief among the Japanese people that the ruling party under Abe was gradually reverting to the "old-style LDP." One reason for this perception was Abe’s failure to grapple with the tasks of reform in a visible way. By drawing a clear line between his own policies and the earlier reform drive, Abe undermined public support for his cabinet and his party. As I will explain below, this process has been clear to see in the opinion poll results over the course of his time in office.

First, we should take a look at what it means to revert to the "old-style LDP." Understanding this requires a firm grasp of the historical significance of Koizumi’s administration. The LDP administrations that had existed up until Koizumi took the reins had all shared certain characteristics. They made use of public spending and regulatory measures to protect people in particular industries, in exchange for which they enjoyed strong support from those people when election time came around.

Prime Minister Koizumi parted ways with this LDP tradition, though, producing his structural reform platform as a way to break away from his party’s past policies. This reform took a variety of shapes, but its goals were fundamentally the same: to take capital and human resources from relatively less efficient economic sectors and transfer them to sectors with higher efficiency or those fulfilling more urgent social needs, thereby sparking new economic growth.

By raising the banner of structural reform, the Koizumi cabinet was turning its back on the interests of the base that had supported the LDP in the past. Cuts in public works spending meant slashing the benefits provided to the construction industry; mandatory reductions in fees for medical care dealt a blow to parties in the medical industry. The biggest of all of these moves was the privatization of the national postal service system, by which Koizumi cut off the lifeline of support from what had been the most reliable vote-getting group for the party: the nationwide network of postmasters. In addition, Koizumi pushed for the "trinity reforms" aimed at decentralization of taxation and public finances. While this cannot be classified as a measure stripping protection from any one industry, it was a move that harmed the viability of regions with less-than-sound economies.

It was only to be expected that members of the LDP, who had enjoyed broad popular support thanks to the policies traditionally espoused by the party, would oppose these reforms. Koizumi’s term was marked by rising friction between him and the LDP’s old guard—friction that reached its peak during the infighting over the issue of postal privatization. Some Liberal Democrats in the Diet voted against the privatization bill in a bid to bring down the Koizumi cabinet, and these holdouts succeeded in blocking the bill’s passage in the House of Councillors. The prime minister’s response was to dissolve the House of Representatives and take the matter straight to the people in a general election in September 2005. The question of whether to privatize Japan’s postal services was the nominal focal point of this contest, but the real decision being made was on structural reform itself, of which postal reform was merely a symbol.

Under Koizumi’s orders, the LDP withdrew its endorsement from the legislators who had voted against the postal reform bill and did its best to drive them out of office by selecting and working strongly for rival candidates. In this way the party sent the Japanese people a clear message that it was willing to press ahead with reform even if it meant eliminating its own members opposed to that change—in short, that it would not depart from its policy course. This message was encapsulated in Koizumi’s promise to "smash the old LDP" and win the election on the strength of the new version of the party.

It is indeed likely that Koizumi cost the party some support from its traditional base by pushing forward with this shift in LDP priorities. In doing so, however, he succeeded in winning fresh support from urban residents and unaffiliated voters. This is evident from the results of the September 2005 vote in Tokyo, where the LDP won 29 seats and lost in only one race; 38% of unaffiliated voters, said to make up around one-fifth of the voting population as a whole, voted for LDP candidates in the electoral districts.

READMITTING THE REBELS

In September 2006 Koizumi stepped down and was succeeded by Abe Shinzô. Speaking at a press conference following his designation as prime minister on September 26, Abe positioned his new administration as a continuation of his predecessor’s: "I firmly intend to carry forward the structural reforms that Prime Minister Koizumi has advanced for the last five years. Indeed, I mean to accelerate them and make them even more robust."

This was a strong statement of Abe’s will to continue down the reform path. Soon after he took office, though, he made an important decision that cast deep doubt on his real dedication to reforming Japan. This was his readmission to the LDP of the "rebel legislators" who had gone against the postal reform plan. Abe had in fact indicated his willingness to readmit these politicians in the run-up to the September 2006 LDP presidential election, the contest that determined who would succeed Koizumi. And early in October he instructed the LDP’s top officials to welcome the expelled members back into the fold. In doing so he acceded to the wishes of the LDP membership in the House of Councillors, whose leaders judged that the cooperation of these politicians would be needed for the party to perform well in the upper house election to take place the following year.

In late November, following discussions within the LDP concerning the conditions to be placed on the readmission of these politicians, the party formally declared that 11 rebel legislators were once again members in good standing. The reasons given for this move were that the legislators had voted for Abe in the Diet balloting to tap the next prime minister and that they had signed pledges to honor the LDP’s public commitments made during the previous general election. It was also noted that often in the past party members had left over conflicts within the LDP, only to be welcomed back later. For veteran party members, therefore, readmitting the postal rebels seemed only natural. But the general public did not see it this way. A public opinion poll by the Asahi Shimbun in the middle of November 2006 found that 47% of respondents opposed readmitting the rebel legislators to the ruling party. Another survey implemented a month later showed that this backlash had grown still stronger, with fully 67% of respondents disapproving of the LDP’s decision. This also contributed to a serious decline in approval ratings for the Abe administration: While Abe had enjoyed support as high as 63% in late September, soon after launching his cabinet, this figure dropped to 53% in mid-November and to 47% in December, after the rebels came back to the LDP. During this time the administration was also losing the support of unaffiliated voters. In September 47% of respondents claiming affiliation with no political party supported the prime minister, but this number plummeted to 33% in November and just 27% in December.

This falling popularity was hardly surprising in view of the history of the September 2005 general election. In that contest the LDP made postal privatization the key plank in its platform, and in every electoral district but one it fielded a pro-privatization candidate. For the LDP to allow these rebels, who had gone against the party on the postal privatization issue, back into the party after battling against their reelection in 2005 was tantamount to breaking its own promise to the public. And as I noted above, this privatization was emblematic of structural reform as a whole, meaning that this LDP decision appeared to signify acceptance of politicians who lacked dedication to the cause of reform. In this way Prime Minister Abe undermined his own administration’s pro-reform credentials.

It is interesting to examine the rate at which Abe’s cabinet lost its support. Opinion polls spanning the period from early October to mid-December 2006 show a drop of 16 percentage points in the cabinet’s approval rate. Much of this drop can probably be ascribed to the readmission of the postal rebels. Another period that saw major change in the poll numbers was from the middle of May 2007 (44% in support) through the election at the end of July (around 30%). A simple calculation shows that if the expelled members had not been let back into the party, the LDP could have gone into the House of Councillors election with a cabinet approval rating somewhere above 40%. Koizumi’s cabinet had ratings in this range just before the July 2004 upper house election, and the party won 49 seats in that contest. It is likely that the LDP could have avoided its 2007 drubbing if it had not lost public support by letting the rebels back in.

A LACK OF FOCUS ON REFORM

The Abe cabinet came under heavy fire after the readmission of the LDP rebels. On the fiscal policy front, however, it had actually been adhering to the reform line and making steady progress on reducing government spending. The supplementary budget for fiscal 2006 (April 2006–March 2007) had slashed ¥2.5 trillion from the amount of new government bond issues, and the 2007 budget set total new bond issuance at ¥25.4 trillion, a full ¥4.5 trillion lower than the previous year’s amount. This shrank the primary budget deficit in the general account to ¥4.4 trillion. But despite this real progress on the fiscal front, the administration made no publicly visible moves to tackle the task of structural reform.

An example of this lack of visible focus on reform can be seen in the naming of the government’s economic and fiscal policy package for fiscal 2007. This policy package has been compiled annually by the Council on Economic and Fiscal Policy since 2001 to set forth the government’s fundamental approach to the nation’s economy and fiscal outlook. Up through last year it bore the official title Basic Policies for Economic and Fiscal Management and Structural Reform. But this year "structural reform" was dropped from the name, and the CEFP document was titled simply Economic and Fiscal Reform 2007. What is more, this year’s package failed to focus on select policy goals, but sought instead to achieve something in an excessively broad range of fields.

In addition to the question of Abe’s dedication to continuing the structural reforms started by his predecessor, there was the problem that his administration has not made it clear where its emphasis lies in terms of economic policy. The CEFP functions under the prime minister as an organ for debating economic policy choices. In addition to this council, which played a prominent role during the Koizumi years, the Abe cabinet has set up numerous advisory organs, including a team to create strategic schemes to raise the country’s growth potential, a council to promote "second chances" for people seeking to return to school or the workforce, a council for the Asian Gateway Initiative, a council to focus on specific strategic issues (notably support for children and families), and a council to promote Abe’s "beautiful Japan" program. There has been little clue as to which of these many groups is of primary importance to the cabinet, though, and none of the results of their deliberations have reached the public in the form of easily understandable policies. Abe did craft his "second chance" policy in response to rising economic inequalities, a problem receiving considerable media attention, but this was a policy without clearly defined content, and it did not gain widespread public support.

OUT OF TOUCH WITH THE PUBLIC

What this plethora of councils shows is that Prime Minister Abe’s focus has been on matters other than economic policy. His primary emphasis has been on policy issues related to the fundamental being of the nation. Revising the Constitution has been perhaps the number-one goal of his administration from its very beginning, and during Abe’s time in office the Diet passed a bill—in this case proposed by legislators rather than the Cabinet Office—defining the process for a national referendum, which will be required for any constitutional revision. Also passed was a revised Fundamental Law of Education that aims to bring about deep reform in the Japanese educational system.

Abe has also effected considerable change in the areas of foreign affairs and security policy. His visits to South Korea and China soon after taking office greatly improved Japanese ties with those two nations, which had fallen into a deep chill under Prime Minister Koizumi. The longstanding issue of upgrading the Defense Agency to a full ministry has also been dealt with on Abe’s watch, and he has convened a council of influential people to consider the possibility of interpreting the Constitution in such a way as to allow Japan to take part in collective self-defense actions. And this summer he went so far as to extend the regular Diet session in order to push through a revised National Public Service Law introducing merit-based promotion and remuneration systems and placing limits on the practice of amakudari, bureaucrats’ "descent from heaven" into cushy positions in government-affiliated organs and private-sector companies after leaving the civil service.

The areas that Abe has addressed with some success, however, are not necessarily the areas in which the public had hoped his cabinet would achieve results. Public opinion polls have shown people to be most interested in economic measures, particularly in the areas of social security, economic stimulus, and employment. Interest in constitutional reform has been markedly low. An October 2006 Yomiuri Shimbun survey, for instance, found that 59.2% of respondents wanted the government to tackle pension system reforms and 50.6% economic and employment measures; constitutional reform, meanwhile, was a key area of concern for just 5.7% of respondents.

One area in which the policy interests of the Abe cabinet and the Japanese people might have meshed was the reform of the nation’s educational system. If Abe had focused the spotlight on the need to improve the quality of Japan’s schools, he could have made a strong case that this was at once needed structural reform and the best possible way to tackle economic inequalities in society. Raising the quality of school education for each member of society is, after all, a way to boost the nation’s economic potential over the long term, and by guaranteeing quality education across the board as a public service, the state can prevent the rigid stratification of economic classes. But under Abe, debate on educational reform spread its focus to peripheral issues: starting the university academic year in September rather than April, rethinking approaches to moral instruction, and even educating adults in proper parenthood. The discussion was never distilled into anything that the people could grasp easily.

In the end, the Abe cabinet proved unable to hammer out any economic policy that could be held up to the people as an example of its leadership. This helped focus people’s attention on the pension scandal, which was eventually dragged into the House of Councillors election as a major point of contention. If Abe had developed more marketable policies, his party would not have been constantly on the defensive during the upper house campaign; but all the factors described above combined to hand the LDP one of its worst election defeats in history.

ABE SOLDIERS ON

As noted in my introduction, Prime Minister Abe was quick to announce he would remain in office despite his party’s historic loss, and with the exception of a few voices in the LDP calling for him to leave, his party for the most part stood behind his decision. Why was Abe able to stay in power when past leaders facing similar situations, like Prime Minister Uno in 1989 and Prime Minister Hashimoto in 1998, had been forced to step down? There are two answers to this question.

First, the influence of the factions within the LDP has dwindled over the years, as they have grown weaker due to the 1996 electoral reform creating single-seat districts and proportional-representation blocks, as well as stricter regulations on political funding. Following the LDP loss in the July 1989 upper house election, Uno expressed his desire to stay on as prime minister, but the party factions spoke with a unified voice to tell him to step down. And after the July 1998 contest, Hashimoto was pushed out of office by the faction headed by Obuchi Keizô—the mighty Keiseikai, which he had led himself before becoming prime minister. The factions continued to see their power drain away thereafter, though. In April 2001 Koizumi Jun’ichirô won the LDP presidency without the backing of a powerful faction, and as prime minister he chose members of his cabinet without paying heed to factional considerations; this made it clear that these LDP groupings were no longer in the driver’s seat when it came to choosing the party’s chief or the members of LDP-led cabinets.

The party continues to have factions even today. They are much less cohesive than in the past, though, and it has become more difficult to get all members of a faction to work together on policy issues. In the past faction bosses wielded great power, and once a chief made a decision, the politicians in his faction would line up obediently to support it. This meant that all it took was a few of those influential figures recommending that the prime minister step down to trigger a powerful movement within the party demanding just that. Today things are different: Even if a significant number of LDP politicians hope to see the premiership change hands, they find it difficult to launch a concerted movement to bring it about because of the lack of factional cohesiveness.

The second reason that Abe is still in power is that the members of the House of Representatives still have two years left in their terms in office. Given the dismal support ratings for the LDP today, there is little chance that the prime minister will dissolve the house and call a snap election anytime soon. Most of the LDP members have judged that there is no pressing need to remove Abe right away; they can safely sit and watch how the situation unfolds for a while longer.

A ROCKY ROAD FOR THE CABINET

Prime Minister Abe reshuffled his cabinet on August 27. He appointed more experienced and veteran members of the party to ministerial posts than in the initial cabinet he formed last September. The public welcomed the reshuffle and the cabinet approval rate picked up. But now that the opposition parties hold a majority of seats in the House of Councillors, his LDP will find it harder to get legislation through the Diet. This is not the first time for the LDP to face a situation where the opposition has held a majority in the upper house. But compared with cabinets that have had to deal with a split Diet in the past, Abe’s present cabinet faces a more difficult situation than any other since the LDP was formed in 1955. There are two reasons for this.

First, in previous periods when the Liberal Democrats lacked a majority in the upper house, they never had to win the consent of the top opposition party in order to get their bills enacted; instead they were able to work with smaller parties to secure the necessary votes. Following its heavy losses in the 1989 election, the LDP began constructing cooperative relationships with parties like the Kômeitô and Democratic Socialist Party, through which it remained successful at getting its legislation passed. The LDP had serious trouble pushing its bills through following its July 1998 defeat in the upper house election, but it soon went to work at building a majority, first forming a coalition with the Liberal Party and then inviting the Kômeitô into the government. The makeup of the LDP-led coalition has changed over the years, but the basic pattern has remained the same.

Until July this year this formula worked well, allowing the LDP to achieve its legislative agenda. In the wake of the upper house election, however, the landscape has changed considerably, and prospects are slim that the LDP can find the small party cooperation it needs to secure passage of its bills. In order to make progress on the legislative front, the LDP must now negotiate with the Democratic Party of Japan, which heads the opposition. It is easy enough to predict that the DPJ will strike a combative stance, with its eye on winning power in the lower house in the next general election; this means that the Abe cabinet will have rocky going as it sends bills through the Diet.

Second, in contrast with previous periods when the LDP needed to cooperate with other parties to win upper house passage for its bills, this time the party is no longer the largest single group in the chamber. Coming out of the July election as the second-place party, the LDP has had to yield the presidency of the House of Councillors and the chair of the Committee on Rules and Administration to the DPJ. These two posts wield great power in setting the schedule for upper house deliberations, meaning that the LDP has effectively lost control of that house’s agenda to the DPJ for the extraordinary session of the Diet to begin in September.

These two differences make it quite clear that the Abe cabinet, in comparison to its counterparts in previous split-Diet eras, is looking at a far more difficult time getting its bills passed. Under such conditions, how will the political scene evolve? I can present two scenarios.

One scenario that we can think of is a return to the old LDP, with reduced momentum for structural reforms. This seems conceivable on the basis of recent remarks by Prime Minister Abe and top figures in the party. The Abe cabinet would give up trying to push through structural reforms, considering this effort to have been the cause of the LDP defeat in the election. On the day of cabinet reshuffle, Abe acknowledged that the LDP lost the election because it did not pay sufficient heed to the gap between the center and provinces. Asô Tarô, the party’s newly appointed secretary general, criticized former Prime Minister Koizumi, who had implemented structural reforms, declaring, "it is necessary to reconstruct the LDP, which was broken down by the one who promised to do just that."

Thus, the reshuffled cabinet will attempt to formulate a set of policy measures to reduce regional disparities. In his policy speech to the Diet on September 10, Abe made a commitment to policies aimed at assisting revival of rural areas. Such policies in the end are likely to mean a revival of pork-barrel projects, an approach totally opposed to structural reforms. Yet important cabinet ministers have also served in the Koizumi cabinet and have made their own commitments to the 2006 comprehensive overhaul of revenue and expenditure, which set forth structural reforms for the next five years. Thus, it is doubtful that all cabinet ministers will sincerely support measures to respond to regional disparities.

If that is the case, what will be the result in the first scenario? Policy murkiness. The cabinet will find it awkward to push through structural reforms, but at the same time it will not be able to push through "regional gap" measures. In this case, the LDP will look like Aesop’s bat (an indeterminate creature, neither bird nor beast), and this will have serious implications for the next general election.

As the murky commitment to structural reform was a major factor behind the LDP’s defeat in the July election, a second scenario is one that would help the Abe cabinet and LDP recover support from the public. Under this scenario, though unlikely at the moment, Prime Minister Abe steers his administration in the direction of structural reform. He energetically proposes policies that, while they may or may not be acceptable to the opposition DPJ, are attractive to the Japanese people. It will be difficult for the Democrats to dig in their heels against proposals that enjoy popular support. Even if the DPJ leaders make the decision to reject a bill in the House of Councillors, there is no guarantee that they will be able to enforce party solidarity. Looking ahead to the prospects for the next general election, this scenario, which if successfully implemented will keep the DPJ off balance, is probably the best option for the LDP. There is still much support for structural reforms in urban areas, which will be the main battlefield in the lower house election.

In any case, the most important factor in determining the fate of the cabinet as well as the ruling party is public approval of the cabinet. Regardless of the Abe cabinet’s policies, if its approval ratings remain in the doldrums, LDP legislators in the House of Representatives are very likely to call for a new prime minister as they near the end of their terms in office and face the prospect of going into a general election under an unpopular leader, placing many of them in danger of losing their seats.

Translated from an original article in Japanese written for Japan Echo.

© 2007 Japan Echo Inc.