Analysis: Even as election spells Japan PM win, big reform may lose out

Sun Jul 14, 2013 8:53pm EDT
 
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By Linda Sieg

TOKYO (Reuters) - Prime Minister Shinzo Abe is likely to win a mandate on Sunday for his three-part recipe to end stagnation in the world's third-biggest economy, but anyone expecting him to use it to push a "Big Bang" reform agenda may need a reality check.

Abe's Liberal Democratic Party-led bloc is expected to win a hefty majority in a July 21 upper house election, ending a "twisted parliament" in which the opposition controls the upper chamber. Media surveys published on Monday showed the LDP maintained a substantial lead over rival parties.

That stalemate has hampered policies for most of the past six years since Abe, then in his first term as premier, led the LDP to a humiliating 2007 upper house defeat. He resigned two months later and was followed by a string of short-term leaders.

Abe, who returned to office in December for a rare second chance, will have few excuses for shying away from reforms including deregulation that many see as vital to generating growth - but his commitment to doing so remains in doubt.

"What's required is the kind of thorough-going reform that Mr. Abe doesn't seem to have the vision or stomach for," said Jun Okumura, a senior advisor for Eurasia Group and former bureaucrat at Japan's trade and industry ministry.

"Just because he wins an election doesn't mean vested interests will be any more amenable to changes that would affect them negatively," he said. "A leader can do a lot with the ability to appoint and dismiss cabinet members and ultimately, the right to call a general election.

"But I don't see Mr. Abe as that kind of leader."

Hopes for his "Abenomics" prescription of hyper-easy monetary policy, big spending and steps to promote growth pushed up Tokyo share prices and weakened the yen even before his LDP-led bloc won a December poll for the powerful lower house.   Continued...

 
Japan's Prime Minister Shinzo Abe, who is also leader of the ruling Liberal Democratic Party, speaks to voters atop a campaign van in Tokyo July 4, 2013, at the start day of campaign the July 21 Upper house election. REUTERS/Toru Hanai