Seoul English radio asked me to speak last month on Shinzo Abe’s return as Japanese prime minister. (Here is the program I speak on several times a month, and I will be on again tonight at 7:45 pm KST.) I didn’t get a chance to put up my thoughts on Abe earlier, so here we go.

Abe is fairly controversial, because he’s a nationalist and made the wrong noises in the past about Japan’s war crimes in WWII. But I also think he is tactically smart enough to avoid openly provoking the Koreas and China on that. Watch for whether or not he moves to alter the Kono Declaration. That is the big benchmark to focus on. Unfortunately Abe has grumbled about changing it, but I don’t think he will. Similarly, while he has visited the Yasukuni Shrine, he did not do so when he prime minister before. So my sense is he’s reasonable intelligent on these issues, even if the Japanese right continues to be disturbingly unreconstructed about the war. But at least Abe’s trying to talk with Korea again after the implosion of relations last year. That’s a big of progress.

Anyway, the interview follows the jump.

1) Are growing right-wing sentiments in Japan a reflection of discontentment with the Democratic Party of Japan? Observers have said that this is not a victory of the LDP, but more of a massive defeat of the ruling party. What contributed to this?

That’s right. The LDP got less than 30% of the raw vote . It won its majority, because the opposition was so fragmented. This is not a mandate or a landslide in the actual voting, just in the statistical representation in the Diet. Abe even admitted this publicly.

The DJP lost a lot of support because of its handling of the tsunami and the resultant near-meltdown of the Fukushima nuclear plant. It also recently sought to double the sales tax in order to reduce Japan’s soaring deficits and debt. Former PM Noda was something of a fiscal hawk, demanding austerity and tax hikes to close the budget gaps. As in Europe, that was not popular and lead to a backlash.

Beyond that the DJP simply hasn’t governed very well. They came in a few years ago with lots of big talk about shaking up Japan. The DPJ was going to focus on social welfare instead of big business. They were going to renegotiate the relationship with the Americans, particularly regarding US troops in Okinawa. They were going to focus on global warming and fixing Japan’s relations with Asia. The idea of an ‘East Asian Community’ was thrown around for a few years. But none of this really went anyway.

But the really big issue, always in the background, is the economy. Japan has been in and out of recession for almost 25 years now. It’s now in its 4th technical recession since 2000. Its national debt exceeds 200% of GDP – which is an absolutely terrifying figure. Deflation, which creates all sorts of weird economic effects has been a problem since the 90s. The real burden on any Japanese office holder is to get the economy moving. That was the big issue for this election, as it has been for awhile. Japanese incumbents who can’t figure out how to get Japan out of its rut will get kicked out, and that applies to Abe too. If he can’t get Japan growing again, he’ll lose the next election too.

2) The LDP-led coalition secured a two-thirds majority in the lower house of parliament. What kinds of issues are at the forefront for them to tackle in the coming days?

Probably the economy and energy, and there may be efforts to slow the sales tax rise and greater public discussion of the Trans-Pacific Partnership, or TPP, trade deal

Well the big promise, the most controversial one is unlimited quantitative easing, which is central bank-speak for inflation. As we said, Japan has had deflation, which is pretty rare, especially in developed economies, for two decades. Theoretically, deflation sends rather weird incentives to consumers. It encourage high saving, because prices will go down theoretically. Because it’s so rare, it’s not as researched, and we don’t really know too much about how to defeat it.

Something a little similar has happened in the US in the last few years, and the Fed policy has been to flood the market with dollars. Inflation encourages spending, because it says your dollar or yen has greater purchasing power today than tomorrow. The government also wants to spend lots of money on infrastructure as stimulus, but that’s of limited value. Like Korea, Japan is already overbuilt. It has enough ‘bridges to nowhere.’ What Japan really needs to do, IMO, is ignite consumer spending.

There is also still the tsunami clean-up, including a national debate about nuclear power, broached by the near-meltdown at Fukushima. Abe has quietly said he wants to keep nuclear power in Japan, and given how long it takes to build up or shut down a nuclear plant, and how short Japanese PMs tend to be in office, I would guess that this will be a early priority.

Finally, he’ll go off to the US soon. Abe has promised a tough line on the Senakaku islands spat, and he’ll need US support for that. The DJP was all over the place on the US alliance – sorta like the DJ and Roh administrations in Korea. So like Lee MB, I imagine Abe will seek to restore the US alliance. Just like in Korea, that alliance is a good hedge against China and NK.

3) Abe plans to send Japanese personnel to Senkak and pledged no compromise on claims to the disputed islets. To what extent can Japan risk alienating China, with whom it has an important economic relationship?

That’s a really good question. Lots of Asia experts have suggested that economic ties between Asian states should moderate conflict – why fight over some rocks in the sea when we can all get rich and buy blu-ray players and nice cars? My sense is that the economic costs are probably higher for China than Japan. Japan can relocate production to other cheap locations, as it did in the 1980s, and Japanese products are successful all over the world in a way China’s are not. China’s dealings with Japan are an important benchmark for foreign investors of how still-developing China deals with the outside world. Does is follow the rules of the global economy, of which Japan is very much a part, or not? If China cracks down hard on Japanese in China, other foreigners will run for the exits too.

4) Do South Koreans have reason to be concerned about escalating tensions with Japan? Abe’s grandfather was arrested but not indicted as a World War II war criminal and he himself has rescinded Japan’s apology to wartime sex slaves.

I don’t think so. Abe did not visit Yasukuni when he was PM, and he was more moderate on China back then compared to what he said in the campaign. He certainly doesn’t need a tangle with the two Koreas at the same time the trouble with China is sharpening. It is true that Abe has a family history with the imperial government from the Pacific War, but lots of Japanese politicians have had uncomfortable links to the past (as did Park Chung-Hee too it should be said). While that may be generally disagreeable in itself, I don’t see any reason why this would raise Korean-Japanese tensions beyond where they already are.

5) Abe’s government may amend its pacifist constitution. What impact do you project this will have in East Asian international relations? Should we fear a return of Japanese militarism?

This will have more impact on China than Korea. China, and standing up to China, was an issue in the campaign. This does leave Korea in a tight spot, right between the two. Since China’s rise in the last two decades, Korea has tried to avoid choosing between China on the one side and the US and Japan on the other. Abe may make holding that middle ground even harder.

Filed under: Foreign Policy, Japan, Korea (South)