By Linda Sieg and Leika Kihara
TOKYO Nov 15 Five years after ending a brief
tenure marked by nationalist rhetoric tempered with pragmatic
diplomacy, scandals in his cabinet and a devastating election
loss, former Prime Minister Shinzo Abe is poised for another
shot at Japan's top job.
That prospect is raising concerns that the 58-year-old
grandson of a prime minister would worsen already chilly ties
with China, while at home pressuring Japan's central bank to
take extraordinary steps such as negative interest rates to
rescue the economy from recession, a policy prescription that on
Thursday sent the yen tumbling.
"What else can we do but hope that he will do better?" said
Gerry Curtis, a political science professor at Columbia
University in New York, adding, however, that Abe has given
little cause for optimism since taking over again as head of the
main opposition Liberal Democratic Party (LDP).
"Let's hope that once he becomes PM again, realism will
Abe, a nationalist who took office as Japan's youngest
post-World War Two premier in September 2006, quit abruptly
after a year in power that was dogged by scandals, a rout for
his LDP in an upper house poll and a crisis over Japan's support
for U.S.-led operations in Afghanistan. He cited ill-health as
the reason for resigning.
In a surprising comeback, Abe was elected LDP party
president in September, putting him in pole position to become
premier if, as many expect, his party wins the most seats in a
snap lower house election that Prime Minister Yoshihiko Noda
said on Wednesday he would call for Dec. 16. That would return
the LDP, which ruled Japan for most of the past six decades,
back in power just three years after a huge election defeat.
Since taking over the party, Abe has visited the Yasukuni
Shrine for war dead - seen in the region as a symbol of Japan's
past militarism, talked tough on a Sino-Japanese row over tiny
islands known as the Senkaku in Japan and the Diaoyu in China
and reiterated calls to easing constitutional restraints on
On Thursday, he said he will not yield to China in the
islands row and would work to boost Japan's defence spending,
which has fallen for the past decade, if necessary in response
to China's military buildup.
"If China is going to raise spending, I want to send a
message that we will keep pace," he told a gathering of media
and business executives.
On the economic front, Abe has called for extreme steps by
the Bank of Japan to lift the economy out of years of deflation
- such as printing unlimited yen and setting interest rates
below zero. He has also cast doubt on a commitment to implement
a two-stage rise in the 5 percent sales tax to 10 percent by
The tax rise, aimed at curbing the biggest public debt
burden among advanced nations at more than twice the size of the
economy, was Noda's signature policy success during his year in
office, but he needed LDP support to enact it.
Opinion polls show the LDP leading over Noda's Democratic
Party, which swept to power for the first time in 2009 only to
see their support sag, but they don't seem too enthused about an
Abe comeback. Only 28 percent of voters surveyed by NHK public
TV backed Abe as "most suitable" to be Japan's next prime
minister. That compared to 16 percent who picked Noda, while 51
percent said "neither" were suitable.
PRAGMATISM VS NATIONALIST IDEALS
To be sure, Abe - whose core agenda in 2006 was a call to
create a "Beautiful Japan" that would restore traditional
values, take pride in its past and play a bigger role on the
global stage - won praise during his first term for mending ties
with China that had chilled under predecessor Junichiro Koizumi.
Some pundits and politicians say Abe would be pragmatic this
time too and steer away from exacerbating frictions between
Asia's two biggest and tightly intertwined economies.
"He's a hawk, but if he becomes prime minister, he will have
to switch to a more realistic stance," said independent
political commentator Atsuo Ito.
Abe on Thursday said there was "no room for negotiation" on
the island feud, but added it was important to have strategic
relations with China to preserve economic ties.
Abe has also suggested Japan should change a landmark 1995
apology for its wartime aggression and a separate 1993 statement
on "comfort women" in which Japan apologised for military
involvement in forcing women into sexual slavery at wartime
brothels, a stance sure to upset South Korea as well as China.
"Leaders do things differently than candidates, but Tokyo
and Beijing have painted themselves into a corner," said Jeffrey
Kingston, director of Asia studies at Temple University's Japan
campus, referring to the row over tiny East China Sea isles.
"There is mutual glowering and I don't think Abe is clever
enough or inclined to make much headway on that," he said.
Financial experts say Abe would probably put priority on
reviving growth over repairing Japan's tattered finances and
might delay raising Japan's sales tax, a move that may lead to a
credit rating downgrade and rise in bond yields.
A vocal critic of the BOJ, he wants the central bank to
engineer inflation of 3 percent, three times higher than the
current target, by printing unlimited yen.
Although the central bank is independent, Abe's threats
matter because as premier he would have the authority to pick
the successor to BOJ Governor Masaaki Shirakawa, whose five-year
term ends in April.
"The most symbolic form of pressure would be how Abe picks
the new BOJ governor," said Koichi Haji, chief economist at NLI
"If he opts for a vocal advocate of aggressive easing, the
central bank may resort to extreme measures like full-blown QE
(quantitative easing). If he picks someone with a milder view,
the BOJ will still continue to ease but take more moderate