Tweet This
For Japan’s Prime Minister Shinzo Abe, the Ides of March came early this month, as a year-old scandal involving the sale of a public land came back to life, resulting in protests calling for his resignation and a drop in his support to as low as 36%. Abe has deftly survived political scandals before, but with a loss of faith in his leadership from the public and members of his own party, he may finally be on his way out. If Abe resigns, the question remains: what are Abenomics (his much vaunted economic policy) without Abe?
Related: The Good, The Bad And The Ugly Of Abenomics
When Abe assumed the mantle of Prime Minister in 2012, he promised to revitalize the Japanese economy with a new economic policy, “Abenomics.” Abenomics is based upon three principles, dubbed "the three arrows," of monetary easing, fiscal stimulus and structural reforms; it has had moderate success. The Financial Times credits the policy with doubling the value of the stock market since he came to office.
The scandal that won't go away
The scandal now troubling Prime Minister Abe involves public land sold to a private school operator, Moritomo Gakuen, headed by Yasunori Kagoike, in 2016. Moritomo Gakuen operated a kindergarten in Osaka that had incorporated a pre-war ultra-nationalist curriculum into the classrooms and had the support of Prime Minister Abe and his wife, Akie. Both Abe and Kagoike are connected via a right-wing nationalist group, Nippon Kaigi. According to the book, The Truth Of Nippon Kaigi (日本会議の正体) by journalist Osamu Aoki, the group believes Japan was not an aggressor in World War II, that the post-war pacifist constitution should be replaced with one that removes human rights, popular sovereignty, gender equality and restores Imperial Japan. The majority of Abe’s cabinet are also members of the group.
According to testimony in Japan’s parliament, Kagoike had originally planned to name the new school Shinzo Abe Memorial Elementary School and Abe’s wife, Akie, was slated to be the honorary principal. Moritomo Gakuen, had begun negotiations with the Ministry of Finance to purchase the land in 2013, and finally in June of 2016, the government sold him the land for 134 million yen ($1.25 million) almost 800 million yen ($7.5 million) less than the original appraised value.
Japan's media raises alarm
It was on February 9, 2017 that the Asahi Newspaper reported the land deal and raised questions about whether Abe had used his influence on behalf of the school. On February 17, Abe testified in Parliament that if he and his wife had played any part in the deal, he would resign as Prime Minister and as a Parliamentarian. Ten days later, Mrs. Abe resigned as honorary principal. In March 2017, school operator Kagoike testified that he had received a donation of one million yen in cash ($9,000) from Abe via his wife and asserted that his relationship to the couple was very close. However, the scandal hurt support for the project and Moritomo Gakuen filed for bankruptcy on April 21, 2017. At the end of July 2017, Kagoike and his wife, were arrested on fraud charges, related to public subsidies, effectively silencing both of them to making public comment on the matter. The scandal seemed to fade away completely after Abe called for snap elections in September 2017, and his coalition maintained a clear majority.
Also on Forbes: Shinzo Abe's Anti-Climatic Victory In Japan: Power Without Popularity
However, on March 2 of this year, the Asahi newspaper reignited the scandal by reporting that the Finance Ministry had altered documents related to the land sale when they submitted them to Parliament. On March 7, a government official involved in altering the documents committed suicide, leaving behind a note that indicated dismay about being forced to tamper with government documents, which is a crime. By March 10, the Financial Ministry admitted to altering documents relating to the sale. The Mainichi Newspaper and others have reported that some of the omissions in the documents include references to the Nippon Kaigi connections behind the land deal.
A story with legs
Japan’s news media has been unrelenting in covering the scandal in recent weeks. Part of that is due to the Abe’s administration’s antagonistic attitude towards the press since assuming office–driving Japan’s World Press Freedom Ranking down from 11 in the world to 74. Abe has particularly singled out the liberal Asahi Newspaper, which broke the story of the scandal, as an enemy, publicly criticizing the newspaper by name several times in sessions of the parliament, accusing them of mistakes and calling them "pitiful" on Facebook.
Discontent with Prime Minister Abe’s heavy-handed policy making, including passage of the unpopular State Secrets Act and Criminal Conspiracy Laws, which were greeted with massive protests, intensified earlier this year with the introduction of Labor Reform bills to the Parliament. Abe apologized publicly for using data riddled with mistakes in explaining the benefits of his labor reform plans, and tabled part of his labor reform plans. The protestors calling for his resignation cite these missteps, his cronyism and plans for constitutional reform, as some of the other reasons they feel spurred to action.
Meanwhile, Osaka District prosecutors are investigating the case, which now involves the crime of altering public documents, which is a serious offense in Japan.
What happens to Abenomics without Abe?
Now that it seems Abe’s long reign may be reaching an end, investors in and out of Japan are nervous as to what may happen next.
Leo Lewis, wrote in the Financial Times on March 14, in a column titled, "Land Scandal Sours Shinzo Abe’s Pitch To Investors": “Open shorts on the yen are now at their lowest since June 2017, partly on fears that…Japan is heading again into the sort of long tunnel of political uncertainty that has historically taken the currency north.”
Grant Newsham, a Senior Research Fellow at the Japan Forum for Strategic Studies, credits Abe with finally doing something to put the Japanese economy on track after years of being adrift. “When working at the U.S. Embassy in the 1990’s I often met a senior financial official. Asked how Japan was going to fix its banking problems, he replied, ‘Wait until the economy improves.’ Abe, like him or loathe him, has had a plan and that inspires confidence. But when he goes, Abenomics, which never really fulfilled its promise–is likely to fade with him. And so will investor confidence in Japan. Every ship at sea need a captain and a compass. If he jumps ship or is thrown overboard, Japan may lose both.”
William Pesek, author of Japanization: What the World Can Learn from Japan's Lost Decades, had a slightly more optimistic view of post-Abe Japan. "Abe falling on his sword would savage markets and send the yen skyrocketing, in knee-jerk fashion. But there’s a silver lining. My gut is that Abenomics wouldn’t just continue, but have a better shot in different hands. Under Abe, it’s been 90% monetary easing, 10% reform, at most. A new PM might talk less and do more. More than five years into Abenomics, what’s really changed structurally?"
