quarta-feira, 17 de dezembro de 2014

The truth behind Shinzo Abe’s election ‘landslide’

Who will win last week’s Japanese election? The question seems foolish, not to mention grammatically confused.

Shinzo Abe’s gamble to hold a snap election paid off brilliantly. The opposition was caught off guard and, against all the odds in the midst of a recession, the ruling coalition maintained its two-thirds “supermajority” in the lower house. What’s more, the prime minister has seen off an embryonic rebellion from his own party hacks angered that they were overlooked in a cabinet reshuffle in which five women were appointed. He has shown them who is boss. He will now sail through next year’s Liberal Democratic party leadership election. Nothing will then prevent him staying in office until late 2018, making him Japan’s longest-serving prime minister in half a century. On this reckoning, he is the big winner. Yet, as with many things in Japan, probe a little deeper and not everything is as it seems.

First, Mr Abe’s LDP actually lost seats, albeit only four. The turnout, at 52 per cent, was the lowest of the postwar period. Many of those who stayed at home would have voted against Mr Abe — had there been anyone to vote for. The Democratic Party of Japan, the official opposition, is in such disarray that it failed to field candidates in several districts. In spite of its shortcomings, it still managed to scramble 11 more seats.

The big winners turned out to be the pacifist Komeito party, the LDP’s coalition partner; and the Communist party, which more than doubled the number of seats it holds to 21. That will allow it to introduce legislation into the Diet, most of which will presumably not be to the conservative Mr Abe’s liking. Compulsory singing of “The Internationale” on the Diet floor, perhaps? In terms of the security policies that are dearest to Mr Abe’s heart, the seats gained by Komeito, a party with a strong Buddhist support base, are just as worrying. The Buddha is not on record as supporting a rewrite of Japan’s pacifist constitution.

Mr Abe will now almost certainly have to abandon that ambition. Not only does Komeito have more leverage in the coalition. The small rightwing parties that support a more robust security stance were wiped out. Michael Cucek, a long-time political observer, argues credibly in his blog that the prime minister’s rightwing agenda has been stopped in its tracks, and Mr Abe will be able to do no more than pay lip service to his revisionist agenda. Mr Cucek’s post is provocatively titled: “How Prime Minister Abe Lost on Sunday.”

That may be over-egging it. More than foreign policy issues, Mr Abe’s fate rests on the economy. Here the reverse of the above arguments may be true: things may be better than they appear. On the surface, Japan’s economy is not in great shape. It was knocked sideways by a rise in consumption tax in April. That led to two quarters of contraction and — if recent data are to be believed — only the mildest of recoveries.

This may already be old news. In the next 18 months, the economy could be in for a strong run. The threat of another consumption tax rise is over, at least until 2017. The yen has become super-competitive, thanks to another round of quantitative easing that takes the currency’s devaluation against the dollar to about 45 per cent in two years. After years in which companies have invested in plant abroad, there is a real prospect of reshoring. Furukawa Electric, and industrial groups Toray and Daikin, are all building factories in Japan. Rumours are that Toyota could be next.

Those companies that do not bring jobs back will at least bring higher profits denominated in a weaker yen. Last year, unions pressed for a 1 per cent pay rise and secured 0.8 per cent. This year, according to Jesper Koll of JPMorgan in Tokyo, they will press for 2 per cent — and probably succeed. Wages in the large casualised part of the workforce are already rising 6 per cent a year. The labour market is tight, with more jobs on offer than applicants. Every December, the post office offers temporary jobs to cope with the trillion-plus new year greetings cards sent. Two years ago, it was offering Y970 an hour, which rose to Y1,080 last year. This year, the hourly rate is Y1,450.

Prices are edging in the opposite direction. That is largely because “cost-push” inflation, resulting from higher imported oil prices, is petering out as oil prices plummet. If wages do rise, people will start to feel better off and spend more. If so, cost-push inflation could slowly give way to demand-led inflation — precisely what Mr Abe wants.

Of course, this is a bit of a fairytale scenario. If it contains even a smidgen of truth, however, Mr Abe will be the winner of Sunday’s election after all.

David Pilling

Fonte: FT