Abe Shinzō as Policy Trailblazer

Former Prime Minister Abe Shinzō, the longest-serving prime minister in Japanese history, was shot and killed while speaking at a campaign event in Nara Prefecture on July 8, 2022. During his nine years in office (2006–7 and 2012–20), Abe boldly challenged both the process and substance of policy making in Japan. With the benefit of hindsight, I would like to reassess that crusade and its legacy.

Shaking up the Policy-Making Apparatus

As prime minister, Abe set a new course for Japanese security policy. But to effect the changes he sought, it was necessary first to restructure the policy-making apparatus.

In most policy areas, the prime minister’s leadership role had already been strengthened substantially, first by the political reforms of 1994 and then by the government reorganization and other administrative reforms implemented in 2001. Since 2001, the prime minister, supported by the Cabinet Secretariat and Cabinet Office, had been able to direct and coordinate the development of policies involving multiple ministries, leading to a more efficient and politically responsive process. But the prime minister still had very limited ability to shape policy in the security arena, where conflicts between the Ministry of Defense and the Ministry of Foreign Affairs often worked as impediments.

Soon after taking office a second time, Abe addressed the root of the problem through institutional reform. In 2014, at his initiative, the National Security Council was established directly under the prime minister’s office to serve as the principal forum for coordinating Japan’s security and defense policies (superseding the Security Council). The National Security Secretariat was created within the Cabinet Secretariat to support the NSC. In this way, Abe built a policy-making apparatus through which he could exert strong leadership in the area of security.

Challenging Security Assumptions

During his nine years at the helm, Abe challenged several of the key conceptual frameworks on which Japan’s postwar foreign and defense policies had been built (see Kanehara Nobukatsu, “A Look at Abe Shinzō’s Legacy in Japanese Security Policy”). In terms of concrete policy outcomes, the most important of these challenges was doubtless his bid to reinterpret Article 9 of the Constitution, Renunciation of War.

Abe launched this campaign during his first tenure as prime minister, when he set up an advisory panel to review the longstanding ban on the use of force for collective self-defense. He resumed his crusade when he returned to power, and in 2014 his cabinet approved a reinterpretation of Article 9 that allows Japan to engage in collective self-defense under certain circumstances. This opened the way for legislation that greatly expanded the scope of Japanese security policy and the role of the Self-Defense Forces.

Abe’s Free and Open Indo-Pacific (FOIP) initiative was another challenge to existing frameworks. Before Abe introduced this strategic concept, India was typically treated as geopolitically distinct from the Asia-Pacific, which encompassed East Asia and Southeast Asia. Abe maintained that the regions bordering the Pacific and the Indian Ocean should be seen as a single strategic entity. Here, too, he opened up new policy horizons by “thinking outside the box.”

Abe also took action to translate his FOIP doctrine into reality by initiating the Quadrilateral Security Dialogue (Quad), a framework comprising Japan, the United States, Australia, and India. This was a signal accomplishment not just for Abe but for Japanese diplomacy, which has rarely seized the initiative in building cooperative frameworks involving major powers. Both the FOIP doctrine and the Quad have been incorporated into Japan’s National Security Strategy.

In this way, Abe’s challenges to the status quo have had a lasting impact on security policy in Japan and around the world.

Promoting Free and Fair Trade

As prime minister, Abe promoted free trade and fair rules of investment through the conclusion of economic partnership agreements and similar frameworks. Of special significance in this connection were the 2013 decision to enter into negotiations for the Trans-Pacific Partnership and Japan’s leading role in renegotiating the agreement after the United States pulled out in 2017.

Abe overcame considerable domestic opposition to the TPP, in part by establishing a “TPP headquarters” within the Cabinet Secretariat. This unit took charge of the negotiations and pursued them while simultaneously ironing out conflicts with various ministries and the domestic interests they represented.

In the wake of America’s abrupt withdrawal from the TPP, Japan—which had rarely assumed a leadership role in multinational trade negotiations—faced the daunting task of resuscitating the agreement among the remaining 11 parties. Abe and his cabinet rose to this unprecedented challenge, and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, also known as TPP-11, was signed in March 2018.

Tackling Deflation

In the realm of domestic policy, Abe’s most intrepid undertaking was doubtless his enlistment of the Bank of Japan in the implementation of an exceptionally-loose monetary policy aimed at conquering deflation—a pillar of the economic program popularly known as Abenomics.

Chronic deflation had been a drag on the Japanese economy ever since the 1990s. During the 2012 general election, Abe had pledged to turn the tide with a “bold policy of monetary easing.” In January 2013, shortly after he took office, the government and the Bank of Japan issued a joint declaration on overcoming inflation and achieving sustainable economic growth. In that statement, the Bank of Japan pledged to pursue monetary easing with the goal of achieving a 2% year-on-year increase in the consumer price index. The following March, Kuroda Haruhiko (previously president of the Asian Development Bank) was appointed BOJ governor, and in April the central bank launched an unconventional program of “quantitative and qualitative easing.” It has maintained its exceptionally -loose monetary policy ever since.

In tandem with this monetary expansion, Abe pursued reforms in corporate governance and agricultural policy as part of a growth strategy designed to unleash private investment. Under Abe’s corporate governance reform campaign, listed companies came under intense pressure to appoint outside directors. Initially resisted by Keidanren (Japan Business Federation), the voice of big business, this reform represented yet another challenge to the entrenched order. The appointment of outside directors was made mandatory under the 2019 revision of the Companies Act.

In the area of agriculture, the Abe administration scrapped the longstanding rice acreage reduction program and revised the Agricultural Cooperatives Act to strip the Central Union of Agricultural Cooperatives (JA-Zenchū) of its authority to audit local co-ops. The elimination of the acreage reduction program was a turning point for Japanese farming, and the loosening of JA-Zenchū's longtime control over local cooperatives was an important step toward more sweeping reforms.

Updating the Workplace and Social Spending

In the fall of 2015, Prime Minister Abe turned his attention to labor policy and social programs.

In 2016, Abe launched the Council for the Realization of Work-Style Reform with the aim of slashing Japan’s notoriously long working hours, along with other outdated labor practices. Although the Labor Standards Act placed nominal limits on overtime, the Article 36 allowed an employer to skirt those restrictions and extend working hours almost indefinitely through securing an agreement with a majority of employees or their representative. Under Abe’s leadership, the Labor Standards Act and other statutes were revised to strengthen the regulations, limiting overtime to 100 hours per month without exception. In this way, Abe challenged entrenched labor practices dating back decades.

While pursuing work-style reform, Abe also took the first steps toward adjusting Japan’s social and healthcare programs, which were heavily biased toward the elderly. With the institution of a universal child allowance in 2010, under the Democratic Party of Japan, the government had begun allocating social expenditures to the younger generations. Abe went a step further by budgeting ¥2 trillion for families with young children, funded by some of revenues from the 2-point consumption tax hike (8% to 10%) implemented in October 2019. The program that came into effect the same month guarantees free early childhood education as well as child care for all children between three and five years of age. For low-income families, it offers free daycare for children up to two years old, as well as college scholarships.

The Light and Shadow of Abenomics

As the foregoing suggests, Abe’s tenure as prime minister was defined by a series of challenges to the status quo. But one may legitimately ask whether all of those initiatives ultimately had a positive impact.

The jury is still out on the costs and benefits of the BOJ’s “bold policy of monetary easing.”

Since 2017, when the CPI excluding fresh food moved into positive territory, Japan has been free of deflation. In this sense, the exceptionally-loose monetary policy has achieved its stated objective of conquering deflation. But the costs have been significant.

To keep interest rates low, the BOJ has had to purchase Japanese government bonds in massive quantities. At the end of 2012, its holdings amounted to ¥115 trillion, 12% of the total outstanding balance of JBGs. By the end of September 2022, those holdings had swollen to ¥545 trillion, close to 45% of the total. Meanwhile, the outstanding balance of government bonds ballooned from ¥705 trillion at the end of 2012 to ¥1,042 trillion at the close of 2022. However, because interest rates were so low, the cost of servicing the debt remained low as well, permitting the government to continue borrowing and spending without serious consequences.

Abe was cognizant of the need for fiscal discipline. He raised the widely reviled consumption tax twice during his tenure and made significant progress reducing the primary budget deficit. But artificially low interest rates have masked the fragility of Japan’s public finances. If interest rates rise, the government will be obliged to spend a growing chunk of the annual budget on interest payments. Budget constraints have already had a stunting effect on policy in many areas, and rising interest rates could greatly exacerbate the problem. The government could find itself without the means to implement vital policies.

Former Prime Minister Noda Yoshihiko, who led the cabinet as leader of the DPJ before his party fell to Abe’s LDP in 2012, delivered a touching tribute to his erstwhile political nemesis on October 25, 2022. Addressing Abe’s empty seat in the Diet, where the two had clashed so memorably, Noda promised to “continue asking questions” about the “intense light you radiated and the long shadow you cast.” Amid mounting interest-rate and fiscal pressures, the legacy of Abe’s exceptionally-loose monetary policy will doubtless be a key focus of such questions going forward.

(Originally published in Japanese. Banner photo: Then Prime Minister Abe Shinzō confers with an aide during an upper house committee meeting on September 14, 2015, amid protests over controversial security legislation. © Jiji.)