Business Standard

A stronger partnership

What Shinzo Abe's victory means for India

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Business Standard New Delhi
When Shinzo Abe had to resign as prime minister of Japan in 2007, it was because his Liberal Democratic Party, which has dominated postwar Japan politics, had crashed to a resounding defeat in elections to the upper house of the country's parliament, the Diet, two months earlier. However, a similar set of elections this weekend, for half the upper house's 242 seats, saw a victory for the LDP and its allies that has vastly strengthened Mr Abe's position as prime minister this time around. They won over 70 of the seats on offer, taking their count up to over 130 from 102, and crossing the simple majority mark. Mr Abe will see this as a statement of popular support for his radical agenda of structural transformation of the economy, looser monetary policy, and a more nationalist stance in foreign affairs. It is true that many of those policies continue to face opposition within the LDP itself, particularly from those associated with health-care, organised labour and farming interests. Party critics of Mr Abe might find themselves equally energised. But it appears that the period of legislative deadlock that has defined Japanese politics for the past few years, with the opposition in control of the upper house, is over.
 

Mr Abe's economic policies, known as Abenomics, consist essentially of controlled inflation that has released almost $130 billion of stimulus into Japanese markets. The Topix stock market index has raced up by 60 per cent in the past eight months, and the yen has depreciated by over 20 per cent, making Japanese exports more competitive and supercharging its companies. Mr Abe now wants to address growing unemployment and casualisation of the work force - over 35 per cent of which is in temporary jobs - through labour-law reform, breaking the postwar social contract that basically guaranteed jobs for life. He also wants to reopen Japanese nuclear power plants - mothballed since the 2011 Fukushima disaster - to reduce its dependence on foreign fuel. These will all be heavily opposed domestically.

When it comes to foreign policy, Mr Abe is one of the most openly nationalist of postwar Japanese premiers; it is widely assumed that he would like to drop the famous clause of Japan's US-imposed constitution that commits it to pacifism. However, his victory did not quite give him the two-thirds majority he would need to do that. In the meantime, therefore, he is likely to double down on his strengthening of national security capabilities at home, and - crucially for India - further strengthen Japan's alliances with Asian countries disturbed by China's rise, and with the US. Japan's negotiations with the US-led Trans Pacific Partnership trade bloc may be difficult to pull off, but they are a sure sign of intent.

From India's point of view, Mr Abe's triumph is good news. He has been a strong supporter of a partnership with India, and has pushed more investment by Japanese companies in India, to minimise its dependence on China. The troubled Sino-Japanese relationship will only grow worse as Japan asserts itself further. It is to be noted, however, that China has not reacted well in the recent past to India growing closer to Japan, or for that matter to the United States. As US Vice-President Joe Biden arrives in India, and as Mr Abe gathers his strength in Tokyo, India must not let fear of China's reaction hold it back. After all, China's engagement with both Japan and the US - in both economic and people-to-people terms - is far greater than India's engagement with either country. India has a lot of room to expand in terms of its welcoming of Japanese and American connections.

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First Published: Jul 22 2013 | 9:40 PM IST

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