Second premiership of Shinzo Abe

Abe (pictured campaigning in 2012) briefly served as opposition leader.

Abe and other candidates campaigning during the LDP presidential election in 2012. His chief rival, Shigeru Ishiba, is standing immediately to his right.

Following the resignation of Liberal Democratic Party president Sadakazu Tanigaki, Abe was re-elected as president of the party on 26 September 2012, coming in second out of five candidates in the first round of voting, but defeating former Defense Minister Shigeru Ishiba in a runoff vote by 108 votes to 89.^[1]

Abe returned to the LDP leadership at a time of political turmoil, as the governing DPJ had lost its majority in the lower house due to party splits over nuclear policies and the cabinet's move to raise the consumption tax from 5 to 10 percent. Prime Minister Yoshihiko Noda was forced to rely on the LDP to pass the consumption tax bill and in return was pressured by Abe and the opposition parties to hold a snap general election. Noda agreed to this on the conditions that the LDP passed a bond-financing bill and would support a commission to reform the social security system and address electoral malapportionment in the next diet session.^[2]

On 16 November 2012, Prime Minister Noda announced the dissolution of the lower house and that the general election would be held on 16 December.^[3] Abe campaigned using the slogan "Nippon o Torimodosu" ("Take back Japan"), promising economic revival through monetary easing, higher public spending and the continued use of nuclear energy, and a tough line in territorial disputes.^[4][5] In the elections on 16 December 2012, the LDP won 294 seats in the 480-seat House of Representatives. Together with the New Komeito Party (which partnered with the LDP since the late 1990s), Abe was able to form a coalition government that controlled a two-thirds majority in the lower house, allowing it to override the upper house's veto.^[6]

On 26 December 2012, Abe was formally elected as prime minister by the Diet, with the support of 328 out of 480 members of the House of Representatives. He and his second cabinet, which he called a "crisis-busting cabinet", were sworn in later that day.^[7][8] The new government included LDP heavyweights such as former prime minister Tarō Asō as deputy prime minister and finance minister, Yoshihide Suga as chief cabinet secretary and Akira Amari as economy minister.^[7] Following his victory, Abe said, "With the strength of my entire cabinet, I will implement bold monetary policy, flexible fiscal policy and a growth strategy that encourages private investment, and with these three policy pillars, achieve results."^[9]

In February 2013, Abe gave an address at the Centre for Strategic and International Studies in Washington, D.C., in which he explained his economic and diplomatic objectives, and that he had returned to the prime ministership to prevent Japan becoming a "Tier Two Nation", declaring that "Japan is back".^[10]

The Second Abe cabinet revived the Council on Economic and Fiscal Policy (CEFP) that had played a key role in formulating economic policy during the Koizumi cabinet, but had been abandoned by the 2009–2012 DPJ administrations.^[11]

Abe declared in his January 2013 policy speech to the Diet that economic revival and escaping deflation was "the greatest and urgent issue" facing Japan.^[12] His economic strategy, referred to as Abenomics, consisted of the so-called "three arrows" (an allusion to an old Japanese story) of policy. The first arrow was monetary expansion aimed at achieving a 2% inflation target, the second a flexible fiscal policy to act as an economic stimulus in the short term, then achieve a budget surplus, and the third a growth strategy focusing on structural reform and private sector investment to achieve long-term growth.^[10]

In 2019, it was reported that 40% of key economic statistics collected from 2005 to 2017 contained errors, casting doubt on the effectiveness of Abe's economic program and the reliability of Japanese economic statistics. It was discovered that the labor ministry did not follow protocol by only surveying about one-third of all the large Japanese businesses it was supposed to survey. The data was eventually corrected, and it was discovered that the faulty data presented Japanese economic statistics more favorably than the corrected data.^[13] The faulty data cost 19.7 million people about 53.7 billion yen in unpaid benefits, and cost the Japanese government 650 million yen to correct the error.^[13] Opposition politicians criticized the governments response; one lawmaker called Abe's economic program a fraud, with many journalists labeling the event as a data scandal.^[13][14][15]

At the first CEFP meeting in January 2013, Abe declared that the Bank of Japan should follow a policy of monetary easing to achieve a target of 2 percent inflation. Abe maintained pressure on the Bank's governor, Masaaki Shirakawa, who was reluctant to set specific targets, into agreeing to the policy. In February, after Abe publicly speculated that the government could legislate to strip the bank of independence, Shirakawa announced he was leaving office prematurely before his term expired.^[16][17] Abe then appointed Haruhiko Kuroda as governor, who had previously advocated inflation targets, and who has pursued the government's policies of monetary easing.^[18]

After the first meeting of the Bank's monetary policy committee after he had taken office in April, Kuroda announced an aggressive program of easing intended to double the money supply and achieve the 2 percent inflation target at "the earliest possible time".^[19] Over the first six months of the second Abe Cabinet, the Yen fell from a high of ¥77 to the dollar to ¥101.8, and the Nikkei 225 rose by 70 percent.^[20]

In a surprise move in October 2014, Kuroda announced that the BOJ would boost the monetary easing program and accelerate asset purchases, the monetary policy committee split by five votes to four but supported the policy. This was interpreted as a response to disappointing economic figures in the aftermath of the increase in the consumption tax to 8 percent, inflation has fallen to 1 percent from its peak of 1.5 percent in April.^[21][22]

The Abe Cabinet's first budget included a 10.3 trillion yen stimulus package, composed of public works spending, aid for small businesses and investment incentives, that aimed to increase growth by 2 percent.^[23] The budget also increased defense spending and manpower while reducing foreign aid.^[24]

In Autumn 2013, Abe decided to proceed with the first stage of the increase in the consumption tax from 5 to 8 percent in April 2014 (with a second stage envisaged raising it to 10 percent in October 2015). The bill to raise the tax had been passed under the previous DPJ government, but the final decision lay with the prime minister. He and Finance Minister Tarō Asō explained that the tax would be increased to provide a "sustainable" basis for future social spending and to avoid the need to finance future stimulus by issuing government bonds. While this was expected to affect economic growth in the quarter following the rise, Abe also announced a 5-trillion yen stimulus package that aimed to mitigate any effects on economic revival.^[25] After the increase in April, Japan fell into recession during the second and third quarters of 2014, leading to Abe delaying the second stage of the tax rise until April 2017 and calling a snap election (see § 2014 general election).^[26] In response to the recession, Aso announced that the government would ask the Diet to pass a supplementary budget to fund a further stimulus package worth 2–3 trillion yen.^[27]

There had been some division within the Abe cabinet between "fiscal hawks", such as Finance Minister Aso, who favored fiscal consolidation through spending cuts and tax increases, and deflationists, such as Abe himself, who argued in favor of a "growth first" policy that prioritizes economic expansion and recovery over budget considerations using the slogan "no fiscal health without economic revitalization".^[28][29][30] Abe's decision to delay the consumption tax increase in November 2014 and his push for a large fiscal deficit in the 2015 budget without social security cuts was interpreted as a victory for this faction within the LDP. The government did, however, commit to a primary surplus by 2020, and pledged to review its strategy in 2018 if the primary deficit had not fallen to 1 percent of GDP by that time.^[28]

On 15 March 2013, Abe announced that Japan was entering negotiations to join the Trans-Pacific Partnership (TPP). This was interpreted by analysts as a means through which the government could enact reforms to liberalize certain sectors of the Japanese economy, most notably agriculture, and was criticized by farm lobbies and some sections of the LDP.^[31][32] Economist Yoshizaki Tatsuhiko described the TPP as having the potential to act as the "linchpin of Abe's economic revitalization strategy" by making Japan more competitive through free trade.^[33] In February 2015, the Abe government struck a deal to limit the power of the JA-Zenchu body to supervise and audit Japan's agricultural co-operatives, in a move designed to facilitate TPP negotiations, improve the competitiveness of Japan's farming sector and curtail the influence of the agriculture lobby.^[34]

Abe revealed the first measures related to the "third arrow" policies in June 2013, which included plans to establish deregulated economic zones and allow the sale of drugs online, but did not include substantial measures related to the labor market or business reform.^[35] These measures were less well-received than the first two arrows had been since Abe took office, with the stock market falling slightly and critics arguing that they lacked detail; The Economist, for example, judged the announcement a "misfire".^[36] Analysts did note, however, that Abe was waiting until after the July Upper House elections to reveal further details, to avoid an adverse reaction by voters to potentially unpopular reforms.^[37] At the annual meeting of the World Economic Forum (WEF) in Davos in 2014, Abe announced that he was ready to act as a "drill bit" to break through the rock of vested interests and "red tape" to achieve structural reforms of the economy. He cited reforms in agriculture, energy and health sectors as evidence of this, and pledged to push forward with the TPP, a Japan–EU trade deal and tax, corporate governance and planning reforms.^[38]

Abe announced a package of structural reforms in June 2014, that The Economist described as "less a single arrow than a 1,000-strong bundle" and compared favorably to the 2013 announcement. These new measures included corporate governance reform, the easing of restrictions on hiring foreign staff in special economic zones, liberalizing the health sector, and measures to help foreign and local entrepreneurs.^[39] The plans also included a cut in corporation tax to below 30 percent, an expansion of childcare to encourage women to join the workforce, and the loosening of restrictions on overtime.^[40] In December 2015, the government announced corporation tax would be reduced to 29.97 percent in 2016, bringing the cut forward one year ahead of schedule.^[41]

In September 2013, Abe called for a "society in which all women can shine", setting a target that 30 percent of leadership positions should be held by women by 2020. Abe cited the "womenomics" ideas of Kathy Matsui that greater participation by women in the workforce, which is relatively low in Japan, especially in leadership roles, could improve Japan's GDP and potentially fertility rates, despite declining population figures. The Abe cabinet introduced measures to expand childcare and legislation to force public and private organizations to publish data on the number of women they employ and what positions they hold.^[42][43][44]

In November 2013, the Abe cabinet passed a bill to liberalize Japan's electricity market by abolishing price controls, breaking up regional monopolies, and separating power transmission from generation by creating a national grid company. This move was partly in response to the 2011 Fukushima disaster, and the bill faced little opposition in the Diet.^[45] By March 2015, more than 500 companies had applied to the Economy Ministry to enter the electricity retail market and the electricity industry was expected to be fully liberalized by 2016, with gas utilities expected to follow suit by 2017.^[46] Abe had also said he favored the rebuilding of Japan's nuclear reactors following the Fukushima disaster (though much of the authority to restart nuclear plants lies with local governments) and planned to strengthen relations with the United States.^[47]

In 2013, the Eurekahedge Japan Hedge Fund Index posted a record 28-percent return, which was credited to the unprecedented actions of the Abe government.^[48] In July 2015, the IMF reported that, while the structural reforms had "modestly" improved growth prospects, "further high-impact structural reforms are needed to lift growth" and prevent over-reliance on yen depreciation.^[49]

When Abe returned to office, although neither party had controlled the House of Councillors (the upper house of the Diet) since the 2007 election, the opposition DPJ was the largest party. The governing coalition enjoyed a two-thirds majority in the lower house, allowing it to override the upper house's veto, but this requires a delay of 90 days. This situation, known as the "Twisted Diet", had contributed to political gridlock and the "revolving door" of prime ministers since 2007.^[50] Abe's campaign for the 2013 election focused on themes of economic revival, asking voters to give him a stable mandate in both houses to pursue reforms, and took a more moderate tone on defense and constitutional matters.^[51][52]

In the 2013 upper house election, the LDP emerged as the largest party with 115 seats (a gain of 31) and the Komeito with 20 (a gain of 1), giving Abe's coalition control of both houses of the Diet, but not the two-thirds majority in the upper house that would allow for constitutional revision.^[53] With no national elections due until 2016, this result was described as giving Abe the opportunity of "three golden years" of parliamentary stability in which to implement his policies.^[54]

Abe's return to the prime ministership saw a renewed attempt to downplay Japan's wartime atrocities in school textbooks, an issue that had contributed to his earlier downfall.^[55] In 2013, Abe supported the creation of the Top Global University Project program. This is a ten-year program to increase international student attendance in Japanese universities and hire more foreign faculty. There is also funding for selected universities to create English-only undergraduate programs.^[56][57] In 2014, Abe allocated millions of dollars of the fiscal budget to help programs that help single individuals in Japan find potential mates. These programs entitled "Marriage support programs" were started in hopes of raising Japan's declining birthrate, which was half of what it was six decades prior.^[58]

Abe with United States vice president Joe Biden in Tokyo, 2013

Abe with Brazilian president Dilma Rousseff in Brasília, 2014

Abe with Singaporean prime minister Lee Hsien Loong at the Istana in Singapore, 2014

Shortly after taking office Abe signaled a "drastic reshaping" of foreign policy and promised to pursue diplomacy with a global, rather than a regional or bilateral outlook based on "the fundamental values of freedom, democracy, basic human rights, and the rule of law".^[12] His choice of Fumio Kishida as foreign minister was interpreted as a sign that he would pursue a more moderate line compared to his hawkish stance in the run-up to the general election.^[11] His first visit overseas after becoming prime minister once again was to various countries in Southeast Asia.^[59] Abe increased its allies in its international campaign to counter a North Korean nuclear threat. Abe often visited countries such as Singapore, Japan's largest Asian investor and vice-versa.^[60]

Within weeks of returning to power, the Second Abe cabinet faced the In Amenas hostage crisis of 2013 in which 10 Japanese citizens were killed. Abe condemned the killings as "absolutely unforgivable" and confirmed that Japan and Britain had co-operated over the incident.^[61] Abe believed that this incident demonstrated the need for the creation of a Japanese National Security Council (see below), and convened a panel to consider its creation soon after the crisis.^[62]

Abe was unusually active in the field of foreign affairs for a Japanese prime minister, making visits to 49 countries between December 2012 and September 2014, a number that was described as "unprecedented" (by contrast, his immediate two predecessors Naoto Kan and Yoshihiko Noda visited a combined total of 18 countries between June 2010 and December 2012).^[63] This was interpreted as a means to offset poor relations with China and the Koreas by increasing Japan's profile on the world stage and improving bilateral ties with other countries in the region. Southeast Asian nations, Australia, and India were significant and frequent destinations for Abe, who visited all 10 ASEAN countries in his first year in office. The diplomatic tours also functioned as another element of Abenomics by promoting Japan to the international business community and opening up avenues for trade, energy, and defense procurement deals (for example, business executives often travel with Abe on these visits).^[64][65]

In September 2013, Abe intervened to aid Tokyo's bid to host the 2020 Summer Olympic and Paralympic Games, giving a speech in English at the IOC session in Buenos Aires, in which he extolled the role of sport in Japan and sought to reassure the committee that any ongoing issues with the Fukushima plant were under control.^[66][67] After the bid was successful, Abe sought to portray the games as symbolic of his Abenomics economic revitalization programme, saying, "I want to make the Olympics a trigger for sweeping away 15 years of deflation and economic decline."^[68] In 2014 he said that he hoped a "robot olympics" would be held at the same time, to promote the robotics industry.^[69]

Abe's foreign policy moved Japan away from its traditional focus on the "big three" bilateral relationships with the United States, China, and South Korea, and sought to increase Japan's international profile by expanding ties with NATO, the European Union, and other organizations beyond the Asia-Pacific region.^[70][71] In 2014, Abe and British prime minister David Cameron agreed to establish a "2 + 2 framework" of annual consultations between the British and Japanese foreign and defense ministries, with Abe calling for greater co-operation on issues "from peace of the seas to the security of the skies, space and cyberspace". This followed a similar agreement with French ministers in Tokyo earlier in the year.^[70][72] In fact, this followed the Herman Kahn lecture of 25 September 2013 in which he outlined his foreign policy for the next several years; in fact he was the first non-American to receive this award. In it he championed "the Indo-Pacific century" based on "freedom, democracy, human rights and the rules-based order with the TPP as its backbone". He planned at this time to reshape the interpretation of the constitution away from the narrowness that would see the JSDF handcuffed and unable to help allies in time of need. The new National Security Council of Japan was born in this speech, during which Abe observed that its neighbor had increased its own military budget by at least 10% per annum for more than 20 years. Abe stated that because Japan was one of the most mature democracies he thought it only natural that Japan help ensure the welfare and security of the world, and found it right that his "beloved country [be] a proactive contributor to peace".^[73][74]

Abe concluded the Japan–Australia Economic Partnership Agreement with Australia's Abbott government in 2014 and addressed a joint sitting of the Australian Parliament in July.^[75] In heralding the agreement, he also offered condolences for the suffering of Australians during World War II – singling out the Kokoda Track campaign and Sandakan Death Marches.^[76] He was the first Japanese PM to address the Australian parliament.^[77]

In January 2014, Abe became the first Japanese leader to attend India's Republic Day Parade in Delhi as chief guest, during a three-day visit where he and Prime Minister Manmohan Singh agreed to increase co-operation over economic, defense and security issues and signed trade agreements related to energy, tourism and telecoms.^[78] A close relationship was anticipated between Abe and Narendra Modi after the latter's election as Prime Minister of India in May 2014, when it was noted that they had established ties from at least seven years previously when Modi was still Chief Minister of Gujarat and that Modi was one of three people Abe "followed" on Twitter. The two men exchanged congratulatory messages after the election.^[79] Modi made his first major foreign visit to Japan in autumn of 2014, where during the visit Abe invited Modi to become the first Indian leader to stay at the Imperial State Guest House in Kyoto.^[80] The two leaders discussed agreements on nuclear co-operation, rare-earth elements, and joint maritime exercises.^[81]

On 30 May 2014, Abe told officials from the ASEAN countries, the United States, and Australia, that Japan wanted to play a major role in maintaining regional security, a departure from the passiveness it has displayed since World War II. He offered Japan's support to other countries in resolving territorial disputes.^[82]

Relations between Japan and its immediate neighbors, China and South Korea, remained poor after Abe's return to office. While he declared that the "doors are always open on my side", no bilateral meetings between Abe and Chinese leadership took place for the first 23 months of his second term.^[10][83] Neither did Abe hold any meetings with President Park Geun-hye of South Korea during his 2012 to 2014 term of office.^[84] Both countries criticized Abe's visit to the Yasukuni Shrine in December 2013, with the Chinese Foreign Minister describing the action as moving Japan in an "extremely dangerous" direction.^[85] In addition China continued to criticize Abe's defense reform policies, warning that Japan should not abandon its post-war policy of pacifism.^[86] Abe's speech at the WEF in 2014 was interpreted as a criticism of Chinese foreign and defense policy when he said that "the dividends of growth in Asia must not be wasted on military expansion" and called for greater preservation of the freedom of the seas under the rule of law, although he did not specifically refer to any one country during his remarks.^[87][88]

In November 2014, Abe met General Secretary of the Chinese Communist Party Xi Jinping at the APEC meeting in Beijing for the first time since either had taken office, after a photocall that was described as "awkward" by the press. Abe later told reporters that during the meeting he suggested establishing a hotline between Tokyo and Beijing to help resolve any maritime clashes and that the "first step" had been taken to improve relations.^[83][89]

Abe tried to centralize security policy in the Prime Minister's office by creating the National Security Council to better coordinate national security policy, and by ordering the first National Security Strategy in Japan's history.^[90] Based upon the American body of the same name, the law to create the NSC was passed in November 2013 and began operating the following month when Abe appointed Shotaro Yachi as Japan's first National Security Advisor.^[91]

In December 2013, Abe announced a five-year plan of military expansion. He described this as "proactive pacificism", with the goal of making Japan a more "normal" country, able to defend itself. This was in reaction to a Chinese buildup and a decreased American influence in the region.^[92]

In the same month, the Diet passed the Abe cabinet's State Secrecy Law, which took effect in December 2014.^[93] The law expanded the scope for the government to designate what information constitutes a state secret and increased penalties for bureaucrats and journalists who leak such information to up to 10 years in prison and a 10-million-yen fine. The passage of the law proved controversial, with thousands protesting the bill in Tokyo and the cabinet's approval rating falling below 50 percent for the first time in some polls. Detractors argued that the law was ambiguous and therefore gave the government too much freedom to decide which information to classify, that it could curtail freedom of the press, and that the cabinet had rushed the legislation without including any corresponding freedom of information guarantees.^[94][95] Abe argued that the law was necessary and applied only in cases of national security, diplomacy, public safety and counter-terrorism, saying, "If the law prevents films from being made, or weakens freedom of the press, I'll resign."^[96] However he did concede that, in retrospect, the government should have explained the details of the bill more carefully to the public.^[97]

In July 2014, the Abe cabinet decided to reinterpret Japan's constitution to allow for the right of "Collective Self-Defense".^[98] This would allow the Self Defense Forces to come to the aid of, and defend, an ally under attack, whereas the previous interpretation of the constitution was strictly pacifist and allowed for the force to be used only in absolute self-defence.^[99] The decision was supported by the United States, which has argued for greater scope for action by Japan as a regional ally, and led to a revision of the US-Japan defense cooperation guidelines in 2015.^[100][101] In response the Chinese Foreign Ministry said the decision "raised doubts" about Japan's commitment to peace, and argued that the Japanese public is opposed to the concept of collective self-defense.^[102] Abe argued that the move would not lead to Japan becoming involved in "foreign wars" such as the Gulf or Iraq War, but instead would secure peace through deterrence.^[103] This led to the introduction of the 2015 security legislation to give legal effect to the cabinet's decision (see below).

The cabinet inaugurated in December 2012 was the longest-serving and most stable in post-war Japanese history, lasting 617 days without a change in personnel until Abe conducted a reshuffle in September 2014, with the stated aim of promoting more women into ministerial posts. The reshuffled cabinet tied the record of five women ministers set by the first Koizumi cabinet. Most key figures, such as Deputy Prime Minister Aso and Chief Cabinet Secretary Suga, were kept in their posts although Abe moved Justice Minister Sadakazu Tanigaki out of the cabinet to become Secretary-General of the LDP.^[104] However, on 20 October two of the women promoted in the reshuffle, Justice Minister Midori Matsushima and Trade Minister Yūko Obuchi, were forced to resign in separate election finance scandals. Abe told the press, "As prime minister, I bear full responsibility for having appointed them, and I apologize deeply to the people of Japan."^[105]

In November 2014, while Abe was attending the APEC forum meeting in China and the G20 Summit in Australia, rumors began appearing in the press that he was planning to call a snap election in the event that he decided to delay the second stage of the consumption tax increase.^[106] It was speculated that Abe planned to do this to "reset" Diet business after it had become gridlocked due to the fallout from ministerial resignations in October, or because the political situation would be less favorable to re-election in 2015 and 2016.^[107]

On 17 November, GDP figures were released that showed Japan had fallen into recession as per the two-quarters of negative growth following the first stage of the consumption tax rise in April.^[26] Abe held a press conference on 21 November and announced that he was delaying the rise in the consumption tax by 18 months, from October 2015 to April 2017, and calling a snap general election for 14 December. Abe described the election as the "Abenomics Dissolution" and asked the voters to pass judgment on his economic policies.^[108] Abe's popularity fell slightly with the announcement and he declared that he would resign if his coalition did not win a simple majority, though analysts agreed this was highly unlikely due to the weak state of the opposition.^[109] The opposition parties attempted to field a united front in opposition to Abe's policies, but found themselves divided on them.^[110]

In the 2014 general election, the LDP won 291 seats, a loss of 3, but the Komeito gained 4 to win 35. Therefore, the governing coalition maintained its two-thirds majority in a slightly reduced lower house of 475.^[111]