REMAKING IMAGE MAKEOVER: Shinzo Abe has become much more media savvy in his second turn as Japan’s prime minister. REUTERS/TORU HANAI

Premier Shinzo Abe is riding high on his popular recovery program. But the true aim of him and his backers is to remake Japan’s pacifist post-war order. The agenda behind ‘Abenomics’

BY LINDIA SIEG, YUKO YOSHIKAWA AND TETSUSHI KAJIMOTO , MAY 24, 2013

hen ill health and political gridlock forced Occupation after Japan’s defeat in World War Two. Shinzo Abe to quit after one dismal year “What worries me most now is that because of Was Japan’s prime minister, his pride was my resigning, the conservative ideals that the Abe dented and his self-confidence battered. administration raised will fade,” Abe wrote in the One thing, however, was intact: his commitment magazine Bungei Shunju after abruptly quitting in to a controversial conservative agenda centered on September 2007. “From now on, I want to sacrifice rewriting Japan’s constitution. Conservatives see myself as one lawmaker to make true conservatism the 1947 pacifist charter, never once altered, as em- take root in Japan.” bodying a liberal social order imposed by the U.S. Less than six years after his humiliating departure,

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Abe, 58, is back in office for a rare second term. He is riding a wave of popularity Support for Shinzo Abe’s cabinets spurred mainly by voters’ hopes that his FIRST ABE CABINET, Sep. 2006 - Sep. 2007 SECOND ABE prescription for fixing the economy will Support Don’t support CABINET, Dec. 26 - end two decades of stagnation. The policy, known as “Abenomics”, is mix of monetary 80% easing, stimulative spending and growth- 70 65% inducing steps including deregulation in 55% sectors such as energy. 60 But interviews with some two dozen al- lies and insiders show “Abenomics” was a 50 late addition to his platform. 40 34% Abe’s unlikely comeback was engineered by a corps of politicians who called them- 30 selves the “True Conservatives,” many of 18% whom share his commitment to loosening 20 constitutional constraints on the military and restoring traditional values such as 10 group harmony and pride in Japanese cul- 0 ture and history. Oct. N D J F M A M J J A S Jan. F M A M While the cultural-political agenda is 06 07 13 what drove them, Abe and his backers Note: data for Sep. 2006 and Dec. 2012 not available. Sep. 2007 figures follow a cabinet reshule also came to realize that voters cared most Sources: Reuters; NHK Political Survey. about the economy, so this time, they made it the first priority. “Mr. Abe in his first term put more prior- HOPE OF REBIRTH ity on revising the constitution than on the economy - repeating a mistake seen as a key economy,” said Yoichi Takahashi, a former factor in Abe’s first failed attempt to govern. Months after resigning in September 2007, finance ministry official who is an adviser to “He wants to achieve what he left un- Abe visited Kumano Shrine deep in the Abe. “Even now, I think that is the case. But done – to break free of the ‘post-war mountains of western Japan, known since I think he realized that in terms of order of regime’,” said Koichi Hagiuda, a law- ancient times as a place of healing and res- priority, he had to work on the economy first.” maker and special aide to Abe. “What is urrection. Few thought then he would be Ahead of a July upper house election most symbolic of that is the constitution politically reborn as one of the country’s that his Liberal Democratic Party (LDP) that was drafted in one short week un- most popular leaders. looks set to win, Abe is again floating the der (U.S. General Douglas) MacArthur’s “It is said that if you make a pilgrimage conservative political agenda, including Occupation.” there, you will be restored to life,” said one constitutional revision, that drew his core But Hagiuda added: “He has no inten- government source close to Abe. “I said, ‘Let’s supporters even as he tries to steer a more tion to rush”. go there and you will surely come back.’” pragmatic course. Japan’s security ally, the United States, “I urged him many times ... to take some Revising the constitution, though, ranks would likely welcome an easing of the con- action aimed at becoming prime minister far down the list of public priorities, polls stitution’s constraints on Japan’s military. again. But he kept saying, ‘No, no. It’s too soon. indicate, and voters are sharply divided over But Washington worries that Abe’s efforts The public will not forgive the way I resigned.’” whether to alter the document’s signature to strike a less apologetic tone on wartime Yet Abe never abandoned hope of po- passage, the war-renouncing Article 9, to history will further strain ties with China litical redemption, his closest advisors from legitimize the military. and South Korea, who suffered under those times say. Some Abe allies worry that a hasty push Japan’s occupation and colonization before “He definitely wanted to be prime min- for constitutional changes could upset vot- and during World War Two. ister again,” said , who ers who want the focus to stay firmly on the Abe has declined requests for interviews. had served as the LDP’s No. 2 official

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INNER CIRCLE: Executives supporting Abe include railway executive Yoshiyuki Kasai and Fujifilm Holding’s Shigetaka Komori; loyal backer Yoshihide Suga is now his . REUTERS/ISSEI KATO/TORU HANAI

during Abe’s first term. “And those around he was hospitalized after quitting. powerbrokers thought his future was on him encouraged him and told him ‘Your the back bench. “TRUE CONSERVATIVES” time will come.’” “Politically savvy people did not think Abe’s time had appeared to come when Soon after his resignation, Abe and oth- that he could come back as prime minis- the scion of a wealthy political family took er LDP conservatives set up the True ter,” said Michael Green, Japan chair at the office in 2006 at the age of 52, Japan’s young- Conservatives Association. Its goals were Washington-based Center for Strategic & est post-war premier. Abe was dedicated to protect tradition and culture, revise the International Studies, whose ties to Abe go to conservative ideals imbibed at the knee “post-war regime”, protect national inter- back to his stint at the U.S. National Security of his grandfather, former Prime Minister ests and earn international respect. Council from 2001 to 2005. “The people Nobusuke Kishi, and encapsulated in Abe’s Central to the group’s world view is a who pushed his comeback and remained 2006 book, “Toward a Beautiful Country.” belief that the constitution, drafted by U.S. fiercely loyal were not the most influential.” A wartime cabinet minister, Kishi was Occupation officials in February 1946, not A group of conservative business ex- imprisoned but never tried as a war crimi- only restricted Japan’s right to defend itself ecutives known as the Four Seasons nal after World War Two. He was premier but also eroded traditional mores by em- Association provided moral support and from 1957 to 1960, but had to resign with- phasizing individualism and citizens’ rights advice. Members included Central Japan out achieving his goal of revising the paci- over social harmony and duty to the state. Railway Co’s Yoshiyuki Kasai and Fujifilm fist constitution due to a public furor over The association included close allies Holdings Corp’s Shigetaka Komori. a U.S.-Japan security pact that he rammed such as Yoshihide Suga, a former min- “Mr. Kasai and Mr. Komori thought through parliament. ister in Abe’s first cabinet. It formed the they needed to nurture a future prime min- Just 12 months after taking over as heir core of Abe’s support when many LDP ister from among younger politicians,” said to charismatic Prime Minister Junichiro former economics minister , Koizumi, however, Abe stunned the politi- The constitution puts who first introduced Kasai to Abe before cal world by quitting. His term was marred he first became premier. “After he resigned, by scandals in his cabinet, a public outcry individual rights too far out in they disbanded, but contact and friendship over lost pension records and a huge elec- front. remained on a personal basis. Mr. Kasai and tion loss that created a deadlock in parlia- the others were in full agreement that he ment. He also suffered a severe worsening Shigetaka Komori should have a second chance.” of his chronic ulcerative colitis, for which Chairman and CEO, Fujifilm Holdings Kasai, 72, is an outspoken critic of China

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HE’S BACK: Abe bowing to the applause of fellow members of parliament after his election as prime minister last Dec. 26th. REUTERS/KIM KYUNG-HOO

and during the first Abe cabinet served on Group - a pun on Abe’s name and the icon- interview with Reuters in May of that year. an advisory panel on teaching of patrio- ic cover of the 1969 Beatles album. “I want to receive the judgment of the tism in Japanese schools. He declined to be Suga had been working towards Abe’s people in the election, obtain the voters’ trust interviewed. Komori, 73, is credited with return from the time he quit. His reasons, and work towards my next goal,” he said then. saving Fujifilm from the fate of failed im- say some who know him, were as much Indeed, Abe’s close allies say the August aging rival Kodak. personal as ideological. “He was a bosom 2009 general election, which ousted the Their backing stemmed from agreement friend,” said one political source. LDP after ruling Japan for most of the past with Abe’s conservative agenda rather than The campaign to bring back Abe gath- half-century, marked a turning point. specific economic policies. ered momentum in 2009 even as public Abe went to unusual lengths to ensure “The constitution puts individual rights support for the LDP slid under yet another he not only kept his own seat in that poll too far out in front,” said Komori, who with unpopular prime minister, pushing the - never really in doubt - but also resound- Kasai later became core members of a more long-ruling party towards the opposition ingly defeated his Democratic Party rival. recent corporate-executive support group for for the first time since it was briefly ousted He pounded the pavement, called on voters Abe, the Cherry Blossom Association. “Mr. in 1993-1994. at their homes, shook hands at shopping al- Abe is extremely sensitive to the merits of Abe began to emerge from the shadows, leys - rare activities for former prime minis- restoring that sort of Japanese spirit. I was in traveling to Washington in April 2009 to ters with safe seats. great agreement with that,” he told Reuters. speak at the Brookings Institution, where “That was the time I felt that this man he expressed concern about China’s mili- definitely intends to try (for the premier- RETURN TO THE STAGE tary build-up and touted “innovation” as ship) again,” said the government source Abe met periodically with a quartet of for- the cure for Japan’s economic ills. close to Abe. “He wanted to win by a land- mer cabinet- minister comrades – Suga, His public appearances sparked specula- slide. I think his intention was to settle the and tion he was considering another bid for the account with the past that way.” – who called themselves the Abbey Road premiership, a possibility he left open in an Abe did win by a landslide, but the LDP

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was trounced by the novice Democratic I think Mr. Abe realized that Party of Japan. Now in the opposition, in terms of order of priority, he Abe took over leadership of the True had to work on the economy first Conservatives Association. “After we lost power, we thought that if Yoichi Takahashi we did not create a true conservative core, Abe adviser our time in opposition would drag out,” said Seiichi Eto, a founding member of the a heretical view,” one government source group and now a special aide to the prime said. “The study group advocated revis- minister. “From that time, we carried out ing the BOJ law, and we felt it would be activities like a .” laughed at by world leaders.” By March 2012, however, it was clear PENSIONS AND POCKETBOOKS Abe supported a bolder monetary policy. While Abe and his allies remained com- Business supporters pushed him to rein in mitted to their conservative agenda, the the strong yen, which was battering export- failure of his first administration had taught ers and pushing output offshore. A big bout them one scarring lesson: Voters care more of monetary easing might do just that. UNSUCCESSFUL SUITOR: Popular Mayor about pensions and pocketbooks than Two months later, Abe impressed busi- tried unsuccessfully to woo Abe changing the constitution and reviving pa- ness executives at an exclusive gathering to his small, right-leaning Japan Restoration triotic education. with his economic analysis. He whipped Party. REUTERS/ ISSEI KATO The program of drastic monetary eas- out color charts comparing the monetary ing that became central to “Abenomics” base - cash in circulation plus deposits at the took root in Abe’s agenda after the triple central bank - under the BOJ, the European the LDP,” said Watanabe of the Abbey disasters of March 11, 2011 - a mammoth Central Bank and the Federal Reserve. Road quartet, recalling a late night chat in a earthquake, tsunami and nuclear crisis. He used the prop to put the blame for bar in Tokyo’s Roppongi nightspot. In June of that year, senior LDP mem- persistent deflation squarely on Japan’s central His allies gave Abe conflicting advice over ber Kozo Yamamoto set up a group calling bank. “I was stunned that he started by talk- whether he should run in a September vote for for a 20 trillion yen ($200 billion) recon- ing about the monetary base and deflation,” leadership of the LDP. Some said it was too struction program to be funded by debt said one source who attended the meeting. soon, others that he should grab the chance. purchased by the Bank of Japan. Ahead of Japan’s mid-August summer ABE REDUX Yamamoto invited Abe to head the Obon holidays, when spirits of ancestors group. It later morphed into an association In the spring of 2012, Abe’s allies prepared are honored, Suga and another close ally urging the central bank to set a 4 percent for a run at the LDP presidency. Much visited Abe in his office for another appeal. inflation target - considered an extreme no- of the groundwork was laid by the True They told him his chances of victory over tion to which the BOJ was staunchly op- Conservatives Association, now renamed two front-runners were at least 50-50. Abe posed. Abe accepted the role, and through Sosei Japan ( Japan Rebirth). Education re- promised to consult his wife, Akie. his association with the group and its form and revising the constitution topped He declared his candidacy on Sept. 12, mentors such as Yale University professor the list of policies, but the proto-platform 2012 – five years to the day after quitting - Koichi Hamada, became a convert. also called for a 3 percent inflation target. and won the leadership race in a rare second Some of Abe’s closest allies, such as Speculation about an Abe comeback round run-off. Campaigning on pledges to Shiozaki, an ex-central bank official in the grew in April, when he met outspoken revive Japan’s economy and diplomacy, Abe Abbey Road group, at first opposed adopt- Osaka Mayor Toru Hashimoto, who hoped then led his party to a landslide December ing what they considered extreme economic to woo Abe to the new right-leaning Japan election win. views. They particularly objected to a threat Restoration Party he was planning to set Back in office, the prime minister and to gut the central bank’s independence by up. Abe rejected the overture. his inner circle – many from his first at- revising its legal charter if it refused to em- “He told me around last May that he tempt to govern - have applied lessons bark on radical monetary easing. would not join the learned from that early failure, when the “What Mr. Yamamoto was saying was and wanted to seek a second chance from government message was more cacophony

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ABENOMICS: After years of self- imposed austerity, Japanese consumer confidence is rising, and along with it, sales of luxury goods REUTERS/ISSEI KATO

than harmony. a military, but has been stretched to allow Hideki Matsui - a national award, Abe got Allies credit Suga, 64, now in the key armed forces now bigger than Britain’s. a present of his own – a jersey with the post of chief cabinet secretary, with running This time Abe is pushing first for pro- number 96. He donned the shirt and strode the tight government ship that eluded Abe cedural changes to the constitution’s onto the field at Tokyo Dome stadium be- the first time. Article 96 to lower the hurdle for revi- fore 46,000 fans and live TV cameras. Unlike during his first term, cabinet sions. Currently, Article 96 requires that Asked later if the number referred to the ministers rarely speak out of turn. Abe is amendments be approved by two-thirds of proposed change in the charter, Abe replied kept front and center in the media through the members of each house of parliament, with a smile: “The uniform is because I am interviews, news conferences and Facebook followed by a majority of voters in a pub- Japan’s 96th prime minister.” postings. Abe spends considerable effort lic referendum. The LDP wants to change wooing media executives but shuns the that to a simple majority in parliament, fol- Additional reporting by Taiga Uranaka, brief daily stand-up Q&A sessions with lowed by the public vote. Editing By Bill Tarrant reporters that tripped him up the first time. Critics say such an amendment would For all the change in style, those close to leave the constitution vulnerable to easily FOR MORE INFORMATION Abe say his ultimate goal remains unchanged. shifting political winds. Linda Sieg, Chief Correspondent Japan “He intends to be in office for four or One recent Sunday, the media-savvy [email protected] five years and in the end, he wants to revise Abe made what looked to some like a pitch Bill Tarrant, Enterprise Editor Article 9 of the constitution,” said another for the revision at the ballpark. After giv- [email protected] government source. The pacifist clause, if ing two popular Japanese baseball greats Michael Williams, Global Enterprise Editor taken literally, bans Japan from maintaining - including former New York Yankees star [email protected]

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