Oct 27, 2014 5:39 AM

Agenda of Japan's Abe challenged as scandals mount

The Associated Press

TOKYO (AP) Prime Minister Shinzo Abe's honeymoon with Japan's voters is fading as scandals and a slowing economic recovery take a toll on his popularity and hinder progress on his policy agenda.

The resignations of two ministers in Abe's newly reshuffled Cabinet and reports that political funds of the replacement trade minister were used in a visit to a sex show bar were just the start.

Those reports got people digging into the riches to be found in publicly available political funding disclosures. They show some lawmakers spending hundreds and often thousands of dollars a night on visits to restaurants and mahjong parlors, while ordinary households are struggling to keep up with rising costs for food, heating and other necessities.

The most recent opinion polls show Abe's approval ratings slipping to around 50 percent. They had mostly been in the 60s since 2013.

The controversies are unwelcome distraction at a time of sharpening divisions within the ruling party over whether Abe should press ahead with a sales tax hike next year that is needed to help fix the tattered finances of the world's third-largest economy.

News of possible election law and political funding violations forced the resignations last week of Abe's justice and trade ministers, both among the five women who had just taken office in the early September Cabinet reshuffle that showcased Abe's commitment to stronger roles for women in leadership.

"It's a serious setback. So much of the Abe Cabinet's shine was due to its aura of invincibility and inevitability," said Michael Cucek, a Tokyo-based analyst and fellow at Temple University Japan.

Troubles over campaign funds and related issues have long contributed to Japan's famous "revolving door" politics. Abe's first term as prime minister, in 2006-2007, ended when he was driven from office by scandals and health problems after just a year.

Abe got a rare second chance when his Liberal Democrats regained power from the Democratic Party in December 2012. Since then, the LDP's coalition with the Buddhist-affiliated Komeito, or Clean Government Party, has established majorities in both houses of the parliament.

This time around, Abe has cultivated a confident, relaxed style of leadership, repeatedly declaring "Japan is back!" while his chief Cabinet Secretary Yoshihide Suga endeavors to keep their gaffe-prone allies more or less in line.

"Until this crisis it looked pretty certain he was just going to cruise," Cucek said. "Now that politics as usual has returned we could see the same sort of decay that we've seen in the past," he said.

Trade minister Yuko Obuchi, a rising star and daughter of a former prime minister, resigned on Oct. 20 after admitting to discrepancies in reporting of her political funding. Justice Minister Midori Matsushima also quit after the opposition filed a criminal complaint alleging that the distribution of "uchiwa," or hand-held fans, to her supporters violated a ban on gift giving.

Obuchi's successor as trade minister, Yoichi Miyazawa, then drew fire over an 18,230 yen ($170) tab listed in his political funds accounting for an evening's entertainment at a sadism and masochism themed establishment in his home city of Hiroshima. Miyazawa and his staff say he did not visit the club himself, and the money was paid back.

The next flap was over Miyazawa's ownership, as the minister responsible for the power industry, of shares in Tokyo Electric Power Co., whose Fukushima Dai-Ichi nuclear power plant suffered meltdowns after the March 2011 earthquake and tsunami. Miyazawa said Friday he had put the shares, worth about $2,000, in a trust.

Over the weekend, reports noted that political funds of Taro Aso, a former prime minister who is now finance minister, were used to pay monthly tabs of up to 1.5 million yen ($14,000) to a mahjong parlor in the Roppongi nightclub district.

Opposition questioning over such issues in the parliament is slowing work on the main priorities of the current Diet session: policies to revive languishing rural regions and increase female employment to help compensate for the aging and shrinking of the overall workforce.

"Abe is perceived to have made a mess of the early September reshuffle and is faced longer term with added popular doubt given a timetable of awkward policy decisions," said Stephen Church, an analyst at Societe Generale in Tokyo.

But Abe's strongest asset may be the weakness of the highly splintered opposition. The Democratic Party's rating, which had been hovering around 5 percent, has risen but remains in the single digits in most polls.

Abe appears undecided over whether to press ahead with a 2 percentage point increase to the national sales tax that is needed to offset a public debt that stands at about 250 percent of GDP.

The economy contracted 7.1 percent in April-June after a 3 point increase in the sales tax on April 1.

Instead of delaying the tax hike for the sake of political expediency, Abe will likely go ahead with it as promised before the end of the year but also announce extra economic stimulus, said Masamichi Adachi, an analyst at JPMorgan in Tokyo.

The bigger concern is whether Abe will take unpopular measures to help restore the country's waning competitiveness and ensure sustained growth after two decades of malaise.

Up to now, progress on those tasks has lagged, Adachi said.

"The process is going ahead but still quite slow and not sufficient to overcome the challenges this country is facing," he said.


Elaine Kurtenbach on Twitter: http://www.twitter.com/ekurtenbach


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