On Sunday, July 22nd, Japanese Prime Minister Shinzo Abe’s Liberal Democrat Party (LDP) won a widely expected victory in upper house elections, securing LDP-coalition control over both houses and placing Japan’s near-term political agenda into Abe’s hands. However, what Abe intends to do or is capable of doing with this opportunity is a source of debate. Despite the LDP’s “landslide” victory, the challenges to Abe’s agenda remain formidable, and contain significant economic, diplomatic, and political hurdles.
First, the PM’s signature “Abenomics” policy of fiscal, monetary, and regulatory reform is expected to go ahead. With G8 approval for such reforms and public optimism for the recovering economy, the success of policies enacted thus far have been a key component in Abe’s victory. The crucial element to watch now is the extent of announced regulatory reforms. Reforms announced before the election were seen by analysts as not going far enough and tepid compared to earlier proposals. Additionally, there are key stakeholders to these reforms who represent vested interests that could undermine its full potential. These stakeholders are not only influential business leaders, but members of the recently-elected upper house. Therefore, the push for deeper reforms is expected to be a far more difficult and uncertain process than the previous policies of fiscal and monetary stimulus.