Stratfor's 2018 Second-Quarter Forecast highlighted the raft of reforms planned by Japanese Prime Minister Shinzo Abe. But a scandal's resurgence could cause complications for Abe and his party as he attempts to bring major changes to Japan.
Scandal has reared its head in Japan once again, putting the prime minister's position in jeopardy. The scandal centers around the June 2016 sale of government land to the nationalist Moritomo school in Osaka prefecture at a steep discount — allegedly amid pressure from Prime Minister Shinzo Abe. The Moritomo Gakuen scandal burst into headlines February 2017, raging for months and sapping Abe's approval rating at a critical juncture. However, the North Korea crisis and government testimony seemed to largely put the scandal to bed by mid-2017 — though rumblings have continued off and on since. Meanwhile, Abe appeared to have secured the position of his ruling Liberal Democratic Party (LDP) with snap elections that yielded a supermajority in the legislature, paving his way toward a strong showing in party leadership elections in September. With the opposition weak and the next election not scheduled until 2019, Abe is hoping to focus on his legislative agenda, which includes defense spending approvals, labor reform, constitutional change and tax changes. But the scandal's return has put the fate of key legislation in question and could present problems for Abe in the LDP leadership election.
The scandal's latest flare-up began March 2, when media reports emerged that Japan's Finance Ministry had altered documents on the scandal to remove references to Abe, his wife and other ruling party lawmakers. Then, on March 9, the head of the regional office in charge of the Moritomo Gakuen land sale committed suicide and National Tax Agency chief Nobuhisa Sagawa — who was employed at the Finance Ministry when the sale occurred — resigned. On March 12, the ministry officially confirmed it had doctored documents.
For now, the government is trying to frame the tampering as limited to lower-level officials. But the outcry has been increasing for Finance Minister Taro Aso to resign, and small-scale protests have broken out in Tokyo. Around 70 percent of the public supports Aso resigning and the approval rating for Abe's Cabinet has dropped by six points. If Abe becomes implicated in either the scandal's pressure campaign or the cover-up, it could cost him his seat in power. However, there is still much to unwind before that point is reached.
In the meantime, the LDP's ability to move forward will be in question. Opposition parties previously managed to harpoon a key part of Abe's labor reform by fanning the flames of a separate data scandal, and they are already saying they will maintain a boycott on critical budget issues due by April. From the opposition's weak position, its best bet is to keep the scandal alive. Abe's biggest issue, meanwhile, is dealing with his finance minister, who also heads the LDP's second-largest internal faction. Aso could be difficult to remove from power, but would have every reason to tarnish Abe's reputation if he resigns. And while Aso reportedly has little interest in becoming prime minister, his faction's support will be critical for Abe in September's party elections. With North Korea unlikely to provide another splashy distraction, Abe will have much to weigh and sort out.