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Japan eyes stability with Abe in front

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(Globalpost/GlobalPost)

After his party's decisive win in a weekend Tokyo vote, Prime Minister Shinzo Abe looks set for victory in next month's upper house election, analysts say, giving Japan the political stability that has eluded it for so long.

A win there would break the cycle of weak and short-lived administrations that have dominated the political landscape since long-serving Prime Minister Junichiro Koizumi left office in 2006.

"The LDP does not have to do anything" in the run-up to the poll, said Tomoaki Iwai, political science professor at the Nihon University, referring to Abe's Liberal Democratic Party. "The current tide will not basically change."

There are no significant domestic obstacles on Abe's horizon ahead of the expected July 21 vote for half of the seats in the senate.

The prize is a majority in both houses, neither of which would face a vote for another three years.

That would give him time and power enough to force through some of the painful and unpopular reforms economists say Japan's slumbering economy so desperately needs.

The LDP and its junior coalition partner New Komeito trounced all-comers in the 127-seat Tokyo Metropolitan Assembly election on Sunday.

Despite a low turn-out of just 43.5 percent, voters appeared to endorse Abe's brand of economic tonic.

"Abenomics" blends massive monetary easing, big fiscal spending and a series of reforms aimed at freeing up businesses.

To the delight of the political classes, it has taken some steam out of the yen, boosted Tokyo's long under-performing stock market and put a spring in the collective step of Japan Inc.

Economists are divided over the long-term merits of the package, coming as it does with the further bloating of public debt, already more than double the size of the Japanese economy and the worst level in the industrialised world.

But without any alternative to offer, the main opposition Democratic Party of Japan, whom Abe unseated last December, remain in disarray.

Voters still deeply distrust the DPJ, whose three-year rule is characterised in the popular mind by empty promises, diplomatic missteps, policy gaffes and never-ending internecine strife.

Credit Suisse economist Hiromichi Shirakawa said the ruling bloc would effectively sit on its hands until after the election.

"In terms of both fiscal and monetary policies, this is not a period to commit to something new," he said.

After the polls, Abe was likely to offer more growth measures to try to get the economy back on track.

He has already promised to offer a major investment tax break, a step that will be necessary to offset the impact of a planned consumption tax hike from the current five percent to eight percent in April and to 10 percent in 2015, Shirakawa added.

Some analysts argue that after July, Abe could get back on his hobby horse and set about drafting a new constitution, promoting patriotism among schoolchildren and reassessing Japan's wartime history.

His detractors say this risks further irritating already inflamed relationships with China and South Korea.

So far, Abe has proven critics wrong and devoted himself almost entirely to fixing the economy, largely staying away from the nationalistic pronouncements he has been known for.

Iwai believes he will probably stick to the script over the next month, despite pressure from his support base on the right.

But after the polls could be a different matter, Iwai said.

"Mr. Abe will likely reveal his true colours."

hih/hg/jta

http://www.globalpost.com/dispatch/news/afp/130624/japan-eyes-stability-abe-front