Tokyo’s political soap opera

Shinzo Abe faces plenty of roadblocks in his quest to revive Japan’s sluggish economy. His mentor wasn’t supposed to be one of them.

Former Prime Minister Junichiro Koizumi is easily the most popular Japanese politician of the last 20 years. Not since Yasuhiro Nakasone in the mid-1980s had a Japanese leader made such a splash domestically and globally. Not coincidentally, both were keen reformers - as Abe, too, claims to be.

After he left office in 2006, the now-71-year-old Koizumi seemed happy to stay in the shadows. That changed last month, when he made a very public about-face from his previous support of Japan’s nuclear industry. “Nothing is as costly as nuclear power generation,” Koizumi said in an Oct. 1 speech, arguing that Japan “could do well without” the dangerous reactors on its seismically active shores.

Since then, Koizumi has made a series of televised comments about the crisis at Fukushima, the dangers of atomic waste, the desirability of Japan (TPX) hawking nuclear hardware overseas, and the urgent need for green alternatives. His campaign is landing a major blow to Abe’s revival plan. “Abenomics” claims to be firing three arrows - monetary and fiscal stimulus, plus deregulation - but there’s a nonadmitted fourth: cheaper energy. The anti-nuclear movement Abe sought to contain now has a bona fide political rock star on its side.

Why would Koizumi fire his arrow at the heart of his protege’s program? Some wonder if it’s revenge. After five years of clearing away the bad loans of the 1990s, privatizing giants such as Japan Post and scrapping wasteful public works spending to reduce government debt, Koizumi entrusted Abe with his anti-deflation blueprint. Abe tossed it in his office drawer and focused elsewhere during his first - and failed - stint as prime minister from 2006-7. Japan’s recovery faltered.

I’m giving Koizumi the benefit of the doubt. He is the master of the zeitgeist. Like former U.S. President Bill Clinton, Koizumi’s gift was reading the national mood and harnessing public anger to force his change-resistant Liberal Democratic Party to act. Koizumi senses the public’s very valid fear of reactors, and he’s shaming Tokyo to act.

There are actually five things Abe would be wise to learn from Koizumi to ensure this term ends better than his first.

One, keep your word. Few thought Koizumi could privatize the sprawling postal system, which ran the world’s biggest savings bank - a multitrillion-dollar piggy bank that corrupt politicians used to fund pet projects. Abe has taken the easy steps among those he promised: opening the monetary and fiscal spigots. But more than 10 months in, Abe has had zero success making Japan more competitive, those steps having failed to spur innovation and encourage companies to hire more employees or raise salaries. As 2014 approaches and markets wonder what gives, Abe hasn’t even fleshed out his much-advertised restructuring plan.

Two, the people are your secret weapon. Koizumi’s lively mane of gray hair and blunt comments earned him the nickname “Lionheart.” He captivated a nation hungry for the strong, forward-looking leadership Asia’s second-biggest economy hadn’t seen in years. That gave Koizumi the high approval ratings he needed to nudge the Liberal Democratic Party in a new direction.

Abe should use a similar dynamic to jam controversial reforms through his party. Instead, he’s more inclined to tell the Japanese what the country needs than to listen. If Abe worked harder to get the people behind him, persuading them to call their parliament members and demand change, Abenomics might succeed. Instead, the prime minister is earning the public’s distrust with a bill that would give the government sweeping power to keep secrets, including those related to the murky and incompetent nuclear industry.

Three, it’s not personal. Investors consider Abe a big thinker; Koizumi wants him to think much bigger. Abe, 59, should heed Koizumi’s call for an aggressive plan to rid Japan of the reactors the public came to fear after March 11, 2011, when a giant earthquake and tsunami destroyed Fukushima. A green revolution that involves Japan’s vast geothermal resources would create jobs and prosperity and also serve humankind. Japanese would rally around an endeavor that would pay bigger dividends than restarting reactors or selling new ones to India and Turkey.

Four, mind the neighbors. Koizumi was hardly without his flaws. Many economists believe his pro-market policies gutted Japan’s social-safety net and accelerated inequality. But his biggest failing was angering China and South Korea with unrepentant visits to Tokyo’s Yasukuni Shrine, which honors several convicted war criminals along with Japan’s war dead. Abe refuses to say whether he will visit the shrine, an action that would further alienate two important economies already seething over competing island claims. A weaker yen isn’t going to help Japanese exporters if Chinese and Koreans aren’t buying their goods.

Five, don’t mess up the endgame. Koizumi throttled back during the last two years of his premiership, and his reform drive lost momentum. Abe needs to shift his own into a higher gear, accelerate upgrades over time and cement them. Otherwise, his cabinet’s 60 percent approval rating will disappear, along with his chances of changing Japan Inc.

Abe may be too bitter to realize that his mentor is doing him a big favor. By lending his popularity to the anti-nuclear chorus and exciting the public about a pro-growth energy future, Koizumi isn’t just counseling a better way. He’s offering his protege an invitation into the pantheon of true Japanese reformers.

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*The author is a Bloomberg View columnist.

by William Pesek