Bloomberg News

Ex-Japan Premier Abe Named Head of LDP Before Election Fight

September 26, 2012

Liberal Democratic Party President Shinzo Abe

Liberal Democratic Party (LDP) President Shinzo Abe. Photographer: Haruyoshi Yamaguchi/Bloomberg

Japan’s main opposition party chose Shinzo Abe as its leader to contest the next election, five years after he suddenly resigned as prime minister blaming illness and a policy deadlock.

Abe, 58, defeated former Defense Minister Shigeru Ishiba in a runoff today in Tokyo to become head of the Liberal Democratic Party ahead of elections Prime Minister Yoshihiko Noda must call by August. Polls indicate the LDP may win, putting Abe in line to become premier for a second time.

An advocate of revising Japan’s pacifist constitution to loosen military restrictions, Abe has called for building on islands at the heart of a territorial dispute with China that is threatening trade between Asia’s two biggest economies. He also favors having the Bank of Japan (8301) adopt an inflation target of 3 percent to combat more than a decade of falling prices.

“He’s taken a hard line on China, but foreign policy doesn’t win elections,” said Jeff Kingston, head of Asian studies at the Tokyo campus of Temple University. “Abe stumbled so badly the last time as prime minister. What is the LDP going to do to revive the economy?”

The opposition faces pressure to help pass legislation funding this year’s budget or imperil an economic recovery threatened by falling exports. The LDP agreed to support a bill raising the sales tax to cope with the world’s largest debt in exchange for Noda’s pledge to call elections “soon.”

Noda, who was re-elected head of the ruling Democratic Party of Japan last week, has yet to say when that might be.

‘More Instability’

“Abe is pro-growth, meaning he is in favor of inflation targeting and more money printing,” said Hiromichi Shirakawa, chief economist in Tokyo at Credit Suisse Group AG and a former Bank of Japan official. “There will be more instability politically because Abe will just criticize DPJ policies.”

Japan and China are mired in their biggest diplomatic crisis since 2005 over islands in the East China Sea called Senkaku in Japanese and Diaoyu in Chinese. Noda’s government bought them from a private owner this month, sparking outrage from China. While he has no construction plans, Abe and other senior LDP officials have called for building facilities on them to aid Japanese fisherman.

“We want to show our intention to firmly protect the islands and our territorial waters,” Abe said at a post- election press conference. “The interests of countries that border one another sometimes clash. Even so, we need one another and I plan to control the situation with that strategic awareness.”

‘No Dispute’

He reiterated Japan’s position that “there is no dispute” over the sovereignty of the Japanese-controlled islands.

The Chinese and Japanese foreign ministers met yesterday for the second time this month in an attempt to ease rising tensions that have disrupted a $340 billion trade relationship.

Abe resigned as premier on Sept. 12, 2007 after a year in office citing health problems, setting off a revolving door of Japanese prime ministers. His popularity plummeted after the government revealed that millions of dollars in pension-fund money had gone unaccounted for, and his cabinet ministers were involved in a succession of scandals.

“Of course my victory in this race doesn’t clear away my responsibility for what happened five years ago,” Abe told party members. “With my responsibility for that experience engraved in my heart, I will do all in my power to win the next election.”

A Yomiuri newspaper poll published Sept. 18 showed 31 percent of respondents planned to vote for the LDP in the proportional representation section of the next election, compared with 14 percent for Noda’s Democratic Party of Japan and 16 percent for a new party formed by Osaka Mayor Toru Hashimoto.

To contact the reporters on this story: Isabel Reynolds in Tokyo at ireynolds1@bloomberg.net; Takashi Hirokawa in Tokyo at thirokawa@bloomberg.net

To contact the editor responsible for this story: John Brinsley at jbrinsley@bloomberg.net


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