Japan's Diet Debates WWII as Nationalism Clouds Abenomics

As Japan girds for a wallop to spending from a looming sales-tax increase, discussion in the nation’s parliament turns to history -- not to 1997, when the last bump in the levy helped trigger a recession, but to 1937.

Opposition lawmaker Hiroshi Oogushi asked Prime Minister Shinzo Abe Feb. 12 whether remarks made by one of his appointees denying the 1937 massacre of Chinese in Nanjing posed a problem. Abe responded that it wasn’t appropriate to comment on something said in a personal capacity.

The exchange wasn’t unusual, with references to World War II events coming up more than two dozen times in Diet sessions this year, and more in daily press briefings by government officials. While Vice Foreign Minister Nobuo Kishi says nationalism is “absolutely not” on the rise, plans to loosen the pacifist constraints of the constitution to boost the military are stoking concern the Abe administration has fired up the nation’s right-wing and is taking its eye off economic revival.

“He needs to bring about the economic recovery that everyone wants,” said Kozo Yamamoto, a lawmaker in Abe’s Liberal Democratic Party, referring to the prime minister, whom he has advised on economic policy. “He should avoid getting bogged down in other issues.”

Reflation Efforts

Abe’s first year in office saw him unleash fiscal stimulus, pledge reduced regulation for businesses and replace the central bank’s leadership team with reflation advocates who implemented unprecedented easing. Yet to come is implementation of the structural reform agenda, a restart of the nation’s nuclear industry, and navigating the impact of higher sales taxes.

With economic growth weakening to the lowest in a year in the fourth quarter, at an annualized 0.7 percent, investors are signaling concern that the initiative known as Abenomics may be waning. The Topix index of stocks has tumbled 10 percent since the year began, compared with a 0.2 percent gain in the MSCI World Index.

Abe’s efforts to reinterpret the constitution to allow the military to better support allies and his decision to visit a shrine that commemorates war dead has stoked tensions with China and South Korea, which suffered under Japanese occupation. He also spent political capital pushing through legislation that increases punishments for people who leak government information, a move that triggered mass street protests.

‘Enormous Drain’

“The secrecy laws were consuming an enormous amount of government time” late last year, said Martin Schulz, an economist and senior fellow at the Fujitsu Research Institute in Tokyo. “The foreign policy towards China and military build-up is an enormous drain of time.”

Chinese and South Korean officials keep close tabs on Japanese remarks on wartime events -- which also regularly come up in Chief Cabinet Secretary Yoshihide Suga’s twice-a-day press briefings. Some days, spokesmen on both sides of the East China Sea are engaged in 1940s retrospection -- such as on March 19, when Suga and Chinese Foreign Ministry spokesman Hong Lei issued their takes on Japan’s use of forced labor.

“I feel very strongly that I do not want my nation Japan to become a nation like Tibet,” Shintaro Ishihara, a leader of the nationalist Restoration Party, said today, referring to China’s occupation of the territory. Ishihara contributed to the deterioration of Sino-Japanese relations when as Tokyo governor in 2012 he tried to buy islands in the East China Sea also claimed by China.

Military Brothels

Back at the Diet, Hiroshi Yamada of the opposition Japan Restoration Party spent his allotted time for questions at the budget committee Feb. 20 quizzing officials about how Japan came to apologize for trafficking women to military brothels across Asia in the 1930s and 1940s. He asked whether evidence given by survivors was a “fabrication.”

Abe and Suga themselves don’t deny war atrocities. Japan’s cabinet yesterday reiterated that it upholds past apologies and said the government planned to issue a new statement next year to mark the 70th anniversary of the country’s defeat that would be “future-oriented and appropriate for the 21st century.”

Meeting with Park

Abe and South Korean President Park Geun Hye held talks yesterday for the first time as leaders, in a meeting hosted by U.S. President Barack Obama in The Hague that focused on areas of shared concern such as North Korea’s nuclear program. Abe said he was “so very happy” to see Park and that it’s “extremely important” for the three countries to cooperate on North Korea.’’

At the same time, Suga said Feb. 28 that the government wants to set up a team to investigate the grounds for a 1993 apology over the use of ‘‘comfort women’’ by the military. Much of that evidence came from testimony of survivors of the military brothels. South Korea, which was occupied by Japan from 1910 until the end of the war, has denounced the move.

Aides and appointees have also stoked nationalist concern. In his first press conference on Jan. 25 as head of Japan’s national broadcaster, Katsuto Momii said the Imperial Army’s use of sex slaves was a practice “common in any country at war.”

Renewing Confidence

An element of Abe’s reflation initiative has been to restore confidence among a population afflicted by two decades of economic stagnation, with Japan losing to China the title of having the world’s second-largest gross domestic product. Expanding the military and fueling nationalist sentiment is a component of such a renewal of confidence, said Masamichi Adachi, a Tokyo-based senior economist at JP Morgan Securities Asia.

Abe wants to achieve confidence by showing that we are a more normal, independent country -- the military is part of it,’’ he said. At the same time, “I don’t think Prime Minister Abe ever, ever wants to have this right-wing agenda prevent economic reforms,” he said.

Japan is bracing for what could be the economy’s deepest quarterly contraction since the March 2011 earthquake when the sales tax rises to 8 percent from 5 percent on April 1. Another 2 percentage point bump is scheduled for October 2015. GDP is forecast to shrink 3.9 percent in the three months from April, according to the median estimate in a Bloomberg News survey of economists.

Abe Support

Abe still has time to implement economic change before his leadership of the LDP is up for a vote in September 2015. Support for Abe rose three percentage points to 56.9 percent in a poll conducted by Kyodo News on March 22-23. The agency polled 1,023 people by phone and did not give a margin of error. About 58 percent of respondents said they opposed Abe’s efforts to reinterpret the constitution to defend allies.

There are signs that the reinterpretation may be a first step to actually changing the constitution. The ruling coalition and some opposition parties today agreed on new rules for holding a referendum to change the constitution. The main provision of the law will be to reduce the age limit for those eligible to vote in any such referendum to 18 from 20.

Outside of politics, war-themed entertainment has gained in popularity since Abe took office in December 2012. A movie about a kamikaze pilot topped box office charts for the first eight weekends of the year, grossing $68 million in that time, according to Film Business Asia. Activists say there has been an up-tick in anti-Korean graffiti in Tokyo, while Japan’s soccer league punished the Urawa Reds after fans displayed a banner reading “Japanese Only” at the team’s home stadium on March 8.

’Rat People’

Some domestic media capitalize on Japan’s prickly ties with its neighbors, issuing critical and, at times, racist stories.

One magazine, Sapio, ran a front-page headline in its March edition reading: “The abject poverty of ordinary life in China and South Korea” describing South Korea as a “country of pigs” and referring to millions of “rat people” living in underground homes in China. The magazine’s circulation of 125,000 has increased almost 25 percent since September 2012, three months before Abe came to power, according to the Japan Magazine Publishers’ Association.

In Amazon Japan’s ranking of best-sellers on diplomacy, the top five books are all critiques of Korea and China with titles including “Criminal Korea,” “Throw This Country Away” and “It’s Ugly, But Don’t Look Away.”

The amount of anti-Korean graffiti in Shin-Okubo, an area of central Tokyo known for its Korean residents, began increasing in November last year, according to Eiichi Kawahara, a 50-year-old labor union official who took part in a project to help clean it off.

“It comes against the background of anti-Korean feeling in Japan,” Kawahara said by phone. “That atmosphere has got stronger since the Abe administration began,” he said. “The people who are denying the Nanking massacre and the comfort women problem are his associates.”

Before it's here, it's on the Bloomberg Terminal.