AS the new year kicks off and the coalition government of the Liberal Democratic Party and Komeito gets into full swing, Japan will see a drastic change in the direction of policies set by the DPJ government during its rule of three years and three months. It will not be a new direction, however, but rather largely a revival of the policy direction that Prime Minister Shinzo Abe adopted — or tried to adopt — during his first administration from September 2006 to September 2007. …Due to Mr Abe’s economic policy, which calls for unlimited monetary easing by the Bank of Japan, financial markets may show positive signs. But the nation’s poorest citizens will likely face greater hardships due to the Abe administration’s … conservative idea of ‘self-help’. On the diplomatic front, the Abe administration’s hawkish stance on issues involving the constitution, national security and historical perspectives may increase friction in Northeast Asia.

…But it must not be forgotten that Mr Abe’s top goal is to revise the constitution’s war-renouncing Article 9. He aims to win the upper house election so that the LDP, together with other parties sharing similar ideological ground, can lay the foundation for constitutional change. Given his nationalistic call for changing the ‘post-war regime’, Mr Abe’s policies could change the basic character of post-war Japan and raise suspicions in the international community regarding its true intentions.

…Mr Abe speaks much about the BOJ setting an inflation target of two per cent, but says very little about measures aimed at increasing employment and wages. His policy risks fuelling inflation …—(Jan 1)