By: Todd Crowell

In the year and a half he has been in power, Japan’s Prime Minister Shinzo Abe has visited more than two dozen countries. He has become the most widely travelled Japanese prime minister in recent history. But there are two important countries and two important leaders conspicuously absent from this list: China and South Korea.

Abe hasn’t met with the leaders of either country even though they, like Abe himself, are new to their jobs and, one might think, important to get to know. One can hardly count the meeting in March between Abe and Korean President Park orchestrated by President Barack Obama, which was more like a teacher summoning two unruly children to shake hands.

Obama had a delicate task in his April 24 summit meeting with Abe. He had to reassure an important Asian ally of America’s continuing support without inflaming China. In Tokyo he proclaimed that the Senkaku/Diaoyu islands in the East China Sea, claimed by China but administered by Japan, fell under the provisions and protections of the US-Japan Security Treaty. At the same time, he threw a bouquet at Beijing by saying, “we’re not interested in containing China.” Two days later Beijing sent two Chinese Coast guard vessels into Japanese territorial waters around the Senkakus.

If anything, relations between the three North East Asia giants are getting progressively worse. Hardly a day passes without some new irritant. Historical issues that to most outsiders should have been settled years ago seem as fresh today as they were 70 years ago. The US, which obviously wants the big three, two of whom are formal allies, to get along is increasingly concerned.

Further freezing the ice are recent court cases from South Korea. This past year the courts have ruled on behalf of Korean plaintiffs seeking compensation for forced labor during the World War II. Some of Japan’s leading companies, such as Mitsubishi Heavy Industries, have been implicated in the judgments.

Tokyo maintains that these matters, forced labor, comfort women, and others stemming from the colonization of Korea were addressed in the 1965 treaty normalising relations (Washington takes the same view).

South Korea’s longtime dictator Park Chung-hee was content to keep things that way and take Japan’s reparations to help jump start his country’s economy. His daughter, the current president, is not so accommodating. Indeed, President Park seems to have doubled down on World War II issues, claiming that any summit with Abe would be useless given Japan’s refusal to acknowledge past wrong doings.

The Abe Shokku

It is hardly news that China and South Korea have serious misgivings about Japan’s current prime minister and his vision for Japan. During his first year Abe seemed inclined to follow the example of his predecessors and refrain from making an official visit to the Yasukuni Shrine. Chinese and to a lesser degree Koreans object to these visits because the souls of 14 “Class A” war criminals are enshrined there.

Then on the one-year anniversary of his election, December 26, Abe stunned the country by making a personal visit, informing his advisors only while en route to the shrine. He clearly didn’t want to be talked out of it.

It is a deeply personal issue with the premier. His beloved grandfather Nobosuke Kishi could easily have been the 15th war criminal. He had served as Minister for Munitions in the war cabinet and was detained for awhile but never put on trial.

But it isn’t just the Yasukuni visit that raises concerns about Abe’s real intentions. His appointments to the board that oversees NHK, the national broadcast network, similar to the BBC, have raised eyebrows.

One of the new appointees, novelist Naoki Hyakuta, is an unrepentant nationalist who calls the Nanjing massacre a Chinese fabrication, the comfort women a Korean libel and World War II a crusade to free Asia of Western colonialists.

These views are common boilerplate for the right-wing agitators who harangue shoppers and commuters outside railroad stations, but it is unusual to say the least to have these views come out of the mouths of people appointed to prestigious boards. People caught expressing such views usually have in the past had to resign. Now they seemingly are a part of the mainstream.

Standing Tall

But while Abe may not be the most popular Japanese leader in the view of the next-door neighbors, he still stand tall with the Japanese public. In part this is because he is still standing. At this point in their tenure every one of Abe’s predecessors, including himself in his first term, had resigned. It almost seemed like a law of physics: premiers come in to office with healthy approval ratings that soon begin to drop steadily down into the teens, the party becomes nervous about its re-election chances and the PM resigns.

The Abe government’s public approval ratings have remained surprisingly steady in the high 50 percent range. He has weathered a couple of unpopular moves, such as ramming through parliament a controversial official secrets act and his surprise visit to the shrine, with only a relatively small dip and then a fairly quick recovery.

He has accomplished this by adroitly pivoting back to the issues that really seem to count with the Japanese. In his New Year’s speech, just a week or so after his Yasukuni visit, Abe returned to his main theme of economic revival, urging businesses to hike wages and salaries so that the average Japanese could begin to feel the benefits of his economic program.

Even before his party’s overwhelming election triumph in late 2012, in which the Liberal Democratic Party won 293 seats at the expense of the hapless Democratic Party of Japan, there were signs of improving economics in anticipation of the new regime and its well-publicized plans.

Still, if he wants to remain in power, ordinary voters need to see some basic improvements in their lives. That’s one reason why Abe has been jawboning Japan’s industrial complex to raise wages, with some success. At the end of the fiscal year many major firms informed their labor unions that they will raise pay scales. Major electronics firms announced raises of about ¥2,000 ($20 a month).

However the wage hikes are seen mostly as a kind of sop, the least they could do to help the Abe administration and end a sense of long-term deflation. Moreover, the effects of these raises are offset by the rise in the national sales tax from 5 to 8 percent, which went into effect on 1 April but was certainly no April Fool’s joke. (It goes to 10 percent next year unless the government decides to postpone it.)

The sales tax affects just about everything. Workmen were photographed putting up new maps of train and subway lines including the new rates. The cost of my favorite lunch meal increased by ¥50 (50¢). In the days before the hike went into effect patrons staggered out of big box stores weighted down by appliances purchased before the tax was scheduled to go into effect.

It is widely assumed that the increase will send the economy into a brief and hopefully shallow downturn, probably showing flat or negative growth for the second quarter. Abe has calculated, however, that the slowdown will be short-lived. Whether he has made a good bet will come clear probably around September.

Abenomics exists now in a kind of equipoise. It can’t be as yet hailed as an unqualified success, nor can it be put down as a failure. Much of the easy steps, such as expanding the BoJ’s balance sheet have been taken. The more difficult parts, reforming the economy, are by and large, still to come. And to accomplish this Abe will face challenges from vested interests.

As a result of the 2012 election, the LDP has a commanding majority in the powerful House of Representatives . With its coalition partner, Komeito, it actually has a two-thirds majority. It also controls the upper house as a result of success in the 2013 election. Still, Abe has to accommodate dissenting voices, not just from the LDP’s coalition partner but within the party itself.

The strongly pacifist Komeito has served as brake on some of Abe’s plans to break down the legal barriers to expanded use of the military. A bloc of anti-nuclear MPs from his own party are less than enthusiastic about pushing ahead with nuclear power than some of the party leaders.

Abe must also deal with widespread and still strong public opposition to restarting many plants that were shut down in the aftermath of the Fukushima disaster.

One of the main initiatives in the “third arrow” will be an agreement with the U.S. to join the Trans-Pacific Partnership, a move that many observers in Japan and abroad think will be a bellwether as to whether Abe can push through other reforms that raise objections from vested interests that have long ties with the LDP, in this case, of course, the small but still powerful farm lobby.

Negotiators from both sides worked around the clock to reach an agreement on the Trans-Pacific Partnership (TPP) to decorate Obama’s visit to Japan but they were too far apart. The two sides are in broad agreement on numerous topics such as protection of intellectual property, investment codes and state-owned enterprises, they still disagree on that familiar roadblock, agriculture.

US negotiators were demanding very large cuts in Japan’s duty on imported frozen beef from the current 38 percent to below 10 per cent. Tokyo has not agreed to the American initiative since it was announced April 7 that it had concluded a free trade agreement with Australia, which required Japan to reduce its tariffs on imported beef only to 20 percent. To Japanese anything less is off the table.

No matter the outcome for TPP, Abe has taken the agenda for reform farther than his predecessor Junichiro Koizumi or any other prime minister, but Koizumi was a true believer; Abe is not.

For Koizumi, visits to the Yasukuni shrine were a sop to conservatives, so that he could advance his economic agenda. For Abe, economic reforms are important so that he can visit the shrine. In his heart of hearts Abe would rather be talking about revising the American-written constitution and restoring past glories not economics.

Todd Crowell is Asia Sentinel’s Tokyo correspondent. He wrote this for Asianomics Ltd., Hong Kong-based financial advisory firm