Global Insight Perspective
Significance	The Abe government's defeat has signalled the population's discontent with his focus on such issues as constitutional and educational reform as well as a stronger foreign policy stance, which have come at the cost of ignoring bread and butter issues such as the growing wealth gap.
Implications	Abe's political survival will depend on his ability to maintain the support and cohesion of his party in the face of such a defeat, with some lawmakers having sought to win in the elections by openly attacking Abe's policies. In the short term, a cabinet reshuffle can be expected to address popular distrust in his cabinet.
Outlook	The Democratic Party of Japan (DPJ) victory has given the opposition a chance to reassert itself on the political stage, and it can be expected to halt some of Abe's reform effort by blocking legislation by means of its newly won majority.

A Crushing Defeat

The leadership of Japan’s ruling Liberal Democratic Party (LDP) today agreed to let the country’s unpopular prime minister, Shinzo Abe, retain his post as party president following the Party’s resounding defeat in yesterday’s upper house elections to the opposition led by the opposition Democratic Party of Japan (DPJ). As expected, voters gave Abe a failing mark, reflecting how his administration has been beleaguered by various scandals since coming to power in September last year. The LDP failed to win more than 37 of the 121 seats up for grabs in the elections, with its junior coalition partner gaining eight as opposed to the expected 13 seats. Meanwhile, the DPJ won a sweeping victory in the cities as well as the countryside, traditionally an LDP stronghold, gaining a total of 60 seats. Reflecting the high degree of public discontent, LDP senators in rural regions suffered defeat to political novices, who primarily ran on an anti-Abe platform. The LDP as such fell far short of winning the required 64 seats that it would have had to obtain in order to maintain control of the upper house, with the opposition now having the power to block or slow down any legislation considered undesirable. This is the first time in the ruling LDP’s 52-year history—of which it has spent a mere nine months out of power—that the party obtained fewer seats than the largest opposition party.

While admitting that the LDP had obtained poor results in the elections and that he was in part to blame, Prime Minister Abe has reiterated his determination to stay in power and his continued commitment to his reform agenda of breaking free of what he has termed the post-war regime of which one of his key policy objectives has been constitutional revision. Abe acknowledged that one of the key causes of the major defeat was strong public anger that has ensued in the aftermath of the revelation that his government had lost some 50 million pension records in May, pledging to “tackle the issue of money and politics more vigorously”, according to the Financial Times (FT). While Abe as such seems committed to his policy of “creating a beautiful country”, he has signalled that he would take moves to reshuffle his scandal-ridden cabinet, as well as pledging his will to co-operate with the opposition DPJ in passing vital legislation.

The Opposition Wins Ground

This is a significant victory for Japan’s historically weak opposition, and the DPJ has now called for a general election, with deputy leader Naoto Kan heralding that the elections have shown the will of the people. The opposition has further pointed to the fact that former LDP prime minister Ryutaro Hashimoto resigned in 1998 to take responsibility for his party’s defeat in the upper house elections when it won a mere 44 seats, which is still a better showing than the LDP has managed under Abe’s leadership. Abe has, however, obtained the backing from several LDP heavyweights to remain in office, with the LDP secretary-general offering to resign in his place to take responsibility for the defeat. His backers have tended to relegate the poor showing to the emergence of the pensions scandal, saying that any leader at the helm at the time would have been blamed. However, Abe’s government has been implicated in numerous scandals during his term involving corruption issues, which have served to call into question Abe’s political leadership capabilities and raised concerns that his administration was returning to “the ways of the old LDP”, with his predecessor Junichiro Koizumi having waged war on his own party and the pork-barrel politics with which it had become associated. Two members of his cabinet have had to resign as a result, while former farm minister Toshikatsu Matsuoka committed suicide in the face of corruption allegations. Matters have also not improved by his replacement Norihiko Akagi having faced allegations of being involved in a money scandal on the eve of the election. The DPJ’s sweeping victory has, however, also owed to the success of DPJ leader Ichiro Ozawa in securing victories in rural areas which have long been LDP strongholds by pledging his support for farmers and his commitment to addressing Japan’s growing wealth gap. Ozawa has, however, been absent as his party has celebrated its historic victory and is reportedly recovering from stress and fatigue following months of campaigning.

Outlook and Implications

The historic defeat suffered by the LDP at the polls reflects the growing degree of popular discontent with its recent policies and has given the opposition a chance to reassert itself on the political stage with the DPJ leadership heralding its victory as signalling that “Japan was at last on the verge of a full-fledged two-party system”, according to the FT. The opposition has, however, failed to push a comprehensive policy programme in the past, with voters primarily voting against the LDP as opposed to giving an affirmative vote to the DPJ.

Although the LDP leadership has for now agreed to retain Abe at its helm, questions remain as to whether the party will continue to retain someone who is considered an electoral liability as head, and it may chose to field a new candidate with greater popular support ahead of the next elections in 2009/10. Abe’s defeat in the elections does not immediately force his resignation as the lower house of parliament, which remains firmly under his control, chooses the country’s prime minister, but prime ministers have in the past tended to resign to take responsibility in such cases. As such, Abe’s political survival will depend on his ability to maintain the support and cohesion of his party in the face of such a defeat, with some lawmakers having sought to win in the elections by openly attacking Abe’s policies. In the short term, a cabinet reshuffle can be expected to address popular distrust in his cabinet, with Abe gaining more control over his cabinet being an imperative so as to avoid further corruption scandals.

The Abe government’s defeat has signalled the population’s discontent with his focus on such issues as constitutional and educational reform as well as a stronger foreign policy stance, which have come at the cost of ignoring bread and butter issues such as the growing wealth gap. As such, his government can be expected to focus more on such matters in the time to come, notably addressing the pensions scandal, which has been so detrimental to the Party’s reputation with the growing wealth gap remaining a concern. However, Abe seems determined to press ahead with his reform agenda; this may, however, be complicated somewhat by legislative gridlocks as the opposition now has the power to block of halt legislation following its victory.