Global Insight Perspective
Significance	The cabinet reshuffle is an attempt on the part of Abe to salvage his government and reunite the LDP as the party is seeking to recover from the crushing defeat suffered in the July upper house elections.
Implications	While the cabinet reshuffle may go some way in restoring public trust by installing LDP veterans in key positions in the short-term, questions remain over the prime minister’s political future should the cabinet reshuffle not succeed in addressing public mistrust.
Outlook	Abe is set to continue his agenda of breaking free of what he has termed “the post-war regime”, but his government is under pressure to incorporate bread and butter issues, with concerns about how this may come at the expense of market-oriented reforms and efforts to cut its huge public debt

Mending the Damage

Japan’s embattled Prime Minister, Shinzo Abe, today moved to undertake a wide-reaching cabinet reshuffle, appointing veteran lawmakers to key positions, in a bid to address popular mistrust in his cabinet. Abe and his long-ruling Liberal Democratic Party (LDP) suffered a historic defeat to the opposition led by the Democratic Party of Japan (DPJ) last month, with his government having lost much support due to its involvement in a series scandals, policy gaffes, and its conservative agenda which has failed to focus on bread-and-butter issues (see Japan: 30 July 2007: PM of Japan Stays in Power Despite Crushing Defeat in Upper House Elections). This spurred the opposition as well as some lawmakers from Abe’s own party to call for his resignation. Although his popularity ratings have dropped to an all-time low of 22%, the prime minister has refused to heed such calls, teaming up with LDP heavyweights and promising to address popular concerns through today’s cabinet reshuffle.

LDP Veterans Take the Lead

A group of experienced conservative lawmakers have been moved to key policy posts in the new cabinet line-up. Former foreign minister Nobutaka Machimura, the head of the LDP’s largest faction has been appointed to hold this important portfolio once again. He served as foreign minister under Abe’s predecessor Junichiro Koizumi from 2004-2005 and oversaw the diplomatic crisis which ensued when anti-Japanese riots flared in China over Tokyo’s bid for a permanent seat on the United Nations Security Council. His appointment to this key cabinet position serves to ensure the support of his faction at a time when Abe’s detractors within his own party have called for his resignation. He replaces the popular outspoken foreign minister, Taro Aso, who was named LDP secretary general ahead of the cabinet reshuffle. It is believed that this puts Aso in a good position to pursue his goal of becoming prime minister. The hawkish Aso has been defeated twice in party elections for the post, but has remained a close ally of Abe, with the two sharing the same conservative agenda. Meanwhile, former foreign minister Masahiko Komura was appointed to serve as Japan’s new defence minister, replacing Yuriko Koike who has only held the post for a month after becoming the country’s first female defence chief. Machimura and Komura are expected to be an easy fit with Abe's conservative, pro-U.S. government. Komura is known to have favoured a hard line on North Korea in the past. Machimura was behind efforts to phase out development aid to China, with bilateral relations having been frosty until Abe came to power in September last year.

Abe has named former defence minister, Fukushiro Nukaga, as the country’s new finance minister, while trade minister Akira Amari kept his post. Menawhile, former trade minister Kaoru Yosano took over as chief cabinet secretary from Yasuhisa Shiozaki in what is believed to be a symbolic move away from the previous administration for the new cabinet to start afresh. Additionally, Nobuteru Ishihara (the son of the controversial Tokyo governor Shintaro Ishihara),was appointed LDP policy chief.

In the Wake of the Historic Defeat

The cabinet reshuffle was expected in the wake of the LDP’s historic defeat last month, which saw the ruling coalition losing control of the upper house of the Diet to the opposition for the first time ever. As expected, voters punished Abe, partly reflecting how his administration had been beleaguered by various scandals since coming to power in September last year. One of the key causes of the major defeat was public anger after the revelation that the Abe government had lost some 50 million pension records in May. Additionally, it has been implicated in numerous corruption scandals during his term which have called into question Abe’s leadership and raised concerns that his administration was returning to “the ways of the old LDP”, after Abe’s predecessor Junichiro Koizumi 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 not improved by his replacement, Norihiko Akagi, who faced allegations of being involved in a money scandal on the eve of the election. The Abe government’s defeat has further 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.

Outlook and Implications

The cabinet reshuffle is an attempt on the part of the troubled prime minister to salvage his government and reunite the LDP, as the party is seeking to recover from its crushing electoral defeat. Abe’s political survival depends on his ability to maintain the support and cohesion of his party, with some lawmakers having openly attacked Abe’s policies in its aftermath, highlighting the risks of a ruling party fracturing. While the cabinet reshuffle may go some way in restoring public trust (by installing LDP veterans in key positions in the short term) questions remain over the prime minister’s political future. The LDP leadership has for now agreed to retain Abe at its helm, but if this measure should fail to garner public support, it is unlikely that the party leadership will continue to retain someone who is considered an electoral liability. In such an event, it may chose to field a new candidate with greater popular support ahead of the next elections in 2009/10.

As for wider policy orientations, Abe has 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. Given the lack of popularity for this policy agenda and calls for the government to address more pressing bread-and-butter issues, including the country’s widening wealth gap, a higher degree of attention can be expected to be given to this. This agenda has been championed by the DPJ, and pressure on the government to address such issues has raised concern that this could come at the expense of market-oriented reforms and efforts to cut the huge public debt.

A more immediate political challenge is set to come from the DPJ, which now has the capacity to block or stall proposed legislation. This is particularly set to be a problem in relation to the policies that the Abe government has pushed for regarding the adoption of an active foreign policy. The DPJ leadership has stated that it is opposed to an extension of a navy mission supporting US-led forces in Afghanistan and is also considering terminating Japan’s air mission, which supports U.S.-led forces and the UN in Iraq. These measures are contrary to the activist foreign policy promulgated by Abe and have created concerns in the United States.