Unceremoniously forced to resign as Japan's prime minister in 2007 after only a year in office, Shinzo Abe spent five years in the political wilderness. Few expected that he would return to lead the Liberal Democratic Party (LDP), one of Japan's two major political parties, let alone the country. But in September 2012, the party reinstated him as its leader, and three months later, so did Japan's voters. "Japan is back," Abe declared in a February speech in Washington; he could have been talking about himself as well.
His government enjoys public approval numbers as high as 72 percent, a level not seen this far into a Japanese prime minister's term for more than a decade. His economic program -- dubbed "Abenomics" -- is winning plaudits at home and abroad as a bold attempt to tackle Japan's "lost two decades" of sluggish growth, stagnant wages, and persistent deflation, while voters are tolerating his attempts to deliver on cherished conservative goals like revising the constitution and strengthening Japan's military. As Japan's benchmark index the Nikkei reached a five-year high, and the Japanese economy grew at an annualized 3.5 percent rate in the first quarter, it's tempting to call Abe a success. The Economist did -- in their May 18 issue, the editors put Abe on the cover, dressed as Superman.
Although the Nikkei's 7.3 percent drop on Thursday may remove some of the shine, the fact remains that Abe is perhaps in the strongest position of any Japanese prime minister since the economic bubble burst in the early 1990s. With opposition parties in disarray and a comfortable LDP majority in the Diet, Japan's parliament, Abe could institute the economic reforms that Japan needs -- if he doesn't get distracted by right-wing obsessions.
That's what happened in 2006, when he took power as the anointed heir of his immensely popular predecessor Junichiro Koizumi. During his five years in office, Koizumi focused on economic reform, cleaning up the balance sheets of Japan's banks, privatizing inefficient public corporations, and limiting the growth of government deficits. Many hoped Abe would continue fixing the economy, but he instead expended his political capital on changing the country's education law to emphasize patriotic education, elevating the defense agency to a full ministry, and laying the groundwork for revising Japan's pacifist constitution. Instead of practicing multilateral diplomacy with unstable North Korea, Abe's government obsessed over resolving the issue of Japanese citizens abducted by North Korea in the 1970s and 1980s.
In his Dec. 2012 campaign, Abe promised to overcome deflation and restore economic growth. Since entering office, he has proposed a "three arrows" economic policy: raising the Bank of Japan's inflation target and instituting a $1.4 trillion bond-buying program; unveiling a $116 billion fiscal stimulus package; and developing an economic growth strategy emphasizing, among other things, more resources for medical technology and opportunities for women in the workforce.