The year 2020 has brought about difficult strategic challenges for Japan and its political class. While the postponement of the scheduled Olympics brought dejection for the Japanese economic revival and socio-cultural rejuvenation, the ongoing challenge to manage the COVID-19 pandemic is a bottleneck to its domestic and international prospective planning. Amidst such problems, Shinzo Abe's decision to step-down from power brought political uncertainty in Japan. Even though Abe's successor Prime Minister Suga has quickly built an image of a forward-looking leader via his economic approaches like “Suganomics” to reorient and recover Japan's economy which is under recession, the extent to which Suga can take forward key political and economic initiatives that Abe built over the last eight years remains unclear.
A long-term plan for Suga will obviously be an over-ambitious approach as general elections are due in 2021. If anything, Suga will aim to capitalize on his political platform until then. Hence, one of the foremost leadership challenges for Suga is deciding on calling the time for the election. He would likely prefer to call for an election at the beginning of 2021, while his ratings are still balanced, or declare it after the Olympics and Paralympics to further strengthen his political positioning. Either way, his management of the COVID-19 pandemic while trying to ensure the success of his economic recovery plan will remain a major constraint. Suga's performance will help lead to a victorious election outcome that retains the Prime Minister's position with the Liberal Democratic Party's (LDP). Snap election calls are also made to break away from previous administration's policies; however, as Suga is largely following the policy lines of Abe, the question of calling early-elections remains unclear.
Suga's most pressing challenge in 2021 will be reviving Japan's dwindling economy that has rescinded into a recession – the worst since the Second World War – amidst COVID-19. Critical issues such as a prolonged deflation, quick growing government debt, a declining global demand for Japanese exports and weak productivity outputs have been exacerbated by the pandemic. These have been further complicated by an overall shrinking population and an ageing society. Such challenges cannot be resolved in the short term; even in the long-run, they have remained persistent problems despite Abe's flagship “Abenomics” outlook.
Nevertheless, in light of the bleak reality presented by the current circumstances, Suga must urgently inject stimulus into the Japan's national and regional economies. As continued social distancing, low consumer spending and a cautious private sector dampen economic activity, the Suga administration will need to devise new policy tools to aggressively tackle Japan's economic challenges. Suga must therefore move beyond stimulus packages and “Abenomics” reform policies to give momentum to the slumping economy. He can no longer afford to remain restrained in the present unprecedented and desperate times.
Here, an efficient tool for economic aid is focusing on economic multilateralism with partner countries like the Quadrilateral (Quad 2.0) nations of India, Australia and the US. The creation of the ‘Quad Plus' – with participation by Brazil, South Korea, New Zealand, Israel and Vietnam – also offers Japan a broader and yet integrated economic geo-space to promote its trade ties. The proposition of the Supply Chain Resilience Initiative (SCRI) by Shinzo Abe in his final few weeks as leader has much to bring to the equation here, including but not limited to strengthening the cooperative scope of the Australia-Japan-India (AJI) trilateral into a semblance of an economic alliance.
Another avenue for Japan to push forth economic multilateralism and shape deeper trade engagement with the region and beyond is to take advantage of the prospects presented by trade deals such as Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CP-TPP) and the Regional Comprehensive Economic Partnership (RCEP). Japan was a major driving force behind the CP-TPP and accounts for nearly half of its total GDP. Now, with US' potential return to the fold under President-elect Joe Biden, and UK and China indicating their interest in membership of the group, Japan can further bolster its own economy through enhanced trade ties. The RCEP, which has formed the world's largest free trade bloc, can also significantly bolster Japan's regional trade and strengthen supply chains. Together, both the agreements are set to yield massive benefits for Tokyo, with the RCEP alone raising cumulative trade amongst members by $428 billion.
However, moving forward, Suga will need to balance an increasingly belligerent and unreliable China with its acute economic troubles. Whether Suga can manage Japan's geo-political tensions with China in order to protect Japanese interests and further Tokyo's goal of creating a resilient economy, remains to be seen. Here, the SCRI can be of critical import – yet, its success will be dependent on how far Suga can prioritize the initiative politically and muster multilateral support for a resilient economic architecture.
Alongside his economic objectives, Suga will also need to uphold a Biden-Suga camaraderie to reassert the US-Japan strategic ties amidst a leadership change in the White House. While Trump's “America First” ideology was in conflict with Japanese interests, his adoption of FOIP – first introduced and promoted by Abe – did help Japan's position vis-à-vis China. Now, whether Biden's China policy is harmonious with Tokyo's own shifting China approach and Suga's priorities for 2021 remains to be seen. President-elect Biden has assured Japan of US support in defending the Senkaku islands in the East China Sea and indicated his commitment to a “secure and prosperous” Indo-Pacific, suggesting a recognition of the strategic challenge posed by China. However, moving forward, Prime Minister Suga must imperatively seek greater US contribution to the US-Japan alliance considering the “difficult security environment surrounding Japan” and to further peace and prosperity for the Indo-Pacific. China's incrementally enhancing unilateral and coercive measures makes the US' added support critical at this juncture.
Japan's ties with South Korea must also assume a more progressive outlook under Suga, with a drastic reassessment of Tokyo's priorities in the Korean peninsula. Suga has so far refused to meet his South Korean counterpart and signaled no fresh reset of the delicate and tattered Tokyo-Seoul ties. On the other hand, he has sought meetings with North Korean leader Kim Jong-un with hopes of engaging the hermit nuclear power state in a constructive dialogue, even proposing an unconditional Tokyo-Pyongyang summit in his speech at the 75th UN General Assembly. Suga's Seoul outlook must urgently display a similar characteristic, with a return to “two track” diplomacy that separates historical animosity from the relationship, to initiate a reset in their embittered bilateral ties.
Additionally, Suga must continue to focus on strengthening bilateral and multilateral mode of cooperation in economic and security arenas. Renewed focus on joint initiatives like the Quad, the conjectural framework of ‘Quad Plus' and trilateral groupings such as America-Japan-India (JAI), AJI, and the SCRI will be critical in the coming years. As Japan seeks to accelerate its diversification from China, in terms of both trade and technology, Suga will need to enhance Japan's multilateral contribution through such platforms. Bilateral ties with strategic, “like-minded” partners like India and Vietnam that can benefit Tokyo's economic and security goals must be central aspects of Suga's outlook, with a sharper focus on substantive cooperation. Further, Suga must view the Indo-Pacific through a multi-layered approach; one aspect of which could be a deeper emphasis on developmental connectivity projects, under the Abe-initiated Expanded Partnership of Quality Infrastructure (EPQI), to support regional prosperity. On the whole, Suga will need to reiterate Abe's “Arc of Freedom and Prosperity” to uphold the regional (and global) liberal order and balance Chinese unilateralism and revisionism.
Although Suga's choices are constrained by the present circumstances; he has the potential to create a new era of development and security for Japan. For this, identifying his own leadership style and moving beyond Abe's legacy are crucial qualities that Japan – and the broader Indo-Pacific – need in Suga. Balancing Japan's ties with the Quad, China and other partner states within ‘Quad Plus' while sustaining its momentum as a re-emerging major world power will be Suga's primary task in the emerging international order. Suga's strategic choices for the coming year are poised to ascertain the outcome of these very needs.
Dr. Jagannath Panda is a Research Fellow and Centre Coordinator for East Asia at the Manohar Parrikar Institute for Defence Studies and Analyses, New Delhi. Dr. Panda is a Series Editor for “Routledge Studies on Think Asia”.
