Abenomics' hidden power is foreign pressure

TOKYO - Finally, I think I may have figured out what "Abenomics" is all about. And believe me, it's taken quite some doing, with all those little "arrows" being fired off in all directions by the man who gave his name to the new Japanese system - Prime Minister Shinzo Abe.

The real significance of Abenomics has been cunningly concealed behind a typically Japanese smokescreen (or maybe one should say paper screen) of the type that is often used to create illusions in the land of the rising sun.

Let's look more closely at those three "arrows", as Mr Abe likes to call them, using terminology that draws upon Japan's traditional love of archery. Actually, only two of them resemble arrows fired from a bow while the third is more like a catch-all net fired from a cannon.

Only one of the two arrows was sharply pointed and that was the 140 trillion yen (S$1.8 trillion) of monetary stimulus launched by the Bank of Japan in March after the former Asian Development Bank president Haruhiko Kuroda took the helm at the BOJ. That arrow flew swift and true to its target.

Another took the form of some 13 trillion yen of fiscal stimulus declared by Mr Abe in February, shortly after he took office.

There was nothing particularly novel about this because Japanese prime ministers in general tend to declare fiscal stimulus about as often as they eat sushi.

After the first two arrows were fired, everyone's gaze was directed at the sky looking for the golden "third arrow" that the master bowman had promised would streak across the firmament. But when it did glint briefly in the sun, many people were left wondering: "Was that really it?"

The third arrow seemed to consist of multiple little arrows, all flying around and creating a good deal of confusion or illusion. One was labelled "structural reform", another "economic deregulation", yet another "opening-up measures", and so on.

To those who have been covering Japan for some 20 years now, the feeling of frustration at not being able to identify the size, trajectory and target of the third arrow was nothing new.

There was a distinct sense of deja vu. I have seen maybe a score of New Economic Plans devised by more prime ministers than I can recall.

They are invariably called New Growth Strategies, or Economic Rebirth or Economic Renaissance plans, and they invariably contain a bewildering number of vague headings under which this transformative process is supposed to take place.

They often contain also complex diagrams - sometimes circular graphs - which you might think rather appropriate since you'd end up where you started when you search for where all this was leading. Easily comprehensible explanations of what the strategy is all about are rare indeed.

So, is there really anything different about Abenomics that distinguishes it from the Noda Plan, the Kan Plan, the Hatoyama Plan and the Aso Plan (to name but four prime ministerial grand plans of recent years), not to mention Mr Abe's own initiatives during his first incarnation as PM in 2007?

Well, yes there is, actually.

Think of Abenomics by another name, "Gaiatsu-nomics", and you begin to get an idea of what the whole exercise is really intended to achieve.

Gaiatsu - again as anyone who has been writing for any length of time about Japan through the country's seemingly interminable process of opening to the outside world is aware - refers to foreign pressure. Pressure to prise Japan out of its oyster shell of protection and isolation.

If former commodore Matthew Perry (who opened the door to trade between the US and Japan in 1854) were writing this column, he would probably say much the same thing. Japan finds it easier to accept change when forced to, and Japanese leaders use this fact to their advantage from time to time.

Commodore Perry is no longer banging at Japan's doors with a battering ram but the US-led Trans-Pacific Partnership (TPP) is serving much the same purpose. By hitching Japan's fortunes to the TPP, Mr Abe stands to achieve by stealth what he could not hope to do by brute force.

All those angry Japanese farmers, those policymakers protesting about the destruction of Japanese culture, those people such as doctors and pharmaceutical companies angry about the prospective destruction of the Japanese universal health system may have to simply bend the knee to Gaiatsu.

If you're a shrewd politician like Mr Abe, you don't call it "Gaiatsu-nomics" of course; you use the much more snappy title of Abenomics and take the credit for reforming the Japanese economy if all goes well while having the ability to blame it on foreigners if the experiment fails.

That's what it's really all about.


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