Shinzo Abe's second tenure as prime minister of Japan began on 26 December 2012 when he was officially appointed prime minister by Emperor Akihito in a ceremony at the Tokyo Imperial Palace, succeeding Yoshihiko Noda of the Democratic Party of Japan. This was Abe's second tenure as prime minister, following his first premiership from 2006 to 2007.
Following the resignation of Liberal Democratic Party president Sadakazu Tanigaki, Abe was re-elected as president of the party on 26 September 2012. Abe subsequently led the LDP to a landslide victory in the 2012 general election, ending four years of Democratic Party governance. Abe attempted to counter Japan's economic stagnation with "Abenomics", targeting escaping deflation. He led the LDP to a victory in the 2013 upper house election. He oversaw reforms to strengthen the authority of the prime minister, including the creation of a National Security Council, as well as the passage of a State Secrecy Law. He called a snap election in 2014, which he billed as a referendum on his economic policy; the LDP retained its majority in the election. In 2015, he passed the Legislation for Peace and Security which allowed deployment of the Japan Self-Defense Forces overseas in certain strict conditions, which was controversial and met with protests. He was credited with reinstating the Trans-Pacific Partnership with a new agreement in 2018. Abe led the LDP to a victory in the 2017 election, becoming Japan's longest-serving prime minister.
In foreign policy, Abe pursued strengthening Japan's alliance with the United States. He also saw closer ties with India and Australia, though relations with South Korea suffered under his tenure, especially after the start of the Japan–South Korea trade dispute in 2019. Abe took a strong stance against North Korea, especially regarding the country's abductions of Japanese citizens. Though initially facing deteriorating ties with China, relations between the two countries improved during the later parts of Abe's tenure. In 2020, Abe oversaw Japan's response to the COVID-19 pandemic. In August 2020, he again resigned, citing a relapse of his illness, and was succeeded by Yoshihide Suga.
Background
Following the resignation of Liberal Democratic Party president Sadakazu Tanigaki, Abe was re-elected as president of the party on 26 September 2012, coming in second out of five candidates in the first round of voting, but defeating former Defense Minister Shigeru Ishiba in a runoff vote by 108 votes to 89.
Abe returned to the LDP leadership at a time of political turmoil, as the governing DPJ had lost its majority in the lower house due to party splits over nuclear policies and the cabinet's move to raise the consumption tax from 5 to 10 percent. Prime Minister Yoshihiko Noda was forced to rely on the LDP to pass the consumption tax bill and in return was pressured by Abe and the opposition parties to hold a snap general election. Noda agreed to this on the conditions that the LDP passed a bond-financing bill and would support a commission to reform the social security system and address electoral malapportionment in the next diet session.
On 16 November 2012, Prime Minister Noda announced the dissolution of the lower house and that the general election would be held on 16 December. Abe campaigned using the slogan "Nippon o Torimodosu" ("Take back Japan"), promising economic revival through monetary easing, higher public spending and the continued use of nuclear energy, and a tough line in territorial disputes. In the elections on 16 December 2012, the LDP won 294 seats in the 480-seat House of Representatives. Together with the New Komeito Party (which partnered with the LDP since the late 1990s), Abe was able to form a coalition government that controlled a two-thirds majority in the lower house, allowing it to override the upper house's veto.
Second Cabinet (2012–2014)
On 26 December 2012, Abe was formally elected as prime minister by the Diet, with the support of 328 out of 480 members of the House of Representatives. He and his second cabinet, which he called a "crisis-busting cabinet", were sworn in later that day. The new government included LDP heavyweights such as former prime minister Tarō Asō as deputy prime minister and finance minister, Yoshihide Suga as chief cabinet secretary and Akira Amari as economy minister. Following his victory, Abe said, "With the strength of my entire cabinet, I will implement bold monetary policy, flexible fiscal policy and a growth strategy that encourages private investment, and with these three policy pillars, achieve results."
In February 2013, Abe gave an address at the Centre for Strategic and International Studies in Washington, D.C., in which he explained his economic and diplomatic objectives, and that he had returned to the prime ministership to prevent Japan becoming a "Tier Two Nation", declaring that "Japan is back".
Economic policy
The Second Abe cabinet revived the Council on Economic and Fiscal Policy (CEFP) that had played a key role in formulating economic policy during the Koizumi cabinet, but had been abandoned by the 2009–2012 DPJ administrations.
Abe declared in his January 2013 policy speech to the Diet that economic revival and escaping deflation was "the greatest and urgent issue" facing Japan. His economic strategy, referred to as Abenomics, consisted of the so-called "three arrows" (an allusion to an old Japanese story) of policy. The first arrow was monetary expansion aimed at achieving a 2% inflation target, the second a flexible fiscal policy to act as an economic stimulus in the short term, then achieve a budget surplus, and the third a growth strategy focusing on structural reform and private sector investment to achieve long-term growth.
In 2019, it was reported that 40% of key economic statistics collected from 2005 to 2017 contained errors, casting doubt on the effectiveness of Abe's economic program and the reliability of Japanese economic statistics. It was discovered that the labor ministry did not follow protocol by only surveying about one-third of all the large Japanese businesses it was supposed to survey. The data was eventually corrected, and it was discovered that the faulty data presented Japanese economic statistics more favorably than the corrected data. The faulty data cost 19.7 million people about 53.7 billion yen in unpaid benefits, and cost the Japanese government 650 million yen to correct the error. Opposition politicians criticized the governments response; one lawmaker called Abe's economic program a fraud, with many journalists labeling the event as a data scandal.
"First Arrow": Monetary policy
At the first CEFP meeting in January 2013, Abe declared that the Bank of Japan should follow a policy of monetary easing to achieve a target of 2 percent inflation. Abe maintained pressure on the bank's governor, Masaaki Shirakawa, who was reluctant to set specific targets, into agreeing to the policy. In February, after Abe publicly speculated that the government could legislate to strip the bank of independence, Shirakawa announced he was leaving office prematurely before his term expired. Abe then appointed Haruhiko Kuroda as governor, who had previously advocated inflation targets, and who has pursued the government's policies of monetary easing.
After the first meeting of the bank's monetary policy committee after he had taken office in April, Kuroda announced an aggressive program of easing intended to double the money supply and achieve the 2 percent inflation target at "the earliest possible time". Over the first six months of the second Abe Cabinet, the Yen fell from a high of ¥77 to the dollar to ¥101.8, and the Nikkei 225 rose by 70 percent.
In a surprise move in October 2014, Kuroda announced that the BOJ would boost the monetary easing program and accelerate asset purchases, the monetary policy committee split by five votes to four but supported the policy. This was interpreted as a response to disappointing economic figures in the aftermath of the increase in the consumption tax to 8 percent, inflation has fallen to 1 percent from its peak of 1.5 percent in April.
"Second Arrow": Fiscal policy
The Abe Cabinet's first budget included a 10.3 trillion yen stimulus package, composed of public works spending, aid for small businesses and investment incentives, that aimed to increase growth by 2 percent. The budget also increased defense spending and manpower while reducing foreign aid.
In Autumn 2013, Abe decided to proceed with the first stage of the increase in the consumption tax from 5 to 8 percent in April 2014 (with a second stage envisaged raising it to 10 percent in October 2015). The bill to raise the tax had been passed under the previous DPJ government, but the final decision lay with the prime minister. He and Finance Minister Tarō Asō explained that the tax would be increased to provide a "sustainable" basis for future social spending and to avoid the need to finance future stimulus by issuing government bonds. While this was expected to affect economic growth in the quarter following the rise, Abe also announced a 5-trillion yen stimulus package that aimed to mitigate any effects on economic revival. After the increase in April, Japan fell into recession during the second and third quarters of 2014, leading to Abe delaying the second stage of the tax rise until April 2017 and calling a snap election . In response to the recession, Aso announced that the government would ask the Diet to pass a supplementary budget to fund a further stimulus package worth 2–3 trillion yen.
There had been some division within the Abe cabinet between "fiscal hawks", such as Finance Minister Aso, who favored fiscal consolidation through spending cuts and tax increases, and deflationists, such as Abe himself, who argued in favor of a "growth first" policy that prioritizes economic expansion and recovery over budget considerations using the slogan "no fiscal health without economic revitalization". Abe's decision to delay the consumption tax increase in November 2014 and his push for a large fiscal deficit in the 2015 budget without social security cuts was interpreted as a victory for this faction within the LDP. The government did, however, commit to a primary surplus by 2020, and pledged to review its strategy in 2018 if the primary deficit had not fallen to 1 percent of GDP by that time.
"Third Arrow": Growth strategy and structural reform On 15 March 2013, Abe announced that Japan was entering negotiations to join the Trans-Pacific Partnership (TPP). This was interpreted by analysts as a means through which the government could enact reforms to liberalize certain sectors of the Japanese economy, most notably agriculture, and was criticized by farm lobbies and some sections of the LDP. Economist Yoshizaki Tatsuhiko described the TPP as having the potential to act as the "linchpin of Abe's economic revitalization strategy" by making Japan more competitive through free trade. In February 2015, the Abe government struck a deal to limit the power of the JA-Zenchu body to supervise and audit Japan's agricultural co-operatives, in a move designed to facilitate TPP negotiations, improve the competitiveness of Japan's farming sector and curtail the influence of the agriculture lobby.