Japan’s prime minister Shinzo Abe has lost one of the chief architects of his unprecedented stimulus strategy after his economy minister resigned over allegations he accepted a bribe.
Akira Amari, the economy minister and regarded as the “minister for Abenomics”, has denied pocketing money from a construction company. He said any cash was a legitimate political donation but that he would resign to take responsibility for how his office had handled the matter.
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The scandal is the most serious to hit Mr Abe since he took office in 2012. Mr Amari was Japan’s chief negotiator for the Trans-Pacific Partnership trade deal and part of the prime minister’s inner circle.
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His departure could tip the balance in the government away from economic stimulus towards tighter fiscal policy.
Japan’s attempt to escape from two decades of on-and-off deflation has stumbled, with growth and prices both weaker than expected — at least partly because of tax rises pushed by fiscal hawks in Mr Abe’s party.
“The Japanese economy is on the brink of exiting deflation. We must remove obstacles to the passage of vital laws. Of course, I am no exception. I have therefore today decided to resign from the cabinet,” said an emotional Mr Amari at a press conference in Tokyo.
Last week, the magazine Shukan Bunshun alleged that Mr Amari and his secretaries had accepted at least Y12m ($100,000) from a construction company based in Chiba prefecture, in contravention of Japan’s laws on political funding.
“Even though I have done nothing to be ashamed of, I can’t shift the blame for creating public doubt in politics on to an official,” said Mr Amari. Doing so would be against his “aesthetic as a politician”, he said.
The alleged scandal has consumed Japanese politics since it broke last week but the biggest impact of Mr Amari’s departure is likely to be on economic policy. The yen jumped on news of his resignation before falling back.
“Politically, this will stabilise the government. If Mr Abe had left him in place then the scandal would have gone on and on in parliament,” said Masatoshi Honda, a professor of politics at Kinjo University.
“But economically, Mr Amari was a pillar of Abenomics. Within the cabinet, finance minister Taro Aso was on the side of fiscal consolidation and Mr Amari was on the side of growth — together they struck a good balance,” Mr Honda said.
Without Mr Amari operating from the Cabinet Office, the finance ministry may regain some of its traditional power, pushing for tax increases to lower Japan’s deficit rather than stimulus to boost growth.
Mr Abe must decide later this year whether to go ahead with a rise in consumption tax from 8 per cent to 10 per cent. When he last raised consumption tax in 2014, it drove the economy into recession and stalled any momentum towards the Bank of Japan’s goal of 2 per cent inflation.
The economy minister was also a driving force behind the “third arrow” of Abenomics: structural reforms to boost growth. He was due to travel to New Zealand next week for the TPP signing ceremony and his departure could also set back trade talks between Japan and the EU.
Mr Amari will be replaced by Nobuteru Ishihara, a former environment minister, who ran against Mr Abe in the 2012 contest for leadership of the ruling Liberal Democratic party. Mr Ishihara is the son of controversial former Tokyo governor Shintaro Ishihara.
Mr Amari is the fourth minister to resign from Mr Abe’s government, although none of the others were as close to the prime minister. Two high profile female ministers, Yuko Obuchi and Midori Matsushima, were forced to quit over similar political funding scandals in 2014.
Polls taken since the latest allegations broke suggest little immediate damage to the government’s approval ratings, but much will depend on whether there are further claims. Upper house elections are due this summer, with speculation that Mr Abe could call a simultaneous election for the more powerful lower house.
The chance of a so-called “double election” will fall if Mr Abe’s approval ratings decline in the wake of the scandal.
Date: January 28, 2016