Abe's victory

As expected, Japan's right-wing nationalist government coalition won a comfortable majority in the upper house of parliament in an election held on Sunday, July 21st. Prime Minister Shinzo Abe's Liberal Democratic Party (LDP) and its long-time partner, the Buddhist New Komeito Party, won 76 of the 121 seats up for grabs in the 242-seat upper house.

The win is seen as an endorsement of the coalition's policies that have led to a tentative economic recovery. Japan has jumped from recession to become the fastest-growing economy among major developed nations in the first half of 2013.

Another major factor has been that the Japanese want a stable government. The last time a government had a majority in both chambers of parliament was six years ago, ironically during Abe's first term as prime minister. But now it seems that the 58-year-old has compensated for the major electoral defeat in July 2007 that led to his resignation.

Now Abe can govern unimpeded until the next lower house election in 2016. A third factor was Japan's divided opposition which wasn't able to challenge Abe on any aspect expect for his pro-nuclear energy policy.

Economic and constitutional reforms

The prime minister wants to make use of his stronger mandate for two difficult reform projects. First, he is keen on pressing ahead with his economic plan dubbed "abenomics," designed to increase GDP growth. In order to achieve this, however, Abe needs to overcome resistance from both LDP supporters and important voting blocks. Peasants, pharmacists, doctors and electric power companies reject Abe's proposed market liberalization.

Abe's second priority is to modernize the constitution. This move would officially end the era of Japanese pacifism and grant more power to the military. Only a few hours after the polls closed, the prime minister said he wanted to "expand and deepen" debate over constitutional reform. But also in this case, Abe will have to overcome a huge hurdle. His coalition partner, the New Komeito Party, as well as the majority of Japanese, don't want to renounce pacifism. Moreover, a radical reform is unlikely since it would require a two-thirds majority in parliament and a single majority in a referendum.

Unpopular measures

Nevertheless, many analysts believe that the right-wing conservative leader might focus on changing the constitution, rather than on pressing ahead with unpopular economic reforms. So far, Abe has contented himself with weakening the Japanese currency and increasing government expenditure - despite national debt hitting a record high. The measures are aimed at overcoming deflation and boosting private consumption and business investment.

Abe has also introduced structural reforms, but, so far, he has failed to address the issue of increasing pension costs and the need for more immigration in view of Japan's declining population.

The prime minister is a supporter of free trade. He started negotiations on the subject with other Pacific Rim countries as well as the European Union. But, in order to close a free trade agreements, Abe first needs to bring down the tariff walls protecting Japanese farmers.

Furthermore, the head of government needs to loosen Japan's rigid labor market. To date, most companies are no allowed to fire permanent employees, unless they leave voluntarily, taking a lavish compensation. This system hinders change. Abe is therefore considering the introduction of a new kind of employment status somewhere between permanent and temporary employment.

But the proposed constitutional reform has the potential to spark conflict in East Asia. Japan's Asian neighbors could interpret the country's renunciation of pacifism as a return to imperialism. Abe has strengthened this belief by putting Japan's responsibility for World War II into perspective. On election night, the 58-year-old didn't rule out visiting the Yakusuni shrine, a controversial monument for Japan 's war dead.

Abe argues that Japan's pacifist constitution limits the country's sovereignty. Its armed forces, for instance, are only allowed to open fire after being fired upon. Neither an offensive forward strategy nor the provision of military support for its ally, the United States, is allowed under the current interpretation of article 9. Abe argues that the removal of such limitations could enable Japan to counterbalance China and reassert its claim over disputed islands in the East China Sea. This could, however, lead to a dangerous escalation of military rivalries in the region.