Japan's Abe flounders

In Tokyo on Tuesday, Japanese public broadcaster NHK said that Mr. Abe had informed top executives of the ruling center-right Liberal Democratic Party (LDP) that he would call an early election - two years before his current mandate runs out - and that he would delay introduction of the second round of an unpopular sales tax increase.

On Monday, speaking at a reception, Mr. Abe had hinted at an upcoming battle at the polls, quoting a phrase used by a Japanese admiral in a telegram before a naval battle in 1916 against the Russian fleet - a battle Japan's navy won.

"Weather fine today, but high waves," he said.

The decision to call an election appears to have been provoked by news last week that Japan is slipping into recession, after the economy shrank slightly two quarters in a row.

Sales tax considered necessary to keep up with national debt obligations

The recession was caused at least in part by a hike of Japan's national value-added tax from 5 percent to 8 percent in April 2014. The tax was to have been further increased to 10 percent in October 2015. Now, the second increase looks likely to be delayed.

But Finance Minister Taro Aso told reporters on Tuesday that a sales tax hike at some point was inevitable, because Japan's large accumulated sovereign debt had to be paid for, and because of burgeoning social welfare expenses associated with the rapid aging of Japan's population.

Aso favors some kind of formal assurance that the sales tax increase would eventually be implemented. He suggested, as one option, the removal of a clause in current law allowing the government to delay the tax hike if economic concidtions are too severe.

"It's better to have some form of guarantee," he said.

Abe's economic strategy at risk

Abe told reporters after meeting his economic advisors that consumption was stalling, and that he would prepare stimulus measures, especially for smaller firms and regions.

The Prime Minister has been cagey about the details, but repeated on Monday that it was important to break out of the pattern of deflation that has gripped Japan's economy for most of the past two decades.

Observers are uncertain whether an election will weaken or strengthen Abe's political situation, and with it his structural economic reform program, often referred to as "Abenomics."

nz/hg (Reuters, dpa)