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Many lawmakers, particularly those in Japan's ruling coalition, are anticipating an early election. (Photo by Hirofumi Yamamoto)
The Big Story

Caretaker or changemaker? Riddle of Japan's ambitious new leader

How feared backroom operator Yoshihide Suga intends to seize his moment

SHUNSUKE SHIGETA, Nikkei staff writer | Japan

TOKYO -- Hours after his new cabinet was sworn in on Sept. 16, Japan's newly appointed Prime Minister Yoshihide Suga met privately in his office with his 20 ministers. Each, in turn, got a pep talk and a modest-sounding brief of two policy goals apiece.

Suga had succeeded former Prime Minister Shinzo Abe in a backroom deal following the latter's announcement of resignation on Aug. 28. The longest-serving prime minister in recent Japanese history, Abe had left a legacy that Suga, his chief cabinet secretary, had been chosen to protect. The 71-year-old, a backroom strategist and political arm-twister throughout his career, was now thrust into the role of frontman. But not, presumably, for long.

He was to be a caretaker for about a year until presidential elections within the ruling Liberal Democratic Party could resolve the leadership vacuum left by Abe's departure. Abe's former right-hand man was to remain in this role, as the faithful servant of his patron's legacy. A temporary placeholder.

These meetings, where Suga was expected to outline the limited scope of his mandate behind closed doors, would make that clear: the "cabinet that is going to work for the people," he told them.

But the goals he outlined were anything but the modest plans of a lame duck. From defense acquisitions to digitizing Japan's sprawling, paper-based administrative systems, the priority projects -- 40 in total -- added up to a minor earthquake of reforms. Then, when he came to Health and Labor Minister Norihisa Tamura, Suga told him: "Please make online medicine a permanent option."

It was an innocuous-sounding request, but one that -- to political insiders -- revealed the scope of Suga's white-hot ambition. Online medicine had been approved in Japan as a temporary measure due to the coronavirus pandemic, but the country has a law requiring doctors to see patients in person. And that law was sacrosanct, a bedrock of the political compromise between the political and business elite that has shaped modern-day Japan.

Suga faces the media to announce his candidacy for leadership of the Liberal Democratic Party, Sept. 2. (Photo by Akira Kodaka)

The restriction makes it easier for doctors, a reliable and politically powerful LDP constituency, to avoid competition and monopolize patients in their respective areas. Previous governments had long considered the issue of online medicine untouchable, as doctors zealously guarded their business model.

Circumventing or abolishing that law meant taking on the powerful vested interests at the heart of Japan's hegemonic ruling party, and yet, Suga had brazenly kicked them out of the way, ending local doctors' effective monopolies -- and along with it, the delicate architecture of compromise that had undergirded Abe's rule.

And Suga had only been in the job for two hours.

'Full of ambition'

Part of Suga's appeal, during heated backroom discussions to succeed Abe, had been the presumed light touch he would bring to the job as a caretaker. "I plan to tackle the coronavirus as the top priority; I will adhere to the Abe government's policy," Suga said to his fellow LDP lawmakers in laying the groundwork for his candidacy.

They largely bought into the idea that a Suga government would be a temporary one, while an LDP presidential election scheduled for September next year would offer the party a chance to pick a more suitable leader, the thinking went.

But once the campaign kicked off, Suga did not act like a candidate planning to fill in for a short term. He was full of bold ideas that a transitional government would not dare think of tackling. In debates, speeches and interviews, he advocated reorganizing smaller businesses and regional banks, setting up a digital policy agency, revamping the health ministry and raising the minimum wage.

To those who know Suga, however, there is no mystery. The ban on online medicine was lifted without a fight, and he will get his way on most other things. "These are policies that Suga had been telling high-ranking bureaucrats to pursue," said one official close to the prime minister. "The ministries are aware of his thinking. There is no notable resistance."

Televisions at an electronics retail store in Tokyo show Suga announcing the name of Japan's new era -- a momentous role -- on April 1, 2019. (Photo by Toshiki Sasazu)

Suga is not well-known overseas. But he is deeply feared in Kasumigaseki, the neighborhood of stately government buildings that marks the heart of Japan's bureaucracy. Since the Abe government was formed in December 2012, Suga has coordinated negotiations with ministries as chief cabinet secretary. "Diplomacy is Abe's forte and domestic policy is Suga's turf," is the saying among bureaucratic circles.

He was well-versed in the workings of ministries and agencies, ruthlessly demoting anyone who failed to follow his lead. He had held the Kasumigaseki bureaucracy -- Japan's largest policy-churning think tank -- under his thumb for the past seven years and eight months. "When Suga wants something done in this sprawling organization, he knows exactly which button to push," an official observed.

Hachiro Okonogi, who joined the Suga cabinet as the chair of the National Public Safety Commission, has known the prime minister since he was in his 20s. "I have never seen him leave any loose end untied," he said of Suga. He sets a goal and prepares meticulously to accomplish it. To Okonogi, Suga's political life is like a game of shogi -- a Japanese board game resembling chess -- which requires scrupulous strategizing. His discipline, too, is legendary. While serving as chief cabinet secretary, Suga's daily routine began at 5 a.m., waking to read all the major newspapers and perform 100 situps, followed by a brisk 40-minute walk. He dined four times a day with people from political and business spheres, following with another 100 sit-ups after returning home at night. On weekends, he held study sessions with bureaucrats and business leaders; if North Korea fired a missile or a natural disaster struck, he was instantly at the prime minister's office to hold a press conference, even in the small hours.

"Prime Minister Suga is full of ambition. He is no way thinking of his government as transitional"

A senior member of the Liberal Democratic Party

"Prime Minister Suga is full of ambition," said a senior LDP member. "He is no way thinking of his government as transitional."

Short-lived governments

Prior to Abe, Japan had been plagued by a series of short-lived governments. Leadership churn paralyzed domestic political life, and contributed to the economic dysfunction now known as the "lost decades" between 1990 and 2010.

The average tenure for Japanese prime ministers in the last quarter century has been 821 days. This translates to Japan having five prime ministers during the average term of a single German chancellor.

This vicious cycle of dysfunction and short government tenure was broken by Abe when he took power for the second time in 2012, and banished the curse of the revolving-door leadership. There is no doubt that Suga, who was propelled to power as an emergency fill-in, is looking to have a long reign. But will the rest of the LDP let him?

Lower house members only have a year left in their terms. For Suga to be a long-term prime minister, he would need to win over the public in a general election that must occur by September 2021.

"It's not really my business, but a snap election is something he should think about," Finance Minister Taro Aso, who also serves as deputy prime minister, told a press conference. Many lawmakers, particularly those in the ruling coalition, are anticipating an early election. The spread of the coronavirus seems to have hit a lull -- from a high of over 2000 daily cases in August, it is down to about 300 last week -- and Suga and the LDP enjoy high public support, debuting with a cabinet approval rating of 74%.

Suga, however, will have to balance his clear desire for the affirmation of an election win with progress fighting COVID-19. Calling an election soon after taking office would create a power vacuum lasting about a month, and the public could criticize the move for putting political calculations ahead of measures against the pandemic. Suga, meanwhile, has repeatedly said that the coronavirus response is his top priority. Even if he were to call an early election, it could not be immediately, and likely after a concerted effort to further control the virus.

At the same time, Suga will have to weigh the risks of postponing an election: He will have to again compete in an LDP presidential election in September next year. To win those elections, he will have to maintain high approval ratings and support within the party. His weakness, meanwhile, is his lack of affiliation with a party faction.

A farmer works in a field this month near Suga's childhood home in Akita Prefecture.   © Reuters

LDP factions are the key to power within Japan's ruling party. Ostensibly voluntary policy study groups, they play a crucial role in party presidential elections by backing their leaders or other preferred candidates. They also help members in national elections and fundraising, and lobby for key party and cabinet posts for members.

Suga is the first postwar prime minister who does not belong to such a faction, and in a party in which more 80% of members belong to factions, Suga is an anomaly. Abe, who led the longest-reigning government, was also the de facto leader of the LDP's largest faction.

"Unless Suga wins an election to secure the backing of the public, his will not be a powerful government, and will become reliant on factions," said Hitotsubashi University professor Koji Nakakita.

Untested in foreign policy

Japan's loss of economic vigor has made it increasingly irrelevant, say critics. When U.S. President Bill Clinton visited China in 1998 -- the midst of Japan's "lost decades" -- he famously neglected to stop by. As Washington's top Asian ally, it was a diplomatic snub that symbolized the decline of Japan's standing and gave rise to the phrase "Japan passing."

The rise of China accelerated this trend, and foreign officials cynically remarked that it was hard to remember the names of ever-changing Japanese leaders. With a pacifist constitution that outlaws war, and spending just 1% of its gross domestic product on defense, Japan has largely avoided the rest of Asia's swerve towards 20th century-style great power competition.

But Japan's reduced stature is an existential dilemma for a country which finds itself in an environment more unpredictable than at any time since the end of the Cold War.

Chinese President Xi Jinping is escorted by Japanese Prime Minister Shinzo Abe prior to the G20 Summit  in Osaka, Japan, June 27, 2019.   © Reuters

At this critical juncture in Japan's history, a leader with foreign experience and relationships with world leaders might be an advantage. But Suga's foreign policy credentials are questionable. Unlike Abe, who actively engaged in "summit diplomacy" and leaned on his personal relationships with the likes of U.S. President Donald Trump and Russian President Vladimir Putin, Suga has no background in the field or known connections with foreign heavyweights.

One clue into Suga's foreign-policy vision is the way he acted as chief cabinet secretary. On the surface he was heavily focused on domestic issues, leaving foreign policy to his boss Abe. However, there was one foreign relationship where he was on the inside: the U.S.

When attacked by critics, Suga noted that he had sat in on every phone discussion between Abe and Trump except one.

"On one occasion, I was in Okinawa and did not join," he said. But of the 37 calls between the two leaders, he attended 36. He rarely listened in to any of Abe's calls with other leaders.

During his seven years and eight months as the chief cabinet secretary, Suga went on two overseas trips: to Guam in 2015 and to Washington last year. In Washington, he met with U.S. Vice President Mike Pence at the White House. The fact that Pence walked him to his car and saw him off was seen in Japan as a gesture of respect.

On the same trip, Suga also met with U.S. Secretary of State Mike Pompeo and then-acting Secretary of Defense Patrick Shanahan. When Suga sat down with Toshimitsu Motegi, the foreign minister he kept on from the Abe cabinet, on Sept. 16, he gave clear instructions. "I want you to strengthen the Japan-U.S. alliance, the linchpin of our foreign policy, and steadily implement the 'Free and Open Indo-Pacific Strategy.'"

While Suga is not well known in the U.S., "his reputation as a pragmatic get-things-done Chief Cabinet Secretary who is proficient in policies and intra-government relations sits well in Washington" said Jeffrey Hornung, political scientist at the RAND Corporation, the Santa Monica-based U.S. think tank. "I think the question that people are asking is whether Japan will remain present and visible in foreign affairs at the same level that it was under the Abe administration. Washington grew accustomed to a proactive Japan in international affairs and would likely want to see that continue."

Toshihiro Nakayama, a professor of politics at Keio University, said that the retention of Motegi as foreign policy chief, and the appointment of Abe's brother Nobuo Kishi as defense minister "will have sent a message to the U.S. that Suga is keen to continue Abe's foreign policies." A tricky hurdle that awaits Suga is the November U.S. presidential election. Nakayama said that a President Joe Biden would be easier to build a relationship with, compared to the unpredictable Trump.

"But the Democrats believe that Japan is close to Trump. Suga would need to visit the U.S. at an early date and erase such notions," Nakayama said.

If Trump were elected, however, Suga could face serious headwinds. "It's hard to believe that Suga will be able to build as close a relationship with Trump as Abe," Nakayama said.

The American leader is demanding that allies, including Japan, pay more for the cost of hosting U.S. forces. The new Japanese prime minister may be forced to accept an inflated bill as early as year's end.

Managing relations with China will be Suga's top challenge. Following Abe's line, he has not committed to setting a date for the now-delayed state visit to Japan by Chinese President Xi Jinping. Some in the ruling LDP are calling for an outright cancelation of the invite.

However, few see the idea of decoupling from the world's second-largest economy as realistic. Suga's own stated trump card for revitalizing Japan's rural economy -- growing inbound tourism to 60 million people annually by 2030 -- cannot be achieved without tourists from China and South Korea.

The population decline impacts Japan's status as the world's third-largest economy. (Photo by Akira Kodaka)

Of the 31.9 million tourists that visited Japan in 2019, China sent 9.6 million, accounting for the largest block. South Korea was second with 5.6 million. The combined forces of Chinese and South Korean tourists make up nearly half of the total.

Yasuhiro Matsuda, an international politics professor at the University of Tokyo, notes that China's worldview boils down to a simple two-way choice: Is a country pro-China or not?

"As U.S.-China tensions rise, Japan's relative importance for China will rise. Beijing will likely take various measures to drive a wedge between the U.S. and Japan," he said.

That raises the risk of Japan becoming caught in the middle of Washington and Beijing on economic issues.

Challenges

Such a scenario would bode ill for Suga, who hails an "economy first" stance. He faces the same three issues that have stalked Japan through its lost 20 years, growing steadily harder to reverse and thwarting even the most popular governments.

First is Japan's shrinking and aging population. During the LDP leadership race, Suga pledged to cover fertility treatments under Japan's national insurance, and to address the shortage of day care services that have led to lengthy waitlists. "I'll do everything that can be done," he had said.

Japan's fertility rate, or the average number of children a woman is expected to have in her lifetime, came to 1.36 in 2019, falling for the fourth straight year despite Abe's push to reverse the trend.

Meanwhile, the Japanese population is projected to shrink to about 102 million in 2050 from 127 million in 2015, according to the National Institute of Population and Social Security Research.

The population decline also impacts Japan's status as the world's third-largest economy. Japan's GDP per capita ranked 26th in the world at about $39,304, according to the International Monetary Fund. Its relatively large population -- the 11th largest in the world -- has been the key driver of its domestic market and overall GDP.

Another major obstacle for Suga is deflation. "I will carry on with Abenomics," he said shortly after announcing his candidacy, signaling his support for the large-scale monetary easing launched under his predecessor.

But Suga's plan will likely be complicated by the coronavirus. "Financial institutions will see more defaults because of the pandemic," said Yoshimasa Maruyama, chief economist at SMBC Nikko Securities. "Further monetary easing when they are already struggling could lead to greater side effects."

Still, Maruyama believes Suga should stick to his 2% inflation target. "We now know that monetary easing under Abenomics is not enough to achieve this goal, so the new government needs to articulate a long-term approach that also includes deregulation," he said.

Lastly, Suga will need to tackle Japan's low economic productivity. Suga plans to create a dedicated agency for digital policy to centralize efforts to digitize the government, instead of the haphazard agency-by-agency approach currently in place. He wants to make sure every resident has a My Number identification card, which only about 20% have obtained so far.

Suga is also taking aim at Japan's regional banks and smaller businesses. He has urged consolidation among the 102 regional banks, as well as among the small and midsize companies that make up 99% of Japanese businesses. He wants a more efficient approach to investment and research.

"Abenomics increased employment, but failed to achieve the next step, which is boosting productivity," said Ryutaro Kono, chief economist at BNP Paribas in Tokyo.

Humble and industrious

Suga would like to think that while he can deftly navigate the labyrinthine LDP backrooms, he is -- unlike many predecessors and peers -- closely in tune with the Japanese everyman. When Suga was still starting out as a lawmaker, he says, a mentor told him that "a politician's job is to make sure that the people can earn a living."

Little was known about him personally, even while he wielded enormous power behind the scenes of the Abe government. But he has been careful to stress his humble roots ever since he was first elected to the lower house, at the relatively late age of 47. "It is unthinkable for someone like me, with no regional or family connections, to be on this stage," Suga said recently, when he announced his candidacy in the LDP presidential election he would go on to blitz.

Suga, far right, as a member of a karate club in Hosei University. (Photo courtesy of Yoshihide Suga)

He is not from a renowned political family like Abe, a grandson of Prime Minister Nobusuke Kishi. Taro Aso -- his deputy, and briefly prime minister himself -- is also a grandson of Prime Minister Shigeru Yoshida. But Suga does not approve of politicians inheriting support bases from their fathers. He has always told his three children: "If you want to become a politician, do it from a different prefecture."

As severe on others as he is disciplined on himself, Suga relents on one thing. "I can't drink alcohol. I have a sweet tooth instead," he has said, confessing that he finds pancakes irresistible. He and his wife waited in line to enter Australia's Bills restaurant, which landed in Japan in 2008, to eat ricotta hotcakes.

But importantly, given the scale of the challenges ahead, Suga may also be an optimist. He was born in the frigid climate of the northern Akita Prefecture, the eldest son of strawberry farmers. "I think only people who lived in the north of the country would understand -- but when spring arrives, the snow melts, no matter how cold it is, and the ground appears," he told Nikkei. "I will never forget the feeling of relief when that happens."

Additional reporting by Kosuke Takeuchi and Takuya Mizorogi in Tokyo, and Tomoko Ashizuka in Washington.

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