With the markets already reacting positively to the easing of the nation’s monetary policy pledged by Shinzo Abe, Japan’s new prime minister, there may be positive signs of brighter prospects for the nation’s economy for the first time in many years. In addition to the economy, however, Abe will face many other difficult challenges, among them territorial disputes with Japan’s neighbors – including a tense disagreement with China over the sovereignty of the Senkaku Islands in the East China Sea. The seriously delayed reconstruction of Fukushima and the return of Japanese citizens abducted by North Korea will also have to be dealt with. The new prime minister discusses these and other issues in a candid talk with Journalist Yoshiko Sakurai – his first exclusive interview with a member of the press since reassuming the premiership for the first time in five years.

　　　Sakurai: Mr. Prime Minister, I would like to first congratulate you most sincerely on your party’s landslide victory in the recent parliamentary elections for the lower house and your assumption of office.

　　　Prime Minister Abe: Thank you very much, indeed.

　　　Sakurai: I cannot help but feel your assuming the premiership for the second time reflects a divine desire to have you “try once again to undertake the job of rebuilding this nation.” I am aware you have already started taking various steps. Today, I would like to ask you candidly and thoroughly what sort of Japan you wish to create, given this second chance to lead the nation.

　　　Abe: Our party did indeed score a solid victory this time. However, I keep telling myself – as well as my colleagues – that we must remember that this victory did not result from a full return of public trust in the LDP. We must work hard to produce results by the next upper house elections slated for July 2013. We just can’t sit back and enjoy our victory.

　　　Sakurai: Speaking about the results you’ve just referred to, the markets have already been reacting positively to the so-called “Abenomics,” which refers to your government’s new economic policy of guiding the Bank of Japan (BOJ) to adjust its inflation target from 1 to 2 percent, while simultaneously implementing aggressive fiscal measures alongside structural reform. Already, your projected economic policy has produced some concrete results, such as weakening the yen and increasing stock prices, which had long been on a downward spiral. As a matter of fact, when I took a taxi this morning, the driver said to me in an upbeat way: “Somehow, I feel things are beginning to click.” His remarks made an impression on me because I consider it extremely important for as many people as possible to share a sense that the stagnant Japanese economy, which has trapped the nation in helpless despair and distress, is at long last moving in the right direction.

　　　Abe: In the economic sphere, we are hoping to overcome the current crisis by focusing on three areas – monetary policy, fiscal policy, and growth strategy. The past LDP/Komeito coalition administration managed to weaken the yen up to a point, but didn’t quite succeed in pulling out of deflation. What we learned from this is that more powerful policies are necessary. Specifically, as regards our monetary policy, we have set an inflation target as a step towards implementing an aggressive monetary easing without being constrained by old policies. There may be a variety of criticisms concerning our new policies. However, as you know, there have already been some positive changes in the currency market, and stock prices have actually increased.

　　　Sakurai: Stock prices in Japan plunged by roughly 50% following the 2008 Lehman Shock. Of course, stock markets in other advanced nations also sustained damage from the Lehman Shock, but the average decline rate was less than 20%. No advanced nation has sustained damage from the Lehman shock as severe as Japan.

　　　Abe: Japan suffered the most because the DPJ administration failed to do what needed to be done. Some quarters say that an increase in stock prices benefits only the rich. However, such criticism is unwarranted. After all, a portion of the nation’s pension management is done in the stock market. Therefore, implementing measures to increase stock prices is very important to the nation’s economy. Let me give you an example. The Nikkei average grew from \14,000 to \18,000 in the one-year period from 2006 to 2007 while I was in office. This generated \3 trillion in profits obtained by investing pension funds in the stock market. In other words, when stock prices continue to increase steadily, the value of pension funds will be strengthened accordingly. This we believe is a very pertinent point. We are hoping to demonstrate to the market our national will that, under this economic policy we are dead set on correcting the over-valued yen and pulling out of deflation.

Spirit of Independence and Self-Respect

　　　Sakurai: When it comes to stimulating the economy, I consider it truly vital whether or not the public is able to see things positively or not. During the Koizumi administration, I was told by the then minister in charge of economy and finance – Mr. Heizo Takenaka – that there is no single English word for the Japanese word “keiki,” which refers to “a broad view of the various conditions of economy between boom and bust.” In Japanese, as you know, “keiki” is made up of two characters – “kei” meaning “scene or scenery” and “ki” meaning “readiness or willingness to observe.” I think the Japanese have the propensity to view their nation’s economy as a sort of scenery. If, by observing the overall picture of the new Abe administration’s economic measures, the people of this nation can feel invigorated enough to have high expectations of what it will deliver, I am certain it will provide a great impetus for economic recovery leading to a national rejuvenation. In this vein, I sincerely hope that your administration will achieve satisfactory results before the upper house elections in order to win the confidence of the people.

　　　Abe: I hear you, loud and clear. In the last Abe administration (September 9, 2006-August 27, 2007) Japan’s nominal Gross Domestic Product (GDP) increased to \513 trillion thanks in part to a quantitative easing of the monetary policy. At the same time tax revenues rose several trillion yen to \51 trillion. In the first half of 2006, however – in the midst of the business upturn – however, the Bank of Japan terminated the quantitative easing, feeling that the so-called “deflationary gap” had been addressed. Thereafter, however, the Japanese economy fell into a further deflationary spiral and was unable to free itself from continued stagnation. If an inflation target had been set at the time, I am certain that quantitative easing could have been maintained because the price escalation rate still remained low. I greatly regret that wasn’t the case. Because nominal GDP would have overtaken real GDP then, possibly enabling us to pull out of the deflationary depression that still affects us today.

　　　Sakurai: I fully agree with you about what happened in 2006. At the time, there were those who were seriously concerned about the possibility of hyperinflation, with only prices rising but not salaries. Would you be taking measures to prevent hyperinflation?

　　　Abe: I am aware of those who still express such concerns today. However, I wish to call your attention to the fact that there has never been a nation anywhere in the world that fell into hyperinflation by setting an inflation rate target. That is because if the target is exceeded, the central bank will step in to make necessary adjustments. If the Bank of Japan could not act accordingly, then there would be no reason for it to exist.

　　　Sakurai: I see your point. Matters concerning the BOJ are important in terms of the government stance vis-a-vis policy as well as the independence of the central bank, aren’t they? Incidentally, looking back at the DPJ administration’s performance, I believe one of its fundamental faults was that it encouraged the public to be dependent on the government through irresponsible pork barrel spending. Their policy has seriously impaired people’s spirit of self-help in facing up to hardships.

　　　Abe: Theirs was a policy aimed at making the people more dependent on the government as regards both the economy and social welfare. The nation’s workforce has shrunk by some 1.4 million since when I was in office. Meanwhile, the number of welfare recipients has surpassed the 2 million mark, with related costs ballooning — to nearly \4 trillion yen a year. Enough proof that the spirit of independence and self-respect is precariously lacking because of a mistaken government policy, I must say.

　　　Sakurai: I myself also firmly believe it is this spirit of independence and self-help that is a vital ingredient for foreign policy. What is your opinion on this matter?

　　　Abe: You’ve hit the nail on the head. A nation blessed with such a spirit is respected everywhere around the world. Whereas the DPJ administration failed to nurture and demonstrate such pride. Without any well-thought-out strategy, the DPJ caused US-Japan relations to sour precariously, while bending over backwards to China and South Korea, and even at that our relations with those two countries worsened as well.

　　　Sakurai: Following the nationalization of the Senkaku Islands, the DPJ actually did little to utilize the opportunity. In the meantime, the Chinese have been able to do virtually whatever they want, violating our territorial waters and even air space. Past LDP administrations were also not without fault, though, as they had continued to fundamentally disregard the Senkaku problem. Could you discuss how your administration plans to deal with the high-handedness with which China tries to manipulate Japan? Can we count on the new administration to cope resolutely with Chinese aggression?

　　　Abe: As I have mentioned, the DPJ has chosen a policy of bending over backwards to the Chinese, but it has backfired. After the nationalization of the Senkakus, Japanese corporations and retailers in China were attacked by Chinese rioters, who burned down offices and shops while injuring some Japanese living in or visiting China. This is the type of thing that one country can absolutely never let happen to the citizens and property of another nation. In some ways, it may be unavoidable for us two peoples to develop some differences because of our dissimilar values, although only a narrow strip of water separates China and Japan. Under such circumstances, however, I am afraid officials of the Foreign Ministry generally tend to quietly bow their heads long enough to let the storm pass. That, I don’t think, is the right posture, because, in point of fact, a storm of this nature won’t pass. On the contrary, it most likely will get more severe and come back again and again. Therefore, I believe it vital to show our counterpart where and why we cannot compromise, making absolutely clear, for strategic reasons, where we stand.

　　　Sakurai: As for visiting Yasukuni Shrine, I do not believe it right to refrain from doing so because other nations tell you not to. I strongly believe it is the responsibility of the officials of the Foreign Ministry to engage their counterparts in frank discussions, making every effort to explain as logically as possible why in Japan the prime minister’s visit to the shrine is mandatory as the head of state, and ultimately pave the way for a visit, avoiding all possible misinterpretations and misunderstandings. And yet, the Foreign Ministry appears to me to have a tendency to often put the values of other nations first when conducting foreign policy on the basis of the values of other nations. What are your thoughts on this, Mr. Prime Minister?

　　　Abe: During the election campaign, I stated that my failure to visit Yasukuni Shrine while in office was a matter of extreme regret. After all, it is quite natural for leaders of the world to pay respect to the spirits of the war dead – men and women who worked and fought hard for their nation, sacrificing their lives. In fact, it is a common practice for every head of state around the world to pay homage to the war dead.

　　　Sakurai: I have always been of the opinion that only when it is possible for the prime minister to visit Yasukuni Shrine will Japan be able to call itself a normal nation and its people be truly motivated to contribute to the nation.

Why Japan Needs a Full-Fledged Military

　　　Sakurai: In South Korea, Ms Park Geun-hye will soon take office as the country’s first female president. Relations between South Korea and Japan have soured since her predecessor, Li Myung-bak, landed on one of the disputed Takeshima Inlets in the Sea of Japan. China has also since been seen to have increased its influence over the Korean Peninsula. Faced with the growing Chinese threat, the nations of the Asia-Pacific region have entered an era of a vigorous military build-up, unprecedented in the recent history of the region. In view of this situation, you as the new Japanese leader are obviously changing the course of our foreign relations, unrestricted by past practices. For instance, just as you have long stressed the importance of forming a strategic relationship with India, so you have also made clear that Japan is a maritime nation. In this connection, you have also stated that you will strengthen the Japan Coast Guard by increasing the total number of its ships, including new patrol boats, so that Japan can protect its territorial waters more effectively. You have further committed yourself to increasing the personnel, equipment, and budget of the Japan Self Defense Forces (SDF). As a matter of fact, these are the steps that India, as well as a number of Southeast Asian nations, have strongly wished Japan had taken “much earlier.”

　　　Abe: Surely, if China continues to aggressively increase its military, there is a danger of its disrupting the region’s balance of power and stability, making it easier for an armed conflict to occur. Japan must clearly play its part in helping maintain the region’s status quo. It was for this purpose that I appealed during the election campaign for the need to revise the constitution and elevate the SDF to a full-fledged military force.

　　　Sakurai: There was considerable criticism on your proposal, but I view that as simple nonsense.

　　　Abe: I agree. My plan is to first revise, through a democratic process, of course, Article 9 of the Japanese constitution in order to change the law governing our existing armed forces, while making absolutely clear they will be under stringent civilian control, just as the SDF is today. Of course, the proposed military force will exercise the right to collective self defense. The international community already regards the SDF as a military force under the Geneva Convention. Otherwise, SDF troops on international peace-keeping missions would lose their rights as soldiers, so that when captured they will not be treated as prisoners of war, but only as ordinary civilian “killers.” During the campaign some people asked me silly questions, such as: “When you say you want the SDF to become a full-fledged force, are you presupposing a war?” Obviously, we are not talking about attacking anyone, but if we are attacked we most certainly must be able to defend our people and our national territory. I want to ask these people if they really don’t think it necessary for Japan to defend itself. Simple common sense regarding self-defense applies: If, for instance, a knife-wielding thug breaks into your house and tries to stab your daughter – or son, you will surely do everything possible to try and protect your children from the thug. The question I faced during the election campaign is actually just as silly as asking a person living in a dangerous neighborhood who does self-defense training daily in preparation for an emergency: “Are you presupposing a situation in which you will knock down a thug if he attacks you?”

　　　Sakurai: In English, the “jieitai” is called the “Self-Defense Forces,” while the proposed new full-fledged military force would be “kokubo-gun” in Japanese and “the National Defense Forces” in English. Both “tai” and “gun” are translated as “forces” in English. A claim that the SDF is not already a military force per se is simply not accepted in the international community. Can we rest assured that the Abe administration will now actually take concrete steps towards converting the SDF into a full-fledged military force?

　　　Abe: As a member of the legislative branch, I feel tremendously responsible for the men and women of the SDF. What they hate most when assigned overseas is being made fun of by being identified as the “Japan Selfish Defense Forces,” as I understand it. In short, they are criticized for selfishly defending themselves alone, as the law governing the SDF bans them from exercising the right to collective self-defense. Against such criticism, members of the SDF tell themselves that “we are actually risking our lives to safeguard the peace and security of the region.” Therefore, they strongly desire to see the military they belong to upgraded to a normal military force with the word “self” knocked off of the “Self-Defense Forces.” That is why I wish to change “Self” to “National,” renaming it “the Japan National Defense Forces” (JNDF).

　　　Sakurai: Please also allow me to ask your views on the North Korean abduction Issue. I have highly reliable information that former Prime Minister Yoshihiko Noda attempted himself to negotiate with North Korea through his various personal connections, despite appointing Hitoshi Matsubara as minister in charge of abduction matters. No real results could have been expected when there were no genuinely consolidated efforts to resolve the abduction issue, and sure enough, nothing whatsoever was achieved. Members of the “Association of the Families of Victims Kidnapped by North Korea” have quite high expectations of you and your administration to produce concrete results in connection with the abduction issue.

　　　Abe: The regime in the North has changed to one headed by Kim Jong-un. I believe there is a chance of getting him to the negotiation table because, unlike his father, Jong-un was not directly involved in the kidnappings. And yet, I am well aware that any such negotiations will be complicated, as he will have to deny his father’s judgment at some stage. I believe it mandatory to once again exert pressure on the North. For instance, monetary sanctions implemented in tandem with the US were effective. I am eagerly looking forward to implementing such financial sanctions vigorously in order to make the North conclude that it must accept Japan’s stance on this critical issue.

　　　Sakurai: My next question concerns reconstruction of the disaster-hit regions in Fukushima. I believe reconstruction and rejuvenation of Fukushima Prefecture is greatly lagging behind because of the lack of leadership on the part of the DPJ administration. Since the colossal earthquake and subsequent tsunami and nuclear disaster, I have regularly visited Fukushima as a volunteer. My heart really goes out to those hundreds of thousands of victims still living as evacuees. Among other things, I am worried about their prospects for returning to their hometowns. Evacuees in big cities like Fukushima and Koriyama are entitled to \100,000 (US$1,250) per head a month in compensation from Tokyo Electric in addition to government financial support, with no tax deducted. People in disaster-hit areas themselves are concerned that, if the refugees are allowed to continue to be dependent on such assistance for any length of time, they may have a hard time trying to bring themselves to restart their lives back in their hometowns. Frankly, I myself feel the same way. I consider it extremely important for evacuees who have hometowns whose hazard zone designation has already been lifted to go home to restart their lives as soon as possible. I cannot but hope sincerely that aid should be provided constructively so that the evacuees are encouraged to seek self-reliance. What is most urgently needed beyond anything else is aid and compensation designed to nurture the spirit of self-dependence, discarding a sense of dependence on others which could be extremely detrimental to the evacuees’ future.

　　　Abe: Indeed. But I also think the problems created by the Reconstruction Agency itself have contributed to the delay in Fukushima’s reconstruction. I firmly believe that the bureaucrats of the agency, instead of making empty remarks in their offices in Tokyo, should first and foremost visit the needy areas, observe the overall situation on all levels, and grapple with reconstruction in tandem with those ready to stand up and rebuild their towns. As regards compensation, I believe the government should come to the fore more aggressively and ultimately assume responsibility for it, rather than leaving the matter to Tokyo Electric alone.

　　　Sakurai: The DPJ kept saying over and over that the central government would be responsible for reconstruction, while in fact turning to local authorities for most of the reconstruction measures. This situation has engendered a great mistrust of the central government on the part of the residents. So I believe it is critical for the government to make efforts to have those in the disaster-hit areas get a feel for its determination to get on with reconstruction – not by words but through concrete measures to be implemented as swiftly as possible. The government’s decontamination efforts have also been problematical. I have long been critical of the DPJ’s unscientific decision to set a decontamination target of no more than 1 millisievert per year as “the standard.”

　　　Abe: Yes, as you have just mentioned, Ms Sakurai, the “1 millisievert standard” has become self-perpetuating.

　　　Sakurai: A radioactive dosage of 1 millisievert has unfortunately been popularly established as the demarcation line between safety and danger across Fukushima and beyond. If we live a normal life in Japan, we are exposed to 1.0 millisievert from natural radiation annually, 4.0 millisieverts from X-ray examinations or CT scan, and 0.5 millisieverts from food – for a total annual average of 6.0 millisieverts. Against such a backdrop, it is simply unscientific to try and decontaminate all areas until the dosage level gets below 1.0 millisievert per year. There are many evacuees who have hometowns to return to but have refused to go because of fear engendered largely by this “myth.” I feel that the DPJ is greatly responsible for having unnecessarily caused the delay in the reconstruction of the disaster-hit areas.

To Strive to Be No. 1 in the World – Never No. 2

　　　Abe: At any rate, Japan must make an all-out effort to resolve a variety of problems confronting us today. For that purpose, the government must prioritize revitalization of the economy. I have earlier stated that monetary easing and fiscal policy must come in a single package. The fiscal policy I am referring to will take the form of fiscal stimulus by means of public investment. The public’s opinion of this type of scheme has not always been positive, but I wish very strongly to invest in the future of our nation by such measures as stimulating private investment and consumption, creating jobs, and safeguarding the security of the people.

　　　Sakurai: We also need bold deregulation to encourage growth, don’t we?

　　　Abe: By all means, yes. One example is the medical field. We have nurtured world-class medical technologies in Japan with great potential for global application. And yet, largely because development has been impeded by a variety of regulations, including the Pharmaceutical Affairs Law, our medical equipment and medicine have yet to reach the world’s highest standards. “Asacol,” a drug which cured my seemingly intractable ulcerative colitis and enabled me to assume the premiership again, was at long last sanctioned by the Ministry of Welfare in 2009 – more than a dozen years behind other nations. It was deemed to be ineffective in early tests, I was told. It is indeed puzzling why it took the government so long to sanction it: it proved dramatically effective on me and has been known to have saved numerous other patients around the world. The same goes true for new drugs for use in regenerative medicine utilizing ips (induced pluripotent stem cells) – the area of expertise of Professor Shinya Yamanaka of Kyoto University, who was awarded the 2012 Nobel Prize in Physiology or Medicine.

　　　There have only been three different types of drugs developed in this field in Japan, while I understand that other nations have developed a great number. This sorry situation is all because of our archaic regulations and tax system. I dare add that there are many other fields in Japan that need to be deregulated and revamped, and we will be reviewing these various fields across the board.

　　　Sakurai: I also believe most strongly that education is the key to global competitiveness. I sincerely hope that you as our new leader will wholeheartedly address education reform for people of all ages – not just children – as you pursue a genuine regeneration of this nation. I am eagerly looking forward to what you can do for us in this area, too, Mr. Prime Minister.

　　　Abe: Thank you for your encouragement. Please rest assured that, unlike the DPJ, we will aim for “Japan as number 1” in the world – never number 2. I am determined to do my very best to help rebuild and regenerate Japan by making it a world leader in all fields.

(Translated from “A New Year’s Dialogue with Japan’s New Prime Minister” in the January 3-10, 2013 combined issue of The Weekly Shincho)