Takenaka criticizes Fukui (and the Abe cabinet?)

With the Bank of Japan sending signals that it will raise Japan’s interest rates soon, Takenaka Heizo, former Prime Minister Koizumi’s point man on the economy and structural reform, has criticized the BoJ (and implicitly its president) for prematurely tightening monetary policy, reports the FT.

For a high-ranking “Koizumian” to criticize Japan’s monetary policy — which was defended in the FT by current Finance Minister Omi, as I discussed here — suggests that the LDP might be fractured on more than the nuclear weapons question.

Are we looking at the beginning of an LDP crackup leading up to the Upper House elections?

It is too early to say, but the DPJ has been aggressive recently, pushing back on all fronts in the special Diet session. It has sought to delay the passage of the bill upgrading the Japan Defense Agency to a full ministry, demanding answers to questions regarding a bid-rigging scandal in the JDA’s Defense Facilities Administration Agency that rocked the JDA earlier this year. It has hammered, albeit with uncertain success, the Abe Cabinet on nuclear weapons. And now it is looking to prevent the revisions of the education law from coming to a vote.

Should economic growth soften, as observers fear, and the BoJ raise interest rates regardless, economic management could become another contested front, particularly if others join Takenaka in criticizing Japan’s monetary policy (and the cabinet, implicitly, for not questioning the BoJ’s wisdom publicly). Japan’s Democratic party could then borrow from its American counterpart’s playbook and run on a campaign criticizing the Abe cabinet’s lack of competence.

Unfortunately, this chain of events would mean borrowing from Lenin — the worse things get, the better for the DPJ — but it might be the only way for the DPJ to win a major victory next summer. The policy differences between the LDP and the DPJ are too slight for the DPJ to build a campaign on anything other than personality and competence at governing.

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