JUNICHIRO KOIZUMI was a tough act to follow. The former Japanese prime minister, who stepped down a year ago this month, swung into office in April 2001 like a wrecking ball, pledging to "destroy" his ruling Liberal Democratic Party (LDP) if it didn't accept free-market reforms and seeking to cripple the LDP faction system. With long silver locks and a zest for American pop culture, Koizumi cut a far more dashing figure than most Japanese leaders. In foreign affairs, he lived up to his self-billing as a "diehard pro-American," deploying naval vessels for the war in Afghanistan and later sending several hundred noncombat ground troops to aid the reconstruction of Iraq.
After a turbulent start, Koizumi proved a wildly successful maverick, boasting a charismatic flair that eclipsed his stumbles and unpopular decisions (such as the Iraq mission). In 2005, when his premiership stalled over the privatization of Japan's postal service--which doubles as a savings bank with about $3 trillion in assets--Koizumi boldly expelled anti-privatization LDP members from the party and called a snap ballot. He won a landslide victory, then won postal privatization, and left office as a political folk hero.
It was perhaps unfair that Prime Minister Shinzo Abe would invariably be compared to his iconic predecessor. But when Abe took office last September, there were high hopes that it would be a smooth transfer. He inherited a strong approval rating, and kicked off his tenure with important trips to China and South Korea. Around the same time, Kim Jong Il detonated a nuclear bomb, which focused attention on Abe's muscular defense policy.
But his numbers soon began falling precipitously, thanks to a raft of follies and scandals. For starters: The agriculture minister committed suicide in May. His replacement, Norihiko Akagi, resigned a few months later. Then Akagi's replacement resigned after just one week on the job. (All three were suspected of malfeasance.) The defense minister, Fumio Kyuma, resigned in July after some imprudent remarks about the atomic bombings of Hiroshima and Nagasaki. In late 2006, the head of Abe's Tax Commission resigned due to reports that he was stashing his mistress in a publicly funded apartment.
Abe also sought to bring back LDP members who were purged by Koizumi during the postal privatization spat, which raised questions about his leadership and reform instincts. Meanwhile, the government admitted mishandling tens of millions of pension records, which made Abe seem incompetent. Many Japanese felt he was too obsessed with amending the pacifist, MacArthur-era constitution, and had shown a tin ear for concerns over pensions, health care, wages, and inequality. His party took a drubbing in elections this past July, losing control of parliament's upper house for the first time since 1955.
Opposition leader Ichiro Ozawa, head of the Democratic Party of Japan (DPJ), which now runs the upper house, urged the prime minister to quit. On Wednesday, Abe announced his resignation, prompting a wave of speculation over his motives and successor. Just days earlier, he had vowed to resign if the Diet (parliament) did not extend the anti-terrorism law that has allowed Japanese naval vessels to support the U.S.-led coalition in Afghanistan. But then, rather than fight for its extension, Abe abruptly stepped down.
To some foreign observers and domestic critics, he had epitomized the baleful resurgence of Japanese nationalism. These fears were overblown, but the prime minister did not help his case by denying that Japanese soldiers had forced women into sex slavery during World War II. (Abe later backtracked and vowed to support the 1993 Kono Statement, an apology for the abuse of the "comfort women" that was issued by then-Chief Cabinet Secretary Yohei Kono but never ratified by the Diet.)
Abe, who turns 53 this month, shared Koizumi's vision of boosting the U.S. alliance and expanding Japan's international role. But he was less repentant about Japanese history and lacked Koizumi's Teflon charm. For that matter, constitutional reform simply does not animate the Japanese public. "People didn't really care about this issue," says Edward Lincoln, director of the Center for Japan-U.S. Business and Economic Studies at New York University's Stern School of Business. "It may be the case that people still don't really want to do it."
Amending Article 9 (the peace plank) of Japan's constitution would mark a huge step toward greater alliance cooperation. But even without constitutional reform, the Koizumi-Abe years saw a major upgrading of U.S.-Japan security links. On missile defense, democracy promotion, curbing weapons proliferation, and anti-terrorism efforts, the two countries are much closer today than they were in early 2001. As a former Bush administration official puts it, "Japan has come a long, long way in a relatively short period of time. It's really an extraordinary transformation."
The alliance did hit some rocky shoals this year over a perceived U.S. policy drift on North Korea. Tokyo worries that American diplomats are now appeasing Pyongyang to solve the nuclear problem while neglecting the matter of those Japanese citizens who were kidnapped by North Korean agents in the 1970s and 1980s. There is always suspicion that the U.S. may become overly deferential to China. Meanwhile, Japan still lacks a comprehensive national security strategy and must overcome legal barriers to collective self-defense.
Abe's most likely successor is the foreign minister, Taro Aso, another staunch conservative. With his emphasis on "universal values such as freedom, human rights, democracy, and the rule of law," Aso reflects a nascent trend in Japanese foreign policy. "While not so openly assertive and high profile in [their] defense of human rights as the Americans or Europeans," writes National Bureau of Asian Research president Kenneth Pyle, "the Japanese nevertheless have quietly made these values an important principle in their recent diplomacy with other Asian nations."
That said, Aso, who turns 67 this month, does not appear to have a wide support network within the LDP, and his ascendance is hardly guaranteed. Whoever succeeds Abe will be tasked with rejuvenating domestic economic reform, which has stalled. Koizumi took an active role in getting banks to deal with non-performing loans. He also helped to accelerate corporate restructuring and improve corporate governance. The next prime minister, says Lincoln, should continue Japan's transition toward a private sector that relies more on capital markets and less on banks.
On the trade front, Japan is slowly emerging from its traditional protectionism. In April, Abe signed a landmark free trade deal with Thailand. Tokyo is also finalizing an agreement with ASEAN and negotiating pacts with Australia, South Korea, India, and others. But the Japanese have been reluctant to slash the agricultural subsidies beloved by their well-cosseted farmers. This remains a stubborn impediment to any U.S.-Japan free trade agreement.
Tokyo's biggest long-term challenge is demography. Its population is projected to shrink dramatically by 2050 and even more dramatically by 2100. This will strain the social-welfare system and weaken Japanese economic power. Awkward questions abound: Will Japan once again raise the retirement age? Will it reduce pension benefits? Will it increase female labor participation? Will it permit a larger influx of foreign workers? Japan will certainly need a more open, liberalized economy. But unless fertility patterns radically change, future economic growth is uncertain.
OVER THE PAST DECADE, Japan has become more conservative about its security. Given the rise of China and the erratic menace of North Korea, it is hard to imagine any serious lurch back to the pacifist left. But that doesn't mean revising Article 9 is an urgent public concern: A March 2007 poll found that less than 8 percent of Japanese thought constitutional reform should be a government priority. And if Japanese politics reverts to the factionalism and instability of the pre-Koizumi era, Tokyo would find it more difficult to maintain a consistent, coherent foreign policy.
On the other hand, Japan may be gradually shifting toward a more conventional two-party political structure based on ideology: with one main center-left party (the DPJ) and one main center-right party (the LDP). If such a shift occurs, Japan could undergo a monumental realignment. Ozawa's intentions are unclear. But he and other DPJ members have, at least temporarily, politicized the U.S. alliance.
Which brings us back to the anti-terrorism law. It passed the Diet in 2001 and has been renewed twice. Thus far, Ozawa has refused to extend it again. Japan's participation is not merely symbolic: Pakistani ships rely on Japanese maritime vessels for their refueling needs. A hasty retreat from Afghanistan would damage Japan's international credibility and complicate the American-led mission. "If Japan decides not to continue this operation, you will basically knock Pakistan out of the coalition," U.S. ambassador Tom Schieffer recently told an audience in Washington.
LDP policy chief Nobuteru Ishihara has hinted that a failure to renew the law could prompt an early lower house election. "It might put a little bump in the road in terms of alliance management," says Nicholas Szechenyi, assistant director of the Japan Chair at the Center for Strategic and International Studies. Overall, he reckons, the U.S.-Japan alliance is still on sound footing. But it will be on sounder footing if Japanese ships stay in the Indian Ocean.
Duncan Currie is managing editor of The American.