The third arrow

DURING Japan’s Meiji restoration, which began in 1868, a group of reform-minded officials and citizens worked together to stamp out feudalism, prise open borders and push the country onto a path of rapid industrialisation. In little over ten years they reshaped Japan from top to bottom. That well-known tale has left a perennial optimism among the Japanese that they can, when absolutely necessary, change direction. Others, especially foreigners, are not so sure. In two decades of economic stagnation Japan’s leaders have repeatedly failed to rescue their country’s fortunes.

Shinzo Abe, Japan’s prime minister since 2012, has offered something for both sides. He started surprisingly well. Last year, with Meiji speed, he shot off the first two arrows of “Abenomics”: a huge fiscal stimulus and a dramatic programme of monetary easing. His approval rating soared, as did the stockmarket, and his Liberal Democratic Party (LDP) triumphed in an election for the upper house of the Diet, Japan’s parliament. But his first attempt at a third arrow of structural reforms to unleash growth, an announcement in June 2013, fell flat. He seemed to have been nobbled by Japan’s various lobbies. Then in December he paid a visit to the Yasukuni shrine, which was taken as a symbol of reverence for Japan’s criminal militarist past. That infuriated outsiders and strengthened suspicions that his focus on economic reform had wavered.