After taking office last September, Abe Shinzo won kudos at home and abroad by flying to China and South Korea to mend relations with Japan’s two disgruntled neighbors. Critics who worried he would be too blunt and nationalistic to succeed as prime minister were quickly proven wrong. Few anticipated how many problems he would have on the domestic front. In the last quarter, Abe’s high poll ratings were driven down by a series of scandals in his Cabinet and by backroom political maneuvering that gave the impression he was reversing Koizumi’s reformist agenda. At the beginning of this quarter Abe once again used foreign policy – this time a successful summit with President George W. Bush and at the G-8 – to push his poll numbers up again. The success of the summit was particularly reassuring in the context of growing Congressional criticism of Japan over Tokyo’s treatment of the “comfort women” issue.

Abe’s overseas successes were soon offset by a domestic scandal over the government’s mismanagement of pension accounts (that his government could ill afford) in the lead up to Upper House elections at the end of July. Abe will have to survive the Upper House election (he is not running but it will be seen as a referendum on his job) if he is going to move forward with his greatest goal: constitutional revision. Abe and the Liberal Democratic Party (LDP) hoped at one point that the constitutional revision pledge would carry them to victory in the Upper House election, but the pension system scandal has clearly become the issue on voters’ minds – much to the government’s chagrin. Still, Japanese voters appreciate toughness and perseverance, which Abe has in abundant supply, and that may save him yet.

In the last quarter of 2006, the first quarter since taking office, Japan’s Prime Minister Abe Shinzo enjoyed his honeymoon period by showing the “right stuff”: (snap visits to China and South Korea as part of efforts to reconcile relations with the two countries, success in reaching the unanimous resolution of the United Nations Security Council condemning North Korea for its October 2006 nuclear test; and the first summit meeting with U.S. President George W. Bush that reconfirmed the importance of and confidence in the U.S.-Japan alliance). But the decline of his popularity over the same period because of scandals and disciplinary problems in his Cabinet also revealed political weaknesses. Across the Pacific, President Bush saw his political situation deteriorate with Republican defeats in the House and Senate in November.

The first quarter of 2007 turned out to be a rough patch not only for President Bush and Prime Minister Abe domestically, but also for the U.S.-Japan alliance. In the United States the shock came from comments made by Abe and other political leaders in response to U.S. Congressional hearings regarding “comfort women” (women put into brothels for the Japanese army during the war). In Japan, the shock came from the sudden shift in U.S. policy toward North Korea with the Feb. 13 Six-Party Talks agreement. Several major U.S. newspapers criticized Abe for attempting to justify Japanese behavior during the war and virtually all Japanese newspapers criticized the U.S. decision to take a more accommodating line toward North Korea so soon after the nuclear test. For the first time since the 1995 Okinawa rape incident, editorials in both countries raised questions of trust about the other.

Despite this Sturm und Drang in the press and the legislatures, this quarter also saw a marked increase in high-level attention to Japan from the Bush administration, with visits to Japan from Vice President Dick Cheney, Deputy Secretary of State John Negroponte, and Deputy National Security Advisor J.D. Crouch. Meanwhile, Japan moved ahead with steps to strengthen its security policy institutions, passing legislation that elevates the Defense Agency to a ministry and introducing new legislation to establish a U.S.-style National Security Council. And fears that a more protectionist Congress might start targeting Japan proved mostly wrong as the new Democratic majority instead set its sights on China.

Prime Minister Abe will make his first visit to Washington since taking office in late April. Until then, he has to do his utmost to remind audiences in Japan and the United States that he still has the “right stuff” when it comes to tough problems like North Korea and sensitive issues like the comfort women. He also has to demonstrate his resilience domestically in April local elections just before coming to Washington. And then there is the big test – Upper House elections in July that could be make-or-break.

The third quarter of 2006 began with North Korea’s July 5 missile launches. This quarter, Pyongyang added another provocation with the Oct. 9 nuclear test. The prospect of another nuclear weapons state in Japan’s neighborhood was bad news, but the test also created an opportunity for Japan and its neighbors to begin forging consensus on an approach to this new regional security challenge. While the nuclear test posed a significant threat to Tokyo and prompted discussions (normally considered taboo) of nuclearization as a means to strengthen Japan’s deterrence, it also led the United States to reaffirm its commitment to defend Japan under the nuclear umbrella.

Prime Minister Abe Shinzo, in his first meeting with President George Bush as prime minister, demonstrated a strong commitment to the U.S.-Japan alliance and pledged to cooperate closely on North Korea and other regional security issues. He also pledged to move toward implementing an agreement on the realignment of U.S. forces in Japan, particularly on Okinawa where the new governor appears willing to work with the central government. It is unclear if implementation will go smoothly, but the dynamics of Japan’s security environment, complicated by the North Korean nuclear test, could facilitate further progress in bilateral security cooperation. In the fourth quarter, Abe engaged in a series of security and diplomatic challenges that allowed him to show that he has the “right stuff” to be prime minister, despite his relative youth and inexperience.  But a sudden sag in popularity at home in December and questions about his commitment to economic reform will be areas to watch in the new year.

The key theme for the third quarter of 2006 has been the transition of power from Koizumi Junichiro to Abe Shinzo. Abe has just taken the helm, but he already had command of policy making before becoming prime minister. It was North Korea’s July test-launch of seven missiles that gave Abe a chance to display his leadership credentials, setting the stage for a continued strengthening of the U.S.-Japan alliance. Koizumi’s Aug. 15 visit to the Yasukuni Shrine raised questions and criticism in some corners in Washington about how ideological an Abe government might become, but the Koizumi visit may also have bought Abe time to decide how to handle the complex mix of history and power relations with China.