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Nuclear Scandal Hangs Over Japan’s Abe as Parliament Opens

Nuclear Scandal Hangs Over Japan’s Abe as Parliament Opens

(Bloomberg) -- Questions in parliament about a nuclear payoff scandal threaten to delay Japanese Prime Minister Shinzo Abe’s bid to pass a U.S. trade pact and make progress toward changing the country’s pacifist constitution.

Opposition lawmakers have pledged to hammer Abe’s ruling Liberal Democratic Party as the new session opened Friday over revelations that executives at Kansai Electric Power Co. took millions of dollars in payments, including gold coins hidden in a box of sweets, from a former local official in a town that hosts a major nuclear plant. Minority parties want to summon the executives for questioning in parliament.

Nuclear Scandal Hangs Over Japan’s Abe as Parliament Opens

That could delay progress on Abe’s major agenda item of gaining parliamentary approval for a trade deal reached last month with Donald Trump aimed at fending off the U.S. president’s threats to slap tariffs on Japanese autos.

“It is an appalling spectacle for the government and the opposition parties in the Diet must be sharpening knives,” Tom O’Sullivan, founder of Tokyo-based energy consultant Mathyos, said in an email.

The nuclear scandal could slow Abe’s broader strategy to restart more of the atomic plants shut after the 2011 Fukushima meltdown -- prior to which nuclear power supplied about 30% of Japan’s electricity. Any sense that Abe’s government is failing to investigate the payments thoroughly could weigh on his public support, with distrust of the atomic power industry still running high after one of the world’s worst nuclear disasters.

Nuclear Scandal Hangs Over Japan’s Abe as Parliament Opens

There is also growing concern over a global slowdown. While Abe has vowed to act decisively to support the economy if such risks become a reality, a downturn could call into question the wisdom of increasing the sales tax this week. The move came after years of delay and threatens to slam the brakes on consumption.

“The economy remains the top priority of the Abe administration,” he said in a speech on the first day of the new session. “We have taken ample measures to support the domestic consumption that makes up the bulk of the economy.”

Economic stability, including virtually full employment, has helped Abe keep his grip on power and he’s set to become the country’s longest-serving prime minister come November.

Abe will also face opposition questions over the trade deal under which Japan is to open much of its agriculture market to U.S. imports. In return, the Trump administration gave only a vague assurance that punitive tariffs won’t be imposed on Japan’s already ailing automakers in a sector valued at about $50 billion a year.

Foreign Minister Toshimitsu Motegi told the Nikkei newspaper this week he had no objection to bringing the trade deal into force Jan. 1, a date specified by U.S. Trade Representative Robert Lighthizer, his counterpart in trade talks.

--With assistance from Aaron Clark.

To contact the reporter on this story: Isabel Reynolds in Tokyo at ireynolds1@bloomberg.net

To contact the editors responsible for this story: Brendan Scott at bscott66@bloomberg.net, Jon Herskovitz, Siraj Datoo

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