Fade to black?

If you want to see why Shinzo Abe's ruling Liberal Democratic Party (LDP) could be headed for a crushing defeat in the Diet Upper House election on July 29—and the Prime Minister himself could be forced to resign just 10 months into his tenure—pop into the social-welfare office in Tokyo's central Minato ward. Most days you'll find a gray brigade of angry Japanese voters who want to know where their pensions have gone—and they want to know now. In May the opposition Democratic Party of Japan (DPJ) revealed that records of up to 50 million pension accounts had been misplaced and couldn't be connected to their owners, due to a monumental bureaucratic error. When Abe appeared more concerned with dodging the blame than solving the problem, his already wobbly approval ratings went into free fall. "This may not be the fault of the current administration, but it's inevitable they will be judged by how they handle the crisis—and it's hardly been adequate," says 57-year-old Hideki Tamura, who had been waiting for over an hour at the Minato office to check on his own pension. "In this atmosphere, I wouldn't be surprised if the LDP loses the Upper House elections."

The LDP knew it would face a tough fight—the Upper House members whose seats are in contention were elected in 2001, when an unusually large number of LDP candidates rode the coattails of popular Prime Minister Junichiro Koizumi into office. But no one could have predicted the litany of disasters that have beset Abe over the past two months, including the suicide of one minister under a cloud of corruption (Agriculture Minister Toshikatsu Matsuoka), the resignation of another (Defense Minister Fumio Kyuma) for a foolish remark on the Hiroshima and Nagasaki atomic bombings, and worst of all, the pension crisis. "The LDP has begun to melt down," gloats Tsuyoshi Yamaguchi, a high-ranking DPJ member. A recent survey by the Yomiuri Shimbun newspaper pegged Abe's approval rating at an anemic 32%, and it's likely that the LDP and its ruling coalition partner, the New Komeito Party, will drop enough seats to lose control of the Upper House. The coalition would still remain in charge, thanks to its huge majority in the more powerful Lower House, but an increasing number of LDP legislators have been hinting that a big loss could mean Abe's end. "If we lose elections, the LDP's head has always been made to take responsibility," former Finance Minister Sadakazu Tanigaki told TIME. "So if we don't take the majority, someone has to take responsibility."

Abe's woes are especially galling because when he became Prime Minister last September, it seemed he could do no wrong. Although known as a staunch nationalist, his first act was to visit Beijing and Seoul, patching up strained relations with Japan's key trading partners. But foreign-policy coups were soon overshadowed by a perception that Abe's domestic agenda was lacking. While he spoke of boosting Japan's role abroad and revising the country's pacifist constitution, the public was focused on bread-and-butter economic issues. "When Abe talks about the constitution, people think, 'What about my salary?'" says the DPJ's Yamaguchi. Abe seems incapable of reading the public—Koizumi excelled at that—and can't shake impressions that the economy bores him. "When anyone within 50 meters of him starts talking about foreign policy, his eyes sparkle—he cares," says Jesper Koll, president of Tantallon Research Japan. "But anything else, that's just not the case."

That disengagement—and his own conciliatory nature—might have led Abe to take too light a hand with his ministerial team. Despite promises that he would centralize power in the Prime Minister's office, bureaucrats have recovered some of the influence they'd lost under Koizumi's reform-minded administration. Abe's own ministers have fallen into scandal after scandal. By July 8 even one of Abe's substitute ministers—Agriculture Minister Norihiko Akagi, named to replace the late Matsuoka—was mired in a fresh campaign-funding scandal. "He's just not any good at picking his team," says Jun Iio, a professor at the National Graduate Institute for Policy Studies (GRIPS). "When he faces a crisis, his easygoing style isn't effective."

That became painfully obvious when news of the misplaced pension accounts broke. The problem arose more than a decade ago when workers at the government's Social Insurance Agency (SIA) began merging the multiple pension streams received by retirees into single accounts with individual identification numbers. In the process up to 50 million names were mistakenly recorded, making it difficult to match payments with people. Though the mistakes occurred under a different administration, and almost all accounts should eventually be joined to their owners, the DPJ used the pension scandal to hammer Abe, who seemed slow to realize its importance. The strategy played to the fears of a Japanese public worried about the viability of their pensions given the country's aging, declining population. Abe belatedly pushed through bills to reform the inefficient SIA, but the pension scandal seemed to prove that the Prime Minister couldn't govern. "The LDP leadership failed to act," says Taro Kono, an LDP Diet member. "And now we have to pay the debt."

It's unclear just how badly the LDP would have to lose in the coming elections for Abe to be forced out. Though Kono believes Abe should stay on, a recent internal LDP poll projected the party might win as few as 37 seats—well short of what would be needed to hold onto the Upper House. "If that's the case, he'll probably have to go," Kono says. The likely successor would be Foreign Minister Taro Aso, who finished a distant second to Abe in last September's LDP presidential contest and who covets the top job. But the stern Aso—a conservative who prefers foreign policy to the minutiae of economic reform—just seems like a less likable Abe, and some party members wonder whether a leadership switch would be worth the trouble. "How much of the situation would change?" says former Chief Cabinet Secretary Yasuo Fukuda, whose own name has been floated as a replacement.

Besides, the DPJ fails to beat the LDP at the polls with depressing regularity. "[DPJ leader Ichiro] Ozawa has been singularly good at snatching defeat from the jaws of victory," says Richard Katz, editor of the Oriental Economist newsletter. Though the DPJ has gained a slight edge on the LDP since the pension scandal broke, its own approval ratings rarely break 25%, and most Japanese say they're simply fed up with both parties. Even if the DPJ does manage to seize the Upper House—Ozawa has promised to resign if his party falters—they'll be faced with the tougher question of what to do next. The DPJ could block the LDP's bills, but only temporarily—with its overwhelming majority in the Lower House, the ruling coalition can override opposition. If the DPJ is seen as too obstructionist, it could feed perceptions that the party isn't capable of governing. "The DPJ just criticizes," says Shoichi Nakagawa, the LDP's policy chief. "They haven't done anything to solve these problems."

That's the real trouble: no one has. From its endangered pension system to its emerging young underclass, Japan faces existential challenges, but you wouldn't know that from the tone of the campaigns. Real debates—such as whether to raise the consumption tax to reduce public debt—are postponed until after the election, while the media feeds on the latest political scandal. "It's like the campaign is happening on another planet," says Akihiko Matsutani, a pension expert with GRIPS. "These discussions need to take place now."

Perhaps the most optimistic outcome would see reform-minded young members of both parties join forces to form a new coalition ready to tackle Japan's problems, but the revolution seems unlikely. Less than two years after Koizumi electrified the nation by calling a snap election to defend his reform plans, voters seem resigned to the return of Japanese politics as usual. Back at the Minato welfare office, 71-year-old Asako Hamada sees little reason for hope. "I don't know anything about politics, but I know things are not well at the present moment," she says. "That neither the LDP nor the opposition parties have been able to offer any resolutions that give peace of mind to the Japanese is quite worrying." Candidates from both parties running on July 29 should be worried too.