Abe setting the stage for 'third arrow'

THE gaze of the world is fixed on Japan's skies, waiting for the "third arrow" of Abenomics to streak across the firmament, heralding the arrival of a new era of economic deregulation. But change is beginning to happen at a different level, in the undergrowth of the Japanese bureaucracy.

Abenomics is not only about having the will to reform the world's third largest economy, nor indeed just about possessing the political power to do so. Critically, it is also about being able to ensure that legislated reforms are not neutralised by the powerful bureaucracy. The biggest resistance factor to change in Japan is not the public - be it "conservative" farmers or supposedly consensus-loving ordinary people who oppose interference with custom and tradition that is not preceded by years or decades of consultation. It is the bureaucracy or civil service.

Prime Minister Shinzo Abe is not the first political leader to recognise this. Ichiro Ozawa, a former co-leader of the Democratic Party of Japan, which held office for three years before being swept out by Mr Abe's Liberal Democratic Party, was highly critical of Japanese bureaucrats. Mr Abe has created a sense of charisma that Mr Ozawa lacked and, with the benefit of high popularity ratings is able to be bolder in his attempts to lop away the undergrowth of bureaucratic regulation that prevents change in Japan. This could have a profound impact over time.