CHARGE DISCUSES BSE, DOMESTIC POLITICS WITH LDP'S

C O N F I D E N T I A L SECTION 01 OF 02 TOKYO 001458 SIPDIS DEPT FOR EAP/J, EB/TPP/ABT-WALL AND EB/TPP/BTA-HONAN NSC FOR E.ALTBACH AND M.GREEN PASS USTR FOR CUTLER, NEUFFER, MURPHY, OCONNOR, BOMER PASS USDA FOR OSEC U/S PENN, DEP. U/S LAMBERT,BECHDOL, BUTLER PASS USDA FOR TERPSTRA, DLP WETZEL, ITP FOR SHEIKH E.O. 12958: DECL: 03/14/2015 TAGS: EAGR ECON PGOV PREL ETRD JA SUBJECT: CHARGE DISCUSES BSE, DOMESTIC POLITICS WITH LDP'S HIDENAO NAKAGAWA, HIROSHIGE SEKO Classified By: Charge d'Affaires, a.i., Michael Michalak. Reasons: 1.4 (b) (d). ¶1. (C) Summary. Over dinner with the Charge March 9, LDP Diet members Hidenao Nakagawa and Hiroshige Seko agree that the process for resuming the importation of U.S. beef should be accelerated and that Japan's consumers should be allowed to make their own choices. Nakagawa expects the Diet to pass a postal privatization bill during this session. Nakagawa, who supports LDP DepSecGen SHINZO ABE as the next Prime Minister, believes ABE should take advantage of his activism in party and constitutional reform efforts to promote his PM candidacy. End summary. BSE --- ¶2. (C) The Charge met March 9 over dinner with Lower House Diet member and LDP Diet Policy Chairman Hidenao Nakagawa and with Upper House Diet member Hiroshige Seko to discuss a range of political and economic issues of bilateral interest. The Charge stressed to them that the BSE issue is becoming a major bilateral problem and must be resolved soon, noting that it would be the major topic in a telephone call that same evening between President Bush and PM Koizumi. Nakagawa acknowledged the problem, but insisted that the GOJ ministries and politicians were basically in agreement on the need to settle the issue promptly and that the problem lay with the Food Safety Commission. A number of women's and consumer groups are also vocally pressing for maintaining strict standards, Nakagawa noted, urging Washington to be patient. ¶3. (C) The Charge reminded Nakagawa that there was no scientific basis for delay and that the U.S. side was running out of patience. The matter now requires a political solution, he stated. Seko commented that BSE was nearly the only issue his USG interlocutors wanted to talk about during his December 2004 Washington visit. Nakagawa and Seko agreed that Japanese consumers should be allowed to decided for themselves and that the process to resume beef imports should be hastened. Postal Privatization; Party, Constitutional Reform �00A; -------------- -------------- ¶4. (C) The Prime Minister, Nakagawa maintained, has been too engaged with his domestic political agenda to become very involved with BSE. He has been totally consumed with promoting postal privatization. When the Charge welcomed the prospects of further reform of the Japanese banking and insurance sectors, Seko cautioned that if the United States is perceived as too active in its support of these reforms, it will be criticized for merely championing the interests of U.S. companies. In response, the Charge insisted that the United States simply seeks a level playing field. Nakagawa noted that in the end, the LDP would come up with an agreement on privatization bills during this Diet session. ¶5. (C) Constitutional reform is the other key topic of discussion within the LDP, Seko observed. Discussions include a proposal to move to a unicameral system, a move Seko supports despite the fact that, as an Upper House member, he may lose his position. Seko said he is part of Abe's study group, along with Yasuhiro Shiozaki, on constitutional reform-related security issues. Nakagawa said he believes the group will approach the topic in general terms, including the issue of collective security, and not specifically address the U.S.-Japan bilateral security relationship, which he believes should be handled through other mechanisms, like treaties. Former Prime Minister Nakasone and Deputy Secretary General ABE are concentrating on the preamble to the constitution. A complete draft of the constitution should be complete by mid-November, in time for the LDP's 50th anniversary celebration. ¶6. (C) Nakagawa separately noted the complexity of base and realignment issues. Because of strong interest at the local level, U.S. negotiations with MOFA and JDA are only part of the process. The local communities have to be dealt with, too, and that process will take a lot of time. For this reason, Nakagawa stressed, it was important to move the entire process along expeditiously. PM Prospects -------------- ¶7. (C) Invited by the Charge to speculate on who might follow Koizumi as Prime Minister, Nakagawa insisted that Fukuda, at 68, has absolutely no interest. He (Nakagawa) supports Abe, who at 50, he admitted, is a bit young for the job. Masahiko Koumura and Taro Aso, both in their late 50s, strongly support Fukuda. The two are sandwiched in age between Fukuda and ABE ("mezzanine" generation, in Japanese terms),and if they would be skipped over and the "young" ABE were to become PM, they would likely lose any opportunity to become PM. ¶8. (C) Nakagawa nonetheless believes that ABE should pursue a strategy to promote his future candidacy. ABE should take advantage of his activism in efforts to reform the party and his role in constitutional reform study groups. The unveiling of these reform plans coincides with the party's November 2005 50th anniversary, Nakagawa observed, potentially setting the stage for ABE to highlight his reformist role. Nakagawa believes a possible cabinet reshuffle in the late fall could result in a ministerial position for ABE and help set the stage for ABE to appear the logical successor to Koizumi (who must step down by September 2006, when his term as party president expires). Small Government -------------- ¶9. (C) Abe, Seko remarked, is carefully studying the recent history of the Republican Party, in part for the lessons to be learned about party transformation, but also to examine the Republican approach toward "small government." Nakagawa believes that Japan suffers from a bloated bureaucracy and over regulation. Too many regulations, Nakagawa observed, stifle competition and economic growth. He cited as an example the fact that 8,000 Ministry of Agriculture officials are solely engaged in recording annual rice statistics. He understands that, as civil servants, they cannot be fired and will have to be transferred to other positions. Nakagawa said he also recognizes that the process of shrinking the government will take time, and is thinking long term -- not five, but 25 years. Both Seko and Nakagawa acknowledged, in response to a comment by the Charge, that even a "small government" would still require an adequate number of people to monitor economic activity and serve as "watchdogs." MICHALAK