DAILY SUMMARY OF JAPANESE PRESS 07/07/08

UNCLAS SECTION 01 OF 10 TOKYO 001859 SIPDIS DEPT FOR E, P, EB, EAP/J, EAP/P, EAP/PD, PA; WHITE HOUSE/NSC/NEC; JUSTICE FOR STU CHEMTOB IN ANTI-TRUST DIVISION; TREASURY/OASIA/IMI/JAPAN; DEPT PASS USTR/PUBLIC AFFAIRS OFFICE; SECDEF FOR JCS-J-5/JAPAN, DASD/ISA/EAPR/JAPAN; DEPT PASS ELECTRONICALLY TO USDA FAS/ITP FOR SCHROETER; PACOM HONOLULU FOR PUBLIC DIPLOMACY ADVISOR; CINCPAC FLT/PA/ COMNAVFORJAPAN/PA. E.O. 12958: N/A TAGS: OIIP KMDR KPAO PGOV PINR ECON ELAB JA SUBJECT: DAILY SUMMARY OF JAPANESE PRESS 07/07/08 INDEX: (1) Fukuda, Bush defend each other over abduction, nuclear issues (Tokyo Shimbun) (2) Japanese, U.S. leaders agree on need for trade liberalization to prevent soaring food prices (Yomiuri) (3) Editorial: Japan-U.S. relations -- Twilight of Bush era (Asahi) (4) Editorial: Japan-U.S. summit -- How will two countries cooperate on abduction issue? (Sankei) (5) Editorial: Fukuda-Bush Lake Toya summit meeting eased Japan-U.S. relations, but... (Nikkei) (6) Editorial: Real value of Japan-U.S. alliance to be tested at Lake Toya Summit (Mainichi) (7) DPJ to submit to extra Diet session bills banning amakudari (golden parachute) practice and reforming the road-related tax revenues system (Nikkei) (8) DPJ Secretary General Hatoyama: if DPJ defeated in Lower House election, I and Ozawa will retire from politics (Mainichi) (9) Prime Minister's schedule, July 5 (Nikkei) ARTICLES: (1) Fukuda, Bush defend each other over abduction, nuclear issues TOKYO SHIMBUN (Page 3) (Full) July 7, 2008 Yuji Nishikawa, Political Section Yasuyuki Oguri, America Bureau Yesterday's meeting between Prime Minister Yasuo Fukuda and U.S. President Bush was the first Japan-U.S. summit since the United States decided to delist North Korea as a state sponsor of terrorism. This year's Group of Eight (G-8) summit at Lake Toya in Hokkaido is Bush's last and Fukuda's first. However, Fukuda is the host. In their meeting, the two leaders-both alike declining in public support although they are in different political situations-defended each other over the issue of Japanese nationals abducted to North Korea, apparently in an attempt to avoid causing a fissure in the Japan-U.S. alliance. "I'm well aware that the abduction issue is a delicate issue," Bush said in a press conference following the Japan-U.S. summit. "So," Bush went on, "I called Prime Minister Fukuda to tell him that the United States will not forsake Japan on this issue." With this, Bush directly sought understanding in his message to the Japanese public, which has opposed his decision to delist North Korea. Fukuda said he was "encouraged" by Bush's remark. In the summit, Fukuda handed the English version of a book to President Bush about Megumi Yokota, one of the abductees. The book was written by her mother, Sakie Yokota, and titled Megumi, O-kaasan ga kitto tasukete ageru (North Korea Kidnapped My Daughter). Fukuda and Bush showed TOKYO 00001859 002 OF 010 that they will not forget the abduction issue. In the summit, Fukuda and Bush seemed to give each other a helping hand. The United States has decided to remove North Korea from its terrorism blacklist. This decision dealt a serious blow to Fukuda and his government, for it could cause Japan to lose leverage for a solution to the abduction issue. The Fukuda government was under fire for leaving the abduction issue behind. Meanwhile, Bush is likewise being called into question in Congress for his decision to delist North Korea in spite of its insufficient declaration that does not include nuclear weapons. In the press conference, Bush stated that he also has daughters and he therefore knows well how serious it would be if one were to disappear. Time and again, Bush stressed that he understands how the Japanese people feel. Fukuda noted: "We must not produce a situation where there is no progress on the nuclear issue because there is no progress on the abduction issue. We should resolve both issues together." So saying, Fukuda gave consideration to President Bush, indicating that he would not focus solely on the abduction issue. Fukuda showed such a stance for he feared that a fissure between Japan and the United States would only help North Korea. Fukuda therefore did not ask Bush to reconsider delisting North Korea. He showed a stance of seeking public understanding with Bush. Meanwhile, President Bush's low profile has something to do with his intention to make achievements. President Bush, who has had few diplomatic accomplishments, is now being noted mainly for what he did with former Prime Minister Junichiro Koizumi to strengthen the Japan-U.S. alliance. He needs to see progress on the abduction issue. For that, however, he does not want to hurt his achievements during his remaining six months in office. He played up the Japan-U.S. alliance. In addition, the security situation in Afghanistan has also deteriorated. The Maritime Self-Defense Force is currently deployed to the Indian Ocean, where it is tasked with a refueling mission under the Antiterrorism Special Measures Law. This law is slated to expire next year. However, the United States is considering ramping up its antiterror operations in Afghanistan. "Depending on the circumstances," a source familiar with Japan-U.S. relations noted, "Japan may be asked to make a further contribution." There is also such a hidden calculation behind Bush's attitude toward Fukuda. (2) Japanese, U.S. leaders agree on need for trade liberalization to prevent soaring food prices YOMIURI (Page 7) (Full) July 7, 2008 U.S. President Bush and Prime Minister Fukuda in their meeting yesterday agreed on the view that it is necessary to further liberalize trade by lowering tariffs and other means as measures to prevent natural resource and food prices from soaring any further. The agreement is expected to prompt the now deadlocked new round of global trade talks (Doha Round) under the World Trade Organization (WTO) to move forward. Meanwhile, Bush acknowledged the U.S. economy is slowing down, leaving an uncertainty over Japan's future economic TOKYO 00001859 003 OF 010 prospects, which largely depend on developments in the U.S. economy. Eager for success of WTO Doha Round In a press conference after meeting with Bush, Fukuda said: "Recent sharp price hikes of primary products such as oil and food have seriously affected the global economy. We agreed on the view that prompt countermeasures are necessary." Bush said that the two leaders shared the need for mid- to long-term measures. He then said: "Establishing a free trade system is necessary as an effective measure to help poor countries," indicating his determination to work hard to make the Doha Round a success. U.S. Trade Representative Schwab, the U.S. representative in the Doha Round, was also present at the Japan-U.S. summit. This fact represents the U.S. government's eagerness to make the New Round a success. The WTO is aiming to conclude the Doha Round by the end of this year. To do so, the unofficial ministerial meeting to be held in Geneva in late July will be the last chance. Some involved in the negotiations are guessing that President Bush has begun to get down to brass tacks in a bid to leave positive results on the economic and diplomatic fronts before leaving office next January. Recent skyrocketing food prices have contributed to increasing some farmers' incomes in the U.S., as an exporter of farm products. Given this, the U.S. government appears to be judging that a promotion of discussion on a reduction in state subsidies to farmers in an effort to bring about a settlement to the Doha Round will incur less opposition from farmers. It is expected that if countries reduce tariffs on agricultural and other products following a settlement at the Doha Round, import prices will drop and global inflation will be contained. The issue of U.S. beef imports took center stage in past Japan-U.S. trade talks, but in the meeting yesterday, the two leaders touched on the issue only briefly. South Korean consumers have strongly reacted to the resumption of U.S. beef imports. Given this, the U.S. finds "it difficult to strongly urge Japan to ease its import conditions," a U.S. government source confided. "Strong dollar" emphasized President Bush frankly admitted in a joint press conference that the "U.S. economy has not grown as strongly as expected." He added: "If the U.S. economy perks up, the value of the dollar will be affected. I believe in the effectiveness of our strong dollar policy." Bush thus expressed his hopes that the measures his administration has taken to stimulate the economy, such as tax cuts, will work effectively and tried to hold in check moves to sell dollars in international exchange markets. Regarding the U.S. economy, there is an increasing possibility that a period of inflation combined with stagnation - so-called stagflation - may set in. Many are concerned about a vicious circle TOKYO 00001859 004 OF 010 in which a further decline in the dollar makes oil prices higher and eventually further slows down the economy. The U.S. Federal Reserve Bank (FRB) now has few options for monetary policy. Banking authorities in Europe are moving to raise interest rates to stem inflation. As it stands, the difference in interest rates is expanding between the U.S. and Europe. The expanded difference could weaken the dollar further. Many see the measures being taken by the U.S. government as insufficient to buoy up the economy, so it is uncertain whether the U.S. will be able to jack up the value of the dollar. In the press conference yesterday, Fukuda emphasized that the Japanese and U.S. economies are becoming ever more interdependent. Ironically, his remark indicates that if the U.S. economic recovery slows, the Japanese economy may also be forced to slow down, too. (3) Editorial: Japan-U.S. relations -- Twilight of Bush era ASAHI (Page 3) (Full) July 7, 2008 "The United States will not leave the abduction issue behind," said U.S. President George W. Bush in a joint press conference held yesterday after his meeting with Prime Minister Yasuo Fukuda. Bush took up the abduction issue first. The Japan-U.S. summit was held on the day before the opening of the Group of Eight Hokkaido Toyako Summit. Bush may have thought that he should speak about the abduction issue first because he seems to have felt that the Japanese public was concerned about U.S. policy toward North Korea. In stark contrast, Fukuda praised the state of bilateral relations during the seven and a half years of the Bush administration, saying, "The Japan-U.S. alliance has dramatically improved." He might have been giving consideration to this being the last visit to Japan by President Bush, who will leave office early next year. Even though bilateral relations have deepened, Bush was moved to say, "The United States will not abandon Japan," referring to the North Korean nuclear and abduction issues. In the joint press conference, Fukuda stated: "I'm encouraged" by the President's remarks. The U.S. government must intensely tackle the abduction and nuclear issues, aiming to resolve them. Yet, the past seven and a half years of Japan-U.S. relations appear to have been led around by the U.S.' foreign policy. The government of Prime Minister Junichiro Koizumi supported the "war on terror" launched by President Bush after the 9/11 terrorist attacks on the United States. Koizumi backed the Iraq war, which had created discord between major European countries and the United States. With domestic public opinion split, Koizumi dispatched Self-Defense Forces (SDF) personnel to a combat zone in Iraq. The main reason for the SDF dispatch was the North Korean issue. Prime Minister Koizumi might have thought that if Japan cooperated with U.S. efforts on the Iraq war, which was internationally unpopular, Japan would be sure to get support from the United States TOKYO 00001859 005 OF 010 on the North Korean front on issues that greatly affect Japan's security. However, the crisis of North Korea's nuclear threat to Japan has increased due to Pyongyang's test-firing of ballistic missiles and defiantly carrying out of a nuclear weapons test. No progress has been made on the abduction issue. It is not the first time for Tokyo to rely on Washington for its diplomacy. It is good for Japan to depend on the United States, as long as the United States values international cooperation and is cautious about the use of arms. However, if the United States acts unilaterally, it becomes difficult for Japan to line up with it. International politics will likely be increasingly complicated. In addition to China's recent rapid economic growth, India has accelerated its economic growth and Russia has boosted its presence again. Whether Asia will continue to run along the path of stability and prosperity in the 21st century is unclear. Fukuda appears to be changing Koizumi's policy of solely tilting toward the U.S. by putting relations with China back on a recovery track. His stock argument of "resonance," meaning that good relations between Japan and the U.S. have a positive effect on Japan's Asia policy, is still untested. Japan-U.S. relations will continue be the linchpin of Japanese diplomacy, but Japan and the United States alone cannot resolve all issues. Leaning that there are limits is a lesson from the past seven and a half years. (4) Editorial: Japan-U.S. summit -- How will two countries cooperate on abduction issue? SANKEI (Page 2) (Full) July 7, 2008 The Japan-U.S. summit (held on July 6) between Prime Minister Yasuo Fukuda and President George W. Bush agreed that the verification of the declaration of nuclear programs and activities by Pyongyang was vital for complete nuclear abandonment by North Korea. They also confirmed close bilateral cooperation for resolving the abduction issue. The North's nuclear programs are especially important for Japan. The North's nuclear declaration on June 26 is a far cry from complete and correct, for it does not include information on its nuclear weapons. Needless to say, the declaration must be verified thoroughly. Although President Bush referred to Pyongyang's uranium enrichment program and nuclear proliferation, Washington will delist the North as a state sponsor of terrorism on August 11, as it has informed Congress of its step. Questions remain on the extent to which the declaration will be examined. We would like to see the relevant countries make all-out efforts to verify the declaration. In a joint press conference after the bilateral summit, President Bush said: "The United States will not abandon Japan. The United States' intention to support Japan's position on the abduction issue remains unchanged." It is important to demonstrate the stance that Japan and the United States will continue working closely in addressing the abduction TOKYO 00001859 006 OF 010 issue. We welcome President Bush's statement. Nevertheless, the President probably made such a statement in consideration of Japan's strong concerns that the abduction issue is an ongoing act of terrorism and that the United States might abandon Japan. Prime Minister Fukuda said, "I was encouraged to hear the U.S. position from President Bush." Did Prime Minister Fukuda convey to President Bush Japan's apprehensions about Washington's decision to take the North off its terrorist blacklist while leaving the abduction issue behind? We wanted to see the two leaders spell out how Japan and the United States will work together to resolve the abduction issue. Although Fukuda and Bush played up efforts to enhance the Japan-U.S. alliance, some signs of weakening in the alliance worry us. One is that the United States seems to be prioritizing multilateral talks over the alliance with Japan. President Bush referred to applying pressure to the North through the six-party framework, though China and Russia are less committed to the abduction issue. Another is that Japan's efforts to reinforce the alliance with the United States have been insufficient. Japan for instance will not intercept a U.S.-bound ballistic missile in line with its principle of not exercising the right to collective self-defense. Such a country is not regarded as a dependable ally. There are a plethora of tasks the two countries must joint efforts, such as global warming and soaring oil prices. Top priority must be given to cementing the alliance. (5) Editorial: Fukuda-Bush Lake Toya summit meeting eased Japan-U.S. relations, but... NIKKEI (Page 2) (Full) July 7, 2008 What is the season that can be best likened to Japan-U.S. relations after the U.S. government informed Congress of its decision to delist North Korea as a state sponsor of terrorism? It is certainly not balmy spring. Prime Minister Yasuo Fukuda and President George ¶W. Bush, however, endeavored to generate a spring-like mood at their summit meeting held at Late Toya (on July 6). After their talks, the two leaders, holding their first joint press conference, stressed cooperation on such issues as the denuclearization of North Korea, the abductions by North Korea, the global economy, measures to combat global warming, and aid to Africa. Prime Minister Fukuda said, "The verification of North Korea's nuclear declaration is extremely important in order to bring about the complete denuclearization of that country." President Bush stated, "The United States will not abandon Japan (on the abduction issue)." The stress on unity between Japan and the United States apparently comes from strategic decisions by both governments. A strained Japan-U.S. relationship and an awkward mood between the two leaders would only please the North. Fukuda and Bush managed to avoid that. For both to fall in step with a conciliatory tone toward the North would delight Pyongyang more than Washington and Tokyo. Such a message was avoided by the two leaders. TOKYO 00001859 007 OF 010 How has Washington's decision to take the North off its terrorist blacklist affected the Fukuda administration? Some public opinion polls showed severe results, faulting Prime Minister Fukuda for going along with it. Although support ratings for the Fukuda cabinet seem to have bottomed out, they still remain low. There is discontent among conservative supporters of the Liberal Democratic Party about the delisting the North as a state sponsor of terrorism. If that is to weaken the Fukuda's administration's foundation, albeit indirectly, the Bush administration's decision would end up exacting a political toll on the top leader of an U.S. ally whose footing is weak. The North could respond sincerely to the verification of its nuclear declaration and the abduction issue before it is removed from the U.S. list of terrorism-sponsoring nations on August 11. Such would change the mood in Japan and help Japan and the United States restore unity. The North might opt for buying time or throwing a curve ball to drive a wedge between Japan and the United States. Forecasting the North's action is not easy. The deadline will come in any event, and America's delisting process will come to an end. The rainy season will continue for Japan-U.S. relations. North Korea, a dictatorship, can toy with the feelings of Japan and the United States. A dictatorship can have an edge over an unpopular leader of a democracy with a weak foundation at least over the short term. It is meaningless for Prime Minister Fukuda to hurl unpleasant words at the President, whose days in office are numbered. It was natural for the top Japanese and U.S. leaders to confirm bilateral cooperation. Although it also was diplomatically wise, offering healing words to each other does not help resolve pressing issues. The Fukuda-Bush meeting has somewhat helped to reduce the awkwardness in bilateral relations, but has it sent a strong message to the North to respond earnestly to the nuclear and abduction issues? The North will probably continue trifling with the feelings of Japan, the United States, and China, as well. (6) Editorial: Real value of Japan-U.S. alliance to be tested at Lake Toya Summit MAINICHI (Page 5) (Full) July 7, 2008 In their meeting held prior to the opening of the Lake Toya Summit in Hokkaido, Prime Minister Yasuo Fukuda and U.S. President Bush agreed to closely cooperate in resolving the North Korean nuclear and abduction issues. On the global warming issue, both sides failed to bridge their perception gap. In discussions on these issues, the real value of the Japan-U.S. alliance will be tested at the Group of Eight (G-8) Summit. This is likely to be the last visit to Japan by President Bush before he leaves office next January. The Japan-U.S. relations over the past seven and a half years under the Bush administration are considered to have been good in general. In particular, the personal relationship of trust established between President Bush and Prime Minister Koizumi during the five years of the Koizumi administration TOKYO 00001859 008 OF 010 favorably affected the whole bilateral relationship. Japan has continued to support the President's "war on terror" by dispatching Self-Defense Force troops to the Indian Ocean and Iraq after the terrorist attacks on the U.S. The two countries have also promoted cooperative relations on the military front, as represented by their cooperation on missile defense, as part of efforts to counter North Korea's nuclear and missile threats. However, friction has marked recent relations between Japan and the U.S., mainly due to a definite difference in both sides' positions over issues related to North Korea. The difference might reflect their perception gap regarding the nuclear threat coming from North Korea. North Korea's nuclear weapons have posed a threat directly to Japan, but what the U.S. seems most fearful of is the possible proliferation of nuclear weapons to terrorist groups. The Japanese government, too, harbored this kind of concern. The U.S. also began to take procedures to delist North Korea as a state sponsor of terrorism despite no progress on the abduction issue. This has made Japan even more apprehensive. In the joint press conference, Fukuda proudly said: "The Japan-U.S. alliance has deepened over the past several decades." If that is so, he should show specifics to prove this. Bush said that the U.S. would make utmost efforts to denuclearize the Korean Peninsula. He also stressed the need to strictly verify North Korea's nuclear declaration. He further expressed apprehension about North Korea's uranium enrichment program, nuclear proliferation, and development of long-range missiles. After the G-8 Summit ends, the envoys of the six-party talks will meet to discuss how to verify North Korea's nuclear report and other matters. We hope China, the chair of the six-party talks, will work on other members to establish a perfect mechanism to fully examine the contents of the report. On the abductions, President Bush said: "We are fully aware how delicate this issue is for Japan. We will never abandon Japan on this issue." Among the members of the six-party talks, however, there are differences in interest in the abduction issue. Fukuda, who has emphasized the importance of resolving both nuclear and abduction issues simultaneously, naturally should make utmost efforts to bring about progress in negotiations with North Korea and make more efforts to obtain understanding of Japan's position from the countries concerned. Regarding the global warming issue, the goal the G-8 leaders should attain at least is to reach an agreement on the goal of halving greenhouse gas emissions by 2050. We expect Fukuda to step up efforts to elicit an agreement from President Bush, who remains reluctant to set a goal. (7) DPJ to submit to extra Diet session bills banning amakudari (golden parachute) practice and reforming the road-related tax revenues system TOKYO 00001859 009 OF 010 NIKKEI (Page 2) (Full) July 6, 2008 The main opposition Democratic Party of Japan (DPJ) will submit to an extraordinary Diet session, which is expected to be convened in late August, a bill to ban the practice of amakudari or a golden parachute system under which retired senior bureaucrats take high-paying posts in private firms or government-affiliated organizations. The DPJ also plans to present a bill on reform of the road-related tax revenue system to the upcoming extra session. The aim is to play up differences in reform between it and the government and ruling camp through policy debate. Some in the largest opposition party are calling on their party to flexibly respond to deliberations in the House of Councillors, to which the DPJ submitted a censure motion against Prime Minister Yasuo Fukuda in the latest ordinary session. The DPJ intends to submit the legislation on management and control of retired civil servants (tentative name) which includes such measures as 1) prohibiting the system of finding amakudari positions for bureaucrats; 2) banning the practice of encouraging early retirement, and 3) lifting the retirement age of bureaucrats to 65. Although the party advocates the complete scrapping of amakudari, it failed to include the above measures in the bill to reform the civil servant system, on which it reached agreement in the previous Diet session, because the ruling coalition was opposed. The government plans to free up revenues from the road-related taxes now solely dedicated to road construction and maintenance and reclassify them as general funds. In response, DPJ Deputy President Naoto Kan said: "Under the government plan, the authority alone would be transferred from the Ministry of Land, Infrastructure, and Transport (MLIT) to the Ministry of Finance." The DPJ, therefore, asserts that the authority related to road maintenance and fiscal resources be transferred from the central government to local governments. It is also looking into abolishing the MLIT's regional bureaus. It intends to submit to the extra session a drastic reform bill, including the scrapping of regional bureaus. The DPJ will incorporate such policy measures in a manifesto (set of campaign pledges) for the next Lower House election in order to play up its political identity as a party with policies. It knows, also, that the public pays little attention to the opposition camp while the Diet is out of session. (8) DPJ Secretary General Hatoyama: if DPJ defeated in Lower House election, I and Ozawa will retire from politics MAINICHI (Page 2) (Full) July 7, 2008 Yukio Hatoyama, secretary general of the main opposition Democratic Party of Japan (DPJ),delivered a speech on July 5 in Kanazawa City. Referring to the next House of Representatives election, Hatoyama said: "If our party is not able to win it, I and President Ichiro Ozawa will have to retire from politics. With that determination in mind, we are putting in every effort." (9) Prime Minister's schedule, July 5 NIKKEI (Page 2) (Full) July 6, 2008 TOKYO 00001859 010 OF 010 10:08 Arrived at his private residence in Nozawa. 13:43 Returned to his official residence. 15:51 Met deputy foreign ministers Kohno and Sasae and North American Affairs Bureau Director-General Nishimiya. 16:41 Met Kohno and Sasae, and Economic Affairs Bureau Director-General Otabe. Kohno and Otabe stayed on. 19:09 Went to dinner with his family at a Chinese restaurant in Higashi-azabu. 20:38 Returned to his official residence. Prime Minister's schedule, July 6 NIKKEI (Page 2) (Full) July 7, 2008 09:16 Departed from Haneda Airport on a government plane to attend the G-8 summit. 10:34 Arrived at New Chitose Airport. 11:23 Visited Lake Hill Farm in the town of Toya. 11:35 Arrived at the Windsor Hotel Toya in the town. 13:09 Toured the International Media Center in Rusutsu. 15:33 Held a meeting with President George W. Bush at the Windsor Hotel Toya. 17:12 Held a joint press conference. 18:05 Held a meeting with Canadian Prime Minister Stephen Harper. 19:07 Threw a dinner party for President Bush and his wife. Stayed overnight at the hotel. SCHIEFFER