JAPANESE MORNING PRESS HIGHLIGHTS 07/10/08

UNCLAS SECTION 01 OF 11 TOKYO 001895

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: JAPANESE MORNING PRESS HIGHLIGHTS 07/10/08

Index:

1) Top headlines
2) Editorials
3) Prime Minister's daily schedule (Nikkei)

G-8 diplomacy:
4) President Bush satisfied with results of G-8 Summit at Lake Toya
in Hokkaido (Mainichi)
5) G-8 agreement to halve greenhouse-gas emissions by 2050 now goes
to the UN for follow up, with Prime Minister Fukuda expressing
desire to take lead (Asahi)
6) G-8 Summit seen as doing little to tackle the global food crisis
(Sankei)
7) Prime Minister Fukuda breathes satisfied sigh of relief as G-8
summit ends (Yomiuri)

Fukuda diplomacy:
8) Japan, India in summit meeting agree to closely cooperate on
global warming issues, speed up EPA negotiations (Nikkei)
9) Russian President Medvedev says northern territories issue will
be resolved based on past principles (Nikkei)
10) Prime Minister Fukuda plans to improve the social-welfare
situation of Brazilians living in Japan (Nikkei)
11) Japan, Australia agree on need to create a new organ for nuclear
non-proliferation (Nikkei)
12) Japan-China talks: Fukuda will not remove sanctions on North
Korea for sees not movement on the abduction front (Mainichi)

North Korea problem:
13) Little hope for progress on the abductions issue at the
Six-Party Talks that start today (Sankei)
14) North Korea's nuclear declaration does not mention plutonium
prior to the 1993 crisis (Nikkei)
15) Abductee family association, Diet league critical of G-8 Summit
for not doing enough on abduction issue (Nikkei)
16) Abductee family association blasts LDP's Koichi Kato for
statement that abductees should have been returned to North Korea
(Sankei)

Political agenda:
17) With foreign policy results under his belt, Prime Minister
Fukuda returns to politics, by hinting at shuffling of his cabinet
soon (Nikkei, Yomiuri)
18) Looking to make a bid for the prime minister's seat, LDP's
Shoichi Nakagawa criticizes Fukuda's economic policy, issues
proposals of his own (Asahi)
19) Shoichi Nakagawa presents set of emergency economic measures in
article in current issue of prestigious monthly magazine (Yomiuri)


Articles:

1) TOP HEADLINES

Asahi:
Long-term target to reduce greenhouse gas emissions by 50 PERCENT
by 2050 now put to debate at UN

Mainichi:
Fukuda says G-8's long-term target agreement "contributed to
building momentum for UN negotiations"

TOKYO 00001895 002 OF 011



Yomiuri:
Emerging economies also commit to curbing greenhouse gas emissions;
Major economies agree to continue talks

Nikkei:
Sony, Toshiba, other firms to join forces to develop core technology
for mass-producing large organic electroluminescence panels in
attempt to overtake South Korea

Sankei:
Lake Toya summit ends without setting numerical targets due to
conflict of national interests among emitters

Tokyo Shimbun:
Prime minister releases summit chairman's summary specifying
emission trading within country

Akahata:
Lake Toya summit closes: Industrialized nations fail to fulfill
responsibilities on global warming, food, speculative money

2) EDITORIALS

Asahi:
(1) G-8 summit ends: Numerical targets disappeared overnight
(2) Oita teacher recruitment corruption scandal

Mainichi:
(1) Lake Toya summit: Action must follow on global warming

Yomiuri:
(1) G-8 summit closes: Continued dialogue needed on world's woes

Nikkei:
(1) Did G-8 display ability to resolve problems?

Sankei:
(1) Summit closes: A step forward, yet dissatisfaction lingers
(2) Six-party talks: Resolving abduction issue still a basic
principle

Tokyo Shimbun:
(1) Summit ends: Sense of global crisis must be shared by all
(2) Six-party talks: Take advantage of international opinion

Akahata:
(1) Lake Toya summit: G-8 nations must behave as true major powers

3) Prime Minister's Official Residence (Kantei)

Prime Minister's schedule, July 9 & 10

NIKKEI (Page 2) (Full)
July 10, 2008

July 9
08:47
Attended a meeting with the leaders of the G-8 nations and five
emerging countries at a hotel in Toyakocho, Hokkaido.

09:46

TOKYO 00001895 003 OF 011


Met with South Korean President Lee Myung Bak.

10:37
Attended a meeting of major greenhouse gas emitters.

12:25
Posed for a photo with the leaders of the G-8 nations, eight
emerging countries, and international organizations. Attended a
working lunch.

15:30
Gave a press conference at the International Media Center.

17:00
Met Chinese President Hu Jintao at a hotel.

17:54
Met Indian Prime Minister Singh.

18:35
Met Mexican President Calderon.

19:02
Met Brazilian President Lula.

19:35
Met Indonesian President Yudhoyono.

20:02
Met Australian Prime Minister Rudd.

22:27
Left New Chitose Airport by a government plane.

23:36
Arrived at Haneda Airport.

July 10

00:10
Returned to his official residence.

4) President Bush expresses sense of satisfaction about his
leadership in fight against global warming

MAINICHI (Page 8) (Abridged slightly)
July 10, 2008

U.S. President George W. Bush, who will leave office next January,
headed home yesterday after winding up his participation in the G-8
Lake Toya Summit, his last such experience. The President
contributed to the reaching of a G-8 consensus on greenhouse gas
emissions cuts, the most controversial issue at the summit, by
shifting policy weight to international cooperation. Mr. Bush has
begun demonstrating greater flexibility in the last stage of his
presidency. How is he going to deal with Iraq, Iran, and North
Korea, countries once he referred to as an "axis of evil"?

The leaders' conference yesterday of the Major Economies Meeting on
Energy Security and Climate Change (MEM),held under the lead of
President Bush, came up with a position in favor of sharing a
long-term target for reducing greenhouse gas emissions. This means

TOKYO 00001895 004 OF 011


that the group has succeeded in bringing China and India into the
same game and in paving the way for the global task. The Bush
administration, which has been labeled as passive about cutting
greenhouse gas emissions, seems to be taking the matter as having
begun to head in the direction it had wanted to see.

At the conclusion of the summit, President Bush expressed a sense of
satisfaction, saying: "In order to address climate change, all major
economies must be at the table, and that's what we had here today.
We made clear the setting of (an interim goal for each
industrialized nation). And we made significant progress."

In the Lake Toya summit, the G-8 leaders adopted on July 8 a
statement setting a long-term goal of halving greenhouse gas
emissions by 2050 as a global target, and the July 9 MEM agreed to
support a plan to share the vision of the long-term target.

James Connaughton, chairman of the White House Council on
Environmental Quality, indicated that the G-8 accord stands only
when there is an agreement by all other countries. In the event the
MEM, which includes such major emitters as China and India, fails to
take action, the agreement would turn into a dead letter.

According to Connaughton, there were objections to the G-8 agreement
at the MEM session, but many members also supported it, and one even
said that they had reached a point where there was no turning back.
The prevalent view is that the Bush administration, which remains
cautious about cutting emissions, could not go any further than
demonstrating its "policy shift" at the summit.

5) Long-term target to halve greenhouse gas emissions by 2050 now
put to debate at UN: Premier eager to display leadership

ASAHI (Top Play) (Excerpts)
July 10, 2008

The Hokkaido Lake Toya Summit, which brought together 22 leaders
from industrialized and emerging countries, yesterday closed,
winding up its three-day schedule. The focus of attention has been
on measures to deal with global warming. Regarding the global
long-term target of cutting greenhouse gas emissions by 50 PERCENT
by 2050, summit leaders sought the adoption of the target at the UN,
declaring that they would seek to have all countries share the
target. The next challenge is whether they will be able to persuade
emerging countries, which are seeking stricter numerical goals from
industrialized countries, to share the target.

The Group of Eight (G-8) summit and the Major Economies Meeting on
Energy Security and Climate Change (MEM),including G-8 nations and
eight other countries, such as China, India and Brazil, have now
come to the starting point in their efforts to share the long-term
goal in combating global warming. However, since emerging countries
are strengthening their unity to counter industrialized countries,
it will likely be difficult to get them to compromise.

Prime Minister Fukuda, who served as the chairman, on the afternoon
of July 9 held a press briefing at the International Media Center in
Rusutsu Village. He underscored the achievements, noting: "G-8
nations have shown a common perception, overcoming differences, and
made contributions to giving impetus to talks at the UN. I would
like to display leadership so that emerging economies, such as China
and India, will share the long-term target and the target will be

TOKYO 00001895 005 OF 011


adopted at talks at the UN."

G-8 nations aim at having the long-term target adopted as part of
the next-term framework from 2013 that will replace the Kyoto
Protocol at the UN Climate Change Conference (COP15) to be held at
the end of 2009. The G-8 will seek approval of the target of cutting
emissions by 50 PERCENT by 2050 from all signatory nations in the
run-up to the COP15.

The agreement to cut emissions by 50 PERCENT by 2050 was not
included in the summit declaration. Regarding this, Fukuda said,
"The declaration is naturally based on the premise that G-8 nations,
including the U.S., have agreed to seek to have developing countries
share the target." Concerning the base year for emissions, he said,
"The G-8 agreement envisages a 50 PERCENT cut from the level of the
present time."

6) G-8 Summit: No clues in sight about addressing the food issue;
Hands off the cause of high prices being speculation

SANKEI (Page 2) (Excerpt)
July 10, 2008

On the issue of soaring food prices, Prime Minister Fukuda on July 9
stressed a stance of making sure that assistance was provided,
stating in the chairman's summary statement: "We renew our
commitment to take all the measures at our disposal." However, what
the developing countries have been strongly seeking are measures
that the advanced industrialized countries have been hesitant to
take, such as placing restrictions on speculation. The message is
that G-8 leaders' measures for emerging from the food crisis are not
likely to function.

7) Prime Minister Fukuda, relieved after completing great mission,
says, "We had a productive three days"

YOMIURI (Page 4) (Full)
July 10, 2008

Prime Minister Yasuo Fukuda, who had took office last year following
the sudden resignation of then Prime Minister Shinzo Abe, now feels
greatly relieved for being able to complete his most important task
of chairing the Group of Eight (G-8) Hokkaido Toyako Summit. Fukuda
also feels satisfied because the G-8 summit produced some
achievements.

Fukuda, who looked tired yesterday afternoon, played up the
achievements of the G-8 summit at a press conference as the G-8
chair, saying: "There were some scenes of heated discussions, but we
achieved many significant results. We had a productive three days."

Although Abe paved the way for the G8 summit, having picked the
location Lake Toya in Hokkaido as the venue, Fukuda had to assume a
heavy responsibility as the chairman to deal with such serious
international issues as global warming, a global economic slowdown
triggered by the U.S. subprime mortgage crisis, and soaring oil and
food prices. "He looks like a load has been lifted from his
shoulders" said a person close to Fukuda.

All opposition parties, however, criticized the results of the G-8
summit.


TOKYO 00001895 006 OF 011


Democratic Party of Japan (DPJ) Secretary General Yukio Hatoyama
told reporters yesterday in Tokyo: "(Regarding measures against
global warming,) the G-8 nations alone should have dispatched a
stronger message." He faulted Fukuda for a "lack of leadership."
Tadayoshi Ichida, head of the secretariat of the Japanese Communist
Party, also was critical: "As representatives of the industrialized
countries, the G-8 leaders failed to fulfill their responsibility."
Social Democratic Party Chairperson Mizuho Fukushima told the press:
"I was disappointed at the results that will have no impact and make
no results."

8) Japan, India affirm cooperation in fighting global warming,
discuss accelerating EPA negotiations

NIKKEI (Page 2) (Full)
July 10, 2008

Prime Minister Yasuo Fukuda and Indian Prime Minister Manmohan Singh
agreed last evening to continue to keep in close contacts with each
other in addressing global warming. In the bilateral meeting held on
the sidelines of the just-concluded Toyako Summit, Fukuda expressed
his hope to accelerate negotiations on concluding an economic
partnership agreement (EPA) with India. Singh made a positive reply:
"The EPA initiative has also strong support from the Indian
industry."

Singh expressed his gratitude for having been invited to outreach
sessions at the Toyako Summit. He then indicated a feeling of
anticipation for Japan's expanded investment in railway construction
and other projects in India.

Fukuda said that Japan is willing to extend cooperation particularly
on global warming, food and energy policies, and UN reform on a
priority basis.

9) Russian President: "Solution of territorial issue should be based
on past principles"

NIKKEI (Page 2) (Full)
July 10, 2008

In a press conference held after the end of the Group of Eight (G-8)
Summit, Russian President Dmitry Medvedev said: "We agreed with
Japan that both sides will continue efforts to resolve the Northern
Territories issue based on the principles the two countries agreed
on in the past." He stopped short of referring to whether the past
principles include what was written in the 1993 Tokyo Declaration.
The declaration specified that the dispute over the possession of
the four Northern Territories should be resolved on the basis of the
principles of law and justice. But Medvedev renewed his willingness
to continue negotiations towards a solution of the issue.

Medvedev identified the Japan-Russia meeting as one of the most
important bilateral talks at the summit, indicating his eagerness to
resolve the territorial issue. Former President Vladimir Putin (now
prime minister) insisted that a solution over the disputed islands
be based on the 1956 Japan-Russia Joint Declaration, which noted
that Russia would transfer the Habomai Islands and Shikotan to
Japan. It remains to be seen whether Medvedev intends to make a
policy switch.

10) Fukuda promises to improve situation for Brazilians living in

TOKYO 00001895 007 OF 011


Japan

NIKKEI (Page 2) (Full)
July 10, 2008

In a meeting with Prime Minister Yasuo Fukuda last night, Brazilian
President Silva called for Japan's strengthened cooperation for
better treatment to Brazilians living in Japan. Fukuda said in
agreement: "Brazilians living in Japan have played a significant
role in deepening mutual understanding between the peoples of the
two countries. I would like to step up efforts to resolve social
security, education, and other problems for them."

11) Japanese, Australian leaders agree on initiative to set up
nuclear nonproliferation panel

NIKKEI (Page 2) (Full)
July 10, 2008

Prime Minister Yasuo Fukuda held a meeting with Australian Prime
Minister Kevin Rudd last night. Rudd briefed Fukuda on an initiative
to set up a nuclear nonproliferation and disarmament international
committee. Rudd and former Foreign Minister Gareth Evans proposed
that Japan co-chair the envisioned panel. Agreeing to the offer,
Fukuda said he would appoint former Foreign Minister Yoriko
Kawaguchi as co-chairperson. In reference to the whaling issue, Rudd
said: "We should make efforts to prevent the issue from negatively
affecting bilateral relations."

In conclusion, Rudd emphasized: "The Toyako Summit was highly
successful. I praise the leadership of Prime Minister Fukuda as
chair of the summit."

12) Japan not in situation to lift N. Korea sanctions: Fukuda

MAINICHI (Page 1) (Abridged)
July 10, 2008

Prime Minister Yasuo Fukuda met with Chinese President Hu Jintao
yesterday at a hotel where the Group of Eight (G-8) summit was held.
In the meeting, Fukuda asked Hu to work on North Korean leaders for
a solution to the issue of Japanese nationals abducted to North
Korea. At the same time, Fukuda said, "North Korea has not taken any
specific action to reinvestigate the abduction issue, and Japan is
not in a situation to lift some of its sanctions." Hu went no
further than to answer: "I understand Japan's concern about the
abductions. China hopes that Japan and North Korea will hold
dialogue and resolve contradictions. We have made efforts."

It has been a month since Japan and North Korea held a meeting of
working-level officials, in which North Korea agreed to
reinvestigate the abduction issue and Japan also agreed to lift some
of its economic sanctions on North Korea. The government has
explained that the agreement is neither stagnant nor in retreat and
that Japan and North Korea in the next meeting will talk about when
and how to reinvestigate the abduction issue. There is no knowing
when the next meeting will take place. Meanwhile, Fukuda has
indicated that he will wait until North Korea begins to move. As a
result, the agreement's feasibility is now even murkier.

Fukuda and Hu confirmed that Japan and China will conclude a treaty
at an early date for gas field development in the East China Sea.

TOKYO 00001895 008 OF 011



13) Slim chance of abduction issue making headway: Six-party talks
to give top priority to nuclear verification

SANKEI (Page 5) (Excerpts)
July 10, 2008

The government is determined to seek a sincere response from
Pyongyang at a heads-of-delegation meeting of the six-party talks on
denuclearizing North Korea to be held in Beijing starting today, so
that tangible progress can be achieved. The aim of the meeting this
time, however, is to pave the way for a detailed verification of
North Korea's nuclear report and to move forward the process of
denuclearization of the Korean Peninsula. Since there is a slim
chance of the abduction issue becoming a main topic of discussion at
the meeting, it appears impossible for the issue to move toward a
settlement. Prime Minister Yasuo Fukuda during a meeting with
Chinese President Hu Jin Tao on July 9 categorically expressed his
resolve that there will be no normalization of ties with North Korea
without a settlement of the abduction of Japanese nationals by that
nation. Chief Cabinet Secretary Nobutaka Machimura at a press
conference also held yesterday pointed out, "The major aim of the
six-party talks starting tomorrow is to set principles or a system
at the outset so as to ensure a solid verification of North Korea's
nuclear report."

North Korea at the bilateral working-level talks in June pledged to
reinvestigate the abduction issue. Following the move, Japan pledged
to lift portions of sanctions against that nation in return for
that. However, the issue remains deadlocked with no concrete
progress made on implementing the promised reinvestigation.

14) N. Korea fails to declare plutonium produced before 1993 nuclear
crisis

NIKKEI (Page 3) (Abridged)
July 10, 2008

The members of the six-party talks over the North Korean nuclear
issue will hold a meeting of their chief delegates today in Beijing.
Meanwhile, on June 26, North Korea submitted a declaration of its
nuclear programs in the second phase of its nuclear abandonment. The
declaration, however, does not specify the amount of plutonium
extracted before the International Atomic Energy Agency's
inspections, sources revealed yesterday. In 1993, Pyongyang withdrew
from the Nuclear Non-Proliferation Treaty (NPT). In this nuclear
crisis, North Korea was suspected of having already developed
nuclear weapons. In its nuclear declaration this time, North Korea
again avoided disclosing details about its suspected nuclear
development. Japan, the United States, and other six-party members
called on North Korea to come up with a full disclosure of its
nuclear programs. The gap with this will likely come up in a meeting
of chief delegates.

The declaration was unveiled by several sources familiar with the
six-party talks. Pyongyang has so far declared that North Korea
created plutonium amounting to about 38 kilograms and extracted
about 30 kilograms of plutonium and that the North still has about 8
kilograms contained in spent nuclear fuel rods. Regarding the 30
kilograms, North Korea explains that it used about 2 kilograms for
its nuclear test in October 2006 and manufactured nuclear weapons
with about 26 kilograms, according to the sources. Pyongyang also

TOKYO 00001895 009 OF 011


explains that about 2 kilograms was "disposed of," the sources
said.

North Korea allegedly extracted plutonium at its Yongbyon nuclear
facility when its graphite-moderated nuclear reactor was in
operation from 1986 through 1992. In its nuclear declaration, North
Korea touches on this suspicion, according to the sources. However,
North Korea explains that it removed some damaged fuel rods and
extracted a very small quantity of plutonium, the sources said. The
declaration seems to have gone no further than to follow Pyongyang's
previous assertions.

15) Abductee families, lawmakers criticize G-8 for failing to focus
on abductions

NIKKEI (Page 2) (Full)
July 10, 2008

The families of those abducted by North Korea and a suprapartisan
parliamentary league, headed by Takeo Hiranuma, held a joint
executive meeting yesterday, in which the Group of Eight (G-8)
summit held at Lake Toya in Hokkaido was criticized for failing to
take up the abduction issue for sufficient discussion.

Shigeo Iizuka, who represents the families of abductees, said: "They
hardly mentioned the abductions. I can't help but feel
disappointed." Sakie Yokota also stressed, "I wanted Prime Minister
Yasuo Fukuda to make a little stronger statement."

16) Abductee family association, National Association for the Rescue
of Japanese Kidnapped by North Korea file protest against Kato over
his statement "Abductees should have been returned to North Korea"

SANKEI (Page 5) (Almost full)
July 10, 2008

Former Liberal Democratic Party (LDP) Secretary General Koichi Kato
said, "Since it was a pledge made between the countries, Japan
should have returned (the five repatriated abductees) to North
Korea." In response to this statement, the Abductees Family
Association, chaired by Shigeo Iizuka, and the National Association
for the Rescue of Japanese Kidnapped by North Korea, chaired by
Yoshiaki Fujino, on July 9, issued a statement of protest, noting
that they are indignant at Mr. Kato, who does not understand the
feelings and anxieties of abductees and their families at all.

Referring to the government decision not to return to North Korea
the five abductees who returned to Japan in the fall of 2002, when
then Prime Minister Junichiro Koizumi visited Pyongyang, Kato on a
TV program on the evening of July 7 said, "The government, centered
on then Deputy Chief Cabinet Secretary Shinzo Abe, decided that the
abductees should not be returned to North Korea. This is the reason
Japan and North Korea remain unable to find a breakthrough on the
abduction issue. In my view, if they had been returned to North
Korea, there would have been repeated visits to Japan by those
abductees. This is a difference in a diplomatic sense." Commenting
on General Secretary Kim Jong Il, who admitted to the abduction
issue and offered an apology, Kato said, "He is a person who is in a
position similar to that of the Emperor."

The statement of protest pointed out that it is clear to those who
have any diplomatic sense that if those five abductees had been

TOKYO 00001895 010 OF 011


returned to North Korea, they would have been forced to say that
they returned on their own will and used as a tool for North Korea
to insist that the abduction issue had already been settled.

The statement then criticized Kato, contending that is statement was
shameful and calling into question his mental nature.

17-1) Prime Minister Fukuda accomplishes pending foreign policy
issues, even attaining a modicum of success on the abduction issue;
Focus now will be on shuffling his cabinet

NIKKEI (Page 2) (Excerpts)
July 10, 2008

Prime Minister Fukuda yesterday completed the schedule of events at
the G-8 Summit at Lake Toya in Hokkaido. This being his first time
to chair a summit, he achieved some successes, including the
mentioning of the abduction issue in key statements, but there is no
predicting how much this will improve his ratings in the polls,
which have consistently been low. Can he regain his administration's
footing by the time the next extraordinary Diet session is convened
in late August? The interest of the ruling parties turns now turns
the timing of his expected cabinet shuffle and the next Lower House
election.

Expectation of cabinet support recovery

"It was a satisfying three days," the Prime Minister told the press
corps at the closing of the summit. He reportedly was able to
display his presence in his forte, foreign diplomacy, by personally
coordinating difficult issues by phoning each G-8 leader. When Chief
Cabinet Secretary Machimura called to express his appreciation, the
Prime Minister replied in good spirits, "It went fine!"

Will his cabinet support rate now rise?

17-2) Prime Minister Fukuda begins considering cabinet shuffle to
boost administration's popularity

YOMIURI (Page 1) (Full)
July 10, 2008

With the closing of the Group of Eight (G-8) Toyako Summit, Prime
Minister Yasuo Fukuda yesterday began to consider a cabinet shuffle
in order to step up his efforts to deal with such issues as social
welfare reform with the aim of boosting his administration's
popularity. He is expected to shuffle his cabinet sometime between
late July and early August. Since some in the ruling parties are
negative about shuffling the cabinet, he intends to make a final
decision after keeping close watch on the moves in the ruling camp.

Since the National Council on Social Security, an advisory panel to
the government, will come up this fall with a final report on
pensions, medical services and nursing care, Fukuda envisions a
review of the system to push forward with social welfare reform. He
also hopes to speed up reform of the civil service and tax systems.
Therefore, he is gradually strengthening the view that it would be
desirable for him to deal with an extraordinary Diet session, which
is expected to be convened in late August, with a new cabinet
lineup.

A person close to Fukuda said: "The Prime Minister himself will

TOKYO 00001895 011 OF 011


consider a cabinet lineup after ascertaining the state of progress
in drafting policies and how cabinet ministers are doing their
jobs."

A senior Liberal Democratic Party member said yesterday: "The Prime
Minister may shuffle the cabinet in late July or afterward." In the
ruling camp, some look forward to a cabinet shuffle, believing that
a cabinet shuffle is necessary to play up Fukuda's political
identity, while others assert that the cabinet should not be
shuffled, worrying that new problems may come up over new cabinet
members at the extra Diet session.

18) LDP's Shoichi Nakagawa criticizes tax hikes; Will he seek to
succeed Fukuda?

ASAHI (Page 4) (Full)
July 10, 2008

Shoichi Nakagawa, former policy chief of the ruling Liberal
Democratic Party (LDP),reveals a set of 13 proposals for
revitalizing Japan's economy in the monthly magazine Chuokoron, on
sale on July 10. The main proposals include the notions of covering
basic pensions by using tax revenues and of reinstating the
temporary tax cut system. Since it is the first time for Nakagawa to
come up with such proposals, the rumor may come up that he may plan
to run in the LDP presidential election.

Nakagawa proposes making part-time workers eligible to receive a
welfare pension, reducing the corporate tax, creating a non-tax plan
for small amount of capital gains and government-affiliated fund,
and cutting three percent from the previous year's public works
spending. He criticizes former Chief Cabinet Secretary Kaoru Yosano,
who favors tax hikes and former LDP Secretary General Hidenao
Nakagawa, who is negative about a consumption tax hike, placing
importance on economic growth. He said in the magazine: "I don't
understand what they want to realize. I think they are looking the
wrong way."

19) Shoichi Nakagawa to unveil emergency economic measures

YOMIURI (Page 4) (Full)
July 10, 2008

Shoichi Nakagawa, former LDP Policy Research Council chairman, will
unveil in the monthly magazine Chuo Koron's August issue that will
go on sale today an emergency set of economic measures, including
the revival of corporate tax cuts and of a fixed-rate cut in income
and individual residential taxes, with the aim of avoiding an
economic slowdown because of soaring oil prices. Describing the
present state of the Japanese economy as in something like a third
oil shock, Nakagawa proposes 2 trillion yen in corporate tax cuts,
the revival of 2.6 trillion yen fixed-rate tax cuts, and a pension
system totally funded by taxes.

SCHIEFFER