Identifier
Created
Classification
Origin
08TOKYO2242
2008-08-14 22:42:00
UNCLASSIFIED
Embassy Tokyo
Cable title:  

DAILY SUMMARY OF JAPANESE PRESS 08/14/08

Tags:  OIIP KMDR KPAO PGOV PINR ECON ELAB JA 
pdf how-to read a cable
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UNCLAS SECTION 01 OF 11 TOKYO 002242 

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 08/14/08

INDEX:

(1) Reinvestigation of abduction issue premised on agreement (Asahi)


(2) Prediction of what action Fukuda will take impossible (Yomiuri)


(4) Can Fukuda display his policy imprint? Civil service reform to
enter crucial stage (Mainichi)

(5) DPJ policy (Part 2): Ozawa's security initiative a touchstone
(Asahi)

(5) Ruling parties on offensive in pursuit of large-scale
supplementary budget in order to produce results with next Lower
House election close at hand (Asahi)

(6) TOP HEADLINES

(7) EDITORIALS

(8) Prime Minister's schedule, Aug. 13 (Nikkei)

ARTICLES:

(1) Reinvestigation of abduction issue premised on agreement

ASAHI (Page 2) (Full)
August 14, 2008

By Yoshihiro Makino and Toru Tamakawa in Shenyang, and Katsuhisa
Kuramae

Working-level officials of the Japanese and North Korean foreign
ministries concluded their formal talks held after a two-month
hiatus by agreeing that they would try to complete the
reinvestigation of the abduction issue by this autumn. North Korea
wants to reopen the path toward normalization of its diplomatic
relations with Japan that has been stalled over the abduction issue,
while Japan hopes that the reinvestigation will lead to bringing
home survivors. Difficulties still lie ahead before either country
can reap their fruits.

The talks held at a hotel in Shenyang, China, were suspended on the
afternoon of August 12, the second day, but it was not until past
midnight on August 13 that the Japanese and North Korean
working-level officials returned to hold their final round, more
than 10 hours after the break.

After the talks ended, Song Il Ho, North Korea's envoy in charge of
normalization talks with Japan, with bloodshot eyes told reporters
in a dissatisfied tone: "I do not understand (why the meeting was
delayed). I had initially heard that it was going to be held in the
evening."

Japan was responsible for the prolonged break. Japanese officials,
who had received a briefing on the draft agreement, were wavering
over whether Japan really should go ahead and lift some of the
sanctions merely in return for North Korea's starting the
reinvestigation.


TOKYO 00002242 002 OF 011


According to a Japanese Government official, Kyoko Nakayama, who was
appointed minister in charge of the abduction issue in the recent
cabinet reshuffle, asserted that the government should take a
cautious approach. Prime Minister Yasuo Fukuda, who was asked to
make the final decision, reportedly decided to accept the draft
agreement and gave the following instruction: "Proceed cautiously.
Exert utmost efforts so that survivors can be found." After the
Japanese and North Korean officials returned to the table, the
meeting was adjourned in only 15 minutes.

Until they struck the final deal, Akitaka Saiki, director general of
the Foreign Ministry's Asian and Oceanian Affairs Bureau, and Song
engaged in heated verbal battle from time to time. Song rebuked
Japan for "breaking a promise," while Saiki retorted," You also have
not put into action what you had promised." In response to Saiki's
asserting that Japan wanted "to see the investigations lead to the
discovery of survivors and their return to Japan," Song said, "No
preconditions can be attached."

Despite the hostile atmosphere, both Japan and North Korea hardly
had the option of letting the talks collapse this time.

Japan suspected that North Korea was trying to achieve progress in
its relations with Japan in order to have the United States remove
it from the list of terrorist-sponsoring states, as Washington has
postponed North Korea's delisting. In contrast, a North Korean
source has pointed out that through behind-the-scenes contacts,
North Korea last summer shifted to promoting positive diplomacy
toward Japan with a view to normalizing its diplomatic relations
with Japan. Song felt that "it was rather Japan that was
procrastinating." When he received a detailed proposal concerning
the reinvestigation process from Japan on the afternoon of August
11, the first day of the talks, Song reportedly decided to accept it
immediately.

The same source said that some North Korean officials have expressed
wariness at the possibility that Taro Aso, a hardliner against North
Korea who became the secretary general of the Liberal Democratic
Party in the course of the reshuffling of the Fukuda cabinet, could
become the next prime minister. A North Korean government authority
told an Asahi Shimbun reporter, "It does not mean that large-scale
exchanges involving the use of chartered flights could take place
(even if such flights were authorized as a result of the lifting of
sanctions)," stressing that North Korea was not changing its
attitude to pursue practical benefits. Nevertheless, there is still
no guarantee that a "political decision" envisaging normalization
will lead to reinvestigation that will produce results.

Meanwhile, Japan, which seeks progress in both the nuclear issue and
the abduction issue, wants to avoid stalling bilateral issues. At
the end of October, the deadline will approach when provision of
energy aid to North Korea agreed at the six-party talks will have to
be completed. Amidst the rise in the price of energy, it is certain
that Japan, which is the only country among the related countries
that has refused to participate in the energy aid on the ground that
progress has not been made on the abduction issue, will come under a
lot of pressure from the other countries.

However, a senior Japanese Foreign Ministry official has said, "It
will be difficult to gain public understanding on Japan's
participation in energy aid merely in return for North Korea's
starting the reinvestigation." The bottom line is that the Japanese

TOKYO 00002242 003 OF 011


Government wants to obtain concrete results in the abduction issue
by all means by then.

(2) Prediction of what action Fukuda will take impossible

YOMIURI (Page 4) (Full)
August 13, 2008

When will Prime Minister Yasuo Fukuda dissolve the House of
Representatives for a snap election?

Is he going to dissolve the Lower House on his own?

It is difficult to find answers to these questions because he has
taken "contrary" responses when faced with critical situations in
the past.

Day when the cabinet was shuffled

Such occurred on Aug. 1 when he shuffled his cabinet, as well. A
person close to him said: "The Prime Minister initially had his
heart set on shuffling the cabinet in late July. He therefore took
his summer vacation in early July to consider personnel selections
for the shuffle." What this person meant to say was that the cabinet
shuffle was put off just one day due to the delay of return home of
the trade and farm ministers from talks of the World Trade
Organization.

Many take the view in the capital hill of Nagatacho that Fukuda
might have carried out the shuffle one day earlier because he became
ornery when everybody was jumping to the conclusion that he would
change the cabinet lineup on Aug. 4.

In fact, Fukuda appeared to have made a snap decision before
deciding the framework of a new executive lineup of the Liberal
Democratic Party (LDP) that took place just before he shuffled the
cabinet.

On the night of July 31, Fukuda phoned Taro Aso to sound him out on
an offer to take the LDP secretary general's post. Fukuda had
already decided on the evening of July 31 to carry out a cabinet
shuffle on Aug.
UNCLAS SECTION 01 OF 11 TOKYO 002242

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 08/14/08

INDEX:

(1) Reinvestigation of abduction issue premised on agreement (Asahi)


(2) Prediction of what action Fukuda will take impossible (Yomiuri)


(4) Can Fukuda display his policy imprint? Civil service reform to
enter crucial stage (Mainichi)

(5) DPJ policy (Part 2): Ozawa's security initiative a touchstone
(Asahi)

(5) Ruling parties on offensive in pursuit of large-scale
supplementary budget in order to produce results with next Lower
House election close at hand (Asahi)

(6) TOP HEADLINES

(7) EDITORIALS

(8) Prime Minister's schedule, Aug. 13 (Nikkei)

ARTICLES:

(1) Reinvestigation of abduction issue premised on agreement

ASAHI (Page 2) (Full)
August 14, 2008

By Yoshihiro Makino and Toru Tamakawa in Shenyang, and Katsuhisa
Kuramae

Working-level officials of the Japanese and North Korean foreign
ministries concluded their formal talks held after a two-month
hiatus by agreeing that they would try to complete the
reinvestigation of the abduction issue by this autumn. North Korea
wants to reopen the path toward normalization of its diplomatic
relations with Japan that has been stalled over the abduction issue,
while Japan hopes that the reinvestigation will lead to bringing
home survivors. Difficulties still lie ahead before either country
can reap their fruits.

The talks held at a hotel in Shenyang, China, were suspended on the
afternoon of August 12, the second day, but it was not until past
midnight on August 13 that the Japanese and North Korean
working-level officials returned to hold their final round, more
than 10 hours after the break.

After the talks ended, Song Il Ho, North Korea's envoy in charge of

normalization talks with Japan, with bloodshot eyes told reporters
in a dissatisfied tone: "I do not understand (why the meeting was
delayed). I had initially heard that it was going to be held in the
evening."

Japan was responsible for the prolonged break. Japanese officials,
who had received a briefing on the draft agreement, were wavering
over whether Japan really should go ahead and lift some of the
sanctions merely in return for North Korea's starting the
reinvestigation.


TOKYO 00002242 002 OF 011


According to a Japanese Government official, Kyoko Nakayama, who was
appointed minister in charge of the abduction issue in the recent
cabinet reshuffle, asserted that the government should take a
cautious approach. Prime Minister Yasuo Fukuda, who was asked to
make the final decision, reportedly decided to accept the draft
agreement and gave the following instruction: "Proceed cautiously.
Exert utmost efforts so that survivors can be found." After the
Japanese and North Korean officials returned to the table, the
meeting was adjourned in only 15 minutes.

Until they struck the final deal, Akitaka Saiki, director general of
the Foreign Ministry's Asian and Oceanian Affairs Bureau, and Song
engaged in heated verbal battle from time to time. Song rebuked
Japan for "breaking a promise," while Saiki retorted," You also have
not put into action what you had promised." In response to Saiki's
asserting that Japan wanted "to see the investigations lead to the
discovery of survivors and their return to Japan," Song said, "No
preconditions can be attached."

Despite the hostile atmosphere, both Japan and North Korea hardly
had the option of letting the talks collapse this time.

Japan suspected that North Korea was trying to achieve progress in
its relations with Japan in order to have the United States remove
it from the list of terrorist-sponsoring states, as Washington has
postponed North Korea's delisting. In contrast, a North Korean
source has pointed out that through behind-the-scenes contacts,
North Korea last summer shifted to promoting positive diplomacy
toward Japan with a view to normalizing its diplomatic relations
with Japan. Song felt that "it was rather Japan that was
procrastinating." When he received a detailed proposal concerning
the reinvestigation process from Japan on the afternoon of August
11, the first day of the talks, Song reportedly decided to accept it
immediately.

The same source said that some North Korean officials have expressed
wariness at the possibility that Taro Aso, a hardliner against North
Korea who became the secretary general of the Liberal Democratic
Party in the course of the reshuffling of the Fukuda cabinet, could
become the next prime minister. A North Korean government authority
told an Asahi Shimbun reporter, "It does not mean that large-scale
exchanges involving the use of chartered flights could take place
(even if such flights were authorized as a result of the lifting of
sanctions)," stressing that North Korea was not changing its
attitude to pursue practical benefits. Nevertheless, there is still
no guarantee that a "political decision" envisaging normalization
will lead to reinvestigation that will produce results.

Meanwhile, Japan, which seeks progress in both the nuclear issue and
the abduction issue, wants to avoid stalling bilateral issues. At
the end of October, the deadline will approach when provision of
energy aid to North Korea agreed at the six-party talks will have to
be completed. Amidst the rise in the price of energy, it is certain
that Japan, which is the only country among the related countries
that has refused to participate in the energy aid on the ground that
progress has not been made on the abduction issue, will come under a
lot of pressure from the other countries.

However, a senior Japanese Foreign Ministry official has said, "It
will be difficult to gain public understanding on Japan's
participation in energy aid merely in return for North Korea's
starting the reinvestigation." The bottom line is that the Japanese

TOKYO 00002242 003 OF 011


Government wants to obtain concrete results in the abduction issue
by all means by then.

(2) Prediction of what action Fukuda will take impossible

YOMIURI (Page 4) (Full)
August 13, 2008

When will Prime Minister Yasuo Fukuda dissolve the House of
Representatives for a snap election?

Is he going to dissolve the Lower House on his own?

It is difficult to find answers to these questions because he has
taken "contrary" responses when faced with critical situations in
the past.

Day when the cabinet was shuffled

Such occurred on Aug. 1 when he shuffled his cabinet, as well. A
person close to him said: "The Prime Minister initially had his
heart set on shuffling the cabinet in late July. He therefore took
his summer vacation in early July to consider personnel selections
for the shuffle." What this person meant to say was that the cabinet
shuffle was put off just one day due to the delay of return home of
the trade and farm ministers from talks of the World Trade
Organization.

Many take the view in the capital hill of Nagatacho that Fukuda
might have carried out the shuffle one day earlier because he became
ornery when everybody was jumping to the conclusion that he would
change the cabinet lineup on Aug. 4.

In fact, Fukuda appeared to have made a snap decision before
deciding the framework of a new executive lineup of the Liberal
Democratic Party (LDP) that took place just before he shuffled the
cabinet.

On the night of July 31, Fukuda phoned Taro Aso to sound him out on
an offer to take the LDP secretary general's post. Fukuda had
already decided on the evening of July 31 to carry out a cabinet
shuffle on Aug. 1. Aso told Fukuda: "I would like you to call me
after 7:00 p.m." Fukuda reportedly was finally able to talk with Aso
around 10:00 p.m., but Aso did not accept the offer at the time.

Fukuda reportedly also transferred Toshihiro Nikai from the LDP
General Council chairman's post to the minister of economy, trade,
and industry in another snap decision.

Prior to the cabinet shuffle, Fukuda heard from the New Komeito, the
LDP's coalition partner, and the religious sect Soka Gakkai, the New
Komeito's main backer, that they wanted Nikai to be retained in the
LDP General Council chairman's post. Fukuda had intended to retain
Nikai and Election Strategy Council Chairman Makoto Koga in their
respective posts. However, since the Tsushima faction, which wanted
to get one of the four party executive posts, reacted strongly on
Aug. 1 against Fukuda's plan, Fukuda had to change it.

G8 summit statement

Similar things occurred at the Group of Eight (G-8) summit in
Hokkaido, which Fukuda chaired.

TOKYO 00002242 004 OF 011



On the night of July 7, sherpas, representatives of the leaders of
the G-8 countries, were suddenly summoned. It was because Japan said
that it wanted to make a minor change in the summit statement to be
released on Aug. 8.

Individuals connected with the G-8 summit expressed displeasure
because the agreement that the world would share the goal to halve
greenhouse gas emissions by 2050 had been reached during the
previous week. There was a growing view that Fukuda had probably
reacted to media reports on the contents of the summit declaration.
In the end, all that the sherpas did until late at night of July 7
was just change some words in the statement, while keeping the
agreed outline intact, according to an informed source. On Aug. 8,
Fukuda announced first the main themes of the declaration. This
procedure was decided the preceding week, according to a senior
Foreign Ministry official. Minor changes in the expressions in the
declaration were unexpected, however.

There is a famous story about Fukuda. In January 2004 while serving
as chief cabinet secretary in the Koizumi cabinet, he ordered to put
off by one day the date of dispatching Ground Self-Defense Force
troops to Iraq to support the reconstruction of the country because
the media had already announced the day. As a result, it looked like
the media had made a mistake in their reports.

In the capital district of Nagatacho, speculation has been rife that
Fukuda would transfer power to Aso and that he would dissolve the
Lower House before the end of the year. A person familiar with the
LDP said: "Mr. Fukuda might try to ruin our prediction." Nobody can
predict Fukuda's political agenda.

(4) Can Fukuda display his policy imprint? Civil service reform to
enter crucial stage

MAINICHI (Page 5) (Slightly abridged)
August 14, 2008

In the Financial Services Agency, a handover ceremony was held on
Aug. 5 between Toshimitsu Motegi and Michio Watanabe, incoming and
outgoing minister of state for financial services, administrative
reform, and civil service reform. The ceremony was delayed because
of Watanabe's business trip.

Watanabe took a strategy of arousing public interest in reform of
the independent administrative agencies by repeatedly criticizing
the bureaucracy through the media. He even did not hesitate to lock
horns with other cabinet ministers, including Chief Cabinet
Secretary Nobutaka Machimura. Therefore, his image of being a
reformist has gradually taken root.

In contrast to former Prime Minister Shinzo Abe, who took an
adversarial stance toward bureaucrats, Prime Minister Yasuo Fukuda
was believed to be lenient toward the bureaucracy. However, due to
the discovery of the inappropriate use of road tax revenues, as well
as the Health, Labor and Welfare Ministry's lack of explanations of
the health insurance system for people aged 75 or over, Fukuda has
begun tackling seriously the reform of the civil service system.

At a press briefing held immediately before the shuffle of the
cabinet, Watanabe expressed his obsession with remaining in his
post, saying: "There are many jobs I have yet to complete. If

TOKYO 00002242 005 OF 011


ministers are replaced just one year, fulfilling political
leadership would be impossible." However, Fukuda did not reappoint
Watanabe, who has close ties to former LDP Secretary General Hidenao
Nakagawa, known for his emphasis on the importance of economic
growth.

Motegi, however, takes a somewhat different stance from Watanabe.
After assuming the post, he stated: "Not satisfying ourselves by
just criticizing civil servants, it is important to build reliable
organizations and develop human resources." He has good relations
with Nakagawa, who wants radical change in the civil service system,
as well as with Machimura, who seeks moderate reform of the civil
service system. Some in the government are concerned that if the
government fails to reform the civil service system, Motegi would be
criticized.

Ministries and agencies rebut private sector leadership

The government's taskforce to promote reform of the civil service
system, which came into being in July, will be a main body to
discuss the issue. Hiroshi Tachibana, former managing director of
the Japan Business Federation's (Keidanren) Secretariat, serves as
chief of secretariat of the taskforce. Of the 13 senior officials of
the panel, five came from the private sector.

An informal panel on reform promotion, made up of about 15 members,
will be set up before the end of August. The names of former
economic planning agency chief Taichi Sakaiya, Keidanren Chairman
Fujio Mitarai and Masamitu Sakurai, president of the Japan
Association of Corporate Executives, have been floated as candidates
when a chairman is picked for the planned panel.

However, voices of dissatisfaction are coming from the ministries
and agencies about how much those individuals know about
bureaucratic organization. The main future of the reform is that the
chief cabinet secretary would draft a list of senior officials of
the ministries and agencies. Regarding the creation of a Cabinet
Personnel Bureau, the reform basic law, which came into force in
June, stipulates that legal measures will be made within one year.
The government intends to come up with the outline of relevant bills
as early as the fall. However, there are many issues to be boiled
down such as that whether the chief cabinet secretary will be able
to get a handle on all of the senior officials of the ministries and
agencies.

Over the expansion of the civil servants' basic right, how far the
government can make concessions will likely greatly affect reform of
the civil service system.

(5) DPJ policy (Part 2): Ozawa's security initiative a touchstone

ASAHI (Page 4) (Slightly abridged)
August 14, 2008

On July 22, as the midsummer sun was beating down, a group of
lawmakers from the House of Representatives Foreign Affairs
Committee visited two U.S. military bases in Kanagawa Prefecture,
the Navy's Yokosuka base and the Army's Camp Zama. The purpose of
their base tour was to inspect the Japanese government's burden
sharing of costs for the stationing of U.S. forces in Japan
(omoiyari yosan, or literally "sympathy budget").


TOKYO 00002242 006 OF 011


"Do you have utility meters? Do you fulfill your obligations for
economization?"

One member of the lower chamber committee, who is a lawmaker of the
leading opposition Democratic Party of Japan (Minshuto),asked these
questions about wasting utilities. "I don't think we're wasting," a
U.S. military officer answered. "We would like more," this officer
stressed. "Every one of the soldiers is willing to shed blood to
defend Japan; they are ready to die for Japan," he added.

Against the backdrop of North Korea's nuclear development and
China's military expansion, the Japanese government plays up
security arrangements for the United States to defend Japan. In
July, Prime Minister Fukuda met with U.S. President Bush. After
that, Fukuda was full of praise, saying the Japan-U.S. alliance has
deepened since the Bush administration came into office. After the
Sept. 11, 2001 terrorist attacks on the United States, Japan sent
the Self-Defense Forces overseas for the U.S.-led war on terror
although it was said to be contradictory to Article 9 of the
Constitution. Japan did so to keep its credibility.

In April, the DPJ rejected the sympathy budget, which the government
says is indispensable for Japan to remain allied with the United
States. The DPJ opposed a special agreement that extends the budget,
reasoning that it is wasteful. The proposed special agreement failed
to get the opposition-dominated House of Councillors' approval. This
was the first case of a special treaty disapproved under the current
Constitution.

DPJ President Ichiro Ozawa's view of the Japan-U.S. alliance differs
from the government's. Sekai, a (left-of-center) monthly magazine,
carried Ozawa's criticism of the Bush administration in its November
2007 issue. He wrote: "The United States is not aware that its
isolationism and its excessive pride always confuse harmony in the
international community, including the United Nations."

Ozawa criticized the government for "kowtowing" to the United
States. He is calling for the government to recall the Self-Defense
Forces from the Indian Ocean and Iraq. In his Sekai essay, Ozawa
categorically said the Maritime Self-Defense Force's refueling
activities in the Indian Ocean are the same as rear echelon support
for U.S.-led military operations that are outside the scope of
U.N.-initiated activities. He further referred to the International
Security Assistance Force (ISAF),which is operating in Afghanistan
under a U.N. resolution. Ozawa said, "If I had taken the reins of
government, I would like to realize Japan's participation in ISAF."

Ozawa's advocacy of Japan's ISAF participation, which is more
dangerous than refueling at sea, created a stir within and outside
his party. In December 2006, the DPJ came out with its platform,
which incorporated Japan's proactive participation in U.N.
peacekeeping operations. Based on this standpoint, Ozawa asserted
that proactive participation in U.N. activities-even if it includes
using armed force-does not conflict with the Constitution at all.

Ozawa also said: "To advise the United States, Japan must ready
itself to share the world's peacekeeping responsibility." With this,
Ozawa made clear his difference from the ruling coalition of the
Liberal Democratic Party and the New Komeito. Aside from this
political motive, he strongly insists on an "ordinary country" as he
had a hard time of it to deal with the Gulf War when he was
secretary general.

TOKYO 00002242 007 OF 011



Ozawa has been laying emphasis on his idea of building a "truly
equal" alliance between Japan and the United States. "If there is a
U.N. resolution, Japan is allowed to use armed force." With this
logic, Ozawa has advocated Japan's ISAF participation. However, the
government's constitutional interpretation is that Japan's use of
force is limited to self-defense. The government must change this
interpretation in order for Japan to participate in ISAF
operations.

The United States' policy of attaching importance to Afghanistan
would remain unchanged if the Republican Party or the Democratic
Party comes into office next year after the presidential election.
Pentagon officials have been in touch with Ozawa's aides since
September last year over Japan's cooperation except for refueling.
Taro Aso, now LDP secretary general, has come up with his idea of
having the MSDF escort Japanese oil tankers in the Indian Ocean
instead of extending its refueling mission there.

The DPJ is aiming to take the reins of government through a general
election. The question is how the DPJ will face Afghan assistance.
This will become a touchstone for Ozawa's advocacy of developing
U.N.-centered diplomacy while remaining allied with the United
States.

DPJ proposal a complex mosaic

On Aug. 5, the DPJ's shadow cabinet members, including Foreign
Minister Yoshio Hachiro and Defense Minister Keiichiro Asao,
gathered in a conference room of the House of Representatives
members' office building.

The DPJ's shadow cabinet ministers discussed the issue of extending
the new Antiterrorism Special Measures Law, which will be a point of
contention at this fall's extraordinary Diet session. DPJ Secretary
General Yukio Hatoyama has recently advocated upgrading the DPJ's
counterproposal of Afghan assistance. Hachiro, who derives from the
now-defunct Japan Socialist Party, said to Hatoyama: "The DPJ's
Afghan assistance bill has been carried over for continued
deliberations in the House of Representatives. The government and
the LDP are not determined, and they cannot set even the extra Diet
session in connection with the New Komeito. We should be cautious
about working out another proposal."

Hatoyama wants to consider working out even more realistic measures
for Afghan assistance, envisioning a change of government in the
next general election for the House of Representatives. However,
House of Representatives Vice Speaker Takahiro Yokomichi and DPJ
House of Councillors Chairman Azuma Koshiishi, who shore up Ozawa,
and other JCP-affiliated DPJ lawmakers are cautious about expanding
the SDF dispatch.

When the Diet was in an extraordinary session last fall, the DPJ
worked out its counterproposal, which also reflected the DPJ's
circumstances. At that time, the DPJ agreed to send SDF troops to
Afghanistan. However, the DPJ did not agree to allow them to use
armed force there and limited their role to humanitarian and
reconstruction assistance. Moreover, the DPJ limited the scope of
their activities to ceasefire areas only. Actually, the SDF
therefore can conduct almost no activities there, so the DPJ
counterproposal was called a "complex mosaic."


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(5) Ruling parties on offensive in pursuit of large-scale
supplementary budget in order to produce results with next Lower
House election close at hand

ASAHI (Page 4) (Excerpts)
August 14, 2008

Prime Minister Fukuda has now no other choice but to put up an
economic stimulus package as a subject of debate in the
extraordinary Diet session to be convened in the fall. That is
because the Liberal Democratic Party (LDP) and the New Komeito have
fallen in step in a call for the compilation of a large-scale
supplementary budget out of concern about an economic downturn in
the wake of the steep rise in crude oil prices. However, the
calculations of the Prime Minister's Office (Kantei),the LDP and
the New Komeito for a dissolution of the Lower House for a snap
election differ. The scale of the proposed supplementary budget and
specific economic stimulus measures have yet to be worked out.

New Komeito Secretary General Kazuo Kitagawa: "A large-scale
economic stimulus package should be compiled."

LDP Secretary General Taro Aso: "Piecemeal economic stimulus
measures will not do."

Senior officials of the LDP and the New Komeito on August 13 met at
a Tokyo hotel. The meeting turned into a venue for them to call for
compiling an economic stimulus package and to vow to compile a large
scale supplementary budget.

New Komeito members are openly declaring that an economic stimulus
package is the major policy issue that the Fukuda cabinet should
tackle in the next extraordinary Diet session, as Diet Affairs
Committee Chairman Yoshio Urushibara noted. Probably aware of such a
situation, LDP Diet Affairs Committee Chairman Tadamori Oshima
responded, "If a supplementary budget is to be compiled, it should
be submitted to the extraordinary Diet session in order for the
Fukuda cabinet to indicate its stance as well."

The New Komeito is recently increasing pressure on the government
for fiscal disbursements. It at a meeting between the government and
the ruling parties, where the compilation of a comprehensive
economic stimulus package was adopted, called for introducing a
fixed-rate tax break for low-income earners and offering subsidies
not only to commercial fishermen but also to small- and medium-size
businesses to directly make up for the soaring fuel prices.

The New Komeito is calling for an economic stimulus package with an
eye on a general election. If they succeed in making the government
to pledge assistance measures for middle to low-income earners and
small- and medium-size businesses, their support base, they would be
able to quickly make a public appeal noting that it was their
achievement.

Aso, who is aspiring to become the next prime minister, is conscious
of the New Komeito's political aim, as an aide to him said, "If a
supplementary budget bill is submitted, there will appear a mood for
a Lower House dissolution from within the ruling camp." Aso is
moving in step with the New Komeito, while aware of the New
Komeito's intention, because he knows that the New Komeito expects
him to act a key person in the election.


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However, both the government and the ruling parties are unable to
pick up the real intention of the prime minister, who has the right
to dissolve the Lower House. A senior official of a certain economic
ministry said, "I cannot see what the central command thinks. What
extraordinary Diet session does he want? Does he intend to go as far
as to dissolve the Lower House?"

Aso gave an inarticulate explanation to a news conference held after
his meeting with the prime minister on August 13: "(If an economic
stimulus package is to be compiled,) figures might be set in a
manner that makes resorting to compiling a supplementary budget a
foregone conclusion. There still are some elements that need further
consideration."

Prime minister's decision on whether to opt for firmly maintaining a
policy to achieve fiscal soundness or to shift to a pork-barrel
policy now focus of attention

A certain key minister explained the pressure the secretaries
general of the LDP and the New Komeito applying on the prime
minister this way: "This is the major political bargaining, whether
it is good or bad. Since the approach to a bill extending the New
Antiterrorism Special Measures Law has yet to be set, it would be
impossible to discuss when to compile a supplementary budget." This
is because the timing of compiling a supplementary budget and its
scale as well as to boil down key issues (to be handled in the
extraordinary Diet session) are closely related to a strategy of
dissolving the Lower House election for a snap election.

The prime minister is pressed to make a difficult decision, while
taking the steering of his own administration fully into account, on
whether to veer from the fiscal reconstruction policy to a
pork-barrel policy in response to a demand the ruling parties are
making with an eye on a dissolution of the Lower House for a snap
election or to partially maintain the policy of restoring fiscal
health.

The prime minister stressed that settling difficulties facing the
nation's economy -- the steep rise in prices and the sluggish
economy -- is the shuffled cabinet's key policy challenges. However,
he has been cautious about immediately compiling a supplementary
budget as an economic stimulus measure, indicating his stance of
attaching emphasis to eliminating wasteful expenditures.

An economic stimulus measures using a large-scale second budget is a
means, which the government since the Koizumi cabinet, which has
pursued the fiscal soundness restoration policy, has constrained.
The Finance Ministry's stance is to finance an economic stimulus
package with more than 300 billion yen worth of reserve funds from
this fiscal year's budget and consider a supplementary budget, if
the reserve funds do not suffice.

If the government submits a large scale supplementary budget to the
extraordinary Diet session to be convened in the fall in response to
a call by the ruling parties, in particular, the New Komeito, it is
bound to be taken as has having made a policy switch. However, given
the sagging approval ratings for his cabinet, the prime minister
would find it difficult to steer his administration without
cooperation from the ruling camp. The New Komeito is persistently
calling on the government to stop short of putting the bill
extending the Special Measures Law to a revote in the Lower House to
be approved by a two-thirds majority.

TOKYO 00002242 010 OF 011



If the continuation of Japan's refueling operation in the Indian
Ocean and bills related to the establishment of a consumer agency
are upset, it could deal an immeasurable blow to Fukuda's
administration. However, the present situation is that even the
timetable to convene the extraordinary Diet session has yet to be
set, though the prime minister has indicated his desire to extend
the special measures law.

(6) TOP HEADLINES

Asahi: Mainichi: Yomiuri: Sankei: Tokyo Shimbun: Akahata:
Ueno defends women's judo title, fencer Ota wins men's foil silver

Nikkei:
MOF to offer advice for municipalities to prevent bankruptcies

(7) EDITORIALS

Asahi:
(1) Reinvestigation into abduction of Japanese nationals:
Investigation that has little substance unforgivable
(2) Negative growth: Real potential of private sector will be
tested

Mainichi:
(1) Japan-North Korea talks: Give real power to investigation
committee
(2) Negative growth: Healthy family budget most important


Yomiuri:
(1) Agreement at Japan-North Korea talks: Urge North Korea to
conduct far-reaching reinvestigation into abduction cases
(2) Beijing Olympic Games: We want to enjoy more excitement

Nikkei:
(1) Negative growth is a warning that urges reform
(2) Will the agreement reached at Japan-North Korea talks lead to
sincere investigation?

Sankei:
(1) Reinvestigation into abduction cases: Checking investigation
process important
(2) Noguchi, marathon runner, shock: Thorough crisis management by
Japan Association of Athletics Federations urged

Tokyo Shimbun:
(1) Negative growth: Economy has entered cautionary zone
(2) Reinvestigation into abduction cases would be meaningless,
unless abduction victims return home

Akahata:
(1) Abandonment of jurisdiction over U.S. servicemen: Scrap secret
deal that torments the people

(8) Prime Minister's schedule, Aug. 13

NIKKEI (Page 2) (Full)
August 14, 2008

11:47

TOKYO 00002242 011 OF 011


Met with Environment Minister Saito and Vice Environment Minister
Nishio at his official residence.

13:58
Met with Financial Services Minister Motegi and National Civil
Servant System Reform Promotion Headquarters Chief of Secretariat
Tachibana.

15:30
Met with Cabinet Intelligence Director Mitani.

16:25
Met with LDP Secretary General Aso and Diet Affairs Committee
Chairman Oshima.

SCHIEFFER