DAILY SUMMARY OF JAPANESE PRESS 09/03/08

UNCLAS SECTION 01 OF 10 TOKYO 002415 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 09/03/08 INDEX: (1) Prime Minister Fukuda skips SDF conference, not even sending a proxy; Unprecedented and unheard of omission (Mainichi) (2) Three possible scenarios for Lower House dissolution and general election (Mainichi) (3) Poll on new Fukuda cabinet, political parties (Nikkei) (4) Fiscal discipline on verge of collapse with government inundated with requests for pork-barrel spending (Asahi) (5) With Fukuda's resignation announcement, uncertainty looming over basis for economic growth (Nikkei) (6) (Corrected copy) Essay by Asahi columnist Yoshibumi Wakamiya on the Hiroshima Summit: Next time the U.S. President should come (Asahi) ARTICLES: (1) Prime Minister Fukuda skips SDF conference, not even sending a proxy; Unprecedented and unheard of omission MAINICHI (Page 2) (Abridged) Eve., September 3, 2008 Prime Minister Yasuo Fukuda this morning was absent from the annual meeting of senior level officers of the Self-Defense Forces (SDF) that was held at the Ministry of Defense. It is customary for the prime minister to instruct senior SDF officers from all over the country on current course of defense policy, but because of Fukuda's absence, no policy briefing was given. It appears that this was in accord with the Prime Minister's intention to "avoid appearing in public after having announced his resignation," according to a government source. There have only been two cases of the prime minister being absent from the meeting in the last two years, 2001 and 2002, due to foreign travel. At the time, then Chief Cabinet Secretary Fukuda attended as a proxy. But for a substitute speaker not to be sent from the Prime Minister's Official Residence is "unheard of," said a Defense Ministry senior official. (2) Three possible scenarios for Lower House dissolution and general election MAINICHI (Page 3) (Abridged slightly) September 3, 2008 For the Liberal Democratic Partly, the selection of the successor to Prime Minister Yasuo Fukuda is closely associated with the ability to manage Diet affairs and the party's strategy for dissolving the Lower House and holding a snap general election. At present, there are three main possibilities. One is to dissolve the Lower House at the beginning of the next extraordinary Diet session after the new prime minister is elected. The other is to do so after the supplementary budget clears the Diet in the next session. The decision would depend on whether to put high priority on the momentum of the LDP presidential race or on the government's achievements. The third would be to wait until early next year. TOKYO 00002415 002 OF 010 Possibility one -- Lower House dissolution at beginning of extraordinary Diet session The government and ruling coalition have decided to submit to next year's ordinary Diet session a bill on a flat-sum tax cut, a matter incorporated in the economic stimulus package adopted by them on Aug. 29. With Fukuda's resignation announcement, the option of dissolving the Lower House by the end of the year has again become a real possibility. The lower chamber could be dissolved at the outset of the extra Diet session that would be convened later this month. Under this scenario, the LDP would draw national interest through policy debates by several presidential candidates and then dissolve the Lower House for a general election while the momentum is high. Former Prime Minister Junichiro Koizumi reportedly told former LDP Vice President Taku Yamasaki on the phone on the night of Sept. 1: "The Lower House should be dissolved at the beginning of the extra Diet session after the LDP presidential race is over." Secretary General Taro Aso has already thrown his hat into the ring. Former Secretary General Hidenao Nakagawa and others, who are at odds with Aso over economic and fiscal policy, are looking for a candidate to run against Aso. If former Defense Minister Yuriko Koike becomes the first female candidate, the LDP presidential race would attract much attention. But no one expects the "boom" of interest in the race to equal that of 2001 when Koizumi overwhelmingly defeated then Prime Minister Ryutaro Hashimoto, who seemed to be enjoying a comfortable lead. A former cabinet minister expressed concern over possible ill effects resulting from the two consecutive prime ministers having walked off the job, saying, "No matter who becomes the prime minister, support ratings for the LDP would drop." Dissolving the Lower House at the outset of the next Diet session would also end up leaving in limbo the FY2008 supplementary budget and the fixed-rate tax breaks on income and resident taxes that are necessary for boosting the economy. Deliberations on a bill amending the new Antiterrorism Special Measures Law for continuing the refueling mission in the Indian Ocean would also be put off. Economic and Fiscal Policy Minister Kaou Yosano in a press conference yesterday discouraged the early dissolution theory, saying: "In the political world, the plan that seems the most convenient always falls through." Possibility two -- Lower House dissolution after supplementary budget clears Diet Under the second scenario, the prime minister would dissolve the lower chamber in November after the FY2008 supplementary budget clears the Diet. This would allow the ruling bloc to impress the voters and support organizations with the new economic stimulus package in the election that would follow. Finance Minister Bunmei Ibuki and Chief Cabinet Secretary Machimura indicated in a press conference yesterday that the new administration should give priority to the supplementary budget, saying: "Under the new prime minister, there will be no change to what was decided by the government and ruling coalition." Aso is close to the New Komeito, which has been calling for Diet dissolution between the end of the year and the beginning of the new TOKYO 00002415 003 OF 010 year. If Aso becomes the prime minister, this scenario might unfold. This scenario is also bound to affect the study to raise the government's contribution to the basic pension scheme to half and to free up road-related revenues for general spending starting in FY2009, in addition to the bill amending the new antiterrorism law. This might be criticized as pork-barrel spending at the cost of reform. Possibility three -- Lower House dissolution in early January or later Chances are slim that the lower chamber will be dissolved in early January or in the spring after the FY2009 budget clears the Diet. Given the severe economic conditions, there are strong calls for the enactment of the budget in FY2008. At the same time, the New Komeito is opposed to dissolving the Lower House anytime close to next summer's Tokyo Metropolitan Assembly election. Former LDP Upper House Caucus Chairman Mikio Aoki said to his aide yesterday: "There is no longer a chance to enact the budget bill in the next regular Diet session after the extraordinary session." Lower House dissolution might occur in early January or later in the event the next administration suffers from low support ratings and passes up the opportunity to dissolve the chamber. DPJ deprived of opportunity to play up its presence The major opposition Democratic Party of Japan was planning to intensify its offensive against the LDP-New Komeito administration in order to force it into early Lower House dissolution for a snap general election. With party president Ichiro Ozawa having effectively sealed his third term without a vote and the next extraordinary Diet session postponed until after the LDP presidential election, the major opposition party will now just have to look on the LDP presidential race. With no opportunity in sight to make a public appeal, the party will have to busy itself with the hunt for its candidates for the next general election. Secretary General Yukio Hatoyama on a radio program yesterday expressed a fear of his party sinking into insignificance, saying, "Prime Minister Fukuda announced his resignation to eclipse our party." Hatoyama also urged his party to brace for a possible Lower House dissolution in September, while sounding an alarm against the establishment of a popular Aso administration that would result in a tough Lower House race for the DPJ. Public Relations Committee Chair Yoshihiko Noda and others have been forced to give up their candidacies because of the leadership's logic of putting the Lower House election ahead of the DPJ presidential race. "We, too, should have decided to hold a presidential election," a young DPJ lawmaker lamented. The party held an executive meeting yesterday in which four possible Lower House dissolution dates were presented: (1) at the beginning of the extra Diet, (2) after the question-and-answer session, (3) after the supplementary budget clears the Diet, and (4) after the supplementary budget-related bills are enacted. It was simply TOKYO 00002415 004 OF 010 impossible to predict when the chamber will be dissolved for a general election, the matter even the ruling bloc does not know. (3) Poll on new Fukuda cabinet, political parties NIKKEI (Page 2) (Full) September 1, 2008 Questions & Answers (Figures shown in percentage. Parentheses denote findings from the last survey conducted in early August.) Q: Do you support the new Fukuda cabinet? Yes 29 (38) No 63 (49) Can't say (C/S) + don't know (D/K) 8 (13) Q: Which political party do you support or like now? Liberal Democratic Party (LDP) 37 (37) Democratic Party of Japan (DPJ or Minshuto) 30 (33) New Komeito (NK) 3 (4) Japanese Communist Party (JCP) 4 (4) Social Democratic Party (SDP or Shaminto) 2 (2) People's New Party (PNP or Kokumin Shinto) 0 (0) New Party Nippon (NPN or Shinto Nippon) 0 (0) Other political parties 1 (1) None 16 (15) C/S+D/K 6 (5) (Note) The total percentage does not become 100 PERCENT in some cases due to rounding Polling methodology: The survey was taken Aug. 29-31 by Nikkei Research Inc. by telephone on a random digit dialing (RDD) basis. For the survey, samples were chosen from among men and women aged 20 and over across the nation. A total of 1,549 households with one or more eligible voters were sampled, and answers were obtained from 866 persons (55.9 PERCENT ). (4) Fiscal discipline on verge of collapse with government inundated with requests for pork-barrel spending ASAHI (Page 6) (Abridged slightly) September 3, 2008 The fate of many policy issues has become unclear in the wake of Prime Minister Fukuda's abrupt announcement of his intention to step down. Economic stimulus measures, reconstruction of the social security system and fiscal reconstruction are all supposed to be urgent issues under normal circumstances. However, they will likely be put on the back burner for a while, leaving it up to the next administration, which might take a totally different approach. What will become of the national welfare and economy? The Asahi Shimbun probes into the real situation those policy issues will face. The office of the Yosano Team is located on the 5th floor of the Cabinet Office in Kakumigaseki, Tokyo, where State Minister for Economic and Fiscal Policy Yosano is situated. Ten officials from the Cabinet Office, the Finance Ministry and the Ministry of Economy, Trade and Industry engaged in the compilation of the TOKYO 00002415 005 OF 010 government's economic stimulus package for about a month there. However, the prime minister announced his decision to quit right after the package was compiled in late August. Those officials who were involved in the compilation of the package said the future course of the package has now been derailed. Those officials who compiled the economic stimulus package this time tried to achieve a good balance under a difficult situation. Though they decided on a package with 11.7 trillion yen worth of projects, only 1.8 trillion yen in fiscal spending will be funded in real money from the fiscal 2008 supplementary budget. The government constrained expenditures, because it did not want to lower the banner of fiscal reconstruction. The prime minister rejected a call for issuing additional deficit-covering government bonds in the supplementary budget. In the meantime, he decided to implement in this fiscal year fixed-rate tax cuts, which the New Komeito had demanded, with no particular funding resources behind them. The prime minister has now abandoned his administration just when it had reached a crucial juncture of tilting in the direction of abiding by fiscal discipline or of adopting a pork-barrel spending policy. The Koizumi administration, which started the process of structural reform, tried to achieve fiscal soundness by advancing spending cuts. The Abe and Fukuda administrations have followed through on the Koizumi policy line. However, facing the current economic downturn, LDP Secretary General Taro Aso, one of the potential candidates to succeed Fukuda, is willing to actively increase public spending. In early August, right after assuming his post, he referred to a possible postponement of the government goal of moving the primary balance into the black by fiscal 2011. Yosano, who attaches importance to fiscal reconstruction, said, "There is no way any sensible LDP official would seek increased spending in order to win an election." However, many ruling party members are already calling for more public spending. One senior Finance Ministry official said, "We are now at a crucial juncture of whether to keep intact the policy of restoring fiscal soundness, which has narrowly survived. If pork-barrel spending revives, it would become impossible to spend money for necessary policies due to a heavy debt-payment burden. There is even a side-effect of a rise in long-term interest rates further worsening the economy. Path for economic growth not in sight Zenichi Kanda (65),who runs a cardboard processing factory in Ota Ward, Tokyo, breathed a sigh, when he was watching TV news reporting the prime minister's announcement of his intention to step down. He lamented, "Whatever we seek from politics, nothing will change. The reality is nothing like politicians think." The amount of work his factory performed has dropped to one-third of the amount 10 years ago, when his business was booming. The cost of purchasing raw materials, such as cardboard sheets, has increased 50 PERCENT over the past year. There would be a further rise in the TOKYO 00002415 006 OF 010 cost of purchasing raw materials in the fall. There used to be about 60 companies in the same trade operating in a suburb. However, the number has now dropped to 16 to 17. The package incorporated funds worth 9 trillion yen to help small- and medium-size companies that are experiencing funding difficulties due to the steep rise in crude oil and raw material prices. Kanda, however, said: "If I borrow such money, my debts would simply increase. I want the government to tell us how to cope with the changing business environment." Foreign factors are a main contributor to the current economic slowdown as can be seen in the steep rise in resources and food prices and slowing exports. Prices are expected to continue to hover at a high level. As such, it will become important to change the economic structure to such that can endure environmental changes and to boost domestic demand. However, finance assistance for the introduction of energy-saving conserving technologies appears to be the only measure in the package that could spur structural changes. Only stop-gap pain relief measures for sagging industries, such as subsidies to cover the increased fuel costs, are visible. The Ministry of Land, Infrastructure and Transport once again strengthened a rule restricting new entries into the taxi business this year for the reason of overheated competition. The economic growth strategy, which the government compiled in June, did not include such measures as to boost foreign investment in Japan. The next prime minister will face the test of showing a path for economic growth, while containing the strain of the economic downturn amid such setbacks as the worldwide economic slowdown and rise in prices. (5) With Fukuda's resignation announcement, uncertainty looming over basis for economic growth NIKKEI (Page 5) (Full) September 3, 2008 Uncertainty is now looming over the fate of medium to long-term economic agenda items due to political turmoil in the aftermath of Prime Minister Yasuo Fukuda's abrupt announcement of his intent to step down. The global environment issue, on which Fukuda placed emphasis, has now lost its control tower, so the issue may begin to float away. Trade, agriculture, and social security are important policies for Japan to create a foundation for sustainable economic growth despite its shrinking and aging population. But debate on their drastic reforms may also be left behind. Environment: Focus on how to lead post-Kyoto negotiations The issue of global warming is one of a few areas in which Prime Minister Fukuda demonstrated leadership. In the World Economic Forum Annual Meeting (Davos Conference) in January, Fukuda announced Japan's plan to provide developing countries with aid worth 10 billion dollars. In June, he came up with the "Fukuda Vision," Japan's new guideline on countermeasures to climate change. In the July Hokkaido Toyako Summit, in which global warming was focused on as a major theme, Fukuda took the initiative in discussion. TOKYO 00002415 007 OF 010 These measures are included in "the action plan to form a low-carbon society" adopted at a cabinet meeting in July, so the dominant view is that "the government's policy will remain unchanged, though the implementation of the measures may temporarily be delayed," as said by a senior official of the Ministry of Economy, Trade and Industry. Meanwhile, negotiations will soon start on a full scale to hammer out a new international framework following the 2012 expiration of the Kyoto Protocol. Fukuda promised to announce midterm emissions reduction goals for 2020 or 2030 at a proper time next year. The deadline for negotiations on a post-Kyoto regime is set at the end of next year. After the change of government in the U.S., the new administration is expected to be more positive about tackling global warming. Accordingly, heated haggling is likely to occur in negotiations. A senior Foreign Ministry official said: "The top leader's zeal and leadership will be put to the test. The realization of a low-carbon society will contribute to revitalizing the Japanese economy. An emission trading system will be introduced on a trial basis in October, but whether Japan should introduce the system on a full scale will be left to a political judgment by the new prime minister. Trade: Focus on EPA negotiations In order to strengthen the Japanese economy's growth potential when domestic demand is stagnant due to population decrease, it is imperative to draw in overseas demand for goods and services. In the trade sector, the focus of attention is on how to make progress in negotiations on concluding economic partnership agreements (EPA) with countries in East Asia. EPA negotiations with India and Vietnam have entered their final stage. India is aiming to strike a deal by the time when Prime Minister Manmohan Singh visits Japan this fall. Vietnam is also eager to reach an agreement by the end of this year, which marks the 35th anniversary of the establishment of diplomatic relations between Japan and Vietnam. Japan held working-level talks with South Korea in June in an effort to resume EPA negotiations, but no progress has been made since then. Negotiations with Australia have also reached a deadlock over how to treat farm products. To move the negotiations forward, many are now calling for political leadership. The ministerial meeting in July of the new round of World Trade Organization (WTO) global trade talks (Doha Round) ended in rupture. WTO Director General Pascal Lamy and others are stepping up efforts to resume high working-level negotiations, but if the political confusion in Japan is prolonged, Japan might not be able to speedily take response measures. Agriculture: Uncertainty over farmland reform In the agriculture area, the Ministry of Agriculture, Forestry and Fisheries (MAFF) has decided to compile a package of measures on farmland reform. But the fate of farmland reform is now uncertain. The ministry has studied the possibility of carrying out drastic TOKYO 00002415 008 OF 010 reform, specifically working out measures to enhance productivity by consolidating small patches of paddy fields and farming land into larger units and to expand agricultural businesses by utilizing idle farmland. Depending on the political situation, however, it might become difficult for the government to submit and enact related bills in the regular Diet session next year as scheduled. Given the rising age of the rural population and difficulty in finding successors, a senior MAFF official said: "If reform is delayed, matters related to land rights may become more complicated and consolidating land may become more difficult." As part of efforts to increase the nation's self-sufficiency rate, the ministry has also come up with measures to effectively use paddy fields, but whether Japan can make the agricultural sector stronger from the medium- to long-term perspective is likely to hinge on the outcome of farmland reform. Social security: Nursing care insurance measures may be delayed On health, labor and welfare administration, there is a crowded agenda. Prime Minister Fukuda presented the Five-Point Reassurance Plan in the social security area in July, including emergency measures to cope with the lack of doctors. But the order of policy priority might change under a new prime minister and a new health, labor and welfare minister. A senior ministry official grumbled: "I am concerned that the ministry may not be able to secure enough budget allocations." Next fiscal year, the government is scheduled to revise the nursing-care-reward system. Minister Yoichi Masuzoe is looking into the possibility of boosting nursing-care benefits to be paid to care insurance businesses. He planned to compile a package of proposals later this year on reviewing the nursing-care insurance system at an expert panel. The effort to that end will inevitably slow down. Dark clouds are also hanging over the reform of the ministry itself, in which the public have a sense of mistrust. The government's council on future options for health, labor and welfare administration, chaired by Toyota Motor Corp Advisor Hiroshi Okuda, has decided to come up with a policy direction later this year, but no decision has been made on when it will meet next. (6) (Corrected copy) Essay by Asahi columnist Yoshibumi Wakamiya on the Hiroshima Summit: Next time the U.S. President should come ASAHI (Page 11) (Slightly abridged) September 1, 2008 On that fateful morning, then Illinois assembly member Barack Obama was driving his car in downtown Chicago when he heard on the radio about the first airplane crashing (into the World Trade Center). By the time he reached his meeting, two more planes had crashed into buildings. He immediately got out of the car, looked to the heavens, and thinking about his country and family, was overcome by grief for the victims. It will soon be seven years since the tragedy of 9/11, when terrorists attacked the World Trade Center and the Pentagon. "With those incidents, everything changed," Obama later said. Three years later, he became a U.S. senator, and now, he himself has completely changed, having become a presidential candidate. TOKYO 00002415 009 OF 010 That Barack Obama, recalling the fear that 9/11 generated, came out with a statement of his thinking this July 16 that went: "I will place at the center of nuclear policy the goal of complete abolition of nuclear weapons." In a campaign speech in Indiana, he heatedly stated, "It is time for America to send a clear message that we will aim for a world where there are no nuclear weapons." His statement could only come from a sense of alarm about how fearful it would be if terrorist groups got their hands on nuclear weapons. The Democratic Party that nominated him at its convention at the end of last month included that in its election promises. Having just played a role in that party convention, U.S. House of Representatives Speaker Nancy Pelosi has come to Japan, and is now in Hiroshima. She is attending the G-8 Summit of Lower House Speakers that convenes on Sept. 2. This year, the seventh such event, is being hosted by Lower House Speaker Yohei Kono. At the Toyako Summit of world leaders that was held in July, the main theme was global warming. If that is the case, I would like to bring up here another global crisis. The proposal came from Mr. Kono to choose Hiroshima as the sight to discuss "peace and disarmament." In the past, the eight countries represented here divided themselves into "Axis" countries of Germany, Japan, and Italy and "Allied" countries centered on the U.S. and Britain and fought a war. Now, their parliamentary speakers have assembled to lay wreathes at the monument in Hiroshima dedicated to atomic bomb victims, and tour the Peace Memorial Museum, where the bombings are vividly portrayed. The most noteworthy participant is no doubt Speaker Pelosi, who has come from the country that dropped the bombs. Sixty three years ago, the feeling in Hiroshima, which had made the atomic bombings its hell, was that the United States could not be forgiven and the tragedy could not be wiped away. However, the United States' thinking was that without using the bombs, Japan could not have been subjugated, the expectation being that in ending the war, there would be tragic resistance. There was also a feeling of resistance from Japan, which stressed the catastrophe of the bombings, tending to forget that it had been the aggressor in the war. Even in 1996, when the Atomic Bomb Dome (Peace Memorial) was recognized as a World Heritage, the U.S. was against the move. Mr. Kono, who fully realizes the existence of such a situation, last year broached the idea to Speaker Pelosi first of all with the words, "If you were to come, it would be to Hiroshima." She replied that it would be a "good idea." Perhaps the Speaker's decisiveness was because she is a liberal, but Speaker Pelosi is the highest level U.S. politician to visit Hiroshima in the 63 postwar years. Even John McCain, the Republican Party candidate for president, in May made a similar statement. He introduced former President Reagan's words, "Our dream is a day when there will be no nuclear weapons on this earth," and then stated, "This is my dream, too." If such is the case, I would like to see the next president, whether it is Mr. Obama or Mr. McCain, make a visit to Hiroshima. In the message of aiming for a nuclear-weapon free world, there is no doubt such a spirit. In fact, this July 2, President Bush, then on the way to the Toyako Summit, had this exchange with reporters: When asked, "There has TOKYO 00002415 010 OF 010 been a proposal for the prime minister of Japan to visit Pearl Harbor in Hawaii, and for the U.S. president to visit Hiroshima," he answered, "I haven't given it any thought, but it is an interesting idea." It is difficult for him to make the trip, given his remaining short stay in office, but Mr. Bush did make this significant remark: "Wipe the slate of the past clean, and turn to look to the future." This may have been lip-service, but if his friend (Koizumi) and he as a combination had continued, would it have been out of the question? That reminds me, there has never been a prime minister who has visited Pearl Harbor. There seems to be a strong resistance to do so within the Japanese government. In 1994, such a visit was considered when the Emperor visited the United States, but it never came about. If the prime minister visits Pearl Harbor, the U.S. president, too, would find it easier to pay visits to Hiroshima and Nagasaki. If both leaders bowed their heads in reflection and then laid down memorial wreathes, it would take the form of a real reconciliation and friendship. The atomic bomb victims, too, would perhaps be somewhat buoyed up by the gesture. What words would be used at Hiroshima by Mr. Obama, who captured peoples' hearts with his speeches that called for change and unity? What kind of emotions would be evoked by Mr. McCain, who suffered as a prisoner of war? It may be said to be premature, but my interest in this has continued to climb. ZUMWALT