JAPANESE MORNING PRESS HIGHLIGHTS 09/22/08

UNCLAS SECTION 01 OF 09 TOKYO 002601 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 09/22/08 TOKYO 00002601 001.2 OF 009 Index: Defense and security affairs: 1) No prospects in sight for Japan extending its MSDF oil-refueling mission in the Indian Ocean (Yomiuri) 2) Ruling parties to attack the DPJ in the general election campaign for its blocking of the MSDF refueling issue (Asahi) 3) No prospects in sight for Japan to send peacekeeping troops to Sudan (Asahi) LDP election season: 4) Taro Aso to be elected LDP president today; Oshima reportedly picked as his chief cabinet secretary (Asahi) 5) LDP secretary general's post under Aso administration likely to be awarded to Hosoda, former chief cabinet secretary (Sankei) 6) What was Prime Minister Fukuda's real intention behind his resignation? (Tokyo Shimbun) DPJ election fever: 7) Ichiro Ozawa reelected president of the Democratic Party of Japan, promises three-step implementation of his campaign promises (Asahi) 8) Foreign and security affairs get only slight mention in the campaign material of the DPJ (Mainichi) 9) DPJ wants early deliberation and Diet action on the supplementary budget bill (Tokyo Shimbun) U.S. tackles financial crisis: 10) Secretary Paulsen urges Japan, Europe to cooperate in non-performing loan buy ups under Treasury-Fed rescue scheme (Nikkei) 11) State Minister for Financial Services Motegi welcomes swift U.S. response to deal with financial crisis (Asahi) 12) Financial Services Agency says not asked by U.S. government yet to buy up some of the U.S.' bad assets (Nikkei) Articles: 1) No prospects for continuing MSDF refueling mission YOMIURI (Page 4) (Abridged) September 20, 2008 The government made a cabinet decision yesterday on a bill amending the new Antiterrorism Special Measures Law to extend the Maritime Self-Defense Force's current refueling activities in the Indian Ocean for another year. However, the bill will likely be scrapped in this fall's extraordinary Diet session when the House of Representatives is dissolved. As it stands, there are no prospects for continuing the MSDF's refueling mission. The government is now making a strong appeal to the public on the necessity of continuing the MSDF's refueling activities in the Indian Ocean, maintaining that Japan's withdrawal from activities backing up multinational naval forces operating at sea to block terrorists from Afghanistan and other countries may adversely affect Japan's place in the international community and its alliance with the United States. "Japan will play a responsible role, and it's important to secure sea-lanes. This will not change under any political situation." With this, Defense Minister Hayashi stressed his view to the press yesterday. TOKYO 00002601 002.2 OF 009 In June, Japan sent a fact-finding team to Afghanistan in order for the government to explore what Japan can do in its personnel contributions to that country. However, the government deemed it difficult to pass necessary legislation since the Diet is currently divided. In the end, the government gave up on its dispatch plan. Japan's aid through its official development assistance (ODA) is also less than that announced by the United States (approximately 32 billion dollars) and of Britain (approximately 3.3 billion dollars). Japan is on a par with Canada (about 1.9 billion dollars). Meanwhile, the Air Self-Defense Force, which has been tasked with airlift assistance activities in Iraq, will be recalled within the year. The MSDF's refueling mission in the Indian Ocean is therefore Japan's most visible contribution in the war on terror. There are also some people who are playing up the MSDF's activities in the Indian Ocean while noting that the presence of multinational naval forces in the Indian Ocean is helpful in securing oil shipments from the Middle East to Japan. Liberal Democratic Party Secretary General Aso, now the leading candidate in the LDP's race for its presidency, has proposed having MSDF vessels escort Japanese tankers in the Indian Ocean. The MSDF refueled foreign naval vessels from a total of 11 countries with approximately 490,000 kiloliters from December 2001 through the end of August this year. The MSDF's fuel supply to U.S. naval vessels once came to about 40,000 kiloliters per month. In November last year, however, the law for the MSDF's refueling mission in the Indian Ocean ended due to opposition from the Democratic Party of Japan (Minshuto). In February this year, the MSDF resumed its refueling activities there. Since then in the seven months through the end of August, the MSDF's fuel supply to U.S. vessels was down to a total of about 800 kiloliters. On Sept. 8, former U.S. Deputy Assistant Secretary of Defense Kurt Campbell and former National Security Council Senior Director for Asian Affairs Michael Green met with Administrative Vice Foreign Minister Mitoji Yabunaka at the Foreign Ministry. In that meeting, they told Yabunaka that Afghanistan will be important for the next U.S. administration, adding that Japan will be in trouble if it does nothing. Campbell will reportedly have a lot of clout on the new U.S. administration's policy toward Japan if the Democratic Party's candidate wins the U.S. presidential election, and Green is also expected to be influential if the Republican Party's candidate wins. The future course of Japan's refueling activities is likely to affect the Japan-U.S. alliance. 2) Ruling coalition in general election campaign to attack DPJ for blocking MSDF refueling ASAHI (Page 4) (Abridged) September 20, 2008 The government made a cabinet decision yesterday adopting legislation amending the Antiterrorism Special Measures Law to extend the Maritime Self-Defense Force's current refueling activities in the Indian Ocean for another year. The decision shows that Prime Minister Fukuda wants to pave the way for the bill before leaving office. However, the legislation cannot be expected to clear the Diet since the Lower House will likely be dissolved soon for a general election. The ruling coalition wants to take the offensive TOKYO 00002601 003 OF 009 against the leading opposition Democratic Party of Japan (Minshuto) by focusing on the issue of continuing the MSDF's refueling mission in the election campaign. All the five candidates running in the ruling Liberal Democratic Party's presidential election are referring to the necessity of continuing the MSDF's refueling activities. LDP Secretary General Taro Aso, now leading the other candidates, has also declared that it is inconceivable that only Japan will pull out. The New Komeito, which was reluctant to pass the MSDF extension bill at this fall's extraordinary Diet session, has also apparently changed its attitude since Fukuda's announcement of his resignation. "We should seek the people's judgment on what role Japan should fulfill against terrorism," New Komeito Secretary General Kazuo Kitagawa said in a press conference on Sept. 18, indicating that the MSDF bill should be a campaign issue in the general election. This is not only because the ruling coalition wants to impress the public with an image of "the DPJ as a party reluctant to fight terrorism." If the MSDF's refueling mission is kept before the public eye, the ruling coalition, should it remain in office with a majority of the seats in the House of Representatives after the election, can press the DPJ to take a flexible response on the strength of the public having reached a consensus. However, the DPJ has proposed discontinuing the MSDF's refueling activities, while laying emphasis on its standpoint of sending personnel to Afghanistan to assist with its reconstruction. DPJ President Ozawa has indicated his intention to send the Self-Defense Forces to Afghanistan after taking office. However, the security situation in Afghanistan has been deteriorating. As it stands, it is difficult to expand Japan's civilian assistance in Afghanistan as well as send SDF troops to that country. 3) No prospects for PKO participation in Sudan ASAHI (Page 4) (Full) September 20, 2008 Prime Minister Fukuda can no longer translate into action his avowed plan to dispatch the Self-Defense Forces to Sudan for United Nations peacekeeping operations in that country's southern region. Government officials are preparing an implementing plan so the government can make a cabinet decision on it by early October. However, the PKO plan is not feasible since the Diet will likely be dissolved. When Fukuda met with U.N. Secretary General Ban Ki Moon in late June, he told Ban that Japan would send SDF personnel to Sudan. The government deemed it difficult to send SDF troops to Afghanistan for assistance. Under such a situation, the government sent a fact-finding survey team to Sudan in late July for Japan's role in international peace cooperation. Although the government cannot move on the implementing plan under Fukuda, it is still coordinating to send two SDF officers to the headquarters of the United Nations Mission in Sudan (UNMIS) for database construction and supply management. 4) Aso expected to become LDP president today; Oshima may become new chief cabinet secretary TOKYO 00002601 004 OF 009 ASAHI (Page 1) (Excerpts) September 22, 2008 Liberal Democratic Party Secretary General Taro Aso is expected to become the 23rd LDP president after winning a majority of votes in the first ballot in the LDP presidential election today. Aso intends to determine a new lineup of the four top LDP executives later today. Policy Research Council Chairman Kosuke Hori, General Council Chairman Takashi Sasagawa, and Election Strategy Council Chairman Makoto Koga are likely to stay on in their respective posts. Aso is expected to be named as the next prime minister in an extraordinary Diet session to be convened on Sept. 24. Final coordination is underway to appoint Diet Affairs Committee Chairman Tadamori Oshima as chief cabinet secretary. Aso is expected to reappoint most of the LDP executives because he thinks it is advisable to maintain the current system, including election chief Koga, for the next general election, which is expected soon. Senior Deputy Secretary-General Hiroyuki Hosoda is being mentioned as secretary general to replace Aso. Oshima, who may become the new chief cabinet secretary, is a member of the Koumura faction. Oshima has faithfully backed Aso in past LDP presidential races. Aso apparently highly values Oshima's skill at dealing with the opposition parties in the divided Diet. On an NHK television program yesterday, Aso indicated that he would draw on the entire party to form his cabinet and the party executive lineup with the next general election in mind, saying: "I think the next election will be fought under the lineup of the next cabinet. Forming a broad-based cabinet is important." 5) Aso to be elected as new LDP president; Sonoda likely to be picked secretary general SANKEI (Page 1) (Full) September 22, 2008 The ruling Liberal Democratic Party (LDP) presidential election to choose a successor to Prime Minister Yasuo Fukuda will take place today at party headquarters in a general meeting of its lawmakers from the two chambers of the Diet. It is now certain that Secretary General Taro Aso, 68, will be elected as the 23rd LDP president in the first round of voting, since he has garnered 60 PERCENT of the 386 Diet member votes and nearly 90 of the 141 votes allocated to the 47 prefectural chapters. Aso has decided to appoint Hiroyuki Hosoda, currently his deputy, as the new party secretary general. Aso plans to retain Election Strategy Council Chairman Makoto Koga, Policy Research Council Chairman Kosuke Hori, General Council Chairman Takashi Sasagawa, and Diet Affairs Committee Chairman Tadamori Oshima, in their respective posts. It is regarded as more likely that former policy chief Nobuteru Ishihara will be picked deputy secretary general. The expectation is that former Prime Minister Yoshiro Mori will serve as special advisor. An idea is also being floated that multiple faction heads will be picked to assist the secretary general. With an eye on an early Lower House dissolution and general election, Aso gives top priority to building a unanimous party arrangement by minimizing the shakeup of key party posts. Aso will inaugurate the new party leadership soon after the general TOKYO 00002601 005 OF 009 meeting. He will meet tomorrow with New Komeito leader Akihiro Ota to confirm the continuation of the coalition between their parties. On Sept. 24, when the extraordinary Diet session is convened, the Diet vote on the prime minister will take place in both Diet chambers and the 92nd prime minister will be named. Aso is expected to launch his cabinet on Sept. 24. He will visit the United States on Sept. 25. On Sept. 29 he will deliver a policy speech and each party's representative interpellations will be held on Oct. 1-3 in both chambers of the Diet. Aso intends to dissolve the Lower House if he fails to negotiate with the opposition camp on the supplementary budget. Chances are high that the Lower House will be dissolved on Oct. 3 at the earliest and that the official campaign will kick off on Oct. 14 for an Oct. 26 general election. Rank and file LDP members in 32 prefectural chapters (96votes) cast their vote as of Sept. 21. Aso has garnered 90 votes -- three votes from 28 prefectures and two votes from Nara, Shimane and Tokushima prefectures. He appears to have obtained more than 230 votes from the Diet members. 6) Reporter's notebook: Was prime minister's sudden resignation an act of stupidity or a bold decision? TOKYO SHIMBUN (Page 2) (Full) September 22, 2008 Taro Aso today will be elected as the 23rd president of the ruling Liberal Democratic Party (LDP),succeeding Prime Minister Yasuo Fukuda, who announced his resignation on Sept. 1. Many observers believe that Fukuda suddenly decided to abandon his administration in despair after a run-in with the New Komeito, the LDP's junior coalition partner, as well as due to the gridlock in the Diet with the Democratic Party of Japan (DPJ),the largest opposition party. Others, however, think that it was a calculated move by Fukuda. On Aug. 22, DPJ President Ichiro Ozawa already was reassured reelection for a third term. On Aug. 29, the Fukuda administration drafted a package of economic stimulus measures. Fukuda had planned to decide in a cabinet meeting on Sept. 2 to convene the next extraordinary Diet session on Sept. 12. Many LDP lawmakers believe that Fukuda had his own plan, namely, that the LDP would be able to win the next House of Representatives election by playing up the economic stimulus package and enjoying a boost in popularity under a new prime minister and cabinet. Moreover, if the opening of the extra session was delayed, Fukuda felt dissolution of the Lower House during the session could be avoided. And finally, if the LDP leadership race featured several contending candidates, his party would be able to attack the DPJ as having a closed nature (for reelecting Ozawa without a rival candidate). In fact, the LDP's support rates increased after Fukuda's announcement of his resignation. The DPJ then felt strongly that it might be shunted into the background by the LDP. Some LDP members even said that Fukuda's decision to resign saved their party. Although the LDP presidential race at first appeared to have TOKYO 00002601 006 OF 009 gathered momentum, it suffered a setback after Aso's massive lead in the race was learned. The DPJ is now strongly criticizing the LDP for creating a political vacuum amid the growing financial crisis and the tainted rice problem. Whether Fukuda's resignation announcement was a stupid or wise decision will be decided by the voters in the general election that is still looming ahead. 7) Ozawa, winning third term as DPJ president, says party will implement campaign pledges in three stages ASAHI (Top play) (Excerpts) September 22, 2008 The major opposition Democratic Party of Japan held a special party convention at a Tokyo hotel yesterday and formally elected Ichiro Ozawa as party president unopposed, giving him a third two-year term. Ozawa then delivered an acceptance speech defined as his "policy speech" in which he explained that the party would dramatically change its budget for financing its policies. He also announced that the procedures for implementing his party's policies will be shown in three stages in its manifesto (set of campaign pledges) to be compiled later this month. Ozawa's term will run through the end of September 2010. Giving top priority to measures for the next general election, Ozawa indicated that he would keep all the party executives in principle. At the same time, he said regarding the shadow cabinet: "National interest in and expectations for a DPJ administration are growing. I want to present the public at the earliest possible time with a lineup of major members who will be the core of the next cabinet and to face the next general election with it." He also expressed his determination to take over the reins of government, saying: "As a politician looking to lead state affairs, (the next general election) will be the last big event both mentally and physically. A politician must have firm resolve to undertake state affairs." He thus revealed his determination to become prime minister. Regarding the next general election, Ozawa said: "Staking my political life, I will giVQQdRuilding a Japanese-style safety net. He said: "We will drastically reform the bureaucracy-led governing structure that has existed since the Meiji era. That reform will provide us with sufficient financial sources to create a safety net." Discussing financial resources, Ozawa said: "How taxes are used must be fundamentally revised, and the fiscal structure must be changed drastically. Based on the idea of drastically changing the budgets and of compiling budgets by the hand of the general public, we will gradually shift 22 trillion yen, or about 10 PERCENT of the 212 trillion yen of the government's spending in the combined general and special account budgets, for gradually implementing major policies." Ozawa explained that the party's manifesto will spell out the implementation procedures in three stages: (1) those that will be TOKYO 00002601 007 OF 009 implemented in the fiscal 2009 budget; (2) related bills that will be enacted in the next regular Diet session to be implemented within two years; and (3) those that will be implemented before the term (of the Lower House lawmakers) ends four years from now. 8) DPJ vision for its administration MAINICHI (Page 3) (Excerpts) September 22, 2008 By Tanaka, Nobuchi, Koyama Democratic Party of Japan President Ichiro Ozawa, after winning his third term, delivered a policy speech yesterday in which he set forth the party's nine-item vision for his administration. He also expressed his determination to take over the reins of government, describing the next Lower House election as a showdown and his last chance. In his speech, Ozawa highlighted the need to create a Japanese-style safety net, while promising to change the bureaucracy-led system of governance. At the same time, where he would squeeze out the 22 trillion yen necessary for his diplomatic and securities polities remained unclear. The party needs to spell out specifics to implement its policies. Only international contributions mentioned Foreign and security policies In his policy speech, Ozawa hardly touched on foreign and security policies. He simply said: "Japan will make efforts to enhance peace in the international community." Foreign policy also came in last in the DPJ's basic policy plan, presented on Sept. 8. In the basic policy plan, foreign policy is discussed abstractly: "The party will establish firm Japan-U.S. relations based on equality and relations of trust with other Asian countries. (Japan) will actively join UN peace-building activities and promote UN reform." If the DPJ takes the reins of government before the end of the year, the party would be pressed immediately to deal with the question of extending the New Antiterrorism Special Measures Law, scheduled to expire in January 2009. Although the party is still committed to oppose it, the matter is expected to ignite fiercer controversy than last year in view of the expected impact on Japan-U.S. relations. Based on his UN-centered thinking, Ozawa would rule out the use of force since it is not allowed under the government's interpretation of the Constitution -- unless there were an UN resolution. Last October, Ozawa even said: "Once we take the reins of government, I would like to realize Japan's participation in the International Security Assistance Force (ISAF) in Afghanistan." But his view opposing the refueling mission (in the Indian Ocean) while approving the use of force (in Afghanistan) was criticized as absurd. As a counter proposal, Ozawa called for assistance to the civilian sector, but that option has become difficult, given the deteriorating security situation in the country. Vice President Seiji Maehara has called for making changes to the counter proposal: "A political decision must not be made to provide assistance to the civilian sector." Regarding assistance for Afghanistan, Ozawa said in a press conference on Sept. 1: "How should world peace be maintained? There TOKYO 00002601 008 OF 009 shouldn't be any discrepancy with our basic vision." But discussion still continues in the party. 9) DPJ will not delay deliberations on supplementary budget: DPJ deputy head Kan TOKYO SHIMBUN (Page 1) (Full) September 22, 2008 When asked on an NHK talk show yesterday how his party would respond to Liberal Democratic Party (LDP) Secretary General Taro Aso's plan to pass the supplementary budget through the Diet as quickly as possible, Naoto Kan, deputy president of the main opposition Democratic Party of Japan (DPJ),stated: "I can promise that our party will not to use the budget as a tool to delay (deliberations) and conclude the deliberations for a certain period of time." In order to secure enough time to pursue the government and ruling coalition prior to the next Lower House election, Kan took a positive stance for cooperation with the ruling camp in adopting the budget at an early date, not delaying deliberations. 10) Bad loan purchases: U.S. treasury secretary presents measure on financial crisis to Congress: Will also seek cooperation from Japan, Europe to set up similar system NIKKEI (Page 1) (Full) September 22, 2008 The U.S. Department of the Treasury on September 20 announced that it presented a bill proposing purchases of bad mortgage-related assets with public money. The planned purchasing amount is up to 700 billion dollars or approximately 75 trillion yen. This will serve as a pillar in the government effort to stabilize the financial system. Treasury Secretary Paulson on the 21st revealed a policy of calling on Japan and European countries to set up a similar system. The U.S. government aims at getting the bill done before the end of the week. Calls for expanding assistance to strapped borrowers have also surfaced in Congress. The Treasury Department has amended the original bill, which limited banks eligible for the government's bad loan purchasing plan to domestic institutions. The amended bill has extended the targets, including banks that are operating in the U.S. to a considerable degree. Paulson on an ABC TV program explained, "Foreign banks operating in the U.S. will have an impact on U.S. citizens similar to that of domestic banks." According to the Treasury Department's proposal, the purchasing period will be two years. The target items include housing loans and related securitized products. Asset purchasing prices will be determined based not on book value but on public bidding. Bad loans will be purchased from banks in order of lowest price offerers regarding designated assets. Seven hundred billion dollars is equivalent to 5 PERCENT of the U.S. GDP. Congress is likely to approve the plan, giving consideration to the impact of the financial crisis gripping the U.S. 11) State Minister for Financial Policy Motegi welcomes U.S. financial bailout TOKYO 00002601 009 OF 009 ASAHI (Page 5) (Full) September 22, 2008 Referring to the U.S. government's measures to head off the financial crisis that nation is facing, State Minister for Financial Policy Motegi during a TV talks show on September 21 welcomed the U.S. government's decision. He said, "Moves to remove the root cause of the problem are now under way." He also pointed out, "The U.S. government may find it necessary to inject taxpayers' money" because there is a strong possibility of banks' net worth shrinking, depending on the bad-loan purchasing prices. Motegi pointed out that the injection of massive funds by central banks of various countries and the bailout of individual beleaguered banks would only serve as a stopgap measure. He noted that behind the protracted financial crisis is the fact that no offers have been made for related securitized products due to the sluggish U.S. real estate market." He then gave high marks to the steps the U.S. government has just adopted, noting, "I would like to welcome the measures, since they are intended to dig into the very essence of the problem." Concerning the criticism of the credit crunch of domestic banks linked to the U.S. financial crisis, Motegi called for a smooth money supply. He also pledged to take a second look at the bank inspection system, saying, "I will press home to inspectors that they should not prevent banks from extending proper loans." 12) Purchases of bad loans: We have not received such a request, says Financial Services Agency NIKKEI (Page 3) (Full) September 22, 2008 U.S. Treasury Secretary Paulson on September 21 indicated a policy of asking Japan and European countries to set up a bad-loan purchasing system. Commenting on this, the Financial Services Agency (FSA) said that it had not received any specific request for such. The FSA thus stands firm on its posture that since the blow Japanese banks have suffered from the subprime mortgage crisis is less serious compared with U.S. and European financial institutions, each bank should move ahead with the disposal of nonperforming loans within the scope of its net worth and profits on its own. Its stance is that there is no need for Japan to take measures designed to restore fiscal health using public money even if it receives a request from the U.S. government. The FSA believes that it would be difficult for the Japanese government to extend fund assistance for the U.S. government's bad-loan purchasing plan. Its judgment is that the present financial crisis mainly originated in the U.S., and it would be difficult to have Japanese taxpayers bear the burden. The government has, however, confirmed at such venues as the Council of Economic and Fiscal Policy its stance of closely cooperating with the governments of various countries in order to prevent the U.S.-induced financial crisis from spilling over to other countries. The FSA intends to continue to closely share information with monetary officials of other countries. SCHIEFFER