JAPANESE MORNING PRESS HIGHLIGHTS 01//08

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E.O. 12958: N/A TAGS: OIIP KMDR KPAO PGOV PINR ECON ELAB JA SUBJECT: JAPANESE MORNING PRESS HIGHLIGHTS 01//08 Index: 1) Top headlines 2) Editorials 3) Prime Minister's daily schedule (Nikkei) Defense and security affairs: 4) Refueling mission: Government exchanges of notes with U.S., other countries operating in Indian Ocean ban diversion of fuel for other purposes (Asahi) 5) Heated mayoralty race in Iwakuni City centered on issue of relocation of U.S. Navy carrier-based jets to local base (Mainichi) 6) Road revenue resources being tapped to build U.S. armed forces' housing at Sasebo for 2.5 million yen per unit (Akahata) 7) Defense ministry firms up new equipment procurement system that would allow direct purchases (Mainichi) 8) Ruling parties ready to launch project team to prepare permanent SDF dispatch legislation (Sankei) 9) Prime Minister takes lead in "Killer dumpling" issue (Nikkei) 10) Four African countries picked as candidates to first $10 billion tranche of Japan's environmental aid program (Tokyo Shimbun) 11) Joint gas-field development scheme between Japan, China would split the benefits down the middle (Nikkei) 12) Japanese police authorities ready to file charges against those who impede research whaling, including two incidents last year when crewmen were hurt (Sankei) 13) Russia plans to invest fund money into Japanese stocks (Nikkei) Diet affairs: 14) Supplementary budget bill to pass the Diet on Feb. 6 (Nikkei) 15) Early dissolution of the Diet becoming unlikely as both camps are yet unprepared to run a full slate of Lower House candidates (Nikkei) 16) Democratic Party of Japan's Naoto Kan on TV takes positive view about revising parts of controversial bill (Sankei) Articles: 1) TOP HEADLINES Asahi: Mainichi: Yomiuri: Sankei: Tokyo Shimbun Poisoning from Chinese gyoza dumplings: Pesticide residues found from six more packets manufactured same day when one caused poisoning in Hyogo; Hole found in one packet Nikkei: �0A;Japan-China joint gas field development in East China Sea: Governments of both countries to aim at reaching agreement to divide total profits equally, in principle Akahata: Special-purpose road construction revenues: Mid-term plan worth 59 trillion yen: Policy Committee Chairman Koike calls for using road funds for other purposes TOKYO 00000278 002 OF 013 SUBJECT: JAPANESE MORNING PRESS HIGHLIGHTS 01//08 2) EDITORIALS Asahi: (1) Mechanism of protecting nursing-care givers as well: Proposals for hopeful society; Attractive workplace to attract nursing-car givers; Reciprocal support, by having more young people contribute to nursing-care insurance Mainichi: (1) We want to see next-generation communications network lead to shoring up Japan (2) Births by surrogate mothers: Collecting data is not only challenge by editorial member Yuri Aono Yomiuri: (1) Reform of public servant system: Bureaucratic society must be revitalized (2) Return of democratic government in Thailand: Can new administration restore stability? Nikkei: (1) Do not miss opportunity to take part in fierce competition for international standard Sankei: (1) Proposals for public servant system question prime minister's seriousness (2) New type of flu is challenge that is equally difficult to anti-terror measures Tokyo Shimbun: (1) Reform of public servant system: Watered-down bill unacceptable (2) Who is job card system for? Akahata: (1) Going ahead with medical services system for elderly patients aged over 75 in April impermissible 3) Prime Minister's Official Residence (Kantei) Prime Minister's schedule, February 1 NIKKEI (Page 2) (Full) February 2, 2008 09:01 Attended a cabinet meeting in the Diet building. Foreign Minister Koumura stayed behind. 09:56 Met METI Vice Minister Kitabata at the Kantei. 10:40 Met Assistant Deputy Chief Cabinet Secretary Saka. Followed by Vice Foreign Minister Yabunaka. Later, met Australian Foreign Minister Smith. 11:28 Met Lower House members Taku Yamasaki and Koichi Kato. Followed by Deputy Chief Cabinet Secretary Futahashi. TOKYO 00000278 003 OF 013 SUBJECT: JAPANESE MORNING PRESS HIGHLIGHTS 01//08 14:29 Met Futahashi. Later, met Saka, Cabinet Office People's Livelihood Bureau Director General Nishi, Agriculture Ministry Consumers Safety Bureau Director General Sato, Foreign Ministry Asian and Oceanian Affairs Bureau Director General Saiki, and others. 15:56 Met Cabinet Intelligence Director Mitani. Then met Policy Research Council Chairman Tanigaki, head of the LDP emergency headquarters on safety of imported food, and others. Followed by Vice Minister of Finance for International Affairs Shinohara. 17:21 Met New Komeito Deputy President Hamayotsu and Prop Station President Nami Takenaka. 18:17 Met LDP Reform Promotion Headquarters Head Takebe. 19:22 Met Futahashi at his official residence. Prime Minister's schedule, February 2 NIKKEI (Page 2) (Full) February 3, 2008 10:04 Arrived at his private residence in Nozawa. 17:42 Dined at an Italian restaurant in Minami-Aoyama with his wife, Kiyoko, and his secretary. 19:27 Returned to his official residence. Prime Minister's schedule, February 3 NIKKEI (Page 2) (Full) February 4, 2008 Spent all day at his official residence 4) Japan to exchange notes with U.S., other countries on 'no fuel diversion' ASAHI (Page 1) (Full) February 3, 2008 Japan will now resume the Maritime Self-Defense Force's refueling activities in the Indian Ocean, and the government will exchange official notes with foreign countries under a newly enacted special measures law for the MSDF's refueling support. MSDF fuel provided under an old special measures law was allegedly used for other purposes, so the official note expressly stipulates that the MSDF's fuel supply is limited to use for maritime interdiction operations that are intended to prevent weaponry and drug trafficking. Japan has already agreed with the United States, Britain, France, and Pakistan. The government will make a cabinet decision on Feb. 6 to adopt the note. After that, Japan will sign it with these four countries. Japan is now negotiating with Canada and Germany as TOKYO 00000278 004 OF 013 SUBJECT: JAPANESE MORNING PRESS HIGHLIGHTS 01//08 well. The official note to be exchanged is a document describing bilateral arrangements between the Japanese government and foreign countries on the MSDF's free fuel supply to their vessels participating in Operation Enduring Freedom and Maritime Interdiction Operations (OEF-MIO) in Afghanistan and its environs. The official note this time says Japan will proactively contribute on its own to the international community's efforts by providing fuel to vessels engaged in antiterror maritime interdiction operations. With this, the note clearly prohibits MSDF fuel from being used for military operations in Iraq and for any other purposes. The exchange of notes, which was concluded under the old antiterrorism special measures law, did not expressly stipulate that MSDF fuel must be used for antiterror operations only and must not be used for any other purposes. Therefore, MSDF fuel provided to a U.S. oiler was disclosed to have been supplied to a U.S. naval ship that later engaged in Iraq operations. In addition, the new exchange of note prescribes bilateral consultations between Japan and its signatories in order to implement this note in an effective manner. With this, the note expressly stipulates that Japan will step up bilateral cooperation. Meanwhile, the question is whether foreign vessels will use MSDF fuel after receiving it. Japan has no choice but to entrust this matter to their governments. The Japanese government does not have any specific power to check them later. Foreign naval vessels could be doubly tasked with OEF activities and Iraq operations. Refueling in this case, however, is not prohibited under the new antiterrorism special measures law. As another measure to prevent fuel diversion, the government will also introduce a new system, under which an MSDF liaison officer will hear from foreign governments about the schedules of their vessels. If their schedules are ambiguous, the defense minister will then make a final decision on the advisability of refueling foreign vessels, according to government sources. 5) Fukuda-Ihara battle kicks off for Iwakuni mayoral race MAINICHI (Page 1) (Abridged slightly) February 4, 2008 The official campaign kicked off yesterday for the mayoralty election in Iwakuni, Yamaguchi Prefecture. The biggest campaign issue is the U.S. plan to relocate carrier-based fighter jets to the base in the city. Former LDP House of Representatives member Yoshihiko Fukuda, who supports the plan, and former Mayor Katsusuke Ihara, who opposes the plan, filed their candidates for the election on Feb. 10. A by-election will also take place on April 27 in Yamaguchi No. 2 constituency due to Fukuda's resignation as a Lower House member. The outcome of the race in Iwakuni, a large bloc of votes for No. 2 constituency, is likely to affect the by-election as well. In reaction to U.S. force realignment, the city conducted a referendum in March 2006 and a mayoralty race in April 2006 following the merger with its neighboring municipalities. This is the third time for the city to go to the polls. In the referendum, some 87 PERCENT of residents opposed the relocation of the jets. TOKYO 00000278 005 OF 013 SUBJECT: JAPANESE MORNING PRESS HIGHLIGHTS 01//08 Ihara, in the previous mayoral race, won by a large margin. The race this time was triggered by the government's decision in December 2006 to freeze 3.5 billion yen in subsidies for the construction of a new city hall, citing the city's opposition to the relocation. The municipal assembly voted down four times then Mayor Ihara's budget plans to make up for the lost subsidies. As a result, Ihara resigned as mayor last December to "seek the will of the people." Fukuda has pledged that he will negotiate with the central government regarding specific issues, such as possible noise resulting from the relocation and other security matters, without agreeing to the government's views at all times. "I will stake my political life on the race. Let us change Iwakuni," Fukuda said in a campaign speech yesterday. Ihara, on the other hand, criticized the government regarding the relocation, saying, "The freeze on the subsidies for the city hall is clearly a violation of their promise. The relocation plan concerns the very foundation of central and local governments. I am prepared to directly negotiate with Prime Minister Fukuda on the matter to bring an early settlement to it." 6) U.S. forces' housing built in Sasebo, Nagasaki, financed with special-purpose road construction revenues: 250 million yen per unit, as U.S. Navy planned originally AKAHATA (Top Play) (Abridged) February 2, 2008 Shimbun Akahata has learned that although the U.S. Navy in Japan had planned to build housing accommodations for naval officers, using host-nation support funding for the U.S. forces stationed in Japan (the so-called "sympathy budget" allocations),the facilities were actually built by the Ministry of Land, Infrastructure and Transportation (MLIT) at a total cost of approximately 2.8 billion yen, drawn from special-purpose road construction revenues but allocated for use by the U.S. forces. The government has complied with a long-standing U.S. forces' request for such construction under the pretext of the relocation of U.S. military housing accompanying the construction of expressways. The case has raised the question whether outlays of road-related funds for such a purpose was appropriate. The housing in question is Fiddlers' Green, a U.S. military housing complex built in 2007 and located in Kompira-cho, Sasebo City. A slope abutting a road was developed at the cost of 1.4 billion yen. It has a castle-like wall revetment, which is 14 meters high at the highest point. There are eight blocks with 11 apartments in each block on a site of approximately 12,000 square meters. The construction cost per unit is approximately 250 million yen. The MLIT Nagasaki River and National Road Office explained that the facilities were financed with road funds to replace U.S. forces' housing to be demolished following the acquisition of the site for the construction of a Nishi-Kyushu Express Way. The Japan-U.S. joint committee in May 2004 agreed on a basic housing construction plan. The housing was then built with the Nagasaki River and National Road Office repeatedly carrying out detailed coordination with the U.S. Navy. TOKYO 00000278 006 OF 013 SUBJECT: JAPANESE MORNING PRESS HIGHLIGHTS 01//08 However, it was found that the U.S. Navy had already planned to build housing at this state-owned land in its Sasebo Bay U.S. Navy Facilities Master Plan, mapped out in September 1990, when the route of the express way had not yet been decided. The Japanese government included in a list of facilities to be constructed under the sympathy budget, six Fiddlers' Green family houses at the cost of 2 million dollars. (U.S. forces' data as reported by Hiromichi Umebayashi in "U.S. forces stationed in Japan as learned under the Freedom of Information Act." 7) Defense Ministry's import control office to enter into direct contracts for procurement MAINICHI (Page 1) (Full) February 3, 2008 The Defense Ministry, which began in October last year to study measures to reform its procurement system for the Self-Defense Forces, outlined a conceptual plan yesterday. The plan features setting up a new import and procurement section in its Equipment Procurement and Construction Office (EPCO),a body directly under the defense minister. In addition, the plan also proposes strengthening the ministry's functions to check its procurement with certified public accountants and other experts from outside the ministry. The ministry's project team, chaired by Parliamentary Defense Secretary Minoru Terada, will finalize and release the plan within the current fiscal year. The project team's reform plan lays emphasis on reducing the involvement of trading companies, reflecting on a number of scandals that involved the Defense Ministry. Specifically, Yamada Corporation, a trading company dealing in defense equipment, padded bills to the ministry. The ministry has imported equipment through trading houses. However, the ministry will newly set up an import control section consisting of certified public accountants and other outside specialists. This newly planned office will directly enter into contracts with overseas manufacturers. For the time being, the ministry will ask trading firms to provide information. However, the ministry intends to raise the percentage of direct contracts. The Defense Ministry will also inquire of overseas manufacturers about trading firms' estimates of equipment so as to prevent them from fabricating estimates. In addition, the ministry will impose penalties on trading companies against overbilling. The ministry used to purchase defense equipment during several fiscal years. However, the ministry will purchase equipment at a time to attain a reduction of 5 PERCENT in its cost of procurement over the next five years. 8) Ruling coalition to launch project team this month for permanent SDF dispatch law SANKEI (Page 2) (Abridged) February 4, 2008 The ruling coalition of the Liberal Democratic Party and New Komeito will hold a preparatory meeting its project team on Feb. 6 to create a permanent law allowing Japan to send the Self-Defense Forces on overseas missions whenever necessary. The project team will be launched within the month. Its chair is former LDP Vice President Taku Yamasaki, currently chairman of the LDP Research Commission on Foreign Affairs. Its members include Gen Nakatani, chairman of the TOKYO 00000278 007 OF 013 SUBJECT: JAPANESE MORNING PRESS HIGHLIGHTS 01//08 LDP Research Commission on Security Affairs, and others who once served as defense chief. The project team will also have former Parliamentary Vice Defense Minister Natsuo Yamaguchi from New Komeito. New Komeito, which upholds itself as a party for peace, has remained cautious about the idea of creating a permanent law for SDF missions overseas because its backer, Soka Gakkai, was negative about sending SDF troops overseas. However, Prime Minister Yasuo Fukuda and Democratic Party of Japan (Minshuto) President Ichiro Ozawa met last fall and then took up permanent legislation in their "grand coalition" initiative. New Komeito therefore feared that the LDP and the DPJ could go on without New Komeito. Given such circumstances, New Komeito early this year kicked off an intra-party full-fledged discussion of the permanent legislation, in an aim to lead discussions in the ruling coalition, according to New Komeito sources. 9) Prime Minister takes lead to deal with poison-laden gyoza dumplings, since bureaucrats slow to act NIKKEI (Page 2) (Excerpts) February 3, 2008 Prime Minister Yasuo Fukuda has instructed relevant government officials to speed up discussions of integrating consumer administration. This move reflects Fukuda's judgment that given the current criticism of the government for its delay in dealing with the rash of poison-laden Chinese-made dumplings, it is necessary to take action swiftly to cap the issue, as well as to revamp the current food administration system. Fukuda will establish a panel in the Prime Minister's Official Residence (Kantei) to deal with the problem, with a spring deadline for reaching its conclusions. However, cautious views are coming from relevant ministries and agencies, as well as business circles. The Prime Minister has referred to (unifying consumer administration) as his "showcase policy," but his leadership in this area is soon to be tested. "Why are you so slow to take action?" On the afternoon of Feb. 1, Fukuda stormed at bureau directors-general from the Cabinet Office, the Ministry of Agriculture, Forestry and Fisheries (MAFF),and the Ministry of Foreign Affairs (MOFA),when they visited Fukuda to tell him that they remained unable to take action because the causes of the problem had yet to be figured out. Fukuda told them to thoroughly implement safety measures, for instance, by expanding the scope of import products subject to inspections beside dumplings. Growing criticism of government's slow action On the night of Jan. 31, when he was informed of the problem, Fukuda did not appear to be taking it so seriously. He told reporters: "I think relevant government offices will deal with it after fully investigating why it occurred." But his attitude grew severed as criticism mounted that the government's delay in dealing with the problem had led to a spreading of the problem, some complaining that a month had gone by since the problem erupted before the government announced the problem after its occurrence The approval ratings for the Fukuda administration plunged at the end of last year linked to its delay in dealing with the problem of false records of pension premium payments and the lawsuit against TOKYO 00000278 008 OF 013 SUBJECT: JAPANESE MORNING PRESS HIGHLIGHTS 01//08 the government by drug-infected hepatitis C patients. Fukuda's decision to take the lead in discussion of unifying consumer administration reflects a sense of crisis that his administration could be in dire straits if it failed to unify consumer administration. Merging consumer administration is the issue that Fukuda plans to focus his energies on as a showcase policy for his administration. Fukuda was so highly motivated by his desire to unify consumer administration that he mentioned it at the beginning of his recent Diet policy speech, but the Cabinet Office's Quality-of-Live Policy Bureau, which was tasked with examining the task, was slow to act. Fukuda complained that the bureau "lacks speed." On the night of Feb. 1, Fukuda declared his intention to set up in Kantei a "consumer administration promotion headquarters," which will be composed of relevant cabinet members and experts, to discuss specific measures to unify consumer administration. It was supposed to reach a conclusion in June, but Fukuda instructed that the report be ready much earlier. 10) Government picks four African countries as candidates for first tranche of financial aid to counter global warming TOKYO SHIMBUN (Page 1) (Full) February 4, 2008 The government chose yesterday Nigeria, Madagascar, Senegal, and South Africa as countries to which Japan will provide the first tranche of its grant aid and yen loan package amounting to 10 billion dollars (approximately 1.07 trillion yen) to help them counter global warming. The four countries have seriously suffered from natural disasters and crop damage caused probably by global warming. The government will sent this week a mission of Foreign Ministry International Cooperation Bureau officials to discuss aid measures for forest preservation and drought and flood. Prime Minister Yasuo Fukuda announced the so-called Fund Mechanism last month at the annual meeting of the World Economic Forum (Davos Conference). The government will host the fourth Tokyo International Conference on African Development (TICAD) in May in Yokohama, along with the United Nations and World Bank. The government has placed top priority on its support for African nations since global warming and African development will become main topics of discussion at the July Group of Eight summit at Lake Toya in Hokkaido. 11) Japan, China plan to split profits from joint development of gas fields in East China Sea NIKKEI (Top Play) (Abridged) February 4, 2008 The government unveiled a joint development plan, now under negotiations between the governments of Japan and China in an effort to resolve the standoff over gas filed development in the East China Sea. Both sides are considering evenly dividing profits from joint development. On the areas subject to joint exploration, no agreement has yet to be reached. Japan has proposed that the areas should include sites that straddle the Japan-claimed median line separating Japanese and Chinese territorial waters. The two countries aim to TOKYO 00000278 009 OF 013 SUBJECT: JAPANESE MORNING PRESS HIGHLIGHTS 01//08 reach a settlement based on a two-step approach - reaching an agreement on basic conditions first and then determining details, such as the sites for joint exploration, under a treaty they would conclude. The two countries expect to resume vice minister-level talks in February in anticipation of having an agreement on basic terms in place prior to Chinese President Hu Jintao's planned visit to Japan this spring. Later, working-level meetings will be held to hammer out the details of the treaty. They think that signing a treaty is necessary to give legal endorsement to the agreement. Japan and China have been at loggerheads over the demarcation of their respective exclusive economic zone. Japan insists that the line equidistant from the land territory of Japan and China as the median line, but China does not recognize it. While putting aside this territorial issue, both sides will engage in negotiations to translate joint oil field development into action. Under the plan, (1) Japan would invest more than 50 PERCENT in gas fields closer to it, while China would also invest more than 50 PERCENT in sites closer to it; and (2) The share of profit from each gas field would be determined according to the ratio of investment. To prevent a significant difference from being caused in profits for both countries, they will work out details on what gas fields should be selected and how to set the areas subject to joint development. Japan and China are also negotiating on the gas fields which China has independently developed near the median line, such as the Chunxiao oil and gas field. China asserts that only the areas on the Japanese side from the median line should be subject to joint development, refusing Japan's proposal. China has made a compromise to hold negotiations on Japan's proposal as of now, but it has yet to agree to it. Japan has proposed to pay half of the money China has already invested in order to include the gas fields under development by China in joint development projects. But China has not accepted this proposal. 12) MPD envisions building a case concerning obstruction of whaling as crew members injured in two obstruction cases last year SANKEI (Page 1) (Full) February 4, 2008 It was learned yesterday that the Tokyo Metropolitan Police Department (MPD) is conducting an investigation into the United States environmental protection group Sea Shepherd, which in this past January, had obstructed Japan's research whaling by throwing bottles containing chemicals at a Japanese research whaling ship, on charge of forcible obstruction of business for throwing bottles of chemicals at a Japanese research whaling ship and injuring crew members in last February. It is unusual for the Japanese police to investigate the act of obstruction conducted in international waters. The Public Security Department already confirmed through the owner of the research vessel that the vessel was obstructed by Sea Shepherd, and it is investigating into who actually engaged in the obstruction. The cases under police investigations are two acts of obstruction TOKYO 00000278 010 OF 013 SUBJECT: JAPANESE MORNING PRESS HIGHLIGHTS 01//08 that occurred in the Antarctic Ocean in February of last year. On Feb. 9 of that year, Sea Shepherd threw a bottle containing chemicals that threatened vision and had an offensive odor and a flare at the mother research whaling ship "Nisshinmaru." It also attacked the ship by using a gun that fired life-saving rope. Two crewmembers of the research whaling ship were exposed to chemicals and suffered burns on their faces. Reportedly Nisshinmaru was forced to suspend the work of dismantling a whale. On Feb. 12 of that year, Sea Shepherd threw a flare at the visual inspection ship "Kaikomaru" and collided with it, distorted the handrail on the port side of Kaikomaru, and forced it to stop navigating. Both on Feb. 9 and 12, Sea Shepherd threw rope at the screw. The United Nations Convention on the Law of the Sea stipulates that the right to investigate criminals that occur in international waters lies with the country where the ship is registered. The Public Security Department questioned the owner company in Tokyo of Nisshinmaru and Kaikomaru about the damages the ships suffered. It also confirmed the damages. The Public Security Department is examining whether the charge of forcible obstruction of business or assault is applied to those activities. It will identify through videos recording obstruction and countries concerned who engaged in the obstruction. Once persons who obstructed whaling are identified and the country they stay are found, Japan is likely to consider whether to seek they be put on the international wanted list and whether to demand they be handed over to Japan under the Convention for the Suppression of Unlawful Act against Vessels at Sea. Regarding the recent obstruction case where on this past Jan. 15, two activists of Sea Shepherd threw a bottle of chemicals having an offensive odor at the deck of the Japanese research whaling ship "No. 2 Yushinmaru" and climbed aboard the ship illegally, the Public Security Department is expected to question persons concerned. 13) Russian government fund to invest in Japanese stock, according to Finance minister NIKKEI (Page 1) (Full) February 4, 2008 (Sakai, Moscow) A Russian government fund worth 32 billion dollars (3.4 trillion yen) that launched on Feb. 1 will invest in Japanese stocks, according to Russian Deputy Prime Minister and Finance Minister Alexei Kudrin in an interview with the Nikkei. Prior to a meeting of Group of Seven finance ministers and central bankers in Tokyo on Feb. 9, in which Kudrin will attend, he said that Russia is willing to contribute to normalizing the international monetary market, which has become unstable, triggered by the U.S. subprime mortgage crisis. The fund is now allowed to invest only in U.S. dollar, Euro, and British pound-dominated assets. Kudrin, however, said: "The government is considering adding the yen to the list. Experts analyze it is an appropriate move." The fund will be operated with foreign bonds for the time being, but it plans to invest in foreign TOKYO 00000278 011 OF 013 SUBJECT: JAPANESE MORNING PRESS HIGHLIGHTS 01//08 stocks after obtaining government approval in sometime after October. He also said that the fund will not get involved in corporate management, remarking: "The fund will not hold a stake of more than 5 PERCENT in a company." Kudrin expressed concern about the current weakening dollar in the aftermaths of the subprime loan problem. Kudrin also emphasized that the G-7 should include such emerging countries as Russian, which holds 480 billion dollars in foreign reserves and has become a major energy supplier, China, and India as its official members. He warned: "Without Russia, China and India, the G-7 may lose its influence on the global economy." 14) Fiscal 2007 supplementary budget bill to pass Diet as early as Feb. 6 NIKKEI (Page 2) (Excerpt) February 4, 2008 The ruling and opposition parties will set focus this week on fierce discussions in the ongoing Diet session over a bill revising the Special Taxation Measures Law, which includes measures to maintain the current provisional rate for gasoline and other road-relates taxes. The bill on supplementary budget for fiscal 2007 is expected to be enacted as early as Feb. 6. The House of Councillors Budget Committee will carry out today intensive deliberations on social security issues. Since the upper chamber's panel will spend more time for the supplementary budget bill than the House of Representatives' committee, the opposition bloc plans to respond to a vote tomorrow at the committee. The bill will be voted on the 6th in the opposition-controlled Upper House, but it will be enacted based on the Constitution that stipulates the Lower House holds supremacy for budget packages. The ruling parties are expected to hold a basic question-and-answer session on the 7th and 8th on the fiscal 2008 budget bill. The bill will be enacted before the end of March if it clears the Lower House by March 2 as the Constitution stipulates that budget packages are enacted after they are sent to the Upper House. The ruling coalition, therefore, aims to get it passed by the Lower House by Feb. 29. 15) Ruling, opposition parties making no preparations for Lower House election, feeling that chance is slipping away NIKKEI (Page 2) (Full) February 4, 2008 The ruling and opposition parties appear to be making little preparations for the next House of Representatives election. Both the ruling Liberal Democratic Party (LDP) and largest opposition Democratic Party of Japan (DPJ or Minshuto) are not pushing forward with the selection of their candidates, although they had decided to pick them in early this year. With the agreement by the ruling and opposition camps through the good offices of the leaders of the two Diet chambers on the controversial provisional tax rates, there is growing observation that the chances for a Lower House election has slipped away. There is little mood for the next Lower House taking place soon. Another reason is that there still remains the lurking notion of forming a "grand coalition." TOKYO 00000278 012 OF 013 SUBJECT: JAPANESE MORNING PRESS HIGHLIGHTS 01//08 The main reason for the dwindling enthusiasm, about election preparations among the parties is that DPJ President Ichiro Ozawa indicated that his party would focus on the fall. He, quoting the U.S. presidential election in November, said: "I feel that the election in Japan would coincide with that of the United States." Criticizing media reports, Ozawa stated in a lecture at his political study group: "Even my poetic remarks become reports on political developments." He has repeatedly made similar remarks that could be taken that his party would take the offensive in the fall or later: "I am concerned about the Chinese economy after the August Olympic Games. I expect there will be a great change." In the ruling camp, New Komeito Election Policy Committee Director Yoshihisa Inoue categorically said in a meeting yesterday in Yamagata City: "It is said that this year is a year for a decisive political battle, but the chance for the battle occurring in March or April has slipped away." Seeing the election preparations by the ruling and opposition parties, the LDP has yet to pick candidates for nine of the 15 electoral districts, although it had decided to finish up by its January annual national convention. The LDP has found it difficult to coordinate candidates for six districts in which both "former assassins" and former "postal rebels" who rejoined the party are expected to run. The party plans to file former rebels in the Gifu No. 1 and Tokushima No. 2 districts. However, the issue has not yet been settled because supporters for the former assassins have thronged to party headquarters. Election Committee Vice Chairman Yoshihide Suga commented: "Our choice will be criticized, anyway." Coordination between the LDP and New Komeito has not been pushed ahead in connection with the candidate for the Okinawa No. 1 district. The two ruling parties have no longer expecting a possible April Lower House dissolution. The religious sect Soka Gakkai, the main backer for the New Komeito, has advocated that the next Lower House election should either be conducted sometime after the July Group of Eight summit (Lake Toya Summit) or around July next year when the Tokyo Metropolitan assembly election occurs. Inoue predicts that the next Lower House election will probably occur in the fall. 16) Kan take positive stance about revision talks during Hodo 2001 program on February 3 SANKEI (Page 5) (Full) February 4, 2008 Appearing on Fuji TV's program Hodo 2001 on February 3, DPJ Deputy President Naoto Kan discussed a bill to maintain the provisional gasoline tax and the question of road-related tax reverences. The following is a gist of the main questions and answers. -- The bridging bill has been withdrawn owing to mediation by the Lower House speaker and Upper House president. "The bridging legislation was designed to increase taxes without deliberations. If it had been adopted, the Fukuda cabinet would have collapsed." -- LDP Secretary General Bunmei Ibuki is saying that (the DPJ) has TOKYO 00000278 013 OF 013 SUBJECT: JAPANESE MORNING PRESS HIGHLIGHTS 01//08 promised to bring the matter to a vote within the current fiscal year. "If questions and answers are conducted thoroughly, there might be some modifications to it. 'A certain conclusion' will be reached after all those developments. The compromise note must be taken literally. There could be a vote within this fiscal year as well as additional deliberations." -- Wasn't it the DPJ's strategy to force the prime minister into Lower House dissolution with the bridging legislation? "(Bridging dissolution) was not what we initially aimed at. If the government and ruling parties had rammed the bridging bill through the Lower House, they would have had to use a two-thirds majority override vote twice in late March. They would not have been able to steamroller it. That is why the ruling bloc made concessions (to the DPJ)." -- If there are talks between the ruling and opposition camps on making changes to a revenue bill, there could be: (1) a shortened period, (2) turning a part into a green tax, (3) (using road-related tax revenues) for general purposes, and (4) lowering the tax rates. "One theory goes that because the DPJ holds a majority in the Upper House, the Land and Transport Ministry said that the term should be left at 10 years. There also is a talk in the LDP that (the legislation must be revised) to shorten the period. However, there are many LDP lawmakers who have vested interests in the road industry. They are blustering that they will not allow anyone to flirt with road-related revenues. The LDP would lose unity (as revision talks) move forward." -- Mr. Kan, you said that the faces of LDP Election Committee Chairman Makoto Koga and General Council Chairman Toshihiro Nikai can tell their determined to hold onto road-related interests. Your comment resulted in a letter of protest from the LDP. "Did I say anything wrong? Mr. Nikai and Mr. Koga have said that they would absolutely defend the road revenues, so I said that their resolve was clear on their faces." SCHIEFFER