JAPANESE MORNING PRESS HIGHLIGHTS 10/16/08

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E.O. 12958: N/A TAGS: OIIP KMDR KPAO PGOV PINR ECON ELAB JA SUBJECT: JAPANESE MORNING PRESS HIGHLIGHTS 10/16/08 Index: North Korea problem: 1) Rift between Japan and U.S. over North Korea policy following delisting of DPRK as state sponsor of terrorism (Mainichi) 2) North Korea policy task force meets to affirm that top priority will continue to be abduction issue and that no energy aid will be provided to the DPRK (Mainichi) 3) Families of abductees call for even tougher sanctions against North Korea (Mainichi) 4) Tensions increase between Japan, China over new case of poisoned food imports (Tokyo Shimbun) Election frenzy: 5) Challenged about his former commitment to an early Diet dissolution, Prime Minister Aso responds that "the situation has changed (Sankei) 6) LDP executives continue to talk about a November general election (Sankei) 7) Democratic Party of Japan (DPJ) cooperating in the Diet expecting the Lower House to be dissolved in late October for a snap election (Yomiuri) 8) Ruling parties ready for a late November general election, expecting the Prime Minister to make a timing decision by the end of October (Nikkei) 9) LDP accused by the opposition lawmaker of being at the New Komeito's "beck and call" (Nikkei) DPJ in action: 10) DPJ head Ozawa announces that lawmaker Maeda, who took money from crooked company, will leave the party and not run for reelection (Asahi) 11) DPJ wanted to quickly put out the fire caused by the Maeda scandal by dumping him from the party (Asahi) 12) DPJ approval was key to Yamaguchi having been selected as Bank of Japan deputy governor (Asahi) 13) New stimulus package to center on tax cut that will be paid for by tapping government's hidden reserve funds (Asahi) Articles: 1) Rift remains between Japan, U.S. over Japan's intense opposition to the removal of North Korea from the list of states sponsoring terrorism MAINICHI (Page 5) (Excerpts) October 16, 2008 The government, in a meeting of its Abduction Issue Headquarters yesterday, affirmed its policy course of not providing energy assistance to North Korea. This decision reflected the government's strong concern that with the U.S.' removal of the DPRK from the list of state sponsors of terrorism, Japan's opportunity to resolve the abduction issue will gradually slip away. However, with progress on the nuclear front, pressure is mounting from Japan from the other members of the six-party talks to provide aid to North Korea. Japan has attached importance to cooperation with the United States at the Six-Party Talks, but with strains arising over the delisting of North Korea, the talks could turn severe for Japan, sandwiched in between the abduction issue and pressure to provide energy aid. TOKYO 00002877 002 OF 010 "Let's talk again about this," reminded Foreign Minister Nakasone to Secretary of State Rice at the conclusion of their telephone conversation on the night of Oct. 10. Foreign Minister Nakasone had pointed out to Secretary Rice a number of problem areas in verifying the nuclear-program report under the U.S.-North Korea agreement. Reportedly, there had been no mention in the conversation about agreement to remove North Korea from the terror blacklist. However, Secretary Rice had already decided that conditions were ready to remove the DRPK from the list. The name was removed without Secretary Rice having made another phone call to Foreign Minister Nakasone to persuade him on her decision. Such treatment of Japan by Secretary Rice and others in the U.S. government prompted a senior Foreign Ministry official to express dissatisfaction: "It would have been better if there had been a more respectful process." Prime Minister Aso, speaking in the Upper House Budget Committee on Oct. 14, criticized the U.S.' handling of the matter, saying, "We are displeased." On the other hand, the Prime Minister told the press on the same day, "It is important to hold Six-Party Talks to move talks on the abductions forward." In order to press North Korea to improve its relations with Japan, cooperation among the five countries in the talks with North Korea is needed as leverage on the DPRK, and cooperation of the U.S. is especially important. In the meeting of the abduction headquarters, Foreign Minister Nakasone even pointed out: "Although the U.S. has removed the name from the list, it has various cards it can use against North Korea." North Korea, too, is carefully watching Japan's moves. In the Six-Party Talks agreement, it was decided that in return for completion of the second phase of disabling its nuclear facility, North Korea would receive assistance equivalent to 1 million tons of heavy fuel. A North Korea spokesperson on the 12th sought to check Japan by saying, "Five of the countries are about to provide economic compensation." 2) Government's panel confirms priority to be given to resolution of abduction issue over energy aid to North Korea MAINICHI (Page 2) (Full) October 16, 2008 The government's taskforce to address the issue of Japanese nationals abducted by North Korea, headed by Prime Minister Taro Aso, confirmed in its meeting at the Prime Minister's Official Residence yesterday that Japan will not offer energy aid to North Korea until progress is made on the abduction issue. The meeting was intended to demonstrate the Aso administration's position of continuing pressure on North Korea in the wake of the U.S. delisting of that nation as a state sponsor of terrorism. In the meeting, the panel adopted a policy plan on the abduction issue that reaffirms the government's basic position of not normalizing diplomatic relations with the North until the abduction issue is resolved. The panel reconfirmed the need for strengthened cooperation with the U.S., following its delisting decision. The participants also agreed that the government should urge Pyongyang to launch the reinvestigation of the abduction issue. Prime Minister Aso said in a speech: "The (abduction) issue must be resolved TOKYO 00002877 003 OF 010 promptly. We will demand that all abduction victims be brought back to Japan as soon as possible." The panel met yesterday for the first time since its first meeting in October 2006 under the Abe administration. No meeting was called under the former Fukuda administration. The meeting yesterday was intended to confirm that the government is determined to continue addressing the issue and maintains its basic policy. 3) Three groups affiliated with abduction issue call on government to express determination, including tightened sanctions against North Korea MAINICHI (Page 2) (Full) October 16, 2008 In reaction to the U.S. delisting of North Korea as a state sponsor of terrorism, the Association of the Families of Victims Kidnapped by North Korea, the National Association for the Rescuing of Japanese Kidnapped by North Korea, and the group of Diet members dealing with the abduction issue handed to Chief Cabinet Secretary Takeo Kawamura a letter addressed to Prime Minister Aso. The letter calls on the government to express its determination to resolve the abduction issue by strengthening sanctions and other means. Shigeo Iizuka, chairman of the families' association, visited the Prime Minister's Official Residence with Takeo Hiranuma, chairman of the parliamentary group, and others. He submitted the letter to Kawamura, remarking: "The U.S. delisting decision greatly shocked us. We are concerned that the abduction issue might enter a difficult phase." Kawamura told them: "I understand the family members' apprehension. The government's policy of not taking part in energy aid (under the six-party framework) without progress on the abduction issue remains unchanged. We would like to make efforts to meet your desire." 4) Government to press China to clear up cause of tainted beans incident TOKYO SHIMBUN (Page 2) (Excerpts) October 16, 2008 A housewife was sickened after eating green beans imported from China. The beans were found to be tainted with extremely high concentrations of pesticide. The Japanese government repeatedly asked China yesterday to provide information and review its food safety measures. If the government fails to get satisfactory results from its efforts in investigation the incident and to prevent the recurrence of a similar case, as was the poisoning cases triggered by Chinese-made frozen dumplings, its crisis-management capability might come under heavy fire. Fearing such a possibility, the government is taking a tough stance toward the Chinese government this time. The Foreign Ministry asked the Chinese side through the Chinese Embassy in Japan on the night of Oct. 14 to present information on the management system and the production process in the manufacturer of the products in question. It also made the same request to Chinese authorities through the Japanese Embassy in Beijing yesterday. TOKYO 00002877 004 OF 010 Prime Minister Taro Aso told reporters at his official residence last night: "Products made in China have caused damage in various places. It is quite natural for China to (strengthen) its inspection system." He indicated he would urge China to review its pre-shipment inspection regime. In the poisoning outbreak caused by tainted Chinese dumplings, the Japanese government was criticized for its modest posture as "weak-kneed" from both at home and abroad. Reflecting on this experience, the government is taking a hard-line attitude. In the dumpling scare, Japan concluded from the early stages that the pesticide that contaminated frozen dumplings had gotten mixed into the products in the manufacturing process in China. Despite China's denial of Japan's assertion, though, the government avoided clashing head-on with that nation. This time, the government has taken a confrontational stance with China from the beginning, based on the view that the products were tainted with pesticide in China. Even so, if Japan takes an overly tough approach, relations with China, which were considerably in good shape under the Fukuda administration, could become strained again. Even if the first summit between Prime Minister Aso and his Chinese counterpart is held on the sidelines of the Asia-Europe Meeting (ASEM) in Beijing late this month, the two leaders might spar over the issue of food safety. 5) Prime Minister Aso: Timing of Lower House dissolution changes depending on situation SANKEI (Page 5) (Full) October 16, 2008 Asked about when he would dissolve the House of Representatives, Prime Minister Taro Aso said yesterday at a House of Councillors Budget Committee session: "Before assuming the prime minister's post, I thought that (successive prime ministers) had previously decided on the timing of Lower House dissolution. However, after taking office, I now think it is only natural that the timing of the dissolution changes, depending on the situation." It was first time for Aso to openly admit that he was previously determined to dissolve the Lower House at the outset of the current extraordinary Diet session. He indicated in an article contributed to a monthly magazine that he had wanted to dissolve the Lower House at the opening of the current extra session. Hajime Ishii, vice president of the main opposition Democratic Party of Japan (DPJ),strongly pursuing Aso on this, indicated that his party might submit a no-confidence motion against the prime minister, saying: "Since you can't carry out (dissolution),you should not have said anything." Aso then said: "It is only natural for me to dissolve the Lower House when it is necessary. I will be the one to decide it." Asked about the completion of a second additional economic stimulus package and fixed amount tax cut policy, Aso stated: "I cannot tell before seeing how the Diet schedule will be pushed forward, as well TOKYO 00002877 005 OF 010 as the development of discussions on the tax system (in the ruling camp late this year)." Kaoru Yosano, state minister in charge of economic and fiscal policy, gave this outlook: "There probably won't be enough time by the end of the session to reach a conclusion and ask the Diet (to hold deliberations)." 6) Senior LDP officials voice one after other possibility of general election in November SANKEI (Page 5) (Full) October 16, 2008 Liberal Democratic Party (LDP) Secretary General Hiroyuki Hosoda last night gave a speech at a party hosted by a LDP lawmaker in a Tokyo hotel. In it, Hosoda hinted at the possibility of a general election for the House of Representatives taking place in November. He said: "I have said that a snap election is just around the corner. I think it will be held soon." Former Chief Cabinet Secretary Nobutaka Machimura said at the same party: "There is a mood that an election without doubt will be conducted in the middle or late November." LDP General Council Chairman Takashi Sasagawa predicted that the election would be held in mid-November or on Dec. 7. He added: "After asking for the people's vote of confidence, I would like to celebrate the New Year with a sense of renewal." 7) DPJ to cooperate with ruling camp with eye on Lower House dissolution in end of October YOMIURI (Page 4) (Full) October 16, 2008 Prime Minister Taro Aso has strengthened moves with an eye on the dissolution of the House of Representatives late this month. The Democratic Party of Japan (DPJ),the largest opposition party, which has urged the prime minister to dissolve the Lower House as early as possible, appears to be cooperating with the ruling coalition on such pending issues as the appointment of Bank of Japan deputy governor. A senior ruling coalition member said: "It seems the Lower House will be dissolved through talks." The DPJ, however, has remained reluctant to hold party-heads debate (between Aso and DPJ President Ichiro Ozawa),which is a precondition for Aso to dissolve the Lower House. The government presented yesterday to the Diet the nomination of Bank of Japan Executive Director Hirohide Yamaguchi as BOJ deputy governor, a post which has long been vacant. The expectation is that the nomination of Yamaguchi will be approved in the plenary sessions of the two chambers of the Diet on Oct. 24, since the DPJ will likely approve. The LDP and DPJ also agreed yesterday to take a vote on the fiscal 2008 supplementary budget bill on Oct. 16. The largest opposition party seems to be supporting the prime minister's pump-priming package to stabilize the financial market. One senior ruling coalition official pointed out: "We are moving forward with Lower House dissolution late this month through discussions." Aso will attend the summit of the Asia-Europe Meeting (ASEM),which will take place on Oct. 24-25. He then plans to deliver an outdoor speech on the 26th in Akihabara, Tokyo, for the first time since TOKYO 00002877 006 OF 010 taking office. A bill amending the new Antiterrorism Special Measurers Law will likely clear the Diet as early as the 29th. Therefore, there is a view that the Lower Hose may be dissolved on the 29th or 30th. If that is the case, the outlook is that the official campaign for the election will start on Nov. 18 and the election will be held on Nov. 30. Aso wants to hold party-heads debate with Ozawa before he dissolves the Lower House. In an Upper House Budget Committee session on Oct. 15, he stressed: "I would like to hold party-heads debate on economic stimulus measures." A senior LDP official said: "In various polls, many people said that Aso would be more suitable to be prime minister than Ozawa. Whether the prime minister can bring about the paradigm of confrontation (with Ozawa) holds the key to victory in the election." Aso's aide remarked: "Since an additional economic package will be compiled on the 27th, the prime minister will ask Ozawa whether he can approve or not in a party-heads debate on the 29th. If he rejects it, the prime minister will be able to dissolve the Lower House after criticizing (Ozawa)." The DPJ has not yet responded to the holding of party-heads debate. Some in the ruling camp, however, view that the party-heads debate will trigger Lower House dissolution. 8) Ruling bloc gearing up for Lower House election in late November; Prime minister to make decision by end of Oct. while monitoring economy and other factors NIKKEI (Page 2) (Abridged slightly) October 16, 2008 The ruling bloc has been gearing up for the next Lower House lection, envisaging it will take place in late November. If prospects are obtained for the enactment of important bills in late October and the Lower House is dissolved as a result, the prevailing view is that the official campaign for the election will kick off on Nov. 18 and the voting will take place on Nov. 30. But cautious views are strong in the Liberal Democratic Party which is expected to face an uphill battle. Prime Minister Taro Aso will make a final decision in view of the economic situation and other factors. LDP Secretary General Hiroyuki Hosoda in a fundraising party, held by an LDP lawmaker in Tokyo last night, said: "I have repeatedly indicated that the next election is near at hand. I think there will be the general election quite soon." Former Chief Cabinet Secretary Nobutaka Machimura, who was also present, commented: "In light of the current trend, there is no doubt that (the Lower House election) will take place sometime between mid- to late November." An LDP executive has taken Hosoda's comment as a message to the party to expedite preparations for the election. The executive said, "The DPJ has done a lot of preparations." Election on Nov. 30 is predominant view The ruling an opposition camps have decided to enact a fiscal 2008 TOKYO 00002877 007 OF 010 supplementary budget bill today. Following this, a bill extending the Indian Ocean refueling legislation and a bill amending the Financial Function Early Strengthening Law are also expected to clear the Diet later this month. Prime Minister Aso is scheduled to attend the Asia-Europe Meeting (ASEM) to be held in Beijing on Oct. 24-25. The stage will be set for Aso to dissolve the Lower House after drawing up an additional economic stimulus package. An LDP executive yesterday ordered his prefectural assembly to step up efforts for the election, saying: "The Lower House will be dissolved on Oct. 30. Chances are high that the election will take place on Nov. 30." Another LDP lawmaker also told a prefectural assemblyman that the prime minister would dissolve the Diet after returning from Beijing. The New Komeito and its powerful support organization Soka Gakkai, which have been pressing the prime minister for early Lower House dissolution, also think an election on Nov. 30 is quite possible. A mid-level LDP lawmaker took this view: "The New Komeito has staged a fierce fight-back by joining hands with LDP members comfortable with the next election." Starting on Oct. 17, the day after the supplementary budget clears the Diet, the LDP plans to run a TV commercial playing up the prime minister's strong resolve to come up with additional pump-priming measures. The party has also begun making preparations for policy pamphlets in six areas: the economy, antiterrorism measures, consumers, agriculture, criticism of the DPJ, and urban policy. If the Diet is dissolved immediately after ASEM, voting on Nov. 16 is possible, but the timetable is too tight for it. The APEC, which the prime minister is eager to attend, is scheduled for Nov. 23 in Peru. In view of year-end budget compilation, Nov. 30 seems the last day available. A prime ministerial aide said: "The prime minister still has the desire to dissolve the Lower House at an early date." The DPJ's basic policy is to return to its confrontational stance if the prime minister continues to postpone Lower House dissolution. There is a view in the LDP that the ruling bloc will not be able to overcome difficulties under the divided Diet unless the two ruling parties achieve a victory in the next election to reflect popular will. Support ratings also in focus The prime minister has to clear high hurdles before dissolving the Lower House at an early date. If stock prices continue to plunge and the economy deteriorates due to the worldwide financial crisis, pessimism might grip the LDP, with many saying that the situation does not allow Diet dissolution. Many uncertainties, including the future of cabinet support ratings, might force the prime minister to give up dissolving the Diet before year's end. It would be difficult to opt for sometime between January and March when a fiscal 2009 budget bill will be discussed at the Diet. Once November is passed up, the election might not occur until next spring or later. In yesterday's Upper House Budget Committee session, DPJ lawmaker Hajime Ishii, while citing the prime minister's contribution to a monthly magazine, asked Aso: "Your article says that the Lower House will be dissolved at the beginning of the extraordinary Diet TOKYO 00002877 008 OF 010 session. You should either retract what is stated there or dissolve the Diet." In response, the prime minister said firmly: "I have no intention of retracting it. I will decide on when to dissolve the Lower House." 9) DPJ's Ishii in Upper House Budget Committee session charges LDP with being at New Komeito's beck and call NIKKEI (Page 2) (Full) October 16, 2008 In yesterday's Upper House Budget Committee session, Democratic Party of Japan Vice President Hajime Ishii, with the New Komeito's powerful support organization Soka Gakkai in mind, said in a critical tone: "There is no distinction between religion, politics, and election campaigns." Ishii's questions on Prime Minister Taro Aso's stance over the separation of religion and state and other matters often disrupted the session. Ishii said: "The LDP cannot maintain the administration without New Komeito votes. The party has been at the New Komeito's beck and call." Ishii also called for the summoning of former Komeito heads Junya Yano and Yoshikatsu Takeiri and Soka Gakkai Honorary Chairman Daisaku Ikeda as unsworn witnesses. The prime minister rejected the call, saying: "The Diet should not summon private citizens who are not lawmakers in an easygoing manner." New Komeito Policy Research Council Chairman Natsuo Yamaguchi, who took the floor following Ishii, also rebutted: "This Budget Committee session is tasked to discuss the supplementary budget. Questions irrelevant to the budget should not be raised." 10) Ozawa announces that DPJ's Maeda will not run in next Lower House election ASAHI (Page 1) (Excerpts) October 16, 2008 Democratic Party of Japan President Ichiro Ozawa held a hastily arranged press conference at party headquarters shortly after noon yesterday regarding DPJ Lower House member Yukichi Maeda. Maeda, representing the Tokai bloc under the proportional representation system, has received large sums of money from pyramid scheme operators and asked questions at the Diet supportive of such operators. In the press conference, Ozawa announced that Maeda had informed the party that he would decline the party's endorsement for the next general election, that he would not run in the next race, and that he would like to leave the party. Ozawa said that he had learned of such an intention of Maeda when he met him in Tokyo on the night of Oct. 15. Ozawa also interviewed Maeda for about two hours on Oct. 14. Ozawa explained at the news conference: "We have accepted his proposal in view of the latest scandal and the situation today." Maeda, who is from Aichi Prefecture, is now in his third term. He served as secretary general of Isshin-kai, a policy group in the DPJ supporting Ozawa. He is on the list of candidates for the next Lower House election, announced on Sept. 12 by the DPJ as the first group. In place of Maeda, the DPJ plans to field Inuyama Mayor Yoshihiro Ishida, 63, for Aichi Constituency No. 6. TOKYO 00002877 009 OF 010 11) DPJ hastily settles scandal caused by Yukichi Maeda to stave off possible impact on upcoming general election ASAHI (Page 4) (Excerpts) October 16, 2008 DPJ President Ozawa himself moved to settle the issue of a political fund donation by a multilevel marketing company involving Lower House member Yukichi Maeda, a DPJ member. He has determined that dismissing the scandal caused by one of his aides, who once served as the executive director of the group of mid-ranking and junior lawmakers, would inevitably deal a blow to the party in the upcoming general election. He tried to put an end to the matter, holding an emergency press conference in the predawn hours. Maeda on the afternoon of October 15, immediately before he conveyed his decision to leave the DPJ and relinquish the party endorsement for the next Lower House election, announced his intention to continue his political activities, declaring, "I have nothing to hide." However, after directly hearing the circumstances from Maeda on the 14th and the 15th, Ozawa reportedly told Maeda that he should seek an early settlement of the matter, saying, "You lack a sense of crisis." The Diet members caucus of the party, backed by industry circles, was once headed by Diet Affairs Committee Chairman Kenji Yamaoka, who is seeking a key party post. There has been a growing concern that the matter would hurt the image of the party with scenes of Yamaoka giving a speech on the multilevel marketing system posted on the Internet and aired on TV. 12) Government taps Yamaguchi for BOJ deputy governor post, attaching importance to securing DPJ's approval ASAHI (Page 4) (Abridged slightly) October 16, 2008 Bank of Japan (BOJ) Executive Director Hirohide Yamaguchi will likely take up one of the central bank's two deputy governorships, a post that has remained vacant since April. The selection of BOJ executives was jerked about by the DPJ during the previous Fukuda administration. However, under the Aso administration, the selection of a deputy governor has been smoothly settled. It appears that the ruling and opposition camps fell in step in order to deal with the global financial crisis. Behind-the-scenes coordination of views also proved to be effective. In presenting the name of a candidate for BOJ deputy governor, Aso on the evening of October 15 told reporters at the Kantei, "I made the decision before the G7." One of the aides to the prime minister revealed, "The prime minister made the decision, based not on the person but on principles." In order to fill the deputy governor's post, and send out a message of the government's determination to stabilize the financial market amid the crisis, top priority had to be given to selecting a person who could secure the DPJ's approval. The prime minister made efforts to secretly feel out the wishes of DPJ President Ozawa so that he would not repeat the Fukuda administration's mistake. Ordered by the prime minister, State Minister for Economic and Fiscal Policy Yosano made contact with former Finance Minister Hirohisa Fujii of the DPJ, with whom he is on friendly terms. He asked him about the conditions for Ozawa's TOKYO 00002877 010 OF 010 agreement. They agreed that neither a former finance ministry official nor a scholar should be nominated. All the prime minister cared about was to meet conditions with which the DPJ's approval could be obtained. He did not mind leaving the actual selection of a person to the BOJ. He told reporters on the evening of the 14th, the day before the presentation of the name of a nominee to the Diet, "I am not getting involved in the selection of a candidate for deputy governor this time." The government on the 15th presented 27 personnel appointment proposals for a total of eight government agencies, including the name of a nominee for the BOJ deputy governorship. The ruling parties plan to hear Yamaguchi's policy both in the Lower and Upper Houses on the 21st and obtain approval at plenary sessions of both Houses before the end of next week. Weakening its confrontational stance, the DPJ is now indicating a cooperative stance to passage of bills with an eye on the upcoming dissolution of the Lower House and a snap election. The ruling parties want to take advantage of this situation. The fiscal 2008 supplementary budget bill, the greatest challenge in the current Diet session, is expected to be enacted on the 16th. The bill extending the law governing the MSDF refueling operation in the Indian Ocean will also likely be enacted later in the month. 13) LDP, New Komeito mulling use of hidden reserves worth 3 trillion yen in special budget account for fixed-sum tax cut ASAHI (Top Play) October 16, 2008 The ruling parties have started looking into using portions of reserves set aside for interest-rate fluctuations in the special fiscal investment and loan account to fund a fixed-sum tax cut, which they characterize as the showcase of a new comprehensive economic stimulus package. Surplus reserves from this fiscal year stand at approximately 3 trillion yen. The ruling parties intend to reallocate portions of that amount as so-called hidden funds (maizoukin) to avoid an increase in the issuance of deficit-covering government bonds. However, this three trillion yen in funds is a resource basically used to pay debts. Using this money to the fund a tax cut has a strong flavor of making ends meet with an eye on the upcoming general election. The use of this money will likely be targeted for criticism as hidden borrowing (kakure-shakkin). The fixed-sum tax cut deducts the same amount from the income tax and the local tax regardless of tax payers' annual income. The ruling parties have confirmed their policy of incorporating the tax cut in the new economic stimulus package. Regarding the size of the cut, the New Komeito, which is positive toward the idea, is insisting on more than 65,000 yen for four-member families. This will likely require funding resources worth over 2 trillion yen. SCHIEFFER