DAILY SUMMARY OF JAPANESE PRESS 10/31/08

UNCLAS SECTION 01 OF 10 TOKYO 003051

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TAGS: OIIP KMDR KPAO PGOV PINR ECON ELAB JA

SUBJECT: DAILY SUMMARY OF JAPANESE PRESS 10/31/08

INDEX:

(1) Next possible timing for Lower House election: Second
supplementary budget holds key; Prime minister also eyeing
end-of-year period (Asahi)

(2) Lawmakers in favor of early Diet dissolution, including Hosoda
and Oshima, disappointed at Aso's decision (Asahi)

(3) In interview DPJ Secretary General Hatoyama says, "DPJ makes
frontal attack in Diet" (Yomiuri)

(4) SOFA not an obstacle: Nakasone (Ryukyu Shimpo)

(5) One week after crash of U.S. military light aircraft,
uncertainty looming over investigations (Ryukyu Shimpo)

(6) Former U.S. Ambassador to Japan Baker launches group of six
experts to give advice to Japanese companies on business in U.S.
(Nikkei)

(7) Air cargo: ANA to tie up with UPS; Global reorganization
underway following sluggish demand (Nikkei)

(8) U.S. consulate general visits Obama City to inspect Obama fever,
meets mayor, support group for U.S. presidential candidate Barack
Obama (Fukui Shimbun)

ARTICLES:

(1) Next possible timing for Lower House election: Second
supplementary budget holds key; Prime minister also eyeing
end-of-year period

ASAHI (Page 3) (Full)
October 31, 2008

How to handle the second supplementary budget for financing the
implementation of the new set of economic stimulus measures holds
the key to when the prime minister will dissolve the Lower House.

The prime minister during a press conference on October 31 stressed:
"It is necessary to address the anxieties felt by the public by
realizing policies. This is the top priority." In order to make a
public appeal regarding Aso's policy imprint, too, it is
indispensable to pass the second supplementary budget.

However, the DPJ is stepping up its confrontational stance, because
the prime minister has delayed dissolution of the Lower House. Even
if the supplementary budget secures Diet approval because of
priority given to a decision by the Lower House, a revote must be
taken in the Lower House if it is voted down in the opposition
party-controlled Upper House. Great difficulties remain for the
second supplementary budget.

Chances are that the current extraordinary Diet session could be
extended into the new year, because in order to enact the second
supplementary budget bill during the extraordinary Diet session, it
is necessary to significantly extend the session, which is to close
at the end of November. The prime minister during the press
conference on the 30th stated that if it becomes difficult to find a
breakthrough in the confrontation with the DPJ, he would take into

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consideration the possibility of going to the people over the
propriety of the economic package by dissolving the Lower House. As
such, it is conceivable that the Lower House could be dissolved
around the end of the year.

What if the prime minister allowed to the extraordinary Diet session
to adjourn and suspended the submission of the second supplementary
budget bill until the regular Diet session is convened in January
next year? Since the prime minister has a policy of attaching
importance to the economy, passing the second supplementary budget
and the fiscal 2009 budget will become his supreme tasks. The
possibility is, therefore, strong that the Lower House will be
dissolved in April or later after the fiscal 2009 budget is enacted.
However, if the timing for Lower House dissolution is further
delayed and New Komeito, which wants to focus on the Tokyo
Metropolitan Government Assembly election in the summer, shows
disapproval, the prime minister will likely find it impossible to
dissolve the Lower House until the current term ends next
September.

As such, some take the view that the prime minister should not
reveal when he will submit the second supplementary budget. This is
an option that might strengthen the prime minister's power base.

Former Finance Minister Bunmei Ibuki at noon of the 30th said at his
faction meeting, "The prime minister must not say whether or not he
will submit the supplementary budget to the extraordinary Diet
session." As LDP secretary general during the previous Fukuda
administration, Ibuki spearheaded the steering of the Diet up until
the regular Diet session this year. He experienced travails over the
selection of a Bank of Japan governor and budget-related bills
because of the divided Diet. All the more for that reason, he
believes that the prime minister should take the lead in steering
the Diet by keeping to himself when he will submit the second
supplementary budget bill to the Diet.

As a matter of fact, Aso during the press briefing that day simply
noted, "Whether the supplementary budget will secure Diet approval
or not will affect the timing for dissolving the Lower House." He
steered clear of mentioning when the budget bill would be submitted.
He added: "When to dissolve the Lower House is closely related to
the steering of the Diet. I cannot find an answer unless I determine
whether I can obtain cooperation from the DPJ."

(2) Lawmakers in favor of early Diet dissolution, including Hosoda
and Oshima, disappointed at Aso's decision

ASAHI (Page 4) (Full)
October 30, 2008

Prime Minister Taro Aso has decided to put off the general election
planned for November. Following this decision, discord began to
emerge in the ruling camp. Liberal Democratic Party (LDP) Secretary
General Hiroyuki Hosoda and Diet Affairs Committee Chairman Tadamori
Oshima, who used to stress the possibility of an early Diet
dissolution, have been exposed to cold gazes in the political
world.

On the night of Oct. 25, Aso indicated in an Asia-Pacific Conference
summit a willingness to put off the dissolution of the Diet, saying:
"I think that the government should give priority to an
international role over a domestic Diet dissolution." Around that

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time, Secretary General Hosoda found an old piano at a
Japanese-style hotel in Matsue City, his electoral district, and
began to play Beethoven's Piano Sonata No. 8. He might have begun to
feel "his defeat."

Hosoda had stressed in street-corner speeches that day: "It is
desirable for Mr. Aso to win public confidence (in the election)
first and then carry out various policy measures." But Aso had
gradually inclined toward the idea of delaying the election,
affected by persuasion by his friend, Finance Minister Nakagawa.

Hosoda, who comes from the largest Machimura faction, is known as an
expert on circumstances in constituencies. He analyzed that the LDP
would stand more of a chance if the Lower House is dissolved
quickly, rather than allowing confusion to be caused as a result of
Diet dissolution delayed. Hosoda promptly set up his campaign office
upon sensing the prime minister's eagerness for an early Lower House
dissolution.

Hosoda said on the 18th: "It is most desirable for the government to
dissolve the Lower, win public confidence in an election, and then
come up with economic pump-priming measures. On behalf of Mr. Aso, I
dare to say that the Lower House will be soon dissolved." His words
grew the mood of dissolution.

But Aso repeatedly said: "I give priority to policy achievements
over dissolving the Lower House," gradually making Hosoda feel that
he struck out from others. Aso faction chairman Koki Chuma
complained: "I wonder if it is proper for the secretary general to
talk about a specific timetable." A member of the faction also
criticized Hosoda, saying: "Many in the Machimura faction are
calling on the government to quickly dissolve the Lower House. Their
anticipation is reflected in his remarks that will increase the mood
of dissolution."

Many inside and outside the LDP now see Secretary General Hosoda
have not fully communicated with the prime minister. Junior members
who started preparations for the election in response to Hosoda's
remarks have also expressed their discontent with him.

Relations between Hosoda and Election Strategy Council Chairman
Makoto Koga are subtle. Koga had initially advocated an early Diet
dissolution but has begun to call for pushing it back to later time,
exposing cracks appearing within the party executive. Koga proudly
said to his aides on the night of Oct. 28, "It is now likely that
the Lower House will be dissolved when the incumbent members' terms
expire."

Meanwhile, Diet Affairs Committee Chairman Oshima said in a campaign
speech in his electoral district on the 18th:

"The people must be feeling that the government should have a chance
to listen to the people's voices, because three successive prime
ministers assumed office in a row with no election. Based on the
principle of popular sovereignty, the government should call an
election. President Aso should make the decision in the not too
distant future."

In the political world, the argument for an early dissolution had
toned down, but the remark by Oshima sparked such an argument back
to life. Oshima is one of the closest aides to Aso, as admitted even
by Nakagawa and other friends of Aso.

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Oshima, as Diet Affairs Committee chairman in the Abe and Fukuda
cabinets, experienced difficulties in managing political affairs in
the divided Diet since the LDP suffered a crushing defeat in the
House of Councillors' election in the summer of last year. The
Democratic Party of Japan has insisted on the need for the
government to seek the popular will as the just cause for its call
for an early Diet dissolution. To contain such an argument, Oshima
thought there would be no other means but for the government to
swiftly seek the people's confidence and to restore its legitimacy.

Aso drew up this scenario with Oshima: He would ask DPJ President
Ozawa questions in his policy speech at the outset of the
extraordinary Diet session and announce his decision to dissolve the
Lower House, citing the lack of clear-cut replies from Ozawa as the
reason.

When asked by the prime minister to assume the post of chief cabinet
secretary, Oshima declined the offer, because he believed that
nobody but he can explore an appropriate timing for dissolving the
Diet through Diet management. Even after giving up dissolving the
Diet at the outset of the ongoing extraordinary Diet session, Oshima
continued to make efforts, urging the DPJ to respond to early
deliberations, so that the government would be able to dissolve the
Lower House in late October with the achievement of the
supplementary budget.

Seeing the prime minister remained undecided over the timing for the
dissolution, Oshima had voiced concern to members of his support
group.

As feared by Oshima, Aso told him on the night of the 27th: "I am
now determined to carry through the current Diet session." On the
following day, Oshima told reporters: "No matter what the situation
would be, it is my duty to produce a conclusion in the Diet."

Oshima will become the longest serving LDP Diet Affairs Committee
chairman in postwar Japan on Dec. 12. The New Komeito and even the
DPJ viewed Oshima's words as indicating the timing for the
dissolution of the Lower House. Given this, his credibility has been
undermined. Former Secretary General Hidenao Nakagawa said: "Diet
management is expected to become even more difficult than that in
the Abe and Fukuda administrations" in the current Diet session.
Oshima must be keenly feeling a rocky path lies ahead of him.

(3) In interview DPJ Secretary General Hatoyama says, "DPJ makes
frontal attack in Diet"

YOMIURI (Page 4) (Full)
October 30, 2008

-- When do you think will the House of Representatives be
dissolved?

Hatoyama: A dissolution of the Lower House at the end of the current
extraordinary session or at the outset of a regular session next
year is most likely.

-- How do you depict the process of a Lower House dissolution?

Hatoyama: We initially tried to prevent useless prolongation of
deliberations on the supplementary budget, predicting that Prime

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Minister Aso would dissolve the lower chamber earlier. We thought
that we would be able to force a dissolution, since we have learned
that the Prime Minister will necessarily dissolve the Lower House
even if a no-confidence motion is adopted (in the Upper House).
During a Diet debate, we will demonstrate that the DPJ is more
attractive (than the ruling Liberal Democratic Party (LDP)). We will
make a frontal attack gradually by indirect means. We will also take
a tactic of forcing dissolution after completely beating down (Aso
and the ruling coalition).

-- Will the DPJ demand that former Komeito Chairman Junya Yano be
called to testify before the Diet as an unsworn witness?

Hatoyama: We will do it if there is enough time. It is unreasonable
that the religious sect Soka Gakkai's facilities that enjoy tax-free
status are used for election campaigns. I would like to hear Mr.
Yano's experiences at the Diet.

-- How will your party respond if a second supplementary budget is
submitted to the Diet?

Hatoyama: The situation is not that such a budget will easily clear
the Diet. I see that a cash benefit payments scheme is legal
election law violation and it is an idea of carrying out a general
election by distributing public funds. We will have to seriously
discuss whether a second extra budget is most appropriate economic
stimulus measure.

-- Do you think DPJ President Ichiro Ozawa will switch to another
electoral district?

Hatoyama: If (Ozawa) judges that the DPJ will win without switching
to another district, he will not switch. However, when analyzing
each electoral district, it is not that easy for our party to win.
Time will come for Mr. Ozawa to make a decision for a political
change. Switching to another district is the most visible way to
show his determination.

-- What is the goal of your party?

Hatoyama: The minimum goal is to become the largest party. If the
DPJ becomes the largest party in both chambers of the Diet, the LDP
should fall into the opposition. If we fail to win the election, we
may be caught up in a wave of political realignment. We believe that
we should avoid political realignment.

-- Even if the DPJ wins the next Lower House election, it does not
have a single-handed majority in the Upper House. Which do you
expect -- forming a coalition with the Social Democratic Party and
the People's New Party, or the possibility of portion of the LDP
members leaving from the party?

Hatoyama: We envisage both options. If the DPJ wins, there will be a
possibility of political realignment under which some LDP members
would side with us. If we are defeated, the LDP will strengthen the
momentum. As a result, there is a possibility that our party's Upper
House position will be shaken.

(4) SOFA not an obstacle: Nakasone

RYUKYU SHIMPO (Page 2) (Full)
October 31, 2008

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TOKYO-Foreign Minister Hirofumi Nakasone stated his views before the
House of Councillors Foreign Affairs and Defense Committee yesterday
afternoon regarding the recent crash of a U.S. military light
aircraft (in Nago City, Okinawa Prefecture). Okinawa prefectural
police sought to seize the crashed aircraft, but the U.S. military
rejected the police request. "Japanese and U.S. authorities are
inspecting the crash site and they are still investigating the
accident in cooperation," Nakasone stated. He added, "I don't think
the Japan-U.S. Status of Forces Agreement (SOFA) is an obstacle to
the investigation."

Regarding whether the aircraft crash is handled as an accident in
the line of duty, Foreign Ministry North American Affairs Bureau
Director General Shinichi Nishimiya indicated that the pilot was off
duty when the crash took place. "Judging from the various
circumstances," Nishimiya stated before the committee, "we cannot
think the pilot was on duty." He added, "They have not issued a
certificate of official duty so far." Nakasone and Nishimiya were
both replying to questions asked by Tokushin Yamauchi from the
Social Democratic Party. Meanwhile, the U.S. military will relocate
Marines from Okinawa to Guam, and the Japanese government has agreed
with the U.S. government to pay 6.09 billion dollars in sharing the
burden of costs for the Marines' Guam relocation. In this regard,
Defense Minister Yasukazu Hamada indicated that Japan would not
comply even if there is a request from the United States for a
further cost-sharing burden. "We will not change the ceiling (of
Japan's burden sharing)," Hamada stated.

In May 2006, the Japanese and U.S. governments finalized and
released a report regarding their concurrence on the realignment of
U.S. forces in Japan, estimating the total amount of costs for the
Marines' Guam relocation at 10.27 billion dollars. Last month,
however, the U.S. Government Accountability Office (GAO) released a
report describing that the Guam relocation costs will add up to over
15 billion dollars. Hamada was replying to a question asked by
Satoshi Inoue from the Japanese Communist Party.

The U.S. military is also reportedly planning to deploy the MV-22
Osprey, a vertical takeoff and landing aircraft, to Okinawa. Asked
about the possibility of its deployment to Okinawa, Hamada stated
that the Japanese government has received no explanation from the
U.S. government about the U.S. Marine Corps' aircraft plan for 2009.
"There is a general plan to replace CH-46 and CH-53 helicopters
based around the world with Ospreys, so I cannot rule out the
possibility of their being deployed to Okinawa," Hamada added. He
was replying to a question from Yamauchi.

(5) One week after crash of U.S. military light aircraft,
uncertainty looming over investigations

RYUKYU SHIMPO (Page 24) (Full)
October 31, 2008

One week has passed since a U.S. military light aircraft
crash-landed in Makiya, Nago City, Okinawa Prefecture, on the
evening of Oct. 24. The prefectural police sought to seize the
crashed plane, but the U.S. military, based on the Status of Forces
Agreement (SOFA),rejected the police request and moved the plane to
Kadena Air Base. The U.S. military had made the same response when a
U.S. military helicopter crashed into the campus of Okinawa
International University in 2004, which evoked strong reactions from

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residents of the prefecture. The case this time showed that the
biased conditions in the SOFA have been left uncorrected. The U.S.
military allowed the prefectural police to question one of the four
U.S. servicemen aboard. If all the four members leave the prefecture
and return home or to be transferred to other bases before the facts
are found, it may become difficult to prosecute them. Japanese
investigative authorities are required to swiftly take investigative
procedures.

In a meeting of the Okinawa Prefectural Assembly U.S. Military Base
Special Committee on Oct. 27, three days after the accident,
Kiyoharu Hidaka, head of the prefectural police's criminal
investigation department, spoke of the situation in which the U.S.
military has discretion over basic investigations, including the
questioning of witnesses and the examining of aircraft. In response
to a question in the meeting, Hidaka said: "We sought to take
possession of the aircraft after a joint inspection is conducted at
the crash site, but the U.S. rejected our request. We later made the
same request in writing again, but we have not received a response.
The fuselage has not been fully inspected." He then attributed the
U.S. response to the SOFA.

A minute on agreed matters concerning Article 17 of the SOFA and the
special law on criminal matters do not allow Japan to confiscate
U.S. property without the U.S. military's consent.

Hidaka stressed his determination to prosecute the accident as a
case violating the law against aviation dangerous acts, remarking:
"We will strongly ask the U.S. to provide the results of its
inspections of the fuselage and other matters." It is considered
that the accident occurred because the plane ran out of fuel. But
the prefectural police are willing to find out the cause of the
crash by reexamining the fuselage and other matters.

In this case, the U.S. allowed the prefectural police to inspect the
fuselage and to question the pilot, although Japan was not allowed
to do so in the 2004 accident. The accident occurred when the pilot
was off duty. The case in 2004 was dropped in Japan because the U.S.
military exercised primary jurisdiction, but in the case of the
accident this time, Japan has the right to exercise jurisdiction, so
it will be possible for Japan to establish a case.

In the 2004 accident, it was impossible to prosecute the case
because papers were sent with the name column left blank and for
other reasons. In addition, all the four U.S. servicemen aboard were
found to have returned home about two months after the incident. The
SOFA has made it impossible for Japan to exercise its police
authority and judicial power.

But a senior official of the prefectural police eagerly said: "The
law against aviation dangerous acts can be applied to aircraft
crashes resulting in exposing others to danger. (In the latest case
in which Japan has primary jurisdiction) the crash itself will
enable us to prosecute the case, even if the four had arranged to
tell the same story." Even so, the future of investigations is still
uncertain because what happened in the 2004 case could occur this
time.

(6) Former U.S. Ambassador to Japan Baker launches group of six
experts to give advice to Japanese companies on business in U.S.

NIKKEI (Page 2) (Full)

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Evening, October 30, 2008

A new effort by Japanese and U.S. experts to revitalize Japanese
companies' business activities in the U.S. was launched in
Washington on October 29. Former Ambassador to Japan Howard Baker
started a new group "Japan-U.S. Strategic Advisory," which will
broker business talks between Japan and the U.S. The group consists
of six experts from political, bureaucratic and academic circles.
Two experts, including former Vice Foreign Minister Shotaro Yachi,
joined the group from Japan.

The Japan-U.S. Strategic Advisory will serve as a consultant for
Japanese companies that are considering making large-scale
investment or taking a stake in U.S. companies or carrying out M&As
in the U.S. To be precise, the group is assuming major demand in
such areas as nuclear power generation, the environment, transport
and nanotechnology. It plans to deal with wide-ranging business
areas, including analyses of the investment environment, providing
intermediate service and helping M&A negotiations.

Baker acted as a broker when Toshiba decided to buy Westinghouse, a
leading nuclear power generation company. The member of the group
also includes former U.S. Senator Bennett and former Under Secretary
of the U.S. Department of Energy John Tuck.

(7) Air cargo: ANA to tie up with UPS; Global reorganization
underway following sluggish demand

NIKKEI (Page 3) (Full)
October 30, 2008

All Nippon Airways Co. will tie up with United Parcel Service Inc.,
a leading freight distribution company, for air cargo services. The
two companies will fly with each other's air cargoes onboard to
raise the cost efficiency of their flights. They also plan to launch
code-sharing cargo flights. Demand for international freight
services is declining due to the global economic slowdown triggered
by the financial crisis. In their code sharing, ANA will concentrate
its management resources in Asia and UPS on Europe- and U.S.-bound
flights for more efficient operations.

The two companies basically agreed to launch code-sharing flights in
late March 2009. A tie-up between two major businesses, one in the
airline business and the other in the distribution sector, is rare.
International reorganization is underway in the passenger
transportation industry. The tie-up between the two companies will
likely trigger the grouping of air cargo companies with business
partners in different industries.

ANA and UPS have yet to boil down code-sharing flight routes and the
number of such flights. In the joint operations, ANA is expected to
undertake UPS air cargoes bound for China, South Korea and Thailand.
UPS will carry ANA cargoes on its flights bound for European
countries, the U.S. and the Philippines. Since the two companies'
cargo planes have surplus capacity due to a fall in the volume of
cargo transportation, it will be possible for them to rationalize
their business by reducing the number of flights if their
code-sharing flights increase.

UPS is a leading distribution company standing abreast with FedEx of
the U.S. and DHL of Germany. It flies about 600 cargo planes and has
200 offices around the world.

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With its tie-up with ANA, UPS intends to capture some of
distribution demand from Japanese automobile and electronic
manufacturers. ANA currently has only six cargo planes. However, ANA
characterizes air freight transportation as its key business area
over the long term. It views that the tie-up with UPS would enable
it to flexibly increase flights, when the economy picks up to boost
air cargo volume.

According to the International Air Transport Association (IATA),the
global cargo transportation volume in September dropped 7.7 PERCENT
from the same month in the preceding year, registering a
year-on-year drop for the fourth consecutive month starting in June.
The margin of the decline in September was the largest since 2001,
when the terrorist attacks on the U.S. took place. A decline in the
air cargo volume is particularly visible in the Asia-Pacific
region.

(8) U.S. consulate general visits Obama City to inspect Obama fever,
meets mayor, support group for U.S. presidential candidate Barack
Obama

FUKUI SHIMBUN (Page 1) (Full)
October 29, 2008

U.S. Consul General at Osaka-Kobe Edward Dong paid a courtesy call
to Obama City's Mayor Koji Matsuzaki at the city hall on Oct. 28,
just one week before the U.S. presidential election.

The U.S. Consulate General in Osaka-Kobe covers 17 prefectures in
the Hokuriku, Kinki, Shikoku, and Chugoku regions. That day, after
visiting the Maritime Self-Defense Force base in Maizuru City, Kyoto
Prefecture, Dong visited Obama City, where U.S. Democratic
presidential candidate Barack Obama is a hot topic of conversations
among its residents.

Matsuzaki told Dong:

"The world is paying attention to our city because its name is also
Obama. We would like to take advantage of this to boost tourism and
other industries. So, we want Mr. Obama to win the election."

Dong said in Japanese with a smile: "Whichever wins, there will be
no change in U.S.-Japan relations."

Asked by reporters about the local population's growing attention to
the U.S presidential race, Dong said:

"Since the United States has a great impact on the world, I am not
surprised that the residents in Obama City are highly interested in
the election. It is only natural for the presidential race to help
promote tourism in Obama City."

Asked about the possibility of Obama visiting Obama City, Dong said:
"I have no idea."

After the meeting, Matsuzaki presented a pair of Wakasa-lacquered
chopsticks to Dong. Later in the day, Dong also met Secretary
General Fujiwara of a group of local citizens cheering Obama on its
own. Fujiwara told Dong that there are now more American tourists to
Obama City.


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SCHIEFFER