JAPANESE MORNING PRESS HIGHLIGHTS 05/21/09

UNCLAS SECTION 01 OF 12 TOKYO 001154

SIPDIS

DEPT FOR E, P, EB, EAP/J, EAP/P, EAP/PD, PA;
WHITE HOUSE/NSC/NEC; JUSTICE FOR STU CHEMTOB IN ANTI-TRUST DIVISION;
TREASURY/OASIA/IMI/JAPAN; DEPT PASS USTR/PUBLIC AFFAIRS OFFICE;
SECDEF FOR JCS-J-5/JAPAN,
DASD/ISA/EAPR/JAPAN; DEPT PASS ELECTRONICALLY TO USDA
FAS/ITP FOR SCHROETER; PACOM HONOLULU FOR PUBLIC DIPLOMACY ADVISOR;
CINCPAC FLT/PA/ COMNAVFORJAPAN/PA.

E.O. 12958: N/A
TAGS: OIIP KMDR KPAO PGOV PINR ECON ELAB JA

SUBJECT: JAPANESE MORNING PRESS HIGHLIGHTS 05/21/09

Index:
1) Top headlines
2) Editorials
3) Prime Minister's daily schedule (Nikkei)

Ambassador to Japan:
4) U.S. ambassador-designate to Japan Roos has few ties to Japan
(Sankei)
5) With appointment of John Roos to be ambassador, President Obama
wants to set up a direct personal channel to Japan (Yomiuri)
6) Japanese reaction to Roos appointment one of complete surprise
(Yomiuri)
7) Roos fits pattern of some previous ambassadors to Japan in the
postwar period (Nikkei)

Security affairs:
8) Democratic Party of Japan Secretary General Okada in speech on
U.S. nuclear umbrella urges government to ask U.S. never to use
nuclear first-strike capability (Asahi)
9) Japanese Communist Party Chairman Shii, meeting Prime Minister
Aso, presses Japan to take lead in international negotiations to
abolish all nuclear weapons (Tokyo Shimbun)

Diet agenda:
10) Liberal Democratic Party to put every effort into passing
budget-related bills by the end of the month (Yomiuri)
11) Diet most likely to be extended 50 days, with Lower House
election possible in August (Mainichi)
12) Opposition camp comes out strongly against extending the Diet
(Mainichi)
13) Hatoyama takes lead of DPJ by setting up shadow cabinet and
setting agenda for Diet confrontation, but skirts delicate issue of
security policy (Nikkei)
14) Okada launches own group in the DPJ of about 60 members,
including Seiji Maehara (Sankei)

Economic affairs:
15) May report of the economy revised upward for the first time in
three years (Nikkei)
16) Finance Minister Yosano withdraws government plan to reach
surplus by fiscal 11 (Tokyo Shimbun)

17) New plan would have advanced economies cut greenhouse emissions
by 40 PERCENT by 2020 (Tokyo Shimbun)

Articles:

1) TOP HEADLINES

Asahi, Yomiuri & Tokyo:
New flu infections confirmed in Tokyo, Kawasaki

Mainichi:
Suicide rate among U.S. soldiers doubles from before Iraq war

Nikkei:
Sony to halve number of parts suppliers to cut procurement costs by
500 billion yen

Sankei:
GDP drops record 15.2 percent in January-March period


TOKYO 00001154 002 OF 012


Akahata:
JCP Chairman Shii expresses resolve in speech to win general
election, Tokyo assembly election

2) EDITORIALS

Asahi:
(1) GDP at record low: Links of deflation and employment feared
(2) Japan Post's sloppy management exposed in case of abuse of
discount postal service

Mainichi:
(1) Worst GDP: Take measures to boost family budgets
(2) Arrest of Kanji testing body executives shows sloppy monitoring
of Education Ministry

Yomiuri:
(1) Implementing additional economic measures urged to overcome
economy at postwar low
(2) Lay judges launched today, with people's awareness of system
remaining low

Nikkei:
(1) Effective measures reflecting economic moves needed for sagging
Japanese economy
(2) Stop disgraceful behavior toward Suu Kyi

Sankei:
(1) Hammer out strategy to put economy on sustainable recovery
track
(2) Japan Post must reform itself

Tokyo Shimbun:
(1) Launch of lay judge system marks shift of key role in
administration of justice from government to citizens
(2) Worst record of GDP: Address policy tasks pending for many
years

Akahata:
(1) Jan-March GDP: Reform capitalism without rules

3) Prime Minister's Official Residence (Kantei)

Prime Minister's schedule, May 20

NIKKEI (Page 2) (Full)
May 21, 2009

7:26 Met deputy chief cabinet secretaries Matsumoto and Asano at the
Kantei. Asano stayed on.
09:00 Attended an Upper House Budget Committee meeting.
12:02 Met Consumer Affairs Minister Noda and Chief Cabinet Secretary
Kawamura at the Kantei.
13:00 Attended the Upper House Budget Committee meeting.
17:00 Met Kawamura and Upper House Budget Committee principal
director Iwanaga. Afterward, met JCP Chairman Shii and Head of
Secretariat Ichida, in the presence of Kawamura.
17:47 Met Prime Minister Bouasone of Laos at the Kantei.
18:39 Met Minister Mentor Lee Kuan Yew of Singapore.
19:31 Met Kawamura.
19:50 Dined at a Hotel Okura restaurant with news organizations'
senior writers and others.

TOKYO 00001154 003 OF 012


22:05 Returned to his official residence.

4) President Obama decides to pick Roos as U.S. ambassador to Japan,
but ties to Japan are weak

SANKEI (Page 8) (Full)
May 21, 2009

Takashi Arimoto, Washington

U.S. President Barack Obama as of May 19 decided to appoint
California lawyer John Roos, 54, as the next ambassador to Japan.
This will be announced shortly. Roos headed the joint fund raising
committee for Obama in California in last year's presidential
election and had been an Obama supporter from an early stage.

Compared to Harvard University Professor Joseph Nye and former
transportation secretary Norman Mineta, who had earlier been tipped
for the post, Roos has no close links with Japan. His appointment as
ambassador can be said to be a "reward" for his contributions to the
campaign.

Recent ambassadors to Japan have consisted of the so-called
"heavyweights," such as former vice president Walter Mondale and
former Senate majority leader Howard Baker. The "selling point" of
Roos, who is not a politician, is his close ties to the President,
like his predecessor Thomas Schieffer.

Roos practiced law after graduating from Stanford University Law
School. He first worked for a leading law firm in Los Angeles. As he
told a Stanford law journal, he moved to Silicon Valley in 1985 in
anticipation of the growth of information-technology companies and
became involved in mergers and acquisitions of IT businesses.
Regarding his political activities, he helped Democratic candidate
Walter Mondale with his campaign for the presidency in 1984. His
relationship with Obama deepened from the time he participated in a
dinner party held in 2005. A few days before Obama announced his
candidacy in February 2007, he held a fundraising party at his
house.

Roos has been described as "one of the earliest and biggest fund
raisers" in the presidential campaign" (New York Times). He is said
to have been instrumental in raising enormous campaign funds through
the Internet and other means.

5) U.S. envoy to Japan: Roos awarded for contributions to election
campaign; Expected to play role of channel to the U.S. President

YOMIURI (Page 2) (Full)
May 21, 2009

Etsunari Kurose, Washington

The U.S. Obama administration's designation on May 19 of John Roos,
a 54-year-old lawyer from Silicon Valley in California, as the next
ambassador to Japan is viewed as "a merit award" for the important
role he had played to raise funds for President Obama in the
election campaign, according to a source close to Japan-U.S.
relations. Roos is certainly to be a direct channel for Japan to the
White House, like former Ambassador Schieffer, who is a close friend
of former President Bush.


TOKYO 00001154 004 OF 012


Roos graduated from Stanford University's law school and he is
currently chief executive officer of a law firm in Silicon Valley
that handles the merger and acquisition of information technology
businesses as its main area of business activities. Roos has had
little to do with Japan. But some say Roos is fit for the role of
strengthening economic ties with Japan through such activities as
negotiating over the U.S. government's annual report of requests to
the Japanese government for regulatory reforms.

The name of former Assistant Secretary of Defense Joseph Nye, who
was recommended by Secretary of State Clinton and the Department of
State, was eventually dropped. This can be taken as indicating that
the president and the White House aimed to take the initiative in
foreign policy toward Japan, "the most important ally in Asia."

6) "Unexpected choice" for Japan

YOMIURI (Page 2) (Abridged)
May 21, 2009

California-based lawyer John Roos is now certain to be appointed
ambassador to Japan. This choice, however, was unexpected to the
Japanese government, according to a government source.

It was not until quite recently that the U.S. government informed
the Japanese government of the decision to name Roos. A high-ranking
official of the Japanese government, who had learned of the Roos
appointment from yesterday's newspapers, looked displeased, saying,
"I haven't heard anything about it." Roos is little known. Even the
Foreign Ministry does not know much about him, according to a senior
official of the Foreign Ministry. There are pending issues between
Japan and the United States, such as realigning U.S. forces in
Japan. The Defense Ministry, according to one of its senior
officials, is also beginning to gather information in its own way
about Roos' views concerning these issues.

For the Japanese government, however, the important factor is how
close the ambassador to Japan is to the president, rather than how
well the ambassador is known. Roos is reportedly close to President
Obama, so some are expecting Roos to act as go-between with Obama.

7) Scholars knowledgeable about Japan, diplomats, political
heavyweights, friends: ambassadors reflect Japan-U.S. relationship

NIKKEI (Page 2) (Full)
May 21, 2009

From scholars knowledgeable about Japan, to diplomats, political
heavyweights, and close friends of the president - U.S. ambassadors
to Japan have reflected the state of and changes in the Japan-U.S.
relationship at a particular time. Looking at the criteria for
appointing ambassador to Japan, one can catch a glimpse of the
United States' motive in selecting John Roos.

Most Japanese government officials perceive Roos's appointment as
unexpected. "He probably does not know anybody in the Japanese
government." However, others place hopes on him to serve as a
powerful go-between for the Japan-U.S. relationship since "President
Obama has picked somebody very close to him," (according to a senior
Ministry of Foreign Affairs official).

Ambassadors to Japan in the 1960s were mostly scholars and diplomats

TOKYO 00001154 005 OF 012


who were knowledgeable about Japan, such as Harvard University
Professor Edwin Reischauer. Ambassadors well-versed in the domestic
circumstances in Japan and the practice of diplomacy were needed to
stabilize the bilateral relationship ruffled by the revision of the
Japan-U.S. Security Treaty in 1960 and other events at that time.

With the intensification of Japan-U.S. trade friction in the 1970s,
the appointment of political heavyweights became prominent. Michael
Mansfield, who became ambassador in 1977, and Walter Mondale, Thomas
Foley, and Howard Baker who served since the 1990s, were former vice
presidents or U.S. Congressional leaders. It is believed that the
appointment of heavyweights who exercised influence on the Congress
was meant to prevent the trade frictions from undermining the very
foundation of bilateral relations.

This trend changed under the second Bush administration. President
George Bush appointed his longtime close friend Thomas Schieffer.
Although Schieffer was not a political heavyweight, he is said to be
"one of the ambassadors who was closest to the President,"
(according to a Republican Party source). His influence is thought
to have been crucial in realizing the meeting between Mrs Sakie
Yokota and other family members of the abduction victims with
President Bush in 2006.

Ambassador-designate Roos is similar to Schieffer in that he was a
major supporter of President Obama in the last election. It is
possible that his personal relationship with Obama may be very
helpful in resolving pending issues between Japan and the U.S.
International University of Japan Professor Tomohito Shinoda
(specializing in Japan-U.S. relations) gives the following comments:
"Since the Obama administration is setting out new foreign policies,
an individual who has no preconceptions or past experience may be
better for Japan-U.S. relations."

Previous U.S. ambassadors to Japan

Name
(date of appointment; former job) Type
Edwin Reischauer
(March 1961; born in Tokyo; scholar and Japan expert) A
Alexis Johnson
(September 1966; deputy under secretary of state) B
Armin Meyer
(May 1969; ambassador to Iran) B
Robert Ingersoll
(February 1972; director of Chicago Chamber of Commerce and
Industry) D
James Hodgson
(June 1974; secretary of labor D
Michael Mansfield
(April 1977; Democratic Senate floor leader) C
Michael Armacost
(April 1989; under secretary of state) B
Walter Mondale
(August 1993; vice president) C
Thomas Foley
(November 1997; House of Representatives speaker) C
Howard Baker
(May 2001; Republican Senate floor leader) C
Thomas Schieffer
(January 2005; joint owner of baseball team with president) E


TOKYO 00001154 006 OF 012


A = persons knowledgeable about Japan
B = diplomats
C = political heavyweights
D = businessmen
E = close friends

8) Japan should call for U.S. to drop preemptive nuke attack option

ASAHI (Page 4) (Full)
May 21, 2009

Katsuya Okada, secretary general of the leading opposition
Democratic Party of Japan (Minshuto),met the press yesterday at the
Japan National Press Club. He said there: "The government has been
asking the United States not to remove the nuclear umbrella. It's
quite inconsistent (of the government) to say something about
nuclear elimination. The government should at least tell the United
States not to use nuclear weapons first."

Okada also said: "In that case, the (U.S.) nuclear umbrella is half
off. But if Japan should come under a nuclear attack, then the
United States is not prohibited even from using nuclear weapons. I
don't think it will become a serious obstacle to Japan's national
security." Okada is enthusiastic about nonnuclear policy as he made
a proposal in August last year to make Northeast Asia a nuclear-free
zone.

9) Japan should take lead in int'l talks for nuke elimination: Shii

TOKYO SHIMBUN (Page 2) (Full)
May 21, 2009

Kazuo Shii, chair of the Japanese Communist Party, met with Prime
Minister Aso yesterday evening in the Diet and told Aso that there
had been a reply from the U.S. Department of State to a letter Shii
sent to U.S. President Obama to emphasize the elimination of nuclear
weapons. Shii also told Aso that the Japanese government should take
a proactive role to lead the international community in the
direction of reducing nuclear weapons.

"I hope Japan, as the only atomic-bombed country, will take the
initiative to start international negotiations for nuclear
elimination," Shii said to Aso. Shii added: "A country that has
nuclear weapons made an appeal (on nuclear elimination. That's the
biggest meaning. I'm surprised, I'm paying attention." With this,
Shii expressed appreciation for Obama's recent speech he delivered
in Prague to promote elimination of all nuclear weapons. Aso took
this view: "If we don't see progress on the nuclear issue of North
Korea, it would be quite hard to go ahead with nuclear weapons
elimination."

10) LDP to make utmost efforts to get extra budget-related bills
through Lower House before end of month; Revision talks to enter
critical stage next week

YOMIURI (Page 4) (Excerpts)
May 21, 2009

The Liberal Democratic Party (LDP) and the Democratic Party of Japan
(DPJ) began yesterday revision talks on bills related to the fiscal
2009 supplementary budget, which are now under deliberation in the
House of Representatives. To avoid protracted deliberations in the

TOKYO 00001154 007 OF 012


House of Councillors, the ruling bloc plans to make every effort to
reach a revision agreement so that the bills can clear the Lower
House before the end of the month. The DPJ's stance is that the fate
of the bills depends on the results of the revision talks. The talks
are likely to enter a crucial phase next week.

Under talks are bills to amend three laws: the Development Bank of
Japan law, the bank share holding limitation law, and the Shoko
Chukin Bank law. A meeting was held yesterday in the Diet building
between the LDP members who submitted the bills and the DPJ's Lower
House Financial Affairs Committee directors to discuss how to
proceed with the talks on the Development Bank and the bank share
bills.

Separate from this, LDP Diet Affairs Committee deputy principal
director Yoshitaka Murata assembled yesterday the directors of
relevant committees and instructed them to work hard to get the
bills passed through the Lower House this week, pointing out the
need to secure a high degree of freedom in dissolving the Lower
House.

But the directors intend to carry out the talks until next week,
with one saying, "If we rush to a vote, the talks with the DPJ might
collapse."

Coordination is underway between the government and the ruling camp
to extend the Diet session for 45 days through July 18. This plan
incorporates the constitutional 60-day rule which allows the Lower
House to readopt the tax reform-related bills that did not clear the
Upper House due to opposition by the opposition parties.

The ruling bloc is considering forgoing the enactment of the
capitalism anti-crisis measures bill, which is not urgent and is
being opposed by the DPJ. The main opposition has already indicated
that it would approve the bill to amend the Japan Society for the
Promotion of Science law. If the DPJ approves the three bills,
including the Development Bank bill, they would be enacted by
extending the Diet session for 45 days. For this reason, the ruling
parties attach importance to reaching an agreement through the
revision talks.

11) Diet session likely be extend for about 50 days; Government,
ruling coalition eyes Lower House election in August or later

MAINICHI (Page 1) (Full)
May 21, 2009

The government and ruling parties yesterday began to consider an
extension of the current Diet session for about 50 days into late
July in order to enact the fiscal 2009 supplementary budget and
related bills. In this connection, Prime Minister Taro Aso and New
Komeito leader Akihiro Ota will hold talks late this month to make a
decision on the matter. If the ongoing Diet session is extended, the
possibility of the next House of Representatives election and the
July 12 Tokyo Metropolitan Assembly election being on the same day
will disappear, and the general election will likely be held in
August or later.

Even if the opposition camp rejects a vote on the extra budget bill
in the House of Councillors, the extra budget will automatically
receive Diet approval. Of the key bills, it will be possible for a
bill amending the National Pension Law to be put to an overriding

TOKYO 00001154 008 OF 012


vote on May 16 in the Lower House; the anti-piracy bill, on May 22;
and a bill revising the special taxation measures law on July 22.

It is predicted, however, that the Lower House will take a vote next
week on some of the five bills related to the extra budget,
including a bill amending the Development Bank of Japan Law, which
is aimed to strengthen support for corporations facing capital
shortfalls. Therefore, it will be possible for the Lower House to
take an override vote on them in late July.

For this reason, the dominant view in the ruling coalition is that
it is necessary to extend the session into late July. Some Liberal
Democratic Party (LDP) members have called for extending the session
until early September.

12) Opposition parties oppose extension of Diet session

MAINICHI (Page 2) (Excerpts)
May 21, 2009

The government and ruling parties have decided to substantially
extend the current session of the Diet. The main opposition
Democratic Party of Japan (DPJ),however, yesterday confirmed with
the Social Democratic Party (SDP) and the People's New Party (PNP)
that they will oppose the ruling coalition's decision. The DPJ now
appears to be taking a strategy of bringing about the dissolution of
the House of Representatives as early as possible, by agreeing to an
early vote on the fiscal 2009 supplementary budget. With the
inauguration of the new DPJ leadership led by President Yukio
Hatoyama, the public support rates for the largest opposition party
have risen. This means that the DPJ now has momentum leading into
the next Lower House election.

The Diet affairs committee chairmen of the DPJ, DPJ and PNP met
yesterday in the Diet building. They agreed on a policy of not
unnecessarily dragging out deliberations at the Diet. DPJ Policy
Research Committee Chairman Masayuki Naoshima told reporters
yesterday in a strong tone: "It is clear that the ruling camp
predicts that they will be able to extend the session if the DPJ
drags out deliberations." He added: "Since there are not many bills
that need deliberations during the current session after (bills that
are now being deliberated on) are settled, the Lower House should be
dissolved as early as possible for a snap election."

The DPJ submitted a no-confidence motion against the Aso cabinet in
late February, when the approval ratings for the Aso administration
were about 10 PERCENT . At that time, it took a strategy of luring
an early dissolution of the Lower House by fanning the flames of
removing Aso from office.

13) Hatoyama-led DPJ to formulate manifesto featuring pension reform
to differentiate itself from LDP

NIKKEI (Page 2) (Excerpts)
May 21, 2009

The shadow cabinet of the major opposition Democratic Party of Japan
(DPJ) met yesterday for the first time under President Yukio
Hatoyama and began formulating the party's manifesto (campaign
pledges) for the next House of Representatives election. To make a
clear distinction with the Liberal Democratic Party (LDP),Hatoyama
intends to put at the center a pension-reform plan like the one that

TOKYO 00001154 009 OF 012


guided the DPJ to an overwhelming victory in the 2007 House of
Councillors election. The party also plans to review an explanation
of revenue sources to which Secretary General Katsuya Okada attaches
importance. But views in the party are split over Hatoyama's stock
argument of constitutional revision and other policy issues. To what
extent Hatoyama can display his policy imprint remains to be seen.

Policy Research Committee Chair Masayuki Naoshima me with Hatoyama
and Okada at party headquarters on May 19 in which Naoshima proposed
the establishment of an internal body to openly discuss the party's
manifesto for the next election. The shadow cabinet meeting
yesterday was also attended by former president Ichiro Ozawa, who is
currently deputy president for election strategy. The meeting
approved a policy course to set up a Naoshima-led manifesto
preparatory committee as early as next week.

The committee's discussion will center on reform of the pension
system. The DPJ aims at integrating occupation-specific pension
programs into a single pension system that combines the tax-funded
basic pension scheme and the income-proportional pension program.
But details have yet to be nailed down, such as when to shift to the
new system and when to raise the consumption tax to cover the cost.

During his presidential campaigning, Hatoyama said, "If it is
shifted to the new system in 20-24 years, there is no need to decide
to hike the consumption tax (now)." Okada, on the other hand,
insisted, "Discussion needs to start now." Naoshima at a press
conference yesterday express his plan to aim at sharing basic
thinking.

How to secure revenue sources is another sticking point. Okada has
been calling for the clarification of funding. The DPJ estimates the
necessary cost for main policy steps, such as an income-subsidy
system for farmers, at about 20 trillion yen. The party plans to
cover the cost by eliminating wasteful spending and using "buried
treasures," but such must be nailed down further. Some in the party
share Okada's assertion and tax revenues are likely to decline due
to the deteriorating economy. For this reason, the preparatory
committee plans to review funding.

14) Formation of Okada group with membership of 60

SANKEI (Page 5) (Full)
May 21, 2009

Democratic Party of Japan (DPJ) lawmakers, who supported DPJ
Secretary General Katsuya Okada in Saturday's presidential election,
held a party last night in Tokyo to establish a group supporting
Okada. Okada lost to President Yukio Hatoyama in the leadership
race. The group decided to hold meetings in the future as well. The
formation of the "Okada group" has resulted in a big change in the
power matrix of the DPJ triggered by the presidential election.

The party, held at the New Otani Hotel in Kioicho, Tokyo, was
suddenly had to be changed to a stand-up dinner party because as
many as 60 DPJ members took part in it. Besides Okada, the
participants included Vice President Seiji Maehara, Deputy Secretary
General Yoshihiko Noda, Vice President Tatsuo Kawabata and their top
group members, and many from the group led by Deputy President Naoto
Kan.

According to a participant, the group decided that its members would

TOKYO 00001154 010 OF 012


carry out political activities to support Okada. Many participants,
including Maehara, called for Okada to become the next party
president. A mid-level lawmaker said: "We will support Mr. Okada and
keep an eye on how the political situation will turn out."

"Since some groups have come under the leadership of Okada, the
group is like the Okada Holdings Group," said another mid-level
member. There is already a proposal floating around to call the
group "Kyugo (95) no kai" after the number of votes he obtained in
the election.

Prior to this event, Okada held a press conference at the Japan
National Press Club. In it, he expressed his view that DPJ Deputy
President Ichiro Ozawa, whose state-paid secretary has been indicted
for accepting alleged illegal donations from Nishimatsu Construction
Co., should fully fulfill his accountability for the donation
scandal. He stated: "I have said that he should explain in an
understandable way how the money was used. If the public still has a
question, he should give a full account."

15) Government to make first upward revision of economic assessment
in May report in three years to "Rate of deterioration has eased"

NIKKEI (Page 1) (Full)
May 21, 2009

The Cabinet Office will revise its overall assessment of the economy
upward for the first time in three years and three months in its May
report due out on May 25. The April report noted: "The economy is
worsening rapidly and is in a severe situation." In the latest
report, the expression is changed to "the rate of deterioration has
eased." Although the government will lower its assessment of
employment conditions, reflecting their continuing deterioration, it
will upgrade its views about exports and production, on which signs
of bottoming out are appearing.

Economic and Fiscal Policy Minister Kaoru Yosano will submit the
monthly report to a meeting of economy-related cabinet ministers on
the 25th. Given the outbreak of the global financial crisis last
fall and subsequent downturn in the Japanese economy, the government
downgraded its overall economic assessment every month from October
of last year through February. In May and April, this view was kept
unchanged.

The first upward revision since February 2006 reflects signs of a
halt in the drops in export and production volumes. Such volumes
started declining last fall, but the index of exports in March rose
on a seasonally adjusted basis for the first time in seven months.
The index of industrial production in March also showed the first
monthly increase in six months.

The April report said, "Exports are declining significantly," and
"industrial production is declining very significantly." But the May
report will upgrade these two assessments to "the drops are coming
to an end."

On employment conditions, the April report said, "The situation is
beginning to worsen rapidly," but the government will downgrade this
view to "the situation is worsening rapidly," focusing on the
jobless rate climbing to 4.8 percent in March. Regarding future
prospects, the latest report will show the government's intention to
continue to carefully watch negative factors for the economy, such

TOKYO 00001154 011 OF 012


as large-scale layoffs.

A report released yesterday by the Cabinet Office showed a record
postwar shrinkage of the gross domestic product (GDP) in the
January-March period. But the view is gradually gaining ground that
the Japanese economy hit bottom in the January-March quarter.

16) Finance Minister Yosano gives up on goal of bringing primary
balance into black by fiscal 2011

TOKYO SHIMBUN (Page 2) (Full)
May 21, 2009

Finance Minister Kaoru Yosano at a meeting of the Upper House Budget
Committee on the afternoon of May 20 announced that he had given up
on the government's fiscal reconstruction goal of bringing the
primary balance into the black by fiscal 2011. He said, "The goal
cannot be attained any longer."

This goal was incorporated in the basic policy guidelines on
economic and fiscal management and structural reforms for the fiscal
2006 national budget, adopted at a meeting of the Koizumi cabinet.

Yosano pointed out the worsened fiscal conditions, saying,
"Government bonds worth 10.8 trillion yen will be issued to finance
the fiscal 2009 extra budget, which will push up obligations of the
central and local governments as of the end of fiscal 2009 to 816
trillion yen or a 168 PERCENT of GDP." He acknowledged that it is
impossible to secure an outlook for bringing the primary balance
into the black, saying, "Chances are the goal cannot be achieved by
fiscal 2011. On the contrary, we could be seven years, eight years
or even 10 years behind schedule. The situation is very serious."

Yosano then said, "We must set a goal somewhere along the line. We
are now looking into timeframes for halving deficits in the primary
balance and for evening out the ratio of the outstanding government
bonds to GDP." He thus indicated a plan to set a new goal in the
basic policy guidelines for the fiscal 2009 budget to be compiled
before the end of next month.

17) Greenhouse gases: 40 PERCENT cut by industrialized countries by
2020; negotiation paper for new framework includes large target
figures

TOKYO SHIMBUN (Page 3) (Full)
May 21, 2009

In an effort to create an international framework to combat climate
change, which will replace the Kyoto Protocol, the chairman of the
special taskforce for the UN Framework Convention on Climate Change
has compiled a negotiation paper, which will serve as a basis for
future talks. The document was revealed on May 20.

The paper will become a draft for a new accord, which will stipulate
approaches to be made by all signatory nations, including the U.S.,
which opted out of the Kyoto Protocol, and developing countries,
such as China, which are at present not obligated to cut greenhouse
gas emissions.

The paper includes as a vision to be shared by various countries,
mid-term and long-term CO2 reduction goals to be attained by
industrialized countries as a whole. Though it does not give any

TOKYO 00001154 012 OF 012


specific figures, it incorporates large figures as reduction
targets, such as "25 PERCENT -40 PERCENT ," "30 PERCENT " and "at
least 40 PERCENT ." Those figures are based on the points made by
the Intergovernmental Panel on Climate Change (IPCC). The paper also
cites major long-term reduction targets to be achieved by 2050, such
as "75 PERCENT -85 PERCENT " and "more than 95 PERCENT ." Commenting
on the inclusion of substantial reduction proposals, a government
source said, "The figures are harsh for an international agreement."
The inclusion of such figures will thus likely affect domestic
discussions on the setting of a mid-term goal.

The paper also includes a reduction to be achieved by developing
countries as a whole. As a mid-term goal, it incorporates "a
substantial amount of" or "15 PERCENT -30 PERCENT " cuts by 2020
from the amount of carbon dioxide emitted when no measures are
taken, and a 20 PERCENT cut in comparison with the 2000 level by

2050.

The paper also mentions such targets as to what level greenhouse gas
concentrations in the atmosphere and temperature rise should be held
down. Chances are that Japan might be urged to set such targets.

ZUMWALT