DAILY SUMMARY OF JAPANESE PRESS 05/21/09

UNCLAS SECTION 01 OF 15 TOKYO 001160 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: DAILY SUMMARY OF JAPANESE PRESS 05/21/09 INDEX: INDEX: (1) Appointment of Roos as ambassador to Japan might reflect Obama's stance of prioritizing Japan (Asahi) (2) With Obama aides taking lead, Roos nominated as new U.S. ambassador to Japan (Nikkei) (3) Displeasure in Japanese government evident about the appointment of the new U.S. ambassador to Japan: "We haven't heard a thing about it!" (Yomiuri) (4) "Asa Zuba!": "Upset" in appointment of U.S. ambassador to Japan; Motive and connection with fund-raising capability (TBS) (5) Forcible port call by U.S. minesweepers; arrogant consul general (Sekai) (6) Interview with U.S. special envoy Bosworth: Academic brains needed for North Korea issue (Yomiuri) (7) Chairman Shii at meeting with Prime Minister Aso: Japanese government should take initiative in international talks for abolition of nuclear arms (Akahata) (8) GDP dips 15.2 percent in January-March quarter: Economists project positive growth in April-June quarter (Nikkei) (9) Plan to move JAXA to Cabinet Office scrapped due to resistance from MEXT and education policy clique in the Diet (Sankei) (10) Poll on Aso cabinet, political parties, DPJ's leadership change (Tokyo Shimbun) ARTICLES: (1) Appointment of Roos as ambassador to Japan might reflect Obama's stance of prioritizing Japan ASAHI (Page 3) (Slightly abridged) May 21, 2009 By Yoichi Kato, American General Bureau chief The U.S. administration of President Barack Obama unexpectedly picked John Roos as the next U.S. ambassador to Japan over Harvard University Professor Joseph Nye, a leading Democrat who had been viewed as the most likely candidate. Roos is a lawyer with high-tech companies in Silicon Valley as his clients. Many U.S. government officials and Japan experts in Washington explain the selection of Roos demonstrates President Obama's stance of placing emphasis on Japan in his own style. Priority given to relationship of trust over experience A White House official responsible for personnel appointments confidentially said on May 19: "(Roos) is very close to the president. This nomination is unique and must be welcomed." The selection of a suitable person for the ambassadorship in Japan TOKYO 00001160 002 OF 015 was started prior to the inauguration of the Obama administration in January, in line with work to form Asian teams in the State Department and the Defense Department. In an early stage, the government decided to nominate Nye, focusing on his profound knowledge of Japan-U.S. relations and overall foreign affairs. Even after this, though, it continued to look for other candidates. The government first considered choosing someone from among prominent politicians. Politician-turned ambassadors include former vice president Walter Mondale, who had the experience of being named as Democratic candidate for the presidency, and former House speaker Thomas Foley. This time, the names of former Senator Hagel (Republican) and former transport secretary Mineta were cited, but these options fizzled out. In the final stage, the names of political supporters or friends of Obama floated, as previous president George Bush picked as ambassador to Japan Thomas Schieffer, who is on close terms with Bush. Regarding the favorable effect of selection of someone close to the president, former National Security Council senior Asia director Michael Green said: "The selection would be a big plus for Japan, because he can directly talk with the president over the phone at crucial moments." The nomination of Roos should bring about this favorable effect. Officials responsible for Asian affairs recommended Nye, but Obama chose Roos, also taking into consideration advice by his aides. Former Boeing Japan President Robert Orr, a supporter of Obama, made this analysis: "The president might have had a desire to demonstrate his own policy identity in selecting the ambassadorship." Some say that it is not correct to think that Roos was selected by rejecting Nye. But there is the view that the Nye nomination became entangled in a confrontation between the White House and the State Department over personnel appointments for posts responsible for foreign affairs. Their analysis is that Nye was shunned by those who are close to Obama and affiliated with Secretary Hillary Clinton. Expectations and disappointments on selection of unfamiliar Roos U.S. government officials are nervous about the possibility that the selection of Roos could be taken in Japan as the U.S. treating Japan lightly. When considering Nye's profound knowledge of and long experience in Japan-U.S. relations and diplomatic affairs, as well as the political weight of former ambassadors Mondale and Foley under the Democratic administration, it might be natural for Roos to be seen as a minor person. Even U.S. experts on Japan are overheard expressing a sense of disappointment at the nomination of Roos. But people involved in the selection process all say that the selection was not made with an irresponsible attitude. A person concerned emphasized: "The White House understands it is very important to find the most suitable person for Japan, so a lot of time and efforts were poured into the selection process. The selection of Roos must be gratifying for Japan." Orr commented: "It is not rare for a president to appoint as TOKYO 00001160 003 OF 015 ambassador a person who contributed to raising election funds and is close to him. President Franklin Roosevelt chose Joseph Kennedy, whose son became president afterward, as ambassador to Britain. The White House places high expectations on Roos' business experience, counting on his capability to deal flexibly with changes. He has assisted high-tech, growth-oriented companies as a corporate lawyer. Such a natural aptitude is particularly important when uncertainty is looming over the future of Japanese politics. Some people explain that Roos' lack of experience and knowledge on Japan and Japan-U.S. relations would be sufficiently covered by the excellent embassy staff in Tokyo and appointment of a special aide for him, if necessary. The focus of attention will be on how the U.S. government will introduce Roos, who is quite a stranger to Japanese and persons connected to Japan-U.S. relations. (2) With Obama aides taking lead, Roos nominated as new U.S. ambassador to Japan NIKKEI (Page 3) (Abridged slightly) May 21, 2009 Itaru Oishi, Washington The U.S. Obama administration's efforts to determine the new ambassador to Japan experienced complications at the last phase, but it has now informally decided to give the post to lawyer John Roos, 54, who is little known in Japan. A review of the administration's ambassadorial appointments, including those to Iraq and China, offers a glimpse into a conflict between the White House group close to President Obama and the State Department led by Secretary of State Hillary Clinton. After ensuring his victory last November to become new U.S. president, Obama met with Chuck Hagel, who had just retired from politics. Although he was a Republican, Hagel was a mentor to Obama, who had little experience in foreign affairs. There, Obama reportedly asked Hagel, "Are you interested in Beijing, Tokyo, or London?" Hagel replied that he had no intention of accepting such posts. Obama had received a report from the U.S. Embassy in Tokyo that the Japanese government was expecting the appointment of someone with high international recognition comparable to Mike Mansfield and Walter Mondale. Riding on the coattails of Obama's high popularity, the Democratic Party achieved an overwhelming victory. No political heavyweights lost their seats and therefore did not look for ambassadorial posts. The Obama transition team checked whether there was any incumbent lawmaker willing to become an ambassador. The team had an eye on Japanese-American Senator Daniel Inouye and others as potential candidates, but Inouye did not show any interest, for he was supposed to hold the rotating chairmanship of the powerful Senate Appropriations Committee. Running out of potential candidates, a State Department official in TOKYO 00001160 004 OF 015 charge of Asia policy tuned his eyes to Harvard University Professor Joseph Nye. In January, Clinton aides presented Nye with an "ambassadorial post in Asia" and began doing the spadework for his appointment by Obama. This sparked the observation that Nye was the leading candidate. Obama received many other recommendations. In late February, the State Department felt that it was at a disadvantage. The reason was because the individual the State Department regarded as most fit to become ambassador to Iraq was dropped and the post went instead to Assistant Secretary of State Christopher Hill, who was well received by Vice President Joe Biden and other Democratic executives. Around that time, such top presidential aides as Senior Advisor David Axelrod and Chief of Staff Rahm Emanuel were desperately trying to cut into Republicans with the aim of boosting (Democrats') power in the Senate. They used cabinet and ambassadorial posts as bait for trading for congressional seats. Their approach expanded the gulf with the Clinton-led State Department over personnel appointments. On May 16, President Obama announced his pick for ambassador to China. The White House and the State Department had locked horns up to the last minute. There was a possibility that Republican Utah Gov. Jon Huntsman, who has now been nominated envoy to China, would become Obama's rival in the 2012 presidential race. Huntsman was persuaded by Asian Affairs Director Jeffery Bader of the National Security Council, which is under the direct supervision of the President. Nevertheless, Obama aides struggled to find an individual no less significant than Nye as candidate for the ambassador to Japan. Unable to find any former cabinet minister or legislator to become the envoy to Japan, the Obama administration came up with the idea of appointing an influential Obama supporter. Obama aides who wanted justification, protested, "Mr. Nye has met with President Obama just once." Aides' coordination narrowed down the candidates to two individuals: Roos and David Andrews, a former legal adviser to the Department of State, who has forged a friendship with Obama as a fellow black lawyer. Both served as counselors for major corporations. Obama eventually chose Roos, who had significantly contributed to his victory through fundraising and who is better versed in practical business affairs (than Andrews). Roos, one of the biggest check collectors for Obama By Ken Moriyasu, International Department In early 2005, soon after Obama was elected to the Senate, his staffers began making contacts with influential Democratic supporters. A dinner party held around that time in San Francisco brought together some 20 major donors to John Kerry, who had been defeated in the 2004 presidential election. John Roos was among the ¶20. Two years later, Roos invited some 100 business leaders to his Silicon Valley home and raised 300,000 dollars overnight. A U.S. newspaper described Roos, Obama's Northern California finance chair, as "one of the biggest check collectors for Obama." Looking back at TOKYO 00001160 005 OF 015 those days, Roos said, "Compared to Hillary Clinton, who had strong political and brand power, Mr. Obama was like a Silicon Valley start-up." Driven by his desire to work with and advise young entrepreneurs, Roos, as a lawyer, decided in 1998 to join Wilson, Sonsini, Goodrich & Rosati (WSGR),a small law firm back then. He has established himself as an expert in corporate financing specialized in information technology (IT),home appliances, and biotechnology. He has developed the firm's clients, which now include not only major corporations, such as Google and Apple, but also ventures like YouTube. The WSGR has grown into a major law firm. Roos became the law firm's CEO in 2005. Reportedly, the WSGR is in contracts with over 50 Japanese companies. (3) Displeasure in Japanese government evident about the appointment of the new U.S. ambassador to Japan: "We haven't heard a thing about it!" YOMIURI ONLINE (Full) 00:16, May 21, 2009 (U.S. President Barack Obama) has decided to appoint John Roos as the new ambassador to Japan. A Japanese government source described this as an "unexpected appointment." The Japanese government has received no notice (about Roos' appointment) from the U.S. government. A high-ranking government official, who learned of Roos' appointment through newspaper reports on May 20, expressed displeasure, saying, "We haven't heard a thing about it." Information on Roos is so scarce that even a senior Foreign Ministry official said, "We don't know what kind of person he is." There are a plethora of outstanding issues between Japan and the United States, such as the realignment of U.S. forces in Japan. Some have begun making moves to independently collect information on Roos' thinking on such issues, according to a senior Defense Ministry official. At the same time, some in the Japanese government are attaching more importance to the U.S. ambassador's "close ties" to the President rather than to his public name recognition. Roos is reportedly close to President Obama, and some pin their hopes on him to serve as a mediator between (the Japanese government) and President Obama. ? A possible gap with the ambassador to China ? Meanwhile, President Obama (on Sunday) named Utah Governor Jon Huntsman the new U.S. ambassador to China. Comparing the ambassadors to Japan and China, a diplomatic source said, "There seems to be a qualitative difference between the two. I felt surprised (by Roos' appointment)." His view is shared by many on the Japanese side. (4) "Asa Zuba!": "Upset" in appointment of U.S. ambassador to Japan; Motive and connection with fund-raising capability TBS Television May 21, 2009 The Obama administration has appointed as its ambassador to Japan a lawyer named John Roos, a Silicon Valley consultant who is totally unknown in Japan. TOKYO 00001160 006 OF 015 When program host Mino asked: "How about that?" journalist Nobuhiko Shima said: "Probably no one knows him (in Japan). This is an 'upset' because people were hoping for a heavyweight ambassador." Why did President Barack Obama appoint someone who is not particularly knowledgeable about Japan? According to Shima, Roos is one of 20 people who raised enormous amounts of donations in the last presidential election and is a close confidante of Obama. Shima said that "people who distinguish themselves in fund raising during presidential elections are often rewarded with ambassadorial appointments" in America. The appointment of President John F. Kennedy's father, Joseph Kennedy, as ambassador to the UK by President Franklin Roosevelt during the Great Depression was a good example. In other words, this is a reward for the ability to collect donations. Be that as it may, does this upset - a confidante who did well in campaign fund raising being appointed instead of Harvard University Professor Joseph Nye, a Democratic heavyweight and Japan expert, who was favored by Hillary Clinton and the State Department and regarded as the most likely appointee - have anything to do with hard feelings from the presidential election? The ambassadorial appointment also came as a surprise for Japan. Since Roos' ability is unknown, Shima said, "I wonder if he will be able to convey the Futenma base issue in Okinawa accurately or pass on America's messages to Japan properly." We don't want to think that the hidden motive is to tap his fund raising ability to "collect money in Japan"... (5) Forcible port call by U.S. minesweepers; arrogant consul general SEKAI (Pages 220-201) (Full) June 2009 Tsuyoshi Matsumoto, Ryukyu Shimpo reporter The presence of just one diplomat can hurt the feelings of the citizens of his host country (or community) and seriously undermine the image of his home country. Amid actions by the U.S. Forces in Okinawa which give priority only to military considerations and ignore the wishes of the local communities, the behavior of U.S. Consul General to Okinawa Kevin Maher is causing bitterness among Okinawans. In the June 2008 issue of this magazine, I stated that this unusual consul general was well known for his straight talking and was thought to be "like a soldier in uniform." Since then, Maher's behavior has worsened. His arrogance, which has aggravated Okinawa's antipathy to him, stands out. On April 3, the U.S. minesweepers "Patriot" and "Guardian," based at the U.S. naval base in Sasebo, entered the port of Ishigaki amid angry protests of citizens' groups. Ishigaki Mayor Nagateru Ohama, the official responsible for the administration of the port, had TOKYO 00001160 007 OF 015 voiced his opposition repeatedly, and Okinawa Governor Hirokazu Nakaima had also opposed port calls other than in an emergency. Yet, the two ships arrived despite such opposition. The purpose of the port call was supposedly "goodwill" and "rest and recuperation for the crew," but there is no doubt that the visit was for investigating the topography of the port, in order for the U.S. forces to flex its muscles in the southern part of Okinawa in an emergency. Ohama reacted strongly, stating that, "This is an arbitrary imposition of goodwill. No consideration whatsoever has been given to the local community's feelings." The port of Ishigaki, which is the center of the lifeline for the island of Ishigaki and nearby islands, is designated as an important port by the national government. In 1999, the Ishigaki Municipal Assembly issued a rare "Declaration of a Port of Peace." This document was passed by the local legislature based on Mayor Ohama's strong determination despite the Ministry of Foreign Affairs expressing its displeasure. The declaration calls for full implementation of the three non-nuclear principles based on the spirit of the peace constitution and the promotion of the use of the port for the achievement of peace and prosperity. This document was an expression of the assembly's will, mindful of the danger of using the port for military purposes for the islanders. Maher and the U.S. Navy had also planned a port call at Ishigaki in June 2007, but the destination was changed to Sonai on the island of Yonaguni close to Taiwan due to strong local opposition. This recent visit marks the first time a U.S. vessel has entered a civilian port in Okinawa after reversion to Japanese administration. Maher's provocative posture of trying to make this port call that was thwarted two years ago by hook or by crook was evident at every turn. After the minesweepers anchored, Maher and his party were prevented from alighting from the ships for five hours, having been blocked by the protesting citizens. The police pushed their way through the crowd to breach the barricade forcibly. To avoid untoward incidents, Ishigaki City had asked that: 1) U.S. military personnel should use designated gates; and 2) the consul general, who was staying overnight in a hotel in the city, should not go to the port. This was ignored by Maher. He provoked local residents several times by going right in front of them and making U-turns each time. As the Americans were pushing through the crowd, he shouted "bakayaro (idiots)" at the citizens in the jostle. Furthermore, there was the incident where the "No to the port call" banner put up by the "Association of Ishigaki Women for Article 9 (of the Constitution)" was stolen. Despite the fact that security cameras at the port clearly showed two American soldiers, who were crew members for sure, removing the banner, Maher made the astounding comment that, "They were simply disposing of trash. Can you call this theft?" His sensitivity of defiantly calling an expression of dissent against the U.S. soldiers' behavior as "trash disposal" is simply outrageous. The question of military bases in Okinawa has become an issue between the Japanese and U.S. governments for over a decade. One can assume that the arrival of this consul general who treats the Okinawan people with disdain with a straight face is a reflection of the U.S. government's contempt of Okinawa. TOKYO 00001160 008 OF 015 During this visit to Ishigaki, Maher held a party with only 14 people, mostly members of the Ishigaki chapter of the All Japan Defense Association (AJDA),wining and dining them onboard the ships. He declared defiantly: "It was an amicable party." This AJDA chapter had conducted a survey of restaurants and bars in downtown Ishigaki and presented a list of a dozen or so establishments willing to accept American soldiers to Maher. This was nothing but ostentatious "goodwill" based on the provision of special favors. The deliberate manipulation of information, using his few friends in Okinawa to give the impression that Okinawans are friendly to the U.S. Forces, is the hallmark of Maher. This is akin to the operation of Central Intelligence Agency (CIA) agents sent to Latin America to suppress anti-American countries. He rarely interacts with political and economic leaders in the Okinawan society and spends his time building relations only with people holding values similar to his. He practically does not have any contact with Governor Nakaima, who differs with him on the relocation of the Futenma Air Station. He does not listen to opinions that do not suit his ears and behaves very differently from previous consuls general. A top official of the economic federation in Okinawa says furiously: "He should stop insulting Okinawans. He is the worst that we have ever seen. We don't need somebody like him." Maher has been "promoted" to head the Japan desk of the U.S. Department of State. We are quite happy to see someone who has not done his job of listening to the Okinawan people's views and who has merely tried to impose the U.S. forces' own values leave Okinawa, but it is depressing to know that this "information manipulator," who distorts the image of Okinawa, will be moving to Washington to pull the strings behind the scenes. (6) Interview with U.S. special envoy Bosworth: Academic brains needed for North Korea issue YOMIURI (Page 7) (Full) May 21, 2009 Keiichi Honma, Boston Three months have passed since Stephen Bosworth, 69, was appointed the U.S. government's special envoy for the North Korean nuclear issue. In an unusual arrangement, during this period, he has continued to serve as the dean of the Fletcher School, the graduate school of international affairs of Tufts University, outside Boston in the northeast of the United States. Bosworth gave an interview to Yomiuri Shimbun on May 19. He disclosed that he maintains contact with the Department of State and other offices via video conference and showed confidence that he will be "able to deal with North Korea issues anytime." Books on North Korea lined the bookshelves in the dean's office at Fletcher School. Bosworth said: "I have access to lots of information on North Korea in this room through the telephone, e-mails, media, and books." He also uses special communications equipment for classified information. After his term as ambassador to the Republic of Korea ended in 2001, the culmination of a diplomatic career spanning more than 30 years, Bosworth was asked to serve as dean at Fletcher School. He lives TOKYO 00001160 009 OF 015 with his wife in Boston. After his appointment as special envoy by Secretary Hillary Clinton in February, he has been flying to the State Department in Washington for one or two days every week to meet with Clinton and other officials. Normally, he spends his time making school policy, screening students for admission, managing funds, and handling other matters for the graduate school in Boston. While there is criticism that wearing two hats makes him unable to deal with the DPRK nuclear issue adequately, Bosworth said: "I am not concerned. There are many people in Boston who possess helpful knowledge on the issues we are facing," stressing the benefits of being able to discuss the nuclear issue with academics at Harvard University and other institutions. When he was ambassador to the ROK, Bosworth played an important role behind the scenes during the visits to North Korea by then President Kim Daejung and U.S. Secretary of State Madeleine Albright. He indicated that, "It is important to open your heart and listen carefully to other people's opinions (when dealing with people on the Korean peninsula)." (7) Chairman Shii at meeting with Prime Minister Aso: Japanese government should take initiative in international talks for abolition of nuclear arms AKAHATA (Page 1) (Full) May 21, 2009 Japanese Communist Party (JCP) Chairman Kazuo Shii met with Prime Minister Taro Aso at the Diet on May 20 and asked that Japan take the initiative in preparing for international negotiations for the abolition of nuclear weapons. Other JCP officials present at the meeting were Tadayoshi Ichida, head of JCP secretariat, and Diet affairs chief Keiji Kokuta, while Chief Cabinet Secretary Takeo Kawamura also attended from the government side. During the meeting, Shii reported that he had written a letter to U.S. President Barack Obama, who set the achievement of a "nuclear-free world" as a national goal of the United States in his speech in Prague, the Czech Republic, in April. Shii asked Obama to take the initiative in the complete elimination of nuclear arms, and in return he had received a letter of appreciation from the U.S. government. Shii also reported that the U.S government's reply noted that "we would like to cooperate with the Japanese government to make concrete progress in achieving the goal" of abolition of nuclear arms. He told the prime minister: "As the government of an atomic-bombed country, Japan should take the initiative in calling upon the international community to start negotiations that set the abolition of nuclear arms as the main theme." He added that, "As the only atomic-bombed country, Japan has the moral responsibility and right to do so." Commenting on Obama's speech in Prague, Aso said: "This was the best speech by an American president that I have ever heard. What is most significant about the speech is that a nuclear power is making an appeal (for a 'nuclear-free world') for the first time," indicating that he was surprised and had taken notes on the speech. On the Japanese government's taking the initiative on the abolition TOKYO 00001160 010 OF 015 of nuclear weapons, the prime minister also stated that no progress can be made without resolving the question of North Korea's development of nuclear arms. In response to this, Shii stressed: "While ending the DPRK's nuclear development program is indeed an urgent issue, it is important for the international community to work on the abolition of nuclear weapons promptly, if only to make progress in this issue. This will also help resolve the North Korea issue." He reiterated his request for taking the initiative in international talks for nuclear abolition. (8) GDP dips 15.2 percent in January-March quarter: Economists project positive growth in April-June quarter NIKKEI (Page 3) (Abridged slightly) May 21, 2009 The gross domestic product (GDP) in real terms for the January-March quarter dropped 4.0 PERCENT (annualized 15.2 PERCENT ) from the previous quarter, marking the greatest plunge in the postwar period. Although there is still a long way to go before the economy recovers on a full scale, there have emerged signs that the decline in industrial output has bottomed out with inventory adjustments making progress. There are also indications of exports picking up. As such, there is a strong possibility of GDP in the April-June quarter achieving positive growth. What will the prospects for 2009? Nihon Keizai Shimbun envisages the future course of the Japanese economy, based on views of private-sector economists. Inventory adjustment Signs of an end of the decline of industrial output are already visible. The mined and manufactured production index rose 1.6 PERCENT in March in comparison with the previous month's level, positive growth after a hiatus of six months. Completing inventory adjustments of liquid crystal panels, Sharp has started full operations at its main plant. Panasonic is also fully operating at its existing plasma panel plant since May. This is due to demand from emerging countries. President Fumio Otsubo believes that the government's eco-point system will also stimulate domestic demand. With inventories of thin sheets used for automobiles or as construction materials dropping to an appropriate level, the Japan Iron and Steel Federation Chairman Shoji Muneoka said, "We will become able to manufacture amount corresponding to actual demand, starting in July." The inventory rate in the production industry is declining as a whole. Many economists now think that industrial output will take an upward turn in the April-June quarter, says Yasuo Goto of the Mitsubishi Research Institute. Regarding exports, which serve as a driving force for growth, some Asia-bound exports are showing signs of bottoming out. The major focus is on China. Toso plans to boost production, following increased demand for resin from China, which has come up with economic stimulus package worth approximately 55 trillion yen. Kiichi Murashima of Nikko City Group Securities sees, "Exports will increase towards the summer due to progress in inventory adjustments throughout the world." U.S. risks TOKYO 00001160 011 OF 015 However, many economists see that whether the Japanese economy will rebound or not will depend on whether the U.S. and European economies will turn around, as Masaaki Kanno of JP Morgan Securities noted. Investment in the housing sector in the U.S. is seesawing. There are many risk factors, such as financial instability and management crisis at leading automakers. Ryutaro Kono of BNP Paribas said: "The U.S. and European economies will not turn around anytime soon. Exports will become sluggish in the remaining half of 2009." Consumption holds the key to domestic demand. Though domestic demand is increasing, boosted by the government distribution of flat-sum cash handouts, anxieties about the future remain. The total unemployment rate in March stood at 4.8 PERCENT , down 0.7 points only in two months. Takahide Kiuchi of Nomura Securities said, "Employment adjustments will likely continue for more than a year. It is hard to expect full consumption recovery." A decline in income will serve as a setback to the economy. Junichiro Takeuchi of the Japan Economic Research Center noted, "Salaried workers will feel that the economy is worsening, when they see their bonuses transferred to their bank accounts at the end of June. There is a slim chance of their desire to spend heightening." There is also a deflationary spiral of corporate income dropping due to a fall in prices as a result of a shortage of demand putting a dent in wages. Effects of stimulus measures What are the effects of the government's stimulus measures? With the introduction of an eco-car tax break in April, the amount of orders Nissan Motors received has increased roughly 30 PERCENT , compared with the same month year before. Yuji Shimanaka of Mitsubishi UFJ Securities pointed out, "Boosted public works will produce effects from around the April-June term." Even so, sales of autos other than eco-cars remain sluggish. Ultimate demand has yet to make full recovery. Economists envisage that the economy will pick up gradually in the future, or seesaw or lose steam toward the end of the year. In any case, it is far from making a V-shaped sharp recovery. If the effects of the stimulus package weaken, the GDP could make a downward turn again in the remaining half of the next fiscal year," according to Yoshiki Shinke of the Dai-Ichi Life Research Institute. Disturbing factors A new factor that is casting a pall over the future of the economy is the new influenza strain, which is spreading in the metropolitan zone now. JTB said that 4 PERCENT of domestic trips to the Kansai district for the May-June period were cancelled in three days from the 16th through the 18th. If the current spread of flu results in a pandemic, trade will shrink. Should that occur, Japan would find it difficult to earn money in exporting goods. Mitsumaru Kumagai of the Daiwa Institute of Research said, "A 1 PERCENT drop in trade volume would push down the growth of the world economy by 0.3 PERCENT ." The new influenza strain now spreading in various countries is attenuated in virulence. Yamamoto of the Mizuho Research Institute said, "If anxieties as we are feeling now die down, the effect of the new influenza strain would be limited." TOKYO 00001160 012 OF 015 (9) Plan to move JAXA to Cabinet Office scrapped due to resistance from MEXT and education policy clique in the Diet SANKEI (Page 5) (Full) May 21, 2009 The plan to transfer the independent administrative agency Japan Aerospace Exploration Agency (JAXA) from the Ministry of Education, Culture, Sports, Science and Technology (MEXT) to the Cabinet Office, which was supposed to be the "centerpiece" of the government's basic space program to be compiled by late May, will be scrapped due to fierce opposition from MEXT and Liberal Democratic Party (LDP) Diet members specializing in education and culture issues (education and culture zoku). There had been high hopes for the development of the space industry with the development of H-2A rockets being moved to JAXA, but it appears that the culture in the government and the ruling parties of giving greater priority to bureaucratic interests, rather than national interest, remains unchanged. Space development had been limited to peaceful purposes, but with the enactment of the Basic Space Law in August 2008, space technology can now be used for security and commercial purposes. The government plans to draw up a five-year basic program in FY2009 and is considering moving JAXA, which takes up 60 PERCENT of the space development budget, to the Cabinet Office. This is because the transfer is envisioned to enable JAXA, whose activities are limited to "basic research," to engage in collaboration among industry, the academia, and the government and play a central role in future space development. Chief Cabinet Secretary Takeo Kawamura has emphasized the significance of the transfer on April 22. He said that, "The MEXT alone will not be able to beef up the functions relating to space development." However, this was met with a counteroffensive from MEXT immediately. At a news conference on April 28, MEXT Minister Ryu Shionoya expressed his opposition. He said: "JAXA should accomplish its mission under MEXT." LDP education and culture zoku also resisted this fiercely: "The integration of JAXA took place only three years ago. The transfer is premature." The education and culture zoku consist of many political heavyweights, such as former prime minister Yoshiro Mori and former chief cabinet secretary Nobutaka Machimura. Even Prime Minister Taro Aso and Kawamura were formerly education and culture zoku members. Therefore, advocates of the transfer were put in a very difficult position and the plan to include the transfer in the basic program is now being scrapped because "it is not advisable to have intraparty conflict before the House of Representatives election," (according to a mid-ranking LDP member). Seiko Noda, state minister for space development, reported the situation to Kawamura on May ¶19. (10) Poll on Aso cabinet, political parties, DPJ's leadership change TOKYO SHIMBUN (Page 2) (Full) May 18, 2009 TOKYO 00001160 013 OF 015 Questions & Answers (Figures shown in percentage. Parentheses denote the results of the last survey conducted May 11-12.) Q: Do you support the Aso cabinet? Yes 26.2 (28.0) No 60.2 (55.1) Don't know (D/K) + no answer (N/A) 13.6 (16.9) Q: (Only for those who answered "yes" to the previous question) What's the primary reason for your approval of the Aso cabinet? Pick only one from among those listed below. The prime minister is trustworthy 7.1 (12.6) Because it's a coalition cabinet of the Liberal Democratic Party and the New Komeito 10.9 (9.3) The prime minister has leadership ability 1.9 (2.7) Something can be expected of its economic policies 16.3 (11.4) Something can be expected of its foreign policies 3.1 (3.1) Something can be expected of its political reforms 2.5 (0.9) Something can be expected of its tax reforms 1.8 (1.4) Something can be expected of its administrative reforms 4.1 (3.3) There's no other appropriate person (for prime minister) 50.3 (51.2) Other answers (O/A) --- (1.8) D/K+N/A 2.0 (2.3) Q: (Only for those who answered "no" to the first question) What's the primary reason for your disapproval of the Aso cabinet? Pick only one from among those listed below. The prime minister is untrustworthy 14.7 (14.0) Because it's a coalition cabinet of the Liberal Democratic Party and the New Komeito 6.7 (10.3) The prime minister lacks leadership ability 13.5 (14.6) Nothing can be expected of its economic policies 29.8 (26.0) Nothing can be expected of its foreign policies 2.0 (0.7) Nothing can be expected of its political reforms 10.8 (9.0) Nothing can be expected of its tax reforms 2.8 (4.9) Nothing can be expected of its administrative reforms 8.7 (10.6) Don't like the prime minister's personal character 9.1 (8.3) O/A 0.2 (0.5) D/K+N/A 1.7 (1.0) Q: Do you have expectations for new DPJ President Hatoyama? Very much 14.1 Somewhat 33.4 Not very much 36.4 Not at all 14.2 D/K+N/A 1.9 Q: Do you think the DPJ's change of leadership will be a plus or a minus to the party in the next election for the House of Representatives? Plus 31.9 Minus 16.2 No change 49.0 D/K+N/A 2.9 TOKYO 00001160 014 OF 015 Q: Do you think former DPJ President Ozawa's influence will remain in the DPJ after its leadership change? Considerably 34.2 Somewhat 48.2 Not very much 11.3 Not at all 2.8 D/K+N/A 3.5 Q: Do you think DPJ President Hatoyama should conduct his party's own investigation into Nishimatsu Construction Co.'s illicit donations to former DPJ President Ozawa's fund-managing body? Yes 79.2 No 15.8 D/K+N/A 5.0 Q: Do you think DPJ President Hatoyama should make efforts on the part of his party for a total ban on corporate and organizational donations? Yes 70.0 No 20.4 D/K+N/A 9.6 Q: Do you think DPJ President Hatoyama should ask former DPJ President Ozawa to fulfill his accountability? Yes 77.2 No 18.8 D/K+N/A 4.0 Q: The House of Representatives' current term expires in September this year. When would you like the House of Representatives to be dissolved for a general election? After the supplementary budget's passage through the Diet 34.4 In mid-July or later, after the G-8 summit 25.2 Wait until the current term expires without dissolving the Diet 31.2 D/K+N/A 9.2 Q: Would you like the present LDP-led coalition government to continue, would you like it to be replaced with a DPJ-led coalition government, or would you like the LDP and the DPJ to form a coalition government? LDP-led coalition government 18.7 DPJ-led coalition government 31.2 LDP-DPJ grand coalition 18.9 New framework under political realignment 24.3 D/K+N/A 6.9 Q: Which political party are you going to vote for in the next House of Representatives election in your proportional representation bloc? Liberal Democratic Party (LDP) 25.8 (26.7) Democratic Party of Japan (DPJ or Minshuto) 37.3 (36.5) New Komeito (NK) 4.0 (2.7) Japanese Communist Party (JCP) 4.1 (4.3) Social Democratic Party (SDP or Shaminto) 1.0 (1.2) TOKYO 00001160 015 OF 015 People's New Party (PNP or Kokumin Shinto) 1.5 (0.6) Reform Club (RC or Kaikaku Kurabu) 0.1 (---) New Party Nippon (NPN or Shinto Nippon) 0.1 (0.2) Other political parties, groups --- (---) D/K+N/A 26.1 (27.8) Q: When comparing Prime Minister Aso and DPJ President Hatoyama, which one do you think is more appropriate for prime minister? Taro Aso 32.0 Ichiro Ozawa 43.6 D/K+N/A 24.4 Q: Which political party do you support? Liberal Democratic Party (LDP) 25.2 (26.6) Democratic Party of Japan (DPJ or Minshuto) 30.0 (25.9) New Komeito (NK) 4.2 (3.2) Japanese Communist Party (JCP) 3.4 (2.8) Social Democratic Party (SDP or Shaminto) 0.7 (1.2) People's New Party (PNP or Kokumin Shinto) 1.2 (0.5) Reform Club (RC or Kaikaku Kurabu) --- (---) New Party Nippon (NPN or Shinto Nippon) --- (0.1) Other political parties, groups --- (---) None 33.8 (38.7) D/K+N/A 1.5 (1.0) Polling methodology: This survey was conducted nationwide from the evening of May 16 through May 17 by Kyodo News Service on a computer-aided random digit dialing (RDD) basis. Among randomly generated telephone numbers, those actually for household use with one or more eligible voters totaled 1,448. Answers were obtained from 1,026 persons. ZUMWALT