Identifier
Created
Classification
Origin
09TOKYO1162
2009-05-21 08:28:00
SECRET
Embassy Tokyo
Cable title:  

TOKYO SCENESETTER FOR DEPUTY SECRETARY STEINBERG

Tags:  PREL PGOV OVIP JA 
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S E C R E T SECTION 01 OF 06 TOKYO 001162

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E.O. 12958: DECL: 05/20/2019
TAGS: PREL PGOV OVIP JA
SUBJECT: TOKYO SCENESETTER FOR DEPUTY SECRETARY STEINBERG

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Classified By: CDA James P. Zumwalt, reasons 1.4(b),(d).

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CANCEL TOKYO 1162 WILL RESEND UNDER NEW MRN

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should help Japan focus its limited defense resources on
capabilities that will enhance the Alliance's effectiveness.
Close and effective coordination in the lead-up to the North
Korea Taepodong launch in April has validated the trend
towards increased interoperability. Nevertheless, there are
still political and business interests pressing the
government to invest in expensive and duplicative satellites
and offensive weapons.

I have attached a list of issues and background material for
your reference. We look forward to seeing you in Tokyo.

James Zumwalt, CDA


2. (C) Begin text of Checklist:

--------------
DOMESTIC POLITICS
--------------

-- LDP Hanging On; DPJ Changes the Guard: Four months ago
public support for Prime Minister Taro Aso was approaching
record lows, threatening to trigger moves to unseat him
within his own ruling Liberal Democratic Party (LDP). But
the emergence of scandal allegations involving opposition
Democratic Party of Japan (DPJ) leader Ichiro Ozawa in March
has since boosted support for Aso's administration. Early
indications are that Ozawa's resignation and his replacement
by Yukio Hatoyama may improve the public's view of the DPJ,
but Aso has used his advantage over the past three months to
demonstrate leadership and make progress on most of his key
legislative goals. Aso's domestic focus for the rest of the
Diet session will be to demonstrate the impact of his
legislative efforts on Japan's ailing economy, an effort that
will require him to extend the term into July. The DPJ has
never been closer to ending more than half a century of LDP
domination, but most members realize this may be their last
chance, and they have a history of self-destructing.

-- DPJ Friend or Foe?: Significant ideological differences
within the party make it difficult to predict the impact on

bilateral relations under a DPJ government. Your meeting
with DPJ President Hatoyama will continue the process begun
by the Secretary of building stronger ties to the party and
helping to moderate its views. Despite its critical stance
on a number of Alliance-related issues, the DPJ will seek
positive relations with Washington and will likely steer
clear redlines we lay down on core issues. In this context,
it will be useful to reiterate Secretary Clinton's message to
former DPJ President Obama on our commitment to implement the
realignment of U.S. forces.

-- Political Realignment in the Offing?: A general election
must be held by this fall. We assess that neither the LDP nor
the DPJ will receive sufficient votes to avoid the necessity
of a weak coalition government. Voters are disillusioned
after three years of political gridlock, and some may choose
the DPJ as a protest. Others will be driven to vote for
change by the worsening economy. Over 40 percent of Japan's
electorate is in the undecided category. Continuing
political grid-lock may lead to an eventual realignment of
political forces.

--------------
ECONOMIC DOWNTURN
--------------

-- Priority One - The Economy: PM Aso's top priority is
implementing economic and fiscal measures to strengthen the
domestic economy during the current global economic downturn
in advance of the coming election. On April 10, Aso
announced a supplemental budget of $154 billion dollars in

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government expenditures, projected by USG estimates to
generate 1.9 percent of GDP in new real demand. The
package's objective is the return of the economy to a
sustainable growth path by fiscal year 2010.

-- Will Stimulus Work?: Aso explicitly described his latest
stimulus plan as Japan's response to the G-20 Leaders' call
for "concerted fiscal expansion." However, Japan-based
economists fear some new spending in the April 10 stimulus
package may be poorly targeted. The DPJ agrees with the need
for fiscal stimulus but is contesting individual elements of
the package, which could delay passage of the bill until late
June and the ultimate impact of the stimulus into the fall.

-- Cooperation Critical: Your counterparts will use your
visit to demonstrate close coordination with the United
States in jump-starting the world economy. Japan's current
economic contraction is due to the collapse of global demand,
not a domestic financial crisis. The medium-term economic
outlook is gloomy with rising unemployment, declining
business confidence, and weak global demand for Japanese
exports. Marking the steepest drop since the end of WWII,
the country's real GDP fell 15.2 percent on an annualized
basis from the previous quarter for the January-March 2009
period due falling business investment, private consumption,
housing investment, and net exports. The crisis has
reinforced the need for Japan to shift more decisively toward
domestic demand-led growth, but domestic economic and
structural reform efforts have stalled under Prime Ministers
Aso, Fukuda and Abe.

-- U.S. Actions: Japanese banks and financial institutions
had little sub-prime market exposure and corporate and
banking balance sheets are generally sound, the practice of
holding corporate equities among their assets, combined with
a 50 percent decline in domestic share prices over the past
year has forced many financial firms to book large losses.
Companies such as Toyota and Sony have recorded operating
losses, pared employment rolls, and extended factory holidays
in an effort to quickly slash inventories and costs. These
same companies, however, are aggressively shifting
production, and restructuring in an effort to return to
profitability, but Japanese corporate leaders readily admit
that Japan's economic fortunes are tied to a U.S. economic
recovery.

--------------
BI-LATERAL AND SECURITY ISSUES
--------------

-- Support for Alliance: Many Japanese are becoming more
concerned about the state of our bilateral relationship due
to uncertainty about our China policy and lingering
disappointment with our decision to delist North Korea as
state sponsor of terrorism. But while pacifism remains
deeply ingrained in Japan, there is an emerging consensus
among the public and opinion makers -- due to the DPRK threat
and the PRC's growing power projection capabilities -- that
the U.S.-Japan Alliance is vital to Japan's national
security. Our bilateral security ties remain strong and were
reaffirmed by Secretary Clinton in February when she signed
the Guam International Agreement (GIA) on the realignment of
U.S. Forces, which commits Japan to complete the relocation
of Futenma Marine Corps Air Station on Okinawa and to provide
funds for USMC-related facilities on Guam.

-- Defense Spending: We need to continue to encourage Japan
to take on a greater role in its own defense. Japan is now
compiling its National Defense Program Guidelines (NDPG) and
5-year Mid-Term Defense Plan. These policy reviews offer us
a chance to influence the future shape of Japan's defense
posture. In addition to encouraging greater defense

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spending, enhanced information security, and broader legal
authority to the Self-Defense Forces, we are encouraging
Japan to focus on deepening operational capabilities in ways
that will enhance our Alliance's deterrent value, including
long-range lift, ballistic missile defense (BMD),
sustainment, and maritime operations.

-- Information Security: The U.S. and Japan established a
Bilateral Information Security Task Force (BISTF) in 2007 in
the wake of the unauthorized disclosure of Aegis operational
data by a Japanese MSDF member. Since that time, Japan has
made progress towards strengthening information security
procedures within its ministries, but much work needs to be
done on cyber security and establishing a legal framework to
allow for effective background investigations and security
clearances. The State Department co-chairs the BISTF with
DOD and ODNI at the DAS-level.

-- TIP: Your visit will coincide with the release of the
annual Trafficking in Persons Report Tier Rankings, a
potential irritant to our bilateral relationship. G-TIP has
once again slated Japan to be ranked as a Tier Two country,
despite the fact that Tokyo has met or exceeded all of the
requirements earlier set by Washington. Senior Japanese
officials have repeatedly warned that they will cease
cooperating with us on the issue, having determined that our
ranking system is not objective, not applied equally across
countries, and poorly substantiated. Greater confrontation
over this issue will not help us achieve our goals regarding
trafficking in Japan. Quite the opposite, by recognizing
Japan's substantial achievements, you can elevate our
relationship to a true partnership in resolving this problem
worldwide.

-- Child Porn: On a related topic, a bill to criminalize the
possession of child pornography has been slow to move through
the Diet, due to concerns over privacy issues. An expression
of interest on your part in the progress of this legislation
could refocus efforts by supporters of the bill to gain
passage before the end of this session.

-- IAEA Election: International Atomic Energy Agency (IAEA)
Director General: Japan continues to strongly advocate on
behalf of its candidate for IAEA Director General, Ambassador
Yukio Amano. The GOJ is coordinating closely with the USG in
Washington, Vienna, and Tokyo on outreach to key countries,
and has expressed appreciation for continued U.S. support of
Amano.

--------------
FOREIGN RELATIONS
--------------

-- Afghanistan/Pakistan: In April, Japan hosted the
ministerial-level Pakistan Donors Conference, which garnered
over five billion dollars in pledges. Japan matched our
contribution, pledging one billion dollars in new funds over
two years. In Afghanistan, Japan is working more closely
with the PRTs , assigning a full-time liaison officer to
NATO's office in Kabul and dispatching the first of what will
eventually be four officials from the Ministry of Foreign
Affairs (MOFA) to the Lithuanian PRT in Chaghcharan. With
$1.4 billion dollars pledged since 2002, Japan is the third
highest bilateral contributor (behind the United States and
the United Kingdom) to Afghanistan. An additional $300
million dollars in the supplemental budget will support the
2009 Afghan elections and other security programs, including
payment of salaries for the entire Afghan police force for
six months and contributions to the NATO helicopter trust
fund.

-- Iraq: Japan is the second largest contributor to Iraqi

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reconstruction and is moving to establish an office in Erbil.
In January the two countries signed a "Comprehensive
Partnership" agreement, and Japan can be counted on to
continue to support Iraqi reconstruction.

-- Iran: Japan maintains a "normal" relationship with Iran
and sees itself as a possible intermediary between Iran and
the United States. Shortly after Iranian Foreign Minister
Mottaki visited Tokyo for the Pakistan Donors Conference,
Foreign Minister Hirofumi Nakasone traveled to Tehran,
despite our urging to the contrary. In meetings with Mottaki
and President Ahmadinejad, Nakasone pressed hard for a
favorable response to President Obama's overtures, and also
sought the release of Roxana Saberi. He urged Iran to play a
more "responsible" role, but did not raise Ahmadinejad's
racist remarks in Geneva or Iran's support for Hizbollah and
Hamas. Japan and Iran have announced their intention to
engage in several joint projects pertaining to Afghanistan,
including border cooperation and the training of Afghan
refugees in Iran who are preparing to return home.

-- North Korea: Discussions on the situation in North Korea
and the status of the Six-Party Talks will be a constant them
during your visit and will draw widespread press attention.
Japan remains exceedingly uneasy about the DPRK, particularly
in light of the most recent test launches, and our policy and
will want assurances that we are still in sync. You will be
expected to express concern for the fate of Japanese citizens
abducted by the DPRK, and your words will be parsed carefully
for any clues to potential changes in our approach. The
government remains firm in its refusal to provide energy
assistance to Pyongyang as long as the DPRK's August 2008
pledge to open a reinvestigation into the fate of Japan's
abductees remains unfulfilled.

-- China: Japan's relations with its other immediate
neighbors are generally stable, although problems persist
just beneath the surface. Prime Minister Aso has been
successful in defusing, for the time being at least, the
sharp conflicts over history that damaged relations with
China during the Koizumi years and has successfully led the
first Trilateral Dialogue with Japan-China-Korea and won
agreement from Beijing to re-start Japan's version of the SED
after a long hiatus. While Japanese acknowledge that good
U.S.-China relations are in Japan's interest, they also fear
that the United States will discount Japan's interests in
pursuit of more robust relations with China. Japan has been
sensitive to recent Chinese actions around the disputed
Senkakus and has sought explicit U.S. reassurance on our
commitment to aid Japan in the case of an attack on the
islands.

-- South Korea: Territorial disputes over the Liancourt
Rocks (Takeshima/Tokdo) remain an irritant to relations with
South Korea, but both sides have expressed a desire to build
a Japan-ROK relationship that is "different from the
relationship up until now." Prime Minister Aso and ROK
President Lee Myung-bak have struck up a particularly good
personal relationship, and the pace of "shuttle diplomacy"
has picked up markedly since Aso two took office.

-- Climate Change: Japan is an enthusiastic supporter of the
Major Economies Forum and has been eager to engage Special
Envoy Stern and his team on coordination of our efforts in
the MEF and the UN. The aim for Japan is to achieve an
agreement in Copenhagen that the U.S. can be a part of and
one that includes meaningful actions by developing countries,
especially China and India. To do this, the GOJ will have to
bring along the Japanese business association, Keidanren,
which, influenced by Japan's heavy industry, has opposed
serious efforts to reduce Japan's emissions even though many
Japanese companies stand to benefit from the move to a green

TOKYO 00001162 006 OF 006


economy. Prime Minister Aso has said he will announce a
mid-term target for greenhouse gas reduction by this June,
which will be a test of his ability to navigate between
business interests and a popular desire in Japan to take
action on climate change.
ZUMWALT