DAILY SUMMARY OF JAPANESE PRESS 06/08/09

UNCLAS SECTION 01 OF 17 TOKYO 001281

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 06/08/09

TOKYO 00001281 001.3 OF 017


INDEX:

(1) Poll on Aso cabinet, political parties (Yomiuri)

(2) Hurdles to Japan's sanctions on North Korea; Government rushing
to consider specific policies (Nikkei)

(3) High-level economic dialogue: Japan, China to cooperate to
overcome financial crisis (Nikkei)

(4) Cabinet Office estimates restoration of fiscal health delayed to
2020 or beyond even with 10 PERCENT consumption tax rate (Asahi)

(5) Policy emphasis to shift to Secure Society Council (Nikkei)

(6) Resumption of JICA aid to support private sector infrastructure
projects in Asia mulled (Sankei)

(7) Nago City, local firms planning to form new organization to
promote 700-billion-yen new base-construction project in Okinawa,
probably eyeing contracts (Akahata)

(8) Anatomy of DPJ: U.S. distrustful of DPJ's foreign and security
policies (Sankei)

(9) "Seiron" column: Policies that the DPJ wants to implement are
unclear (Sankei)

(10) TOP HEADLINES

(11) EDITORIALS

(12) Prime Minister's schedule, June 6 (Nikkei)

ARTICLES:

(1) Poll on Aso cabinet, political parties

YOMIURI (Page 6) (Full)
June 8, 2009

Questions & Answers
(Figures shown in percentage)

Q: Do you support the Aso cabinet?

Yes 29.5
No 61.0
Other answers (O/A) 3.8
No answer (N/A) 5.7

Q: (Only for those who answered "yes" to the foregoing question)
Pick only one from among the following reasons for your approval of
the Aso cabinet.

Something can be expected of its policy measures 22.1
The prime minister has leadership ability 10.3
There's something stable about the prime minister 10.1
His cabinet's lineup is good 6.6
Because it's a coalition of the Liberal Democratic Party and the New
Komeito 39.8
O/A 1.1

TOKYO 00001281 002.3 OF 017


N/A 9.9

Q: (Only for those who answered "no" to the foregoing question) Pick
only one from among the following reasons for your disapproval of
the Aso cabinet.

Nothing can be expected of its policy measures 28.5
The prime minister lacks leadership ability 28.2
There's nothing stable about the prime minister 20.8
His cabinet's lineup is not good 4.1
Because it's a coalition of the Liberal Democratic Party and the New
Komeito 15.0
O/A 0.4
N/A 3.0

Q: Which political party do you support now? Pick only one.

Liberal Democratic Party (LDP) 28.5
Democratic Party of Japan (DPJ or Minshuto) 27.7
New Komeito (NK) 2.8
Japanese Communist Party (JCP) 2.4
Social Democratic Party (SDP or Shaminto) 1.0
People's New Party (PNP or Kokumin Shinto) 0.1
Reform Club (RC or Kaikaku Kurabu) ---
New Party Nippon (NPN or Shinto Nippon) ---
Other political parties 0.1
None 35.2
N/A 2.0

Q: When comparing Prime Minister Aso and DPJ President Hatoyama, who
do you think is more appropriate to be prime minister?

Prime Minister Aso 32.9
DPJ President Hatoyama 44.0
N/A 23.1

Q: Do you think the DPJ will be able to take the reins of government
in the next election for the House of Representatives?

Yes 40.5
No 48.8
N/A 10.7

Q: It has been three weeks since Mr. Yukio Hatoyama became DPJ
president. What's your impression of DPJ President Hatoyama?

Improved 14.2
Worsened 2.8
Unchanged 78.1
N/A 4.9

Q: Mr. Ichiro Ozawa of the DPJ resigned as DPJ president in the form
of taking responsibility for illicit political donations to his
fund-managing body. He has now become the party's deputy president
under its new leadership. Is this acceptable?

Yes 30.9
No 62.2
N/A 6.9

Q: The ruling and opposition parties are discussing the issue of
hereditary candidates running from their parents' home

TOKYO 00001281 003.3 OF 017


constituencies. Do you think such hereditary candidates should be
restricted?

Yes 48.5
No 46.2
N/A 5.3

Q: North Korea carried out a second nuclear test in May and has also
repeated its missile launches. Do you think the international
community should impose stronger sanctions on North Korea?

Yes 88.1
No 6.0
N/A 5.9

Q: Do you think the international community's imposing stronger
sanctions on North Korea will work to stop North Korea from
developing nuclear weapons and missiles?

Yes 45.9
No 45.0
N/A 9.1

Q: Do you think the government has been dealing appropriately with
the new influenza?

Yes 68.2
No 26.4
N/A 5.4

Q: Do you think the House of Representatives should be dissolved for
a general election right away, or do you think there's no need to
hurry?

Right away 38.4
No need to hurry 52.2
N/A 9.5

Q: If an election were to be held now for the House of
Representatives, which political party would you like to vote for in
your proportional representation bloc?

LDP 28.7
DPJ 39.1
NK 2.6
JCP 3.2
SDP 1.4
PNP 0.1
RC ---
NPN ---
Other political parties 0.0
Undecided 19.2
N/A 5.6

Q: What form of government would you like to see after the next
election for the House of Representatives?

LDP-led coalition government 14.2
DPJ-led coalition government 20.0
LDP-DPJ grand coalition government 25.2
Government under new framework after political realignment 34.1
O/A 0.1

TOKYO 00001281 004.3 OF 017


N/A 6.3

Polling methodology: The survey was conducted June 5-7 across the
nation on a computer-aided random digit dialing (RDD) basis.
Households with one or more eligible voters totaled 1,734. Valid
answers were obtained from 1,057 persons (61.0 PERCENT ).

(Note) In some cases, the total percentage does not add up to 100
PERCENT due to rounding.

(2) Hurdles to Japan's sanctions on North Korea; Government rushing
to consider specific policies

NIKKEI (Page 2) (Slightly abridged)
June 7, 2009

Negotiations among members of the UN Security Council (UNSC) on the
sanctions resolution against North Korea for conducting its second
nuclear test have entered the final stage. Beginning this week, the
Japanese government will study the implementation of specific
sanctions. The DPRK is certain to react fiercely to the UNSC
resolution as it did to the previous presidential statement, so the
situation is dangerously close to a further heightening of tension.
The government will make a decision based on an overall assessment
of various factors, including North Korea's reaction, the
effectiveness of the sanctions, and domestic legal provisions.

Inspection of cargo on North Korean ships has emerged as one of the
key sanction measures in the UNSC resolution. The purpose of this is
to halt the flow of materials relating to nuclear weapons and
missiles. A similar measure was included in the UNSC resolution
adopted after the DPRK's nuclear test in 2006. If cargo inspections
are implemented rigorously under the new resolution, this will be
the provision to which North Korea will react most strongly.

But it will be difficult for Japan to conduct cargo inspections in
international waters under existing laws. Even though it can do so
by designating an "emergency situation in areas surrounding Japan"
or a "quasi-contingency," the government maintains its position that
the recent nuclear test has not given rise to such an "emergency
situation."

The government therefore is considering either of the following: (1)
amending the law on ship inspection operations; or (2) legislation
of a new law. There are also moves in the Liberal Democratic Party
to look at the possibility of submitting a bill by Diet members,
because "it is ridiculous if Japanese domestic laws make it
impossible (to inspect ships)."

However, since this will also involve a discussion on relaxing the
rules on the use of weapons by the Self-Defense Forces (SDF) and
such other issues, there is a view in the Ministry of Defense (MOD)
that senior official explained "Japan does not have the capability
or the legislation needed for conducting ship inspections in
international waters. We will end up with just stricter inspections
at ports and providing information on North Korean ships to other
countries."

Meanwhile, the U.S. is pushing strongly for financial sanctions,
which is the other main element in the additional sanctions on the
DPRK, because the financial measures it took in 2005 against the
Banco Delta Asia in Macau were effective. For now, the specific

TOKYO 00001281 005.3 OF 017


steps have not been decided upon, but the Japanese government is
prepared to cooperate with the U.S. and other countries in
implementing financial sanctions.

In April, as one of its own additional sanctions, the Japanese
government lowered the amount of cash that requires reporting if
transferred to North Korea. This time, it is expected to consider a
complete ban on transactions with the DPRK's settlement banks.
However, "the actual effectiveness is said to be unclear."

The impact of the above sanctions on North Korea is unpredictable.
There are already signs that the DRPK is preparing to launch another
long-range missile. The situation in that country has become
increasingly volatile, partly in relation to the question of
succession to General Secretary Kim Jong Il. Japan must consider
what comes after the sanctions.

(3) High-level economic dialogue: Japan, China to cooperate to
overcome financial crisis

NIKKEI (Page 3) (Abridged slightly)
June 8, 2009

Tokyo and China at the 2nd high-level economic dialogue, held in
Tokyo on June 7, reached an agreement to protect intellectual
property rights and assist Japanese and Chinese companies in
advancing into various Asian countries. Both countries, the second-
and third-largest economies in the world, took a stance of
cooperating with each other in order to overcome the ongoing
financial and economic crisis. However, with no major progress
achieved regarding a system of obligating disclosure of technical
information on their information and technology (IT) products (China
Compulsory Disclosure - CCC - system) and food safety, these pending
issues have been carried over to the next session, leaving
unfinished tasks for the future.

Among participants in the economic dialogue from Japan were Foreign
Minister Hirofumi Nakasone, Finance Minister and State Minister for
financial Services, Economic and Fiscal Policy Kaoru Yosano and
Economy, Trade and Industry Minister Toshihiro Nikai. Vice Premier
Wang Qishan, Foreign Minister Yang Jiechi and National Development
and Reform Commission Chairman Zhang Ping took part from China.

Yosano and Zhang explained economic measures of their respective
countries. They agreed to cooperate to undergird their domestic
economies with proactive fiscal measures as well as to turn around
the global economy. Various government agencies and related
organizations signed 11 documents of cooperation, including
protection of intellectual property rights and financial cooperation
in various Asian countries.

Assistance to companies advancing into developing countries

As cooperation in the financial area, the Development Bank of Japan
(DBJ) and the Export-Import Bank of China (EIBC) will provide
necessary funds when companies of their respective countries
advancing into third countries in Asia. Since the Asia region is
expected to serve as an economic engine of the global economy after
the ongoing financial and economic crisis is over, Japan and China
see backing companies advancing into that region is very meaningful.
Both countries also agreed to set up a forum for dialogue between
next-generation leaders of their respective countries and promote

TOKYO 00001281 006.3 OF 017


research into earthquakes.

They also agreed to launch talks for promoting energy conservation,
improving water quality of lakes, ponds and rivers and streamline
goods distribution in China, although this was not put in writing.

However, talks on issues, such as the compulsory disclosure of
technical information on IT products and poisoning incidents
involving frozen Chinese-made gyoza dumplings did not go beyond
Japan conveying its interest, according to Nakasone. Nikai called on
China to reconsider the CCC system of mandating companies to
disclose technical details of their IT products expected to be
introduced in May next year. Japanese, U.S. and European companies
are concerned that secret information on their products could be
leaked as a result.

No progress achieved in gas field talks

Japan suggested China takes part in the international mutual
recognition framework joined by 26 countries. The aim is to rein in
the moves of Beijing, which is calling for the disclosure of
technical information for reasons of safety concern. Japan conveyed
to China that it is ready to cooperate with it on the technical
front.

However, China stressed that it had forgone the introduction of the
CCC system for a year at the request of Japan, the U.S. and Europe
and boiled down the scope of products subject to the system to those
procured by the government. It simply indicated a stance of
continuing to hear views of various countries. Japan intends to
continue to ask China to take a second look at its policy. The
situation is, however, unclear.

Concerning the greenhouse gas emissions issue, too, the two
countries failed to reach an agreement with China indicated its view
that how industrialized countries will respond first is important,
when Japan asked it, a large emitter, to make a responsible
response. No major progress was achieved over the joint development
of gas fields in the East China Sea.

Gist of economic dialogue

(Global economy and financial situation)
Q Steadily implement the agreement reached at the financial summit
held in London in April. Cooperate for the recovery of the global
economy.
Q Recognized the need to constrain protectionism

(Trade and Investment)
Q Japan asked China to take a second look at the CCC system, which
it is looking into introducing.
Q Set up a forum for bureau director-level dialogue to promote
cooperation in the goods distribution area.
Q Promote mutual advance by financial institutions of respective
countries
Q Set up a taskforce joined by responsible government officials of
both countries concerning intellectual property rights, such as
measures against copied products.
Q Reaffirmed that it is important to secure the safety of foods and
products. Japan asked China to settle at an early date poisoning
incidents caused by Chinese-made gyoza dumplings.


TOKYO 00001281 007.3 OF 017


(Environment, energy)

Q Japan insisted that both emerging and developing countries need to
take responsibility regarding greenhouse gas emissions cuts. The
Chinese side stressed the responsibility of industrialized
countries.
Q Strengthen measures on industrialized wastes and the disposal of
drainage water.

(Regional and international economic issue)
Q Reaffirmed the need for an early settlement of multilateral trade
liberalization talks (Doha Round) at the WTO
Q The DBJ and the EIBC will assist the advance of Japanese and
Chinese companies' into third countries through concerned financing
Q Cooperation on the new influenza strain through information
sharing

(Others)
Q Hold the next round of the economic dialogue in China by the end
of 2010

(4) Cabinet Office estimates restoration of fiscal health delayed to
2020 or beyond even with 10 PERCENT consumption tax rate

ASAHI (Page 1) (Full)
June 6, 2009

The Cabinet Office has run estimates showing that even if the
consumption tax rate is raised in stages to 10 PERCENT from FY2011,
fiscal balance can only be achieved in the early 2020s. Its
estimates in January had shown that the goal would be met in FY2018.
This delay is due to the ballooning of debts for the economic
stimulation packages and the decline in tax revenues as a result of
the economic downturn.

The government has decided on a consumption tax hike from FY11 in
late 2008 on condition of economic recovery but has not clarified
the margin of increase. The latest estimates clearly show that an
increase in consumption tax of over 5 PERCENT will be necessary for
fiscal restructuring, so the margin of increase will be the focus of
the debate from now on.

The Cabinet Office will report to the meeting of the government's
Council on Economic and Fiscal Policy (CEFP) early next week. Its
fiscal estimates were based on the assumption of an economic
recovery and a consumption hike from FY11. According to the
projection, a surplus in the primary fiscal revenues and
expenditures - funding expenditures other than the repayment of
debts with tax revenues - can only be achieved in the early 2020s.

The January estimates had projected the achievement of a surplus by
FY08 by increasing the consumption tax by 1 PERCENT each year from
FY11. The government had set the goal of achieving a surplus in FY11
in 2006, but due to the worst minus growth in postwar history and
the 15 trillion yen economic package in response to this, the
achievement of the goal will be delayed significantly.

The private sector members of the CEFP will come up with new goals
for fiscal restructuring based on the above. They will first demand
reducing the deficit in the primary balance by half in about five
years from FY09. Beyond FY09, the ratio of government debt to GDP
will be reduced steadily to a level befitting the size of the

TOKYO 00001281 008.3 OF 017


economy. The new goals will be incorporated in the basic policy for
economic and fiscal reforms, the so-called "big-boned policies,
2009" to be drawn up by the government by the end of June.

However, with the general election approaching, the ruling parties
are keen on avoiding any discussions on increasing the consumption
tax. Actually, there is even pressure for increasing social security
spending. It is uncertain whether a specific goal for achieving
fiscal restructuring will be written into the "big-boned policies,
2009."

(5) Policy emphasis to shift to Secure Society Council

NIKKEI (Page 2) (Full)
June 8, 2009

The central stage of making government policy measures aimed to
demonstrate the leadership of the Prime Minister's Official
Residence (Kantei) is now gradually shifting from the Council on
Economic and Fiscal Policy to the Council to Realize a Secure
Society (anshin-kaigi),which is a government advisory panel
studying how to dispel people's anxieties about the future. With the
next House of Representatives general election coming closer, the
priority of such social issues as correcting income disparity has
relatively heightened because the role of the Economic and Fiscal
Policy Council, which was called "an engine to promote reforms," has
been diminished. There is an observation that a report the Secure
Society Council will release in mid-June would become a clear
distinction for political realignment after the general election.

"How should we explain the policy of aiming for a moderate level of
social welfare with a moderate public burden?" Such questions flew
when Kaoru Yosano, who concurrently serves as finance minister,
state minister of financial services, and state minister of economic
and fiscal policy, Chief Cabinet Secretary Takeo Kawamura, and
experts of the advisory panel held a hot discussion on the contents
of the report for more than two hours.

Yosano is the person who suggested forming the panel. He called on
Prime Minister Taro Aso in January to persuade with the list of
panel members in his hands. He told Aso:

"The Council on Economic and Fiscal Policy is a permanent panel
responsible for designing institutional arrangements. We need one
more panel made up of experts from outside the government."

Aso then responded, saying: "I think that's a good idea." The
Council on Economic and Fiscal Policy was formed based on the
Cabinet Office Establishment Law. The Secure Security Council was
set up based on a decision by the prime minister. It will hammer out
policy to ease people's anxieties about such issues as widening
disparities and growing unemployment. In order to cover public
burden by such policy, a consumption tax hike is inevitable. Since
many in the ruling and opposition camps have strong distrust in the
Council on Economic and Fiscal Policy, a panel replacing it was
needed.

The government office district of Kasumigaseki is susceptible to
chemical change. A senior official of the Ministry of Education,
Culture, Sports, and Science and Technology was in contact with
almost all Secure Society Council members in April and explained to
them the need to provide free infant education. The senior ministry

TOKYO 00001281 009.3 OF 017


official told panel members: "The education-related budget ranks at
a low-level among the industrialized countries." The ministry
appears to have predicted that funds would be provided on a
preferential basis to policy issues the Secure Society Council
presented in case the consumption tax rate was increased.

The Council on Economic and Fiscal Policy seems to have lost the
leading role. The work on drawing up a fresh goal for fiscal
reconstruction, the biggest task, is running into difficulties. A
senior Cabinet Secretariat official said: "The possibility is strong
that a goal will not restrict annual budgetary request guidelines"

The big-boned economic policy guidelines for fiscal 2006, a basic
policy for economic and fiscal management, which the Koizumi cabinet
adopted in its last days, stipulated the reduction amounts of the
items of expenditures for annual fiscal year, in order to bring the
basic budget for fiscal 2011 back into the black. The Aso cabinet,
which put that on the back burner, will unlikely to set forth a
strong message, although Aso's aide said: "Some sort of a banner is
needed."

There is also a view in the ruling camp that the formation of the
new council "is a strategic move by Yosano and others for political
realignment or a grand coalition after the Lower House election"
(senior member of the Liberal Democratic Party (LDP)). "It would be
ideal if the Council's report becomes one of the banners when the
political parties are realigned," a source said. The prediction is
that if an LDP-led government is formed after the general election,
the policy of the Council, which places importance on narrowing
disparities, will become the glue holding it together.

(6) Resumption of JICA aid to support private sector infrastructure
projects in Asia mulled

SANKEI (Page 2) (Full)
June 8, 2009

A growing number of Japanese companies plan to participate in
infrastructure projects in Asian countries, not only by winning
construction contracts, but also in terms of offering management and
operational knowhow. Their common aim is to secure stable supplies
of resources. The government has begun to consider the resumption of
investments and loans by the Japan International Cooperation Agency
(JICA) to give support to these private companies.

Itochu Corporation is planning on becoming involved with a project
to construct and operate freight railways on the Central Kalimantan
island of Indonesia that is rich in high quality coal being mined.
This company says: "We would like to make this a stable source (of
coal) in the Asian market. This will also secure a supply for
Japan."

There is also great demand for infrastructure in India with a fast
growing economy. NEXCO East Japan (East Nippon Expressway Company)
has formed a group with consultancies and other firms to market
Japanese style ETC (electronic toll collection) systems.

Right now, the Japanese group is eyeing the outer ring road around
the city of Hyderabad in southern India. Tomoyuki Fujino, overseas
operations team leader of NEXCO East Japan, says confidently that:
"The Japanese system has high expandability and flexibility. It is
the most advanced in the world. It will be appropriate for India,

TOKYO 00001281 010.3 OF 017


which is planning to start building expressways."

Plans are also afoot for participation in water supply projects.
Metawater Company, which is the first company in Japan to win a
contract to operate a water filtering plant from Yokohama City, is
going into the Asian market. Vice President Hiroshi Komaki is very
excited about this. He says: "We would like to embark on
Japanese-style participation by cooperating with the local
government and private companies in projects suitable for the
situation in each country."

In light of such moves in the private sector, the government is
considering the resumption of investments and loans by JICA, which
have been frozen since the reform of special public corporations in
2001, to enable investments and loans for various infrastructure
projects in Asia.

(7) Nago City, local firms planning to form new organization to
promote 700-billion-yen new base-construction project in Okinawa,
probably eyeing contracts

AKAHATA (Page 15) (Slightly abridged)
June 6, 2009

Nago Municipal Government and local companies are planning to launch
a private-sector organization that would promote a plan of the
Japanese and U.S. governments to construct a new U.S. military base
in the Henoko district in Nago City, Okinawa Prefecture. The new
organization will also call on the government to place orders with
local companies on a priority basis. Critics claim that they intend
to earn benefits from the construction project and bring the
citizens to their side, with an eye on the mayoral election next
year.

A plan to establish the private-sector organization called "Camp
Schwab support association" was unveiled for the first time in a
meeting on April 29 of the administration committee that has been
expanded to include the heads and administration committee members
of the Kube area, centering on the Henoko, Kushi and Toyohara
districts. Vice Mayor Bunshin Suematsu and Policy Promotion
Department Head Masamitsu Tamaki of Nago City explained the plan
about the new body.

This idea was first proposed by some executive members of the Henoko
administration committee last December. Tamaki said: "If Henoko
takes action independently, it will not be able to exert enough
influence. Given the strong image that a corporate intends to pursue
profits, we instructed persons concerned to form an incorporated
organization involving the city as a whole."

According to its organization chart and rules, the planned
organization will be composed of five groups - the three districts
in Kube, the northern region promotion council to promote the new
U.S. military base, and the Nago fishermen's cooperative. Nago City
will join the organization as an observer. With "smooth promotion of
the relocation project" as the slogan, they have already asked the
Defense Ministry (Okinawa Defense Bureau) to give orders to local
firms, use their materials, and place orders for projects in
Okinawa. They have decided to ask major general contractors in the
Japanese mainland and Okinawa to use local firms as subcontractors
and procure materials from local firms.


TOKYO 00001281 011.3 OF 017


Even after the construction work is completed, the new body will
continue to be involved in the management, operation and maintenance
of facilities on the base, as well as in the placement of personnel,
such as guards.

According to the rules, a local company that receives an order
directly from the Okinawa Defense Bureau will contribute to the
organization a commission according to the amount of the contract it
receives. A subcontractor will be required to pay a commission of a
certain amount calculated by the organization.

In responding to criticism of the planned body as an organization
intended to pursue bid-rigging and profits from the new base
project, Tamaki in Nago City said: "The association will use profits
earned as contributions and commissions for regional promotion
projects. But the brochure of the association notes: "The relocation
project begins on a full scale, business opportunities will be
created for local firms as the entire project is estimated to cost
500 to 700 billion yen."

Tamaki emphasized that the new association will be launched as soon
as each group's participation is confirmed.

Vice President Tsujimura of the Non-profit Organization Institute
for the Study of Construction Policy, who is well-versed in the
details of large-scale public works projects, said: "Major offshore
engineering companies in the mainland of Japan are expected to win
contracts for reclamation and dredge work in the new base
construction project, leaving no room for local firms. Even if local
companies undertake subcontracted work, such work will probably be
temporary."

Association of Commerce and Industry Chairman Nakamoto criticized
the plan to set up the new organization:

Of the people of Okinawa, 70 percent are against the construction
plan, and a number of citizens voted against the plan. The
government is aiming to build a town that allows the new base by
mobilizing people in commerce and industry, while citing economic
development in Okinawa as the reason for the envisioned
organization. People in favor of the construction plan are aiming to
proceed with the campaign for the mayoral election next year in
their favor."

(8) Anatomy of DPJ: U.S. distrustful of DPJ's foreign and security
policies

SANKEI (Page 3) (Abridged slightly)
June 6, 2009

United States' interest

A group of representatives of the Association of the Families of
Victims of Kidnapped by North Korea (AFVKN),the National
Association for the Rescue of Japanese Kidnapped by North Korea
(NARKN),and the parliamentary league on the abduction issue visited
the United States in late April to exchange views with the Obama
administration officials in charge of North Korea policy and
concerned congressional members. During the visit, a research fellow
responsible for security at an American think tank connected with
the Democratic Party posed the following question to Democratic
Party of Japan (DPJ) abduction issue taskforce deputy head, Jin

TOKYO 00001281 012.3 OF 017


Matsubara: "What would happen to U.S.-Japan relations if the DPJ
were to take the reins of government?"

Earlier, in Mid-April, a group of individuals, including journalist
Yoshiko Sakurai, visited Washington to feel out the United States on
its foreign policy. Receiving the group, former Deputy Secretary of
State Richard Armitage who is knowledgeable about Japan, asked, "How
is (former DPJ President) Ichiro Ozawa doing?"

Matsubara felt that the United States' interest in the DPJ was
growing. Sakurai thought speculation was growing in the United
States that a DPJ administration would be launched in Japan.

At the same time, there are concerns and doubts in the United States
about the DPJ's security and foreign policies. Several individuals
connected with the former Bush administration asked the AFVKN and
others the following question, citing the names of DPJ Secretary
General Katsuya Okada and Vice President Seiji Maehara: "The two of
them recently made a statement in the United States to the effect
that Japan's insistence on the abduction issue is an impediment to a
solution to the nuclear issue. Has Japan shifted its policy of
prioritizing the abduction issue over the nuclear issue?"

On May 14, the day he announced his candidacy for the DPJ
presidency, Okada met with AFVKN Secretary General Teruaki Nasumoto
and others and explained that he had not said such a thing.
Meanwhile, Maehara has not tried to explain anything. Masumoto takes
this view: "Prioritizing the nuclear issue is Mr. Maehara's stock
argument, so he has probably said something close to (the abduction
issue being an obstacle)."

A policy turnaround

The DPJ has opposed almost all government security policies,
including a new antiterrorism special measures law authorizing the
Maritime Self-Defense Force's refueling operation in the Indian
Ocean, antipiracy legislation, and a Japan-U.S. agreement on the
relocation of U.S. Marine Corps from Okinawa to Guam.

The major opposition is also opposed to the Japan-U.S. agreement
reached in 2006 to relocate the U.S. Marine Corps' Futenma Air
Station from Ginowan to Nago. The DPJ's "Okinawa Vision" calls for
the air field's relocation to a site outside Okinawa (preferably
outside Japan). DPJ President Yukio Hatoyama clearly indicated in
his inaugural press conference on May 16 that his party has no
intention of changing the view.

Initially many in the DPJ had thought that the policy shift, which
can said to be a violation of the agreement with the United States,
would not make the party's manifesto (campaign pledges) for the next
House of Representatives election, saying that the party would end
up being criticized as vowing unrealistic matters.

But at a May 26 news conference, Hatoyama signaled that his party
would specify (the policy shift) it in its manifesto, saying, "Our
manifesto should naturally specify that (Futenma Air Station) should
be moved outside Japan."

DPJ shadow cabinet defense minister Keiichiro Asao also indicated
that if his party takes power, the MSDF's refueling operation in the
Indian Ocean wil be discontinued, noting, "It would be illogical
(for the new administration) to continue with something which (our

TOKYO 00001281 013.3 OF 017


party) has opposed twice at the Diet and which former President
(Ichiro Ozawa) described as a violation of the Construction."

U.S. Deputy Secretary of State James Steinberg held talks with Okada
at DPJ headquarters on June 1, during which Okada developed his
stock argument that Japan should urge the United States to abandon
the preemptive use of nuclear weapons. In reply, Steinberg
reportedly rebutted Okada, "Many countries declare in their
doctrines the abandonment of the preemptive use of nuclear weapons,
but that is only doctrine."

Decisions postponed

Security policy is the most controversial issue for the DPJ, which
encompasses members from conservatives to former Japan Socialist
Party ranks. For this reason, decisions have often been postponed or
discussions have not been held at all.

During the extraordinary Diet session in October last year, Deputy
Secretary General Akihisa Nagashima (sic) said it would be quite
effective for Self-Defense Force vessels to escort (Japan-related
vessels). This prompted the government and the ruling parties to
advance discussion on the option of dispatching the SDF to waters
off Somalia. The DPJ, however, did not discuss it earnestly until
February this year, four months after Nagashima made the proposal.

Further, the DPJ did not produce its own plan amending the
government's antipiracy legislation until April 14, the day the
Lower House began discussing the government-presented legislation.

The DPJ is also split over North Korea policy, a top priority for
the nation's security.

On April 1, the DPJ's foreign and defense departments held their
executive meeting in which the party's abduction issue taskforce
chaired by Hiroshi Nakai called for reinforced sanctions against the
North in reaction to the emergence of signs showing the North's
preparations for launching ballistic missiles.

The North conducted its second nuclear test on May 25, but the
departments have yet to make their conclusion. Nakai expressed his
strong discontent in his blog on May 28: "I am aware that there are
lawmakers in the DPJ who are associated with the pro-Pyongyang
General Association of Korean Residents in Japan (Chongryon) and
those who support North Korea. It is the same in the Liberal
Democratic Party, and I don't care about them."

How is the DPJ going to deal with its foreign and security policies?
The party's ability to run the government is being tested.

(9) "Seiron" column: Policies that the DPJ wants to implement are
unclear

SANKEI (Page 7) (Full)
June 8, 2009

Keio University Professor Heizo Takenaka

Strong reaction expected

With the election approaching, the Democratic Party of Japan (DPJ)
has elected Mr. Yukio Hatoyama as its president and put in place a

TOKYO 00001281 014.2 OF 017


new leadership. It is believed that there are an increasing number
of voters who want to give the DPJ a try at running the government
because of the significant decline in the Liberal Democratic Party
(LDP)-centered administration's ability to govern. President
Hatoyama has declared that the main campaign issue in the next
election will be whether there will be a change in government. Like
in America, "change" is also needed in Japan.

However, a change of government should only be a means. By logic, a
party should define a clear set of policies that it wants to
implement and call for a change of government to realize them. For
sure, the DPJ has come up with new "viewpoints" for steering the
administration, such as breaking away from bureaucratic control, but
the substance of the policies it wants to implement remains vague.
That is why the support rate for the DPJ remains surprisingly low.
Even if it is able to capture power based on a passive choice by the
people, thinking it is probably better than the present LDP, it will
soon face a strong public reaction. The DPJ has the responsibility
to come up with robust policies for the healthy growth of the
Japanese economic society. I would like to raise three specific
points regarding the problem with the DPJ's economic policies:

Macroeconomic picture also vague

First, a "macroeconomic" picture is completely absent from the DPJ's
policy debate so far. For example, by how many percent is the
Japanese economy capable of growing and how can this growth rate be
raised through its policies in the future? The process of restoring
fiscal health cannot be determined without such a macroeconomic
scenario. In the past few years, the DPJ has proposed the
restructuring of the budget, which means substituting certain items
on the assumption of the same macroeconomic scenario and overall
budget as the government and the ruling parties. For sure, it is
meaningful to rearrange budget items, but is the overall framework
of the government's budget appropriate? Is its economic outlook
correct? The DPJ has never come up with any counterproposals on such
questions.

The DPJ will most probably argue that the ruling parties have the
support of the bureaucracy while the opposition does not. If so,
this contradicts the DPJ's core policy of independence from the
bureaucrats. If the party is unable to discuss macroeconomics
without relying on the bureaucrats, then it will still be controlled
by them, even if it takes over the reins of government.

Second, the substance of its main policy proposals remains vague.
The DPJ has proposed some interesting policies on pension reform and
other issues, some of which are commendable. However, its position
on a number of major issues is unclear. First, what is the party's
stance on postal privatization? At first, the DPJ had opposed
privatization per se. After losing in the 2005 general election, it
presented proposals to the Diet on the privatization of parts of the
banking and insurance operations, while keeping government control
on the postal services. But now, it advocates the freezing of the
sale of Japan Post shares together with the People's New Party. What
will be its position after taking over power?

Another issue on which the DPJ is unclear is the proposed course for
fiscal restructuring. Its policy choice of not debating the
consumption tax for now is understandable. If Japan indulges in
generous fiscal outlays, like what the LDP is doing now, while also
increasing the consumption tax rate, it will unmistakably become a

TOKYO 00001281 015.2 OF 017


country of low welfare and high cost. That is also the reason why
many pin their hopes on the DPJ's policy. Yet, the DPJ's proposed
fiscal picture is unclear.

Without an administration transition team

Third, if the DPJ is serious about a change of government, why has
it not formed an administration transition team right now? If a DPJ
administration does come into existence, it is expected to have an
extremely tough time in steering the administration because it will
be taking over the Japanese economy and finances literally in their
worst state. That is, it needs to make preparations now on the
assumption of taking over the government in a scorched earth
condition.

For sure, the outcome of the election is unpredictable until the
votes are counted. However, such preparations will be useful for the
DPJ whether it becomes the ruling party or remains to be the
opposition. For the past few years, the succeeding cabinets have
been cabinets without a clearly-defined goal which have been
criticized by the people for not having an "agenda." But come to
think of it, such criticism also applies to the DPJ. A change of
government is a means for implementing desired policies. The point
of contention in the election should not be a change of government
but should be the policy agenda set as the goal of the various
political parties.

(10) TOP HEADLINES

Asahi:
Three local elections to be held in run-up to Lower House general
election

Mainichi:
National health insurance premiums differ 3.6 times by municipality

Yomiuri:
Sugaya says he made false murder confession to police officers after
13 hours of denial

Nikkei:
Corporations to cut capital spending 15.9 percent in FY2009

Sankei:
Maritime Self-Defense personnel on antipiracy mission backed by
their families and the public

Tokyo Shimbun:
Poll on Tokyo election: 32 percent for DPJ, 20 percent for LDP; 80
percent to go to the polls

Akahata:
Labor bureau issues more than 20 guidances and advices to correct
employment conditions

(11) EDITORIALS

Asahi:
(1) Fertility rate of 1.37: Make our society a place where people do
not have worry about having children and raising them
(2) Japan qualifies for 2010 World Cup in South Africa


TOKYO 00001281 016.2 OF 017


Mainichi:
(1) Bill managing official document: Still entrance for reform
(2) Soccer World Cup: Thank "Oshimu effect"


Yomiuri:
(1) Reliance on Chinese money U.S. weak point
(2) Hope Japan's soccer players will perform brilliantly in 2010
World Cup

Nikkei:
(1) More social spending for children

Sankei:
(1) Postponement of restrictions on hereditary candidates: Has LDP
given up self-purification effort?
(2) Japan qualifies for 2010 World Soccer Cup: Look forward to
seeing players' good performance

Tokyo Shimbun:
(1) It is too early to say the recession has bottomed out
(2) Japanese soccer players to participate in 2010 World Cup

Akahata:
(1) Don't expand scope of Japan's host-nation support for USFJ

(12) Prime Minister's schedule, June 6

NIKKEI (Page 2) (Full)
June 7, 2009

10:25 Sent off the Emperor and the Empress leaving Haneda Airport to
visit Fukui Prefecture to attend the 60th National Tree Planting
Ceremony.
11:35 Isetan Shinjuku Store.
12:13 Tailor Moriwaki in North Aoyama.
12:44 Tani Shirt Shop in Hotel Okura. Then had lunch with his
secretary at Cameria at the same hotel.
13:48 Had a haircut at Barber Sato at Hotel Pacific Tokyo in
Takanawa.
15:23 Arrived at the official residence.
15:49 Went to mass in memory of late former Japan Telework president
Koichiro Noda, his relative, held at Tokyo Cathedral St. Maria
Cathedral.
16:46 Attended a ceremony for the first anniversary of the death of
Noda held at Chinzanso.
18:59 Visited a house of his friend at a time when he was studying
in the U.S.
23:11 Arrived at the official residence.

Prime Minister's schedule, June 7

NIKKEI (Page 2) (Full)
June 8, 2009

07:36 Took a walk around the official residence.
10:19 Inspected fire drill and solar energy generation panel at the
No. 4 Primary School in Hachioji.
11:01 Visited the office of a person expected to run for the Tokyo
Metropolitan Assembly election in Hachiman-cho, Hachioji City.
11:16 Visited the office of a person expected to run for the Tokyo
Metropolitan Assembly election in Minami-cho, Hachioji City.

TOKYO 00001281 017.2 OF 017


11:34 Met with Parliament Secretary Hagiuda and Hachioji Mayor
Kurosu at Hachioji L-City, a banquet hall in Hachioji City.
12:38 Visited the office of a person expected to run for the Tokyo
Metropolitan Assembly election in Akishima City.
13:20 Visited the office of a person expected to run for the Tokyo
Metropolitan Assembly election.
13:55 Visited the office of a person expected to run for the Tokyo
Metropolitan Assembly election in Kokubunji Station.
14:54 Made sidewalk speech at the North entrance of JR Kichijoji
Station.
16:07 Arrived at the official residence.
16:46 Sorted out documents at Imperial Hotel.
19:00 Met with Secretary General Hosoda and Chief Cabinet Secretary
Kawamura.
21:18 Arrived at the official residence.

ZUMWALT