JAPANESE MORNING PRESS HIGHLIGHTS 06/10/09

UNCLAS SECTION 01 OF 11 TOKYO 001294

SIPDIS

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

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

SUBJECT: JAPANESE MORNING PRESS HIGHLIGHTS 06/10/09

Index:

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

Defense and security affairs:
4) LDP finalizes proposals for new national defense program
guidelines that include possession of cruise missiles that would
have capability of preemptive strike (Sankei)
5) Past defense chiefs offer their respective advice on whether
Japan should have an enemy-base strike capability (Tokyo Shimbun)
6) LDP security panel comes out against Japan having capability to
strike enemy bases (Nikkei)

North Korea problem:
7) With meeting of seven ambassadors, United Nations Security
Council headed toward agreement on sanctions content of new
resolution denouncing North Korea (Mainichi)
8) UNSC member China remains opposed to inclusion of obligatory ship
cargo searches in new Council resolution against North Korea for its
nuclear test (Sankei)
9) Cautious view in Washington about re-listing North Korea as state
sponsor of terrorism, since such cannot be done due to its missile,
nuclear tests (Sankei)

Economic affairs:
10) Basic balance of state finances will be in the black in 10
years, premised on a 12 PERCENT consumption tax rate (Nikkei)
11) G-8 finance ministers to meet on June 12 to discuss ways to
stimulate their economies (Yomiuri)

12) Russia to start exporting up to 1.5 million tons of wheat to
Japan (Nikkei)

Political agenda:
13) Liberal Democratic Party's project team meets to start drafting
campaign pledges for the Lower House election (Yomiuri)
14) Democratic Party of Japan's campaign pledges (manifesto) for the
election marred by vague sourcing of fiscal resources needed to
fulfill them (Nikkei)
15) Ruling camp puts off setting up constitutional panel until after
election (Yomiuri)

Articles:

1) TOP HEADLINES

Asahi and Yomiuri:
12 PERCENT consumption tax needed for fiscal reconstruction

Mainichi:
LDP, DPJ in hurry to compile "campaign pledges" for Lower House
election

Nikkei:
Central government to allow integration of public service operations
between municipalities

Sankei:
North Korea's Kim Jong Un belongs to Supreme Defense Commission


TOKYO 00001294 002 OF 011


Tokyo Shimbun:
Government to put off goal of fiscal reconstruction until 2020

Akahata:
A-bomb disease lawsuit: Government gives up on final appeal

2) EDITORIALS

Asahi:
(1) Economic, fiscal policy guidelines for FY2009: Why does
government need to conceal necessity of consumption tax rate?
(2) Electric cars: Copious gasoline no longer necessary

Mainichi:
(1) Cluster bombs: We welcome early ratification
(2) Fiscal reconstruction goal: Fine adjustment of "2007 guidelines"
is no good

Yomiuri:
(1) Arms exports: It is time to relax three weapons export
principles
(2) A-bomb disease lawsuit: The issue should be solved as quickly as
possible

Nikkei:
(1) Prime Minister Aso should not break away from structural
reforms
(2) Gulf countries struggling over currency issue

Sankei:
(1) Fiscal reconstruction goal: Securing discipline for expenditures
indispensable
(2) LDP's proposal: The country cannot be defended if defense
capabilities are cut

Tokyo Shimbun:
(1) EU election: Concerned about retreat from unification efforts
(2) Resurging crude oil prices: Government should speed up measures
to curb market speculation

Akahata:
(1) DPJ's plan to ban corporate donations: Receiving donations for
three more years imprudent

3) Prime Minister's Official Residence (Kantei)

Prime Minister's schedule, June 9

NIKKEI (Page 2) (Full)
June 10, 2009

09:03 Cabinet meeting in the Diet building. Finance Minister Yosano
remained. Then met with METI Minister Nikai.
09:31 Arrived at the Kantei.
10:54 Met with Environment Minister Saito.
13:06 Lower House plenary session.
13:53 Met with Diet Affairs Committee Chairman Oshima.
14:00 Met with Ryotaro Tanose, chief secretary of the Asia-Pacific
Parliamentarians' Union Japanese legislative mission, and others.
15:47 Met with Chairman Shingu of the LDP Fukuoka Prefecture
Chapter.
16:06 Met with Vice Foreign Minister Yabunaka, followed by special

TOKYO 00001294 003 OF 011


envoy for the prime minister of Bangladesh.
17:18 Council on Economic and Fiscal Policy meeting. Chief Cabinet
Secretary Kawamura, Yosano, and Nikai remained.
18:08 Met with Kawamura.
18:56 Joint intelligence members' meeting at Grand Arc Hanzomon in
Hayabusa-cho.
19:35 Visited the office of a person who is expected to run in the
Tokyo Metropolitan Assembly election in Shiba-daimon.
19:54 Visited the office of a person who is expected to run in the
Tokyo Metropolitan Assembly election in Kita-shinagawa.
20:17 Visited the office of a person who is expected to run in the
Tokyo Metropolitan Assembly election in Koyama.
20:34 Dined with his secretary at Steak House Katsura at Grand
Prince Hotel Takanawa.
22:08 Met with his secretary at a cigar bar at the same hotel.
23:21 Arrived at the official residence.

4) Japan needs ballistic missiles: LDP policy proposal

SANKEI (Page 5) (Full)
June 10, 2009

The ruling Liberal Democratic Party held a joint meeting of its
defense-related divisions yesterday and worked out a report of
policy proposals to the government for its National Defense Program
Guidelines to be revised late this year. Bearing North Korea in
mind, the LDP, in its policy proposal paper, says Japan should be
able to strike the enemy's missile bases, suggesting the need for
cruise missiles and long-range, solid-fuel ballistic rockets. In
addition, the policy proposal paper also says the government should
no longer cut back on its defense spending and should spend more for
defense. The government has reduced its defense budget since fiscal

2003. Furthermore, the policy paper urges the government to
reinterpret the Constitution so that Japan will be allowed to
exercise the right to collective self-defense in four cases, such as
intercepting ballistic missiles headed for the United States.

The policy proposal paper was drafted by the LDP's defense policy
review subcommittee, chaired by Hiroshi Imazu. The LDP will shortly
present it to Prime Minister Taro Aso and others. However, the focus
is on how far the government will import the LDP's policy proposals
into the new defense guidelines.

The LDP, in its policy proposal paper, suggests the need for Japan
to acquire the capability of striking enemy bases. "Japan's
neighbors are now more threatening," said Gen Nakatani, who presides
over the LDP's security panel. Nakatani stressed, "North Korea has
several hundred Nodong missiles, and there is a financial limit to
the present missile defense system."

The adopted report of policy proposals is more specific than its
draft. The policy proposal paper, in its original draft, said Japan
should be able to strike the enemy's missile sites. In addition, the
policy proposal paper also suggests the need to strike the enemy's
bombers and "vehicles, etc.," including missile-carrying trucks. It
says Japan should have aircraft, cruise missiles, and ballistic
missiles as means to strike enemy bases.

The LDP held a meeting of former defense chiefs yesterday morning
before the joint meeting. In that meeting, they voiced their views,
with one of them saying: "Japan must not cause foreign countries to
misunderstand." Another said, "There will be an election for the

TOKYO 00001294 004 OF 011


House of Representatives, so we should be careful when discussing
this issue." Former LDP Vice President Taku Yamasaki suggested that
Japan should not strike first for preemptive action. His suggestion
was added to the policy proposal paper.

5) Ex-defense chiefs voice concerns about enemy base strike issue

TOKYO SHIMBUN (Page 2) (Full)
June 10, 2009

The ruling Liberal Democratic Party yesterday held a meeting of its
defense division's defense policy subcommittee to hear former
defense ministers' views over the National Defense Program
Guidelines to be revised late this year.

Concerning North Korea's nuclear and missile development programs,
the subcommittee has worked out a report of policy proposals,
suggesting that Japan should acquire the capability of striking
enemy bases, such as striking ballistic missile launch pads before
the enemy launches ballistic missiles. In the hearing, however,
there were objections from among the former defense chiefs, with one
of them saying: "We must hold detailed discussions, or we will be
heading off in a strange direction. That may lead to an argument for
our going nuclear."

The policy proposal paper was weakened and the original wording
"striking enemy bases" was rephrased into "striking rear bases." On
this point as well, questions were raised.

"We should make it clear that Japan will not strike first for
preventive action." This opinion came from Taku Yamasaki. The
subcommittee therefore modified the policy proposal paper's wording
and changed it to "the capability of striking enemy missile bases,"
adding that Japan will "not strike first for preemptive action."

Meanwhile, Hiroshi Imazu, who presides over the subcommittee,
stated, "When it becomes clear that North Korea will fire at Japan
with its declaration, then it's within the scope of defense (to
strike that country's missile bases)." With this, Imazu has
indicated that striking the enemy's bases in the case where its
attempt to attack Japan and its action are apparent would not fall
under the category of striking first.

6) LDP suggests need for cruise missiles to strike enemy bases

NIKKEI (Page 2) (Full)
June 10, 2009

The ruling Liberal Democratic Party yesterday held a joint meeting
of its defense and security affairs panels and decided to make
policy proposals to the government for its National Defense Program
Guidelines to be revised late this year. In the wake of North
Korea's recent nuclear and missile tests, the adopted report of
policy proposals suggests the need for Japan to acquire the
capability of striking enemy bases with long-range cruise missiles
or other means. In addition, when it comes to the right to
collective self-defense, the policy proposal paper says the
government should reinterpret the Constitution so Japan can exercise
the right. The LDP plans to submit the policy proposal paper to
Prime Minister Taro Aso.

The LDP policy proposal paper says the option of striking enemy

TOKYO 00001294 005 OF 011


bases is within the scope of Japan's defense-only posture,
suggesting that the government should consider acquiring the
capability of striking enemy missile bases. It also suggests that
Japan should have weapons like Tomahawk cruise missiles so Japan can
strike the enemy's missile bases, mobile launch pads, and bombers if
its attempt to attack Japan is apparent.

In the meeting, however, there were strong objections from former
Defense Agency Director General Taku Yamasaki and former Defense
Minister Masahiko Komura. In the end, the LDP panels agreed to
preclude the option of striking first for preemptive action.

7) Final coordination on DPRK sanctions: Seven ambassadors hold
urgent meeting

MAINICHI (Page 1) (Slightly abridged)
June 10, 2009

Takayasu Ogura, New York; Shinichi Nishiwaki, Seoul

The five permanent members of the UN Security Council (UNSC),Japan,
and the ROK held an urgent ambassadorial level meeting on June 9 on
the resolution to impose additional sanctions on North Korea for its
latest nuclear test. Final coordination toward an agreement took
place after China made its response. The final agreement is expected
to restrict the flow of goods and money by stricter inspection of
cargo entering and leaving North Korea and the imposition of
financial sanctions. The ROK's Yonhap News Agency reported on June 9
that a surprise agreement was reached on the sanction resolution
with the above contents. If a formal agreement is reached, the
resolution will be presented to UNSC members on June 10 and is
expected to be adopted unanimously.

Yonhap cites an informed UN source saying that a final agreement has
been reached on the resolution. This informed source said: "China
accepted the final compromise proposals presented by the U.S. and
the Western countries." The agreement reportedly includes
comprehensive provisions on ship inspections in international
waters, financial sanctions on the DPRK, and so forth.

According to a source on the discussions, with regard to the
question of legal force of the sanctions, the seven nations appear
to have basically agreed on limiting the sanctions to measures not
involving the use of armed force under "Chapter 7 (Action with
respect to threats to the peace) Section 41 of the UN Charter." In
addition, with regard to the inspection of cargo entering and
leaving the DPRK, while Resolution 1718 adopted after the last
nuclear test "calls on all member states to actively implement"
inspections, the new resolution is expected to provide for stricter
inspections. At first, Japan and the U.S. had pushed for making this
an explicit obligation, but the wording will be weakened at China's
request.

With regard to the arms embargo, which is limited to large weapons
under Resolution 1718, a decision is likely to be made on banning
all arms exports from North Korea. In terms of financial sanctions,
all loans and financial aid to the DPRK, other than those for
humanitarian purposes, are expected to be suspended.

8) Agreement not reached on new resolution on North Korea due to
China's resistance to mandatory ship inspections


TOKYO 00001294 006 OF 011


SANKEI (Page 1) (Full)
June 10, 2009

Toshiya Matsuo, New York

The UN Security Council, which was aiming to adopt a new sanctions
resolution following North Korea's second nuclear test on June 9
held an ambassador-level meeting of seven countries: the five
permanent members -- the United States, Britain, France, China and
Russia -- plus Japan and South Korea. The meeting failed to reach a
final conclusion on the new resolution, including financial
sanctions on North Korea.

The UNSC had been expected to adopt a sanctions resolution at an
early time. However, in the process of concretely discussing
sanctions measures, China balked at a draft sanction led by Japan
and the United States for fear of possible more reckless actions by
North Korea.

As a result, the group ended up highlighting its discord 16 days
after the North's nuclear test.

The group aimed at the adoption of an effective sanctions resolution
based on UN Resolution 1718 which was adopted after the North
conducted its first nuclear test in 2006.

During the meeting, China expressed reluctance to allowing cargo
inspections, saying such would excessively irritate North Korea.
Japan and the United States insisted on making ship inspections in
each country's territorial waters mandatory, but China objected to
it to the end.

Resolution 1718 limits an arms embargo to large weaponry, such as
missiles and tanks. The group aimed at expanding the scope to
include all weaponry. It also aimed at an agreement on a direction
to enhance the effectiveness of existing financial sanctions.

In the process of discussing specific sanctions measures among the
seven countries, gaps gradually became clear in views between Japan,
the United States and South Korea, which called for strong
sanctions, and China and Russia, which insisted on giving priority
to a political settlement.

Amid growing speculation that North Korea might launch more
long-range missiles, Pyongyang has warned that if a resolution was
adopted, it would take a strong extreme action. Attention is focused
on how the UNSC will react to such an event.

9) Reservations in U.S. on re-designating DPRK as terror sponsor:
"Missile launch, nuclear test do not meet requirements"

SANKEI (Page 9) (Abridged)
June 10, 2009

Takashi Arimoto, Washington

U.S. Secretary of State Hillary Clinton has announced the start of
the process to consider re-designating North Korea as a state
sponsor of terrorism, but reservations have already been expressed
by officials in the U.S. administration at this early stage.
Re-designation will require a judgment that North Korea supported
terrorism in the past six months. Moreover, Clinton herself had

TOKYO 00001294 007 OF 011


expressed a negative view on this in late April. Few people believe
that DPRK be put back on the list of sponsors of terrorism any time
soon.

State Department spokesman Ian Kelly discussed the procedures for
re-designation at a news conference on June 8, saying, "There will
need to be a very clear procedure to judge that North Korea has been
supporting international terrorist activities recently," thus
pointing out the need for new "evidence."

White House spokesman Robert Gibbs also stated at a news conference
on the same day that: "Secretary Clinton's statement was in response
to a question on the letter from the senators (seeking the DPRK's
re-listing). The law is clear. There are several requirements."

As Clinton said during an interview with ABC TV on June 7, "They
were taken off the list for a purpose (abandonment of nuclear
programs),and that purpose is being thwarted by their actions," the
previous Bush administration's concession has ended in failure in
reality. However, the U.S. government has just removed the DPRK from
the list last October, so it appears to be reluctant to reinstate it
after only more than six months.

10) Precondition for achieving surplus in primary balance is hiking
consumption tax to 12 PERCENT

NIKKEI (Page 1) (Full)
June 10, 2009

The government's Council on Economic and Fiscal Policy (CEFP) at its
meeting on June 9 presented draft basic policy guidelines on
economic and fiscal management and structural reforms for fiscal
2009 and a fiscal outlook up to the early 2020s. The draft positions
bringing the primary balances of the central and local governments
into the black within the next 10 years as one of new fiscal
discipline targets. It estimates that achieving a surplus in the
primary balance will mandate a hike in the sales tax to 12 PERCENT .
The CEFP is expected to formally adopt the basic policy guidelines
on the 23rd. However, there is a possibility of adjustments of views
with the ruing camp encountering complications.

The primary balance is an index to see whether policy expenditures
for the fiscal year can be covered by revenues without issuing new
debt. The government in 2006 adopted a goal to achieve a surplus by
fiscal 2011.

As a new basic goal, the draft mentions that the ratio of
outstanding obligations held by the central and local governments to
the gross domestic product (GDP) should be stabilized by the mid
2010s and then lowered by the early 2020. Concerning the primary
balance, the draft puts up a two-stage goal: (1) halving the ratio
of debt to the GDP within the next four years; and (2) then
achieving a surplus within 10 years.

According to the estimate, even when the global economy smoothly
turns around and the consumption tax rate is raised 7 PERCENT -- 1
PERCENT a year in fiscal 2011 and after - to 12 PERCENT , a surplus
in the primary balance cannot be achieved before fiscal 2018. If the
consumption tax rate is to be hiked to 10 PERCENT , achieving a
surplus will slide into fiscal 2021.

Referring to spending cuts, Kaoru Yosano, who is in charge of

TOKYO 00001294 008 OF 011


economic and fiscal policy as well as financial services, told a
news conference that a policy of constraining an annual increase in
social security expenditures by 220 billion yen will be kept in
place for the guidelines for the estimate budget requests for the
next fiscal year as well. However, he also noted, "We will compile a
budget, taking the appearance of new social security needs into
account."

11) G-8 finance ministers to check economic measures in meeting on
June 12-13

YOMIURI (Page 9) (Slightly abridged)
June 10, 2009

A meeting of Group of Eight (G-8) finance ministers will be held in
Lecce, Italy, on June 12-13. The meeting will be a preparatory
meeting for the G-8 Summit in Italy in July. The finance ministers
will examine the present state of the global economy, for which
signs of recovery have begun to appear, and the effects of their
economic stimulus measures. They are also expected to reaffirm the
need for cooperation in order to turn around the global economy.

In a press conference after a cabinet meeting yesterday, Finance
Minister and Economic and Fiscal Policy Minister Kaoru Yosano
indicated that it will become imperative for the G-8 countries to
examine the state of progress of their fiscal and financial measures
and then show their determination to continue such measures.

The global economy began to sink sharply last fall, but the view is
gaining ground that the economy is emerging from its worst period.
However, uncertainty still looms over the U.S. economy, and the
economic crises of Central and Eastern European countries are
getting more serious.

Concerns are also growing about the possibility that major
countries' fiscal conditions might worsen as a result of growing
fiscal disbursements to finance their economic measures. If
countries continue to raise long-term interest rates, a damper might
be put on the global economy. In the upcoming meeting, the
participants are also expected to discuss how each country should
restore their fiscal discipline after overcoming the economic
crisis.

12) Russia to export up to 1.5 million tons of wheat a year,
according to its agriculture ministry

NIKKEI (Page 1) (Full)
June 10, 2009

Natsuki Kaneko, Moscow

Russian Agriculture Minister Yelena Skrynnik revealed Nihon Keizai
Shimbun a policy of starting full exports of wheat to Japan. The
plan is to export up to 1.5 million tons of wheat a year, by
building an export base in the Russian Far East jointly with leading
trading companies, such as Itochu Corporation and Sojitz. Its aim is
to advance into the untapped Asian market, characterizing grain,
demand for which is expected to expand over the mid- to long-term,
as strategic export goods. Japan imports wheat from North AMERICA
and Australia. Importing wheat from Russia as well will lead to
diversifying suppliers.


TOKYO 00001294 009 OF 011


Skrynnik made those replies in writing. This is the first time for
her to reply questions asked by any foreign media organizations
since taking office in March this year. She said that Russian
agricultural companies are actively pursuing talks with Sumitomo
Corporation, Sojitz, Mitsubishi Corporation and Itochu Corporation
on exports of wheat to Asia.

Sojitz and OGO, an agriculture-related company, are planning to
build an export terminal at Vostochny Port in Nakhodka. Another
Russian company is also pressing ahead with a similar plan in the
Far East, teaming up with Itochu Corporation. According to a related
source, the envisaged terminals will be able to respectively store
1million tons a year. If the project is put on the track, the
facilities will be expanded. Skyrnnik also revealed a plan to
construct an export base at Trojtsa Port in the southern part of
Primorskii province.

Japan imports roughly 5 million tons of wheat a year, but almost
nothing from Russia. Characterizing Japan as a promising market for
Russia, Skrynnik indicated her view that it would be possible to
export up to 1.5 million tons of quality wheat a year. She also
indicated a desire to export such to China and Taiwan, as well.

13) LDP's work to formulate manifesto likely to encounter snags;
Project team experiences difficulty selecting its chair; Tempestuous
debate expected for consumption tax rate

YOMIURI (Page4) (Abridged)
June 10, 2009

The Liberal Democratic Party's (LDP) project team (PT) to draft the
party's manifesto (campaign pledges) for the next House of
Representatives election held its first executive meeting at party
headquarters yesterday to begin its work. In the meeting, the team
decided to swiftly come up with the party's campaign pledges to
counter the major opposition Democratic Party of Japan (DPJ),which
aims to take over the reins of government through the next general
election. Many members think finding points at issue will be
difficult. At the same time, given the Aso cabinet's sagging support
ratings, some in the party are calling for putting of the election
as long as possible. This, too, is likely to cast a shadow over the
team's work.

The executive meeting selected Election Strategy Council Vice
Chairman Yoshihide Suga as PT chair. Suga and other PT members are
scheduled to meet with Prime Minister Taro Aso today to receive his
instruction about the direction of the manifesto.

The executive meeting was attended by Senior Deputy Secretary
General Nobuteru Ishihara, former General Council Senior Deputy
Chairman Hajime Funada, and Upper House Deputy Secretary General
Akio Sato, in addition to Secretary General Hiroyuki Hosoda, Policy
Research Council Chairman Kosuke Hori, and Suga. They confirmed a
policy course to specify a timeframe to implement the policies and
to produce a complete set of campaign pledges and a summary.

To play up the party's ability to run the government, the envisioned
manifesto will focus on the provision of a sense of security to the
public in their livelihoods, centering on an economic recovery and
social welfare on the domestic front. In the economic area, the
manifesto will reflect the 2009 basic policies for economic and
fiscal reform that lay out a path toward regained fiscal health over

TOKYO 00001294 010 OF 011


the medium term, giving top priority to turning around the economy.
On security policy, the team plans to put high priority on the
Japan-U.S. alliance, North Korean issues, and international
contributions, which are referred to as the DPJ's Achilles tendon,
with the aim of pursuing the main opposition party's stance on
security issues.

The question of the consumption tax rate is expected to be a point
at issue. The Prime Minister apparently wants to include in the
manifesto his stock argument of raising the rate in fiscal 2011.
There is strong opposition to that in the party, which fears that
the party might be taken as favoring a tax hike. At a party
executive meeting on June 8, the Prime Minister instructed the party
to speed up work to formulate its manifesto. An LDP lawmaker said:
"Our party is certain to have an uphill battle under the current
situation. Rushing to produce a manifesto might end up giving a
boost to the election mood."

Initially, Suga, who is close to the Prime Minister, was officially
selected as the PT chair. But this appointment was later withdrawn
due to Suga's call for placing restrictions on candidates running
for hereditary seats in the election. As a result, Secretary General
Sonoda was tipped but he refused to accept the offer. The team
eventually settled on Suga. Some think that these twists and turns
suggest the PT's future.

14) DPJ reveals plan to allocate funds to priority policies first,
bearing in mind criticism for lacking specifics on how to secure
fiscal resources

NIKKEI (Page 2) (Full)
June 10, 2009

The Democratic Party of Japan (DPJ) is hurriedly making preparations
to be armed with theoretical backing for its manifesto (policy
platform) for the next House of Representatives election. In an open
debate of its national conference to build a new Japan yesterday,
Policy Research Council Chairman Masayuki Naoshima revealed a plan
to allocate funds to priority policies, such as child-rearing
support, on a priority basis. The DPJ has been criticized for
lacking specifics on where fiscal resources will come from. He also
said that the party would review 70-trillion-yen allocations out of
the total amount of approximately 209 trillion yen in the general
and special accounts. Bearing criticism for the lack of details on
fiscal resources in mind, the main opposition party is also
examining in which areas taxpayers' money is about to be spent
wastefully in the main and extra budgets.

Naoshima referred to the issue of fiscal resources at the outset of
the debate: "We will implement important policies on a top priority
basis, using our political judgment. Many low-priority policies may
never be imlemented." This remark came apparently in response to the
criticism from the ruling side that the DPJ has not clarify how to
secure funds for measures it has pledged to implement.

No specifics spelled out

The DPJ set up a preparatory committee tasked with working out a
manifesto, chaired by Naoshima. The panel will start work to select
priority policies among those presented by departments. Assuming it
takes over the reins of government, the party estimated last fall
that 20.5 trillion yen would be needed to implement its policies

TOKYO 00001294 011 OF 011


four years after seizing political power. But the party has been
pressed to give a convincing explanation about how to secure the
financial resources, as well as a roadmap to translate the policies
into action.

But in the debate yesterday, Naoshima did not spell out which budget
allocations should be slashed. He just said that the party will look
into trimming approximately 70 trillion yen, excluding expenditures
for pension and other programs that cannot be easily reduced, and
"squeeze out about 10 trillion yen over years." National Graduate
Institute for Policy Studies Professor Jun Iio, who chaired the
debate, said: "Specifically, in which areas subsidies will be cut?
There might be local governments that lose revenue sources."

Measures to eliminate the waste of taxpayers' money are being
discussed in the party. In a meeting yesterday of a group to study
"the budget of a doomed country," Lower House member Seiji Osaka
indicated his intention to choose unnecessary expenditures in the
fiscal 2009 supplementary budget, report them to party headquarters,
and then have the money used to finance new policies. He said: "I
propose fighting the election by including in our manifesto a
measure to suspend budget use."

15) Ruling parties decide not to pick members for Lower House
constitution examination commission

YOMIURI (Page 4) (Full)
June 10, 2009

The ruling Liberal Democratic Party (LDP) and its coalition partner
New Komeito decided yesterday not to select during the current Diet
session the members of the House of Representatives' Constitution
Examination Commission (shuin-kenpo-shinsakai),even if a bill to
set regulations for the commission, including the appointment of 50
members, is adopted tomorrow in a Lower House plenary session. It is
expected that the panel will start its operation after the next
Lower House election.

The ruling coalition decided to enact the bill with a majority of
its lawmakers, judging that if the next general election is held
before the Diet decides on the regulations for the commission, which
was established in August, 2007, the responsibility of the
legislative branch of government will be questioned."

Regarding regulations for the House of Councillors Constitution
Examination Commission (sanin-kenpo-shinskai),the main opposition
Democratic Party of Japan (DPJ) has taken a stance of rejecting
passage of the legislation during the ongoing Diet session. The
ruling parties predict that since the DPJ will not work on the
constitutional issue before the Lower House election, they should
wait the selection of the Lower House panel members until after the
general election because there is a possibility that the DPJ will
start working on consolidating environments for setting regulations
for the Upper House commission.

ZUMWALT