JAPANESE MORNING PRESS HIGHLIGHTS 06//09

UNCLAS SECTION 01 OF 13 TOKYO 001324

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SUBJECT: JAPANESE MORNING PRESS HIGHLIGHTS 06//09

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

North Korea problem:
4) Japan decides to prepare new domestic legislation to allow ship
searches of suspicious cargo on North Korean vessels, authorized by
UN sanction resolution (Sankei)
5) Government and Liberal Democratic Party working on drafting
special measures law to allow ship searches (Nikkei)
6) Japan to set own sanctions by cabinet decision, including full
ban on exports to DPRK (Sankei)
7) With decision to pass special measures law allowing cargo
searches, Prime Minister Aso has a new card to shake policy-split
Democratic Party of Japan (Asahi)
8) DPJ's response to new legislation on ship searches unclear, may
balk due to additional delay in much sought Diet dissolution and
snap election (Nikkei)
9) Maritime Self-Defense Force is reluctant to assume possible new
duty of searching the suspicious cargo of North Korean ships
(Asahi)
10) Japan carrying out ship searches could set off strong North
Korean reaction and additional trouble (Tokyo Shimbun)
11) Unknown whether UNSC sanction resolution will pressure North
Korea to abort its nuclear ambitions (Asahi)
12) U.S. may seek way to shift from pressure to negotiations with
recalcitrant DPRK (Mainichi)

Economic affairs:
13) Government's June report on the economy to remove the word
"worsening" as signs of improvement begin to be seen (Mainichi)
14) G-8 finance ministers' meeting begins today with focus on
reconstruction of state finances (Asahi)
15) Budget ceilings to be set on July 3, earlier than usual
(Mainichi)
16) METI considering plan that would boost nuclear power to 40
PERCENT of total electrical supply (Asahi)

Political agenda:
17) DPJ and Social Democratic Party are ready to form coalition if
the opposition camp wins the next Lower House election (Sankei)
18) Diet passes constitutional reform procedures rules but some of
DPJ lawmakers opposed to constitutional revision boycott the session
(Sankei)
19) Prime Minister Aso stresses the importance politically of the
upcoming Tokyo assembly election in July (Yomiuri)

Articles:

1) TOP HEADLINES

Asahi, Yomiuri, and Tokyo Shimbun:
WHO declares Phase 6 swine flu pandemic

Mainichi:
Chemical sensitivity to be covered by healthcare insurance

Nikkei:
Mitsubishi Heavy Industries to build world's first low-emissions
coal power plant in Australia


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Sankei:
JAXA to conduct life science experiment in space with India in
October

Akahata:
LDP, New Komeito ram Constitution Examination Commission rules
through Lower House

2) EDITORIALS

Asahi:
(1) Sanctions resolution on North Korea: International community
must remain united against threat
(2) DPJ's ability to govern itself still questionable

Mainichi:
(1) North Korea sanctions resolution requires international unity
(2) DPJ's Nishimatsu report does not spell an end to the chapter

Yomiuri:
(1) China key to new resolution on North Korea
(2) Upper House must speedily set Constitution Examination
Commission rules following Lower House

Nikkei:
(1) UN Security Council resolution on North Korea must be
implemented strictly
(2) DPJ expert-panel report too soft on Ozawa

Sankei:
(1) UNSC North Korea resolution: Effective sanctions essential
(2) Northern Territories special measures law: Stir up public
opinion for return of four islands

Tokyo Shimbun:
(1) International net encircling North Korea essential to stop the
country's reckless acts
(2) Constitution Examination Commission rules insufficient

Akahata:
(1) Constitutional amendment procedures must be abolished

3) Prime Minister's Official Residence (Kantei)

Prime Minister's schedule, June 11

NIKKEI (Page 2) (Full)
June 12, 2009

09:43 Arrived at Kantei.
11:00 Met with Nikkei Shimbun Chairman Sugita and Executive Director
Akiyama.
11:49 Met at LDP headquarters with Security Research Commission
Chairman Nakatani, National Defense Division Director Nakayama, and
Defense Policy Study Sub-committee Chairman Imazu. Met later with
Secretary General Hosoda and Reform Implementation Headquarters
leader Takebe.
12:36 Attended study session of the Kanagawa Prefecture's Women's
Bureau. Visited the LDP's election headquarters for the Tokyo
metropolitan election to offer words of encouragement.
13:03 Attended Lower House plenary session.
14:17 Returned to Kantei.

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15:01 Met with Deputy Chief Cabinet Secretary Asano, followed by
Cabinet Public Relations Secretary Ogawa. Responded to interview by
German newspaper.
16:05 Met Cabinet Intelligence Director Mitani.
17:00 Met with Science Council of Japan Chairman Kanazawa, joined by
Science and Technology Minister Noda. Met later with Shimamura,
special advisor to the prime minister, followed by Masuda, secretary
general of the council to realize a security society and Assistant
Deputy Chief Cabinet Secretary Fukuda.
18:49 Met with Deputy Chief Cabinet Secretary Uruma.
19:59 Reported to the Emperor in private.
21:40 Returned to his official residential quarters.

4) Legislation of domestic law to implement ship inspections

SANKEI (Page 2) (Abridged)
June 12, 2009

With the UN Security Council about to adopt a sanction resolution
calling for cargo inspection on North Korean ships, the government
began to consider domestic legislative measures, including a
possible new law, on June 11, in order to implement cargo inspection
on the open sea. Chief Cabinet Secretary Takeo Kawamura stated at a
news conference on the same day that "it is fully possible" that
such legislative work will be undertaken in the current Diet
session.

However, New Komeito has expressed reservations about legislations
for cargo inspection. It is therefore uncertain whether the bills
can be submitted to the current Diet session.

5) Government, LDP considering ship inspections special measures
law

NIKKEI (Page 2) (Abridged slightly)
June 12, 2009

Following a UN Security Council agreement on a draft resolution on
sanctions against North Korea, the government and the Liberal
Democratic Party (LDP) began yesterday considering a special
measures law on inspections of North Korean cargo. An idea has
emerged to make the Japan Coast Guard (JCG) responsible for Japanese
territorial waters and the Maritime Self-Defense Force for the high
seas in Japan's vicinity. Inspecting ships on the high seas requires
the consent of ships' captains. A clear line will be drawn with
oceanic areas where the naval vessels of other countries are
carrying out activities. They also plan to include "rear-area
support" that would allow Japan to provide supplies to U.S. forces.

The government and the LDP are aiming to formulate a draft bill next
week to present legislation to the Diet in the ongoing session.

Ship inspections will be conducted only when the consent is obtained
from the captain of a ceased ship on the high seas. Firing warning
shots to halt a ship will not be allowed and the use of arms will be
limited to legitimate self-defense. An armed conflict might result
from inspections of a suspicious ship by such countries as the
United States. To prevent the use of force in collaboration with
other countries, a clear line will be drawn so that Japan's areas of
activities will not overlap with those of other countries.

The provision of supplies to the naval vessels of such countries and

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the United States and South Korea and of transport assistance will
be allowed. The provision of weaponry and ammunition will not be
included. Areas of activities will be limited to "rear areas," in
the same way as the regional contingency law now in force. In view
of the risk of armed conflicts between MSDF vessels and North Korean
ships, the government plans to allow the county to carry out only
rear-area support without conducting cargo inspections even after
the law is enacted.

6) Cabinet decision to be made June 16 on total ban on exports to
DPRK as Japan's own sanction measure

SANKEI (Page 2) (Slightly abridged)
June 12, 2009

It was learned on June 11 that Japan will impose its own additional
sanctions on North Korea for firing a long-range ballistic missile
and conducting a nuclear test recently. The sanctions will include a
total ban on exports to the DPRK. Coordination is underway for
passing a cabinet resolution and announcing this as soon as June

16.

Japan has already banned the export of 24 "luxury items," including
beef and tuna, to the DPRK after the Taepodong-2 launch and nuclear
test in fall 2006. The new measure will ban all exports to reinforce
existing sanctions. This ban will be in effect until April 13,

2010.

The travel ban will also be broadened. Foreign residents in Japan
and foreign seamen who have been sentenced for violating trade
sanctions against North Korea will also not be allowed to reenter or
land in Japan in principle.

7) Cargo inspection special measures law a new card for Aso

ASAHI (Page 4) (Abridged)
June 12, 2009

There are now moves aiming to legislate special measures to allow
cargo inspections on the high seas. This legislation could be a
bullish factor for Prime Minister Aso, who is fretting about how to
stand out against the leading opposition Democratic Party of Japan
(Minshuto) should he dissolve the House of Representatives for a
general election. It will also likely work to contain the growing
calls for an early dissolution of the Diet. However, some government
officials are cautious about the legislation that will lead to
expanding the scope of Japan's activities, which have been premised
on "neighboring contingencies" that could seriously affect Japan's
peace.

Aso's aim is to set up contested ground for the general election.
His ruling Liberal Democratic Party held a training workshop
yesterday at its headquarters. Aso there stressed that the LDP has
been the only responsible party to protect Japan's national security
and the lives of the Japanese people. Aso is trying to shake up the
DPJ on security policy since he thinks the DPJ's weak point lies in
that area.

What if the DPJ opposes the legislation? The LDP will then call the
DPJ "a friend of North Korea" in its election campaign, one of the
LDP's faction leaders said. What if the DPJ comes around to support
the legislation? In that case, Aso anticipates that he can drive a

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wedge between the DPJ and the Social Democratic Party, which is
critical of the Self-Defense Forces' overseas activities. In fact,
the DPJ held a meeting of its foreign affairs and defense policy
divisions to confirm the necessity of creating a law for cargo
inspections. Even so, one of the DPJ's executives seated in the
House of Councillors is opposed to the legislation as "out of the
question."

In addition, bringing such a major bill before the Diet will likely
affect Aso's strategy of dissolving the Diet.

The bill is expected to be before the Diet late this month even at
the earliest. If Aso is going to enact the bill into law, it will
lead to containing the calls from within the LDP for dissolving the
Diet at an early date before the July 12 Tokyo metropolitan assembly
election.

Meanwhile, the New Komeito, which is the LDP's coalition partner and
sensitive to security policy, is going to accept the legislation.
That is because the New Komeito expects that if the bill is
submitted to the Diet, the general election can be more than a month
after the metropolitan assembly election. One of the party's
middle-ranking lawmakers explained: "This legislation will be the
'bullet' during the latter half of the Diet session. We can prevent
the Diet from being dissolved this month after all the important
bills are passed and when we have nothing to do." The Aso cabinet's
support remains flat. As it stands, a former LDP secretary general
noted that the legislation could be a card to move down the general
election.

8) Many obstacles to early ship inspections; DPJ's move unclear;
Lower House dissolution timeframe may be affected

NIKKEI (Page 2) (Abridged slightly)
June 12, 2009

The government and the Liberal Democratic Party (LDP) have begun
seriously considering a law governing cargo inspections. This comes
from the judgment that Japan, which vocally called for applying
greater pressure (on North Korea) throughout the UN Security Council
talks, must deal with the matter proactively. Enacting a new low in
the ongoing Diet session requires the cooperation of opposition
parties. Prime Minister Taro Aso is likely to be pressed for a
difficult decision linked to his strategy to dissolve the House of
Representatives.

The government and the LDP are specifically considering a new law
allowing the Maritime Self-Defense Force (MSDF) to conduct ship
inspections on the high sears without the situation being designated
as a contingency in areas surrounding Japan. The envisaged law is
unique in that its objective is limited to the implementation of a
sanctions resolution on North Korea. The legislation is intended to
put a stop to the ever-expanding scope of SDF activities and to
weaken the resistance of the New Komeito and other opposition
parties.

In reality, it is difficult for the SDF to conduct effective ship
inspections on the high sea, so it is said that the envisaged
legislation is mainly intended to open the way for rear-area support
to such countries as the United States and South Korea. At the same
time, there are many obstacles that must be cleared for the
enactment of the law.

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The main opposition Democratic Party of Japan (DPJ) is also
considering the new law allowing conducting ship inspections at the
high seas. But in the party, cautious views are strong about
expanding the SDF's scope of activities. DPJ President Yukio
Hatoyama said to the press corps yesterday, "We must sort out our
thinking on matters, including whether there is a need for improving
legislation," while welcoming the UNSC's draft resolution.

A senior DPJ lawmaker explained that the party must be careful so
that envisaged new legislation will not be used as an excuse to put
off Lower House dissolution. The New Komeito thinks the Japan Coast
Guard must be dispatched instead of the MSDF.

The envisaged ship inspection legislation is a double-edged sword
for the Prime Minister. In the ruling bloc, there is a hard-line
view that if opposition parties raise objections to the legislation
or postpone a vote, the Prime Minister should go ahead and dissolve
the lower chamber by making the matter as a campaign issue. But once
a bill is submitted to the Diet, the government will have to make
efforts for its enactment to meet the expectations of other
countries. But that would reduce the timeframe of Lower House
dissolution for the Prime Minister.

9) Cautious views voiced over expanding MSDF activities

ASAHI (Page 4) (Abridged)
June 12, 2009

When sending out the Self-Defense Forces Law on an overseas mission
under a special measures law, there are many issues to discuss over
the effectiveness of sanctions and the authorization of weapons use,
for instance.

The Maritime Self-Defense Force is allowed to inspect ships at sea
under the Ship Inspections Law. In this case, the MSDF, when
inspecting a ship, will check to see if its flag state has
consented, and will inspect the ship with its captain's consent. The
MSDF is not allowed to take any forcible actions like halting ships
or firing warning shots. Ship inspections in this case are
optional.

The SDF is allowed to use weapons only when it is unavoidable to do
so for self-defense. The antipiracy bill, now before the Diet,
allows the SDF to fire on ships refusing orders to stop. This firing
of warning shots is not allowed in the case of inspecting ships.

The SDF is expected to inspect ships on the high seas, based on a
United Nations resolution. If a ship to and from North Korea sails
under the flag of North Korea, that country is not likely to consent
to inspections. The SDF's inspections are also feared to incur North
Korea's runaway action, so there are cautious arguments both in the
government and in the ruling parties.

10) Legislation on ship inspection in current Diet to be stormy;
fear of "flash point" between Japan, DPRK

TOKYO SHIMBUN (Page 2) (Full)
June 12, 2009

Koki Miura


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In light of the finalization of the UN Security Council (UNSC)
sanction resolution against North Korea's nuclear test, which calls
for cargo inspection on ships, among other matters, the government
plans to prepare the legislation to enable ship inspection in the
current Diet session. Although ship inspections under this
resolution have not been made mandatory due to China's demand, this
could develop into a "flash point" between Japan and North Korea in
the future under certain circumstances.

A senior Ministry of Foreign Affairs official stressed on June 11:
"The question now is how to implement the resolution. This needs to
hurt North Korea."

Cargo inspection is the main component of the effort to apply
pressure on North Korea. Ship inspections on the open sea, in
particular, will send a strong message to the DPRK, although its
implementation is uncertain.

The Japanese government, which has demanded strong sanctions along
with the U.S., "needs to respond to the call of the resolution."
(Chief Cabinet Secretary Takeo Kawamura) It is poised to set in
motion the required legislation.

The only existing laws that authorize ship inspections in
international waters by the Self-Defense Forces (SDF) are the
maritime transport regulation law in a situation of armed attack and
the ship inspection operations law under an emergency situation in
areas surrounding Japan. Since a mere nuclear test is difficult to
designate as an emergency situation, the government has judged that
there is need for new legislation. It will study whether to amend
the ship inspection law or to enact a separate new law.

The Liberal Democratic Party (LDP) and New Komeito will launch a
project team as soon as next week.

While the UNSC resolution about to be adopted is rather weak, since
ship inspection (on the open sea) will require the consent of the
flag state, if the DPRK reacts fiercely to the resolution and launch
more ballistic missiles, it is highly possible that a stronger UNSC
resolution will be adopted.

In light of this, there are calls in the LDP for broadening the
authorization for the SDF to use arms under the new law -- to allow
shooting at ships, for instance - in order to enable forcible
inspections.

The ruling parties plan to enact the new law as a main item on the
agenda in the final phase of the current Diet session. However, it
is uncertain whether this can be done before the Diet adjourns on
July 28, since the confrontational mood between the ruling and
opposition parties is intensifying with the House of Representatives
election approaching.

Furthermore, there is an opinion in the Ministry of Defense that:
"If MSDF ships conduct ship inspections on the open sea, North Korea
may regard this as a 'state of war.' We are in for trouble." Certain
officials are anxious. "This is very different from anti-piracy
operations. Are we really supposed to do it?"

11) International community mulling how to urge North Korea to
abandon nuclear program


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ASAHI (Page 2) (Full)
June 12, 2009

The five UN Security Council permanent members, Japan and South
Korea agreed on a draft sanction resolution against North Korea on
June 10, more than two weeks after its nuclear test. Has China made
a policy changed its prudent stance? What is the U.S. aiming at? How
will the international community, including Japan, persuade the
North to forge ahead with the denuclearization process?

Japan still exploring new approach

The Japanese government has launched a discussion on how to proceed
with the six-party talks, besides the effort to lay down a
resolution at the UN.

Foreign Ministry's Asian and Oceanian Affairs Bureau Director
General Akitaka Saiki, Japan's chief delegate to the six-party
talks, left for Washington on the 8th. He said: "We will discuss
future policy options, including the six-party talks, and iron out
differences in our positions." He exchanged views with U.S. Deputy
Secretary of State Jim Steinberg, who returned from a round of
visits to Japan, China and South Korea, and other U.S. government
officials.

Japan advocated a "new approach toward the North," as said by
Administrative Vice Foreign Minister Mitoji Yabunaka, reflecting on
the fact that the approach based on the principle of action for
action, based on which the six-party talks were advanced, proved to
be unsuccessful. Whenever the North took denuclearization measures,
(the international community) offered financial assistance. But such
efforts came to nothing with North Korea's recent nuclear test. A
senior Foreign Ministry official grumbled: "While looking into
details, we strayed off into a wood and found it difficult to see
the grand picture of North Korea's denuclearization."

Even so, there is no effective hand to take against the North for
now. While the U.S. is shifting its weight to pressure tactics in
line with Japan's stance, North Korean Ambassador to the UN Sin Son
Ho showed an attitude of fiercely reacting to the UN draft
resolution. Remaining unresponsive to questions by reporters on the
street in New York on the 10th, he violently pushed away the
microphone directed at him. The tensions are expected to extremely
intensify as the international community remains unable to explore a
new approach toward North Korea.

12) China's consideration to North Korea masks its anger toward that
country

MAINICHI (Page 2) (Excerpts)
June 12, 2009

The five UN Security Council permanent members, Japan and South
Korea reached a final agreement on June 10 on the text of a
resolution calling for additional sanctions against North Korea for
its second nuclear test. Although cargo inspection was not made
mandatory due to the strong opposition of China asserting that the
measure will heighten military's tensions, stronger pressure is
expected to be applied to exports of goods and money to North Korea.
Attention is now focused on whether these measures will press the
North to change its tough stance and on what moves the U.S. and
China, which holds enormous sway over North Korea, will make next.

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U.S. to launch negotiations with pressure

Based on the judgment that North Korea's main purpose is to have the
international community to recognize it as a nuclear power, the
administration of President Barack Obama has decided to play up
"pressure" instead of "rewards" in an attempt to bring the North
back to the negotiating table. If North Korea has no intention to
denuclearize itself, rewards will be useless. But some observers
anticipate that North Korea, which has entered the
leadership-transition period and is trying to demonstrate its
strength through a nuclear test and other moves, may not respond to
a call for talks.

The contents of the draft resolution have been watered down, but it
can be interpreted to mean that the resolution has left a margin in
anticipation of future provocative act. A senior official of the
U.S. State Department said: "I am satisfied with it."

The U.S. is expected to work on China, which has influence over the
North, (to persuade it to promote the denuclearization process).
Senior researcher Bush of the Brookings Institution commented: "It
will be an indicator to see what type of big power China will become
in Northeast Asia."

The tough U.S. stance has also been supported by changes in the
international situation.

Mansfield Foundation Chief Flake, who was an advisor about Asia
strategy to Obama during the presidential election campaign, made
this analysis:

"When North Korea conducted the nuclear test in 2006, the previous
Bush administration's hostile policy was criticized as a failure,
and the administration was pressed to opt for a policy of dialogue.
The Obama administration was calling for dialogue from the
beginning, but North Korea carried out the nuclear test in defiance
of the call. Nobody will criticize the Obama administration."

North Korea will surely resort to a hostile act in reaction to the
pressure, but it is uncertain where the U.S. will set a "critical
point." It is also unpredicted to what extent China, which is
cautious about strong pressure, will offer cooperation. The U.S.
seems to have yet to chart a medium- to long-term strategy.

13) Government ups economic outlook for first time in seven months
in report for June, removing "deterioration"

MAINICHI (Page 1) (Excerpt)
June 12, 2009

The government will revise its assessment of the nation's economy
upward for two months in a row in its monthly report for June. It
will remove the word "deterioration," reflecting that signs of the
drop in production bottoming out are appearing. "Deterioration" will
disappear for the first time in seven months. Coordination is now
underway to insert the expression, "signs of recovery can be seen in
some areas." Finance Minister Kaoru Yosano will present the report
in a meeting of the relevant cabinet ministers on June 17.

14) G-8 finance ministerial to kick off today with focus on economic
reconstruction

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ASAHI (Page 7) (Abridged slightly)
June 12, 2009

A finance ministerial meeting from the Group of Eight nations (G-8)
will take place in Lecce in southern Italy. Amid emerging signs of
the global economy bottoming out, finance ministers from the G-8
will discuss an exit strategy after a crisis response policy stance.
In view of the fact that active public spending is pushing up
long-term interest rates, participants are expected to reaffirm the
importance of economic reconstruction.

The meeting is one of the preparatory meetings for the G-8 to be
held in L'Aquila in central Italy from July 8 through 10. Food
security and climate change, as well as economic stimulus measures
will likely top the agenda.

Participants will look into various countries' public spending and
financial stabilization measures. Anticipating a post-economic
recovery phase, they will discuss a path to economic reconstruction
and how to end exceptional measures, such as government guarantees
and the injection of public money into financial institutions,
according to a senior finance ministry official/

The interest of each country has shifted from fiscal spending to
fiscal reconstruction, because signs of the economy picking up have
begun to appear. An agreement was reached at the financial summit
(G-20) in April to press ahead with fiscal spending totaling 5
trillion dollars or roughly 490 trillion yen. In Japan, too, various
indexes, such as mining and manufacturing production index, are
improving due to stimulus measures. Finance Minister Yosano
indicated his understanding that the Japanese economy had bottomed
out between January and March.

Meanwhile, there is concern over the aftereffects of various
countries financing fiscal spending with massive borrowings. The
U.S. fiscal deficit for fiscal 2009 is estimated to have reached the
worst-ever level of about 1.8 trillion dollars or roughly 176
trillion yen. Due in part for that reason, its long-term interest
rate is rising. Japan's fiscal deficit will also likely mark the
largest-ever level with the issuance of new government bonds in
fiscal 2009 topping 44 trillion yen. Amid growing anxieties over
fiscal sustainability in various countries, it is now urgent to
indicate a path to fiscal reconstruction.

Finance Minister Yosano is expected to explain Japan's measures of
over 15 trillion yen to deal with the economic crisis. He will also
mention Japan's fiscal reconstruction goal, which is now being
drafted. It will involve stabilizing the ratio of outstanding
obligations held by the central and local governments to the gross
domestic product (GDP) by the mid-2010s.

Japan Credit Rating Agency President Makoto Utsumi, former vice
financial minister for international financial affairs, said,
"European countries and the U.S. have been pursuing an exit strategy
from the early stage of the crisis. Such awareness is low in Japan.
It was unable to pursue an exit strategy on the fiscal and financial
fronts during the economic recovery phase following the so-called
lost decade (1990s). If anxieties over the future remain with no
proper exit arguments being pursued, it would become difficult for
personal consumption to pick up."


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15) Prime minister considering adopting budget request guidelines on
July 3

MAINICHI (Page 1) (Full)
June 12, 2009

Prime Minister Taro Aso has started looking into fiscal 2010 budget
request guidelines with the possibility of adopting them at a
cabinet meeting on July 3, by extensively speeding up the annual
timetable to around the end of July. It appears that he has
determined that it would be necessary to do so in order to allow for
the possibility of Lower House dissolution in mid July, because
fiscal 2009 extra budget-related bills and the antipiracy
legislation will likely be enacted before the end of June. The
guidelines are the upper limit of budgetary requests. They are
usually adopted at a cabinet meeting to be held between late July
and early August. Each government agency estimates its budget and
submits budget requests by the end of August. The Finance Ministry
then examines such requests and drafts a budget at the end of the
year.

The prime minister is attaching importance to showing differences
from the Democratic Party of Japan (DPJ) in the upcoming Lower House
election. He apparently aims to demonstrate in specific terms how he
is managing his administration by setting the general framework for
the draft budget. It is believed that if the DPJ seizes power in the
election, it would change the guidelines.

16) METI looking into raising ratio of nuclear power generation to
total power generation amount to over 40 PERCENT to achieve
mid-term goal to cut greenhouse gas emissions

ASAHI (Page 7) (Full)
June 12, 2009

The government has set a mid-term goal to cut greenhouse gas
emissions by 15 PERCENT from the 2005 level by 2020. In order to
achieve this end, the Ministry of Economy, Trade and Industry (METI)
has started looking into raising the ratio of nuclear power
generation to total power generation to over 40 PERCENT . It will
incorporate the improvements of operating rates rate and capacity of
existing reactors and the building of new reactors in a set of
measures designed to promote nuclear power generation to be compiled
soon.

Raising the ratio of nuclear power generation necessitates extending
the interval between regular check-ups of existing reactors and
raising the operating rates of reactors from the current 50 PERCENT
to 80 PERCENT on a par with industrialized countries, by increasing
maintenance during operations. METI will also back a plan to build
nine additional reactors by fiscal 2018. Such a ratio in fiscal 2005
was 31 PERCENT . It dropped to 25 PERCENT in fiscal 2007, when the
Kariwazaki nuclear plant stopped operations due to the Chuetsu
Earthquake. Over 40 PERCENT is fairly higher than those figures.

17) SDP to form coalition with DPJ, giving priority to change in
government

SANKEI (Page 5) (Full)
June 12, 2009

The Social Democratic Party (SDP),a minor opposition party,

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yesterday decided on a policy of taking part in a coalition
government led by the Democratic Party of Japan (DPJ) if the
opposition camp outnumbers the ruling bloc in the next House of
Representatives general election. The SDP has now launched internal
coordination. Although there are gaps in views on constitutional and
security issues between the SDP and DPJ, the SDP has judged that
"the public's expectations for a change in government are strong"
(senior SDP member). The party will give priority to implementing
such policies as social security and economic measures on which the
two parties can find common ground. The People's New Party (PNP),
another minor opposition party, too, has adopted a similar policy.
The three opposition parties, therefore, will speed up preparations
for forming a coalition for making common policies.

In a meeting yesterday morning, the SDP confirmed that if the DPJ
asks to join a coalition government after the Lower House election,
it will launch consultations. DPJ President Yukio Hatoyama expressed
hopes at a meeting yesterday in Tokyo, saying: "I would like to
create a new politics for Japan along with the SDP and the PNP."
Shizuka Kamei, deputy chief of the PNP, who also attended the
meeting, stressed: "With an eye on a change in government, the three
parties should start policy consultations as soon as possible."

However, there is strong concern in the SDP that if the leadership
announces a policy of joining a coalition government, "the SDP could
be wrapped up in a tug-of-war between the DPJ and the Liberal
Democratic Party (LDP)" (senior local chapter member). Therefore,
SDP Chairperson Mizuho Fukushima emphasized: "Opposition to overseas
dispatch of the Self-Defense Forces and to constitutional is our
condition to participate in a coalition government." She aims to
ease dissatisfaction in the party's local chapters. It is expected
that the SDP will put off ironing out differences of opinions in the
party to until after the Lower House election. SDP Secretary General
Yasumasa Shigeno yesterday told reporters: "We want to gain more
than ten seats in the general election in order to have the right to
speak in consultations on a coalition government," indicating that
the SDP will devote its effort to increasing its Lower House
seats.

18) Regulations for Lower House Constitution Examination Commission
approved

SANKEI (Page 5) (Abridged slightly)
June 12, 2009

The House of Representatives approved yesterday in its plenary
session a bill to set "examination rules" stipulating such factors
as the number of members of the Lower House Constitution Examination
Commission, which examines constitutional problems and draft
constitutional amendments, by a majority lawmakers from the ruling
parties. However, the Democratic Party of Japan (DPJ),the Japanese
Communist Party, the Social Democratic Party, and the People New
Party - opposition parties - opposed the bill.

The constitution examination panels, permanent Diet organizations,
were set up in both Diet chambers in August 2007 based on the
revision of the Diet Law, following the National Referendum Law.
However, enacting the regulations had been put off because of the
rejection by the DPJ and other opposition parties. The panels have
not functions for one year and ten months.

In the opposition controlled House of Councillors, there is no

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prospect for the upper chamber to hold deliberations on the
establishment of regulations. Thinking that the constitution panels
in the two Diet houses should be operated the same time, the ruling
parties intend to put off the selection of the Lower House
commission.

The DPJ opposed the bill, citing "We have agreed to make
regulations, but it is not necessary to do so at this time."

19) Prime Minister Aso: Outcome of Tokyo metropolitan assembly
election will have great impact on his strategy for Lower House
dissolution

YOMIURI (Page 4) (Full)
June 12, 2009

The ruling and opposition parties intend to put their all energy
into the campaigning for the Tokyo metropolitan assembly election
(July 12) because there is a view that the results of the Tokyo
election would have an impact on Prime Minister Taro Aso's strategy
for the dissolution of the House of Representatives, as well as on
the next general election.

Aso visited yesterday the Liberal Democratic Party's (LDP) Election
Strategy Headquarters where he said: "(Tokyo assembly election) is
an important election that will lead to the Lower House election.
Although it is a local election, how we will put enthusiasm in it is
significant." He started on June 7 visiting all the LDP-endorsed
candidates, showing his eagerness for supporting the LDP candidates
for the Tokyo metropolitan assembly election.

Aso has been feeling out the possibility of dissolving the Lower
House during the period between late June and the middle of July,
and holding the general election on Aug. 2. However, many in the
ruling coalition want him to reconsider the ruling camp's election
strategy after seeing the results of the Tokyo election, the mayoral
election of Chiba City (June 14),and the gubernatorial election of
Shizuoka Prefecture (July 5).

It is said that if the LDP and New Komeito, which form the ruling
coalition, win a majority of the Tokyo metropolitan assembly, Aso
will be able to smoothly carry out his strategy for Lower House
dissolution. However, if the LDP-New Komeito ruling coalition loses
its majority in the Tokyo assembly, voices calling for the
responsibility of the Aso cabinet, which has suffered low support
rates, for the loss will unavoidably be raised. If such happens, the
date of the general election will be delayed. Therefore, it is
expected that with an eye on a move to withdraw Aso from office,
calls for speeding up an LDP presidential election will become
stronger.

Meanwhile, the main opposition Democratic Party (DPJ) aims to become
gain the second-largest number of Tokyo assembly seats in order to
lead it to the Lower House election.

With the number of candidates being less than a majority in mind,
DPJ Deputy President Ichiro Ozawa told reporters in Yodogawa Town,
Kochi Prefecture: "I want to (the DPJ's Tokyo) to field at least 64
candidates"

ZUMWALT