JAPANESE MORNING PRESS HIGHLIGHTS 06/23/09

UNCLAS SECTION 01 OF 09 TOKYO 001406

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 06/23/09

Index:

Political agenda:
1) Sankei poll: Aso Cabinet support rate plummets 9.5 points to 17.8
PERCENT , with Democratic Party of Japan now 20 points ahead of LDP
as election favorite (Sankei)
2) Prime Minister Aso decides to retain controversial president of
Japan Post, despite public mood against it (Yomiuri)
3) Decision by Aso to keep Nishikawa as head of Japan Post weakens
his hold on the party, since many are opposed to the reappointment
(Asahi)
4) Aso rejects notion of advancing the date for the LDP presidential
election (Yomiuri)

Defense and security affairs:
5) Japan Coast Guard notified by DPRK of a military exercise at sea
June 25-July 10 (Mainichi)
6) MSDF likely to be used for ship searches under new law (Yomiuri)

7) Defense budget portion of the 2009 "big-boned" economic policy
guidelines calls for funds to respond to North Korea's missile,
nuclear programs (Sankei)
8) "Sympathy budget" (host nation support): Over 2 trillion yen for
U.S. base construction projects over 30 years, including housing,
leisure facilities, berthing for CARRIER (Akahata)

9) Prime Minister Aso in meeting with Russian senior official pushes
territorial issue (Mainichi)

10) IWC meeting starts: Japan planning to continue research whaling,
advocates restart of coastal whaling (Mainichi)

11) Japan's exports to China expanding nicely (Mainichi)

12) Cabinet to adopt "big-boned" economic policy guidelines today
(Sankei)

Articles:

1) Sankei-FNN poll: DPJ 20 points ahead of LDP in proportional
representation format; Cabinet's support rate plunges to 17.5
PERCENT

SANKEI (Page 1) (Excerpts)
June 23, 2009

The Sankei Shimbun and Fuji News Network (FNN) conducted a joint
opinion poll on June 20-21 asking people which party they will vote
for in the proportional representation segment in the next House of
Representative election. The results showed that the major
opposition Democratic Party of Japan (DPJ) marked 45.9 PERCENT ,
which was 20.7 points over the Liberal Democratic Party's (LDP) 25.2
PERCENT . The difference increased beyond the 13.9-point difference
marked in the previous survey, conducted on May 17 immediately after
Yukio Hatoyama became DPJ president. The DPJ is clearly ahead of the
LDP with the next Lower House election approaching.

The rate of support for the cabinet of Prime Minister Taro Aso was
17.5 PERCENT , down 9.9 points from the previous survey. Meanwhile,
the disapproval rate for the cabinet increased 11.8 points to 72.9
PERCENT . The support rating had temporarily surged after it fell
below 20 PERCENT in the January-March period this year. But it has

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now again reentered the danger zone of the 10 percent level.

Asked about the Prime Minister's decision to dismiss Kunio Hatoyama
as internal affairs and communications minister over the
reappointment of Yoshifumi Nishikawa as Japan Postal Holdings Co.
president, a mere 20.2 PERCENT of respondents said it was
appropriate, and 62.2 PERCENT said Hatoyama's assertion was
convincing. Some 75.0 PERCENT said Nishikawa should not remain in
his post.

Positive evaluations of Hatoyama rose sharply in comparison to Prime
Minister Aso, as seen by the fact that 57.3 PERCENT described him
as trustworthy in contrast to Aso's 22.7 PERCENT . In the previous
survey, the two were neck-and-neck with both of them marking the 30
PERCENT level. Asked who is appropriate to become the prime
minister, 19.8 PERCENT pointed to Aso, far lower than Hatoyama's
51.6 PERCENT . About 62.1 PERCENT said Hatoyama is good at debates
in comparison to Aso's 21.9 PERCENT .

Asked if the outcome of the July 12 Tokyo assembly election will
result in the resignation of Aso to take responsibility, 54.6
PERCENT said "yes" and 37.2 PERCENT said "no."

2) Prime Minister Aso authorizes reappointment of Japan Post
President Nishikawa

YOMIURI (Top play) (Excerpts)
June 23, 2009

Prime Minister Taro Aso yesterday basically authorized Internal
Affairs and Communications Minister Tsutomu Sato's decision to have
Japan Post Holdings Co. President Yoshifumi Nishikawa continue
serving in his post. Aso was informed by Sato that Japan Post had
admitted the responsibility of its executives for an abortive plan
to sell the Kampo no Yado resort inn network (to the Orix Corp
group) and that Nishikawa offered to give up 30 percent of his pay
over the next three months as a disciplinary measure. Aso approved
of Japan Post's disciplinary measures. It is now expected that the
reappointment of the Japan Post president will be resolved by the
replacement of Internal Affairs and Communications Minister Kunio
Hatoyama and the reappointment of Nishikawa as president of Japan
Post.

After meeting yesterday with Aso at the Prime Minister's Official
Residence (Kantei),Sato met with Nishikawa at his ministry and
received explanations about the disciplinary measures against Japan
Post executives. He again reported them to Aso. After that, he told
reporters: "As I obtained approval from the finance minister and
chief cabinet secretary, I have made the decision based on that
approval." Asked by whether Aso gave approval of the decision to let
Nishikawa continue to serve in his post, Sato said: "Eventually, he
did so."

Following this, Japan Post will submit on June 24 to the Internal
Affairs and Communications Ministry a final replay to its order to
business improvement and propose the reappointment of nine
executives to a shareholders meeting on June 29. After a
representative of the government, which holds Japan Post's all
shares, gives approval, the company will apply for authorization
from the minister and receive authorization.

3) Aso's hold over party seriously damaged by his decision to

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approve reappointment of Nishikawa as Japan Post president

ASAHI (Page 4) (Abridged slightly)
June 23, 2009

Hisanori Imamura, Masaki Hashida

The issue of whether Japan Post Holdings Co. President Yoshifumi
Nishikawa should be reappointed, which had created a serious
confrontation between Prime Minister Taro Aso and former Internal
Affairs and Communications Minister Kunio Hatoyama, was finally
resolved yesterday, a week before a Japan Post shareholders meeting.
In an attempt to avoid discord in his Liberal Democratic Party (LDP)
and a possibility that business leaders will distance themselves
from the LDP, Aso decided to authorize the proposed reappointment of
Nishikawa. But in so doing, he may have lost his grip on the party.

"What about disciplinary measures?" Internal Affairs and
Communications Minister Tsutomu Sato asked Nishikawa yesterday
evening, learning that a business improvement report Nishikawa
presented to him did not include disciplinary measures. Nishikawa
then explained the disciplinary measures, including one against
himself.

Although Sato had reported the outline of the report to Aso and
obtained his approval, he conveyed anew the contents of the
punishments to Aso after his meeting with Nishikawa. Aso reportedly
said: "Well, (the punishments) were presented."

Although Sato, during the week since he took office, investigated as
to whether Nishikawa had violated any law, he could not find
anything. Therefore, there was no reason for him to reject
Nishikawa's reappointment.

Aso has been determined to reappoint Nishikawa after he sacked
Hatoyama. In the party-heads debate on June 17, Democratic Party of
Japan (DPJ) President Yukio Hatoyama said that he would dismiss
Nishikawa if his party took the reins of government, but Aso said:
"The government should be very careful about whether it should
interfere in (personnel changes) backed by the public opinion." A
cabinet minister close to Aso said; "If he dismissed Nishikawa,
there would be no meaning for him to have removed Hatoyama from his
cabinet." As Aso's aide said, if he had Nishikawa resign, he would
have come under criticism for the inconsistency with the replacement
of Hatoyama.

In the LDP, Machimura faction senior members, including former Prime
Minister Yoshiro Mori, called for Nishikawa's resignation. However,
Yoshihide Suga, former internal affairs and communication minister,
supported the reappointment of Nishikawa. It was expected that
internal discord would deepen because the LDP group promoting postal
privatization, including former Prime Minister Junichiro Koizumi and
former Secretary General Hidenao Nakagawa, would strengthen power if
Aso sacked Nishikawa.

Although Aso was able to resolve the issue at the 11th hour, he
failed to fulfill his leadership responsibility, accelerating the
move of party members distancing themselves from him.

4) Prime Minister Aso denies possibility of holding LDP presidential
election early


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YOMIURI (Page 4) (Excerpts)
June 23, 2009

Although there is a move to carry out the presidential election of
the Liberal Democratic Party (LDP) earlier than when it is scheduled
in September, Prime Minister Taro Aso clarified that he had no
intention of moving up the LDP presidential race. For the reason
that it is believed that implementing the presidential race earlier
than the planned is an effort to "oust Aso," Aso appears to have
sought to contain such a move.

Aso told the press corps at the Prime Minister's Official Residence
(Kantei): "I have heard that there are various views, such as that
the presidential election should be moved up. I, however, have no
such intention." Chief Cabinet Secretary Takeo Kawamura also stated
in a press conference yesterday: "The LDP should not lose confidence
and pride in the fact that we have done things under the party
president, who was elected by an overwhelming majority."

Meanwhile, House of Representatives member Taku Yamamoto, who has
been collecting signatures of LDP lawmakers in order to bring
forward the election, revealed a interim counting that 108 members
favored the move - 82 LDP members having signed and 26 having
conveyed their approval by phone.

Koichi Kato, former LDP secretary general, told reporters yesterday
in the Diet building: "LDP Lawmakers are like magma ready to erupt.
Frustrations are spreading among LDP members as the public support
rates for the LDP have dropped."

Article 6 of the LDP regulation stipulates that moving up the
presidential election is possible if a majority (216) of Diet
members (384, excluding the Lower House speaker and Upper House vice
president) and representatives of the LDP prefectural chapters (47)
request such an action before the term of the presidency expires.

5) North Korea informs JCG of its plan to conduct live-fire drills
from June 25 through July 10

MAINICHI (Page 2) (Full)
June 23, 2009

Kiyoshi Ishihara

The Japan Coast Guard (JCG) received yesterday afternoon an email
from North Korea informing that the country will conduct live-fire
drills on the east coast of the Korean Peninsula. Receiving the
notice, the JCG issued at 5:48 p.m. navigation warnings setting an
off-limits area. The North issued navigation warnings about the
eastern coast on June 7 and 17 as well. But this is the first time
that the country has clarified its purpose.

According to North Korea's notice, the country will conduct
live-fire drills between 8 a.m. and 8 p.m. every day from June 25
through July 10, Japan time, in an oceanic area 450 km long and up
to 110 km wide, including international waters, northeast of Wonsan
on the eastern coast.

6) Government, ruling parties studying use of MSDF to be ready for
unexpected events during cargo inspections

YOMIURI (Page 4) (Abridged slightly)

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June 23, 2009

The government and the ruling parties are working on drafting a ship
inspections special measures bill as a response to the UN Security
Council's adoption of Resolution 1874 on North Korea. Although they
are planning to submit a bill to the Diet shortly, there are many
points at issue, such as which organization will conduct cargo
inspections.

The government intends to have the Japan Coast Guard (JCG) carry out
the inspections. The reason is because the JCG is easy to obtain the
opposition bloc's approval with the close of the Diet session
approaching. But the Liberal Democratic Party (LDP) is calling for
the use of the Maritime Self-Defense Force (MSDF). A former cabinet
minister pointed out the need to be prepared for unexpected events,
such as an exchange of gunfire. The LDP apparently also wants to
draw a distinction with the opposition parties for the sake of the
next Lower House election.

An idea is also afloat between the government and the ruling parties
to use the MSDF only in situations that are beyond the JCG's
control.

Under the UN Security Council resolution, obtaining the consent of
the flag state is a prerequisite for conducting ship inspections.
The government plans to add the consent of a ship's captain to this
requirement to reduce the ship's resistance. This point has not been
settled, as there is an opinion in the LDP that inspections need to
have binding power.

What to do with embargoed items that are found in inspections is
also a challenge. Under the UNSC resolution, such items must be
confiscated and disposed of. But doing so might be an infringement
of property rights. The government is studying a step to keep such
items rather than disposing of them immediately.

The government pressed the UNSC hard for a strong resolution in
reaction to North Korea's nuclear test. As such, the government is
determined to enact the cargo inspection legislation to keep Japan's
face in the international community.

7) Basic policy guidelines for fiscal 2009 budget to mention need to
deal with North Korea, leaving room for budget increase

SANKEI (Top Play) (Excerpts)
June 23, 2009

The government on June 22 decided to mention measures to deal with
missile launches and nuclear tests by North Korea in the defense
budget in the basic policy guidelines on economic and fiscal
management and structural reforms for the fiscal 2009 national
budget. This marks the first time for the government to mention
North Korea by name as a country which Japan needs to deal with. The
basic policy guidelines also refer to the importance of the
personnel side of the Self-Defense Forces (SDF),which continue to
fall below the quota. Wording stating that efforts will be made to
establish a truly necessary defense production and technology base
has been incorporated, leaving room for a switch from the trend of
cutting the defense budget, which has been in place from the fiscal
2003 budget.

The final draft of the basic policy guidelines for the fiscal 2009

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national budget for the first time included a section dedicated to
defense matters. Last year's guidelines carried words "ballistic
missile." However, specific wording, "the nation will properly deal
with the security environment, which is becoming increasingly severe
due to missile launches and nuclear tests by North Korea," has been
incorporated this year. The government has thus clarified a stance
of pressing ahead with the building of a missile defense (MD) system
with North Korea in mind.

The revised basic policy guidelines also include measures for the
diversification and globalization of SDF duties. To achieve this
end, the guidelines note that the government will move ahead with
efforts to revise the National Defense Program Guidelines, while
giving consideration to the importance of the personnel side and
intelligence functions of the SDF, and steadily promote the
consolidation of efficient defense capability in harmony with
various government measures.

The steady implementation of measures related to the realignment of
U.S. Forces in Japan has also been incorporated. For the reform of
defense-related procurement, wording stating that efforts should be
made to establish a truly necessary defense production and
technology base, under selection and concentration approaches, has
been added. Consideration has thus been given to the defense
industry, which is being affected by cuts in the defense budget.

The past basic policy guidelines did not give priority to the
defense budget, as is evidenced by it being mentioned in the same
section as public security and measures to deal with natural
disasters.

Since changes in the international situation had not been reflected,
the defense budget had suffered cuts for seven consecutive years
since the fiscal 2003 budget. The defense budget for fiscal 2009
stood at 4.774 trillion yen.

8) 30 years of "sympathy" budget: Over 2 trillion yen spent on U.S.
military base improvement

AKAHATA (Top play) (Full)
June 23, 2009

It has been found that of the "sympathy" budget (host nation
support) for U.S. Forces Japan (USFJ) - which Japan is not even
obliged to pay for under the Japan-U.S. Status of Forces Agreement
-- some 2.1283 trillion yen have been spent for the construction of
bases (under the Facilities Improvement Program, FIP) in the 30
years from FY1979 up to FY2008. This is based on documents provided
by the Ministry of Defense to the Japanese Communist Party, budget
request documents, and other data. A total of 12,872 construction
and renovation projects took place at 66 U.S. military bases in
Japan.

The Japanese government will continue construction work on the
bases. In addition to the "sympathy" budget, it will shoulder the
cost for building the marine base in Guam, extending its
construction work for U.S. military bases overseas.

A breakdown of the figures shows that 11,363 housing units for
military families and 230 barracks were built. Housing-related
projects made up around 90 percent of the total. The construction
cost alone for one housing unit was approximately 48 million yen,

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which is much higher than an average Japanese house. In addition,
there were 68 construction projects relating to schools,
recreational facilities, hospitals, sports fields, repair shops for
ships and aircraft, hangars, blastproof shelters, runways, berths
for nuclear-powered AIRCRAFT carriers, and so forth.

By military base, the U.S. Air Force's Misawa Base (Aomori
Prefecture) tops the list with 2,214 projects. In terms of funding,
the U.S. Marine base in Iwakuni (Yamaguchi Prefecture) marked the
highest amount of 352 billion yen.

The ratio of the FIP in the "sympathy" budget has been diminishing
by the year. On the other hand, the construction of new bases is on
the rise, including: (1) construction of dedicated facilities in the
Self-Defense Forces (SDF) bases in Yausubetsu (Hokkaido),Ojojihara
(Miyagi Prefecture),and Hijudai (Oita Prefecture) for relocating
the training exercises of U.S. Marines in Okinawa in the name of
"training relocation expenses" - totaling 10.9 billion yen up to
FY08; (2) construction of houses for U.S. military officers using
the special road tax revenues of the Ministry of Land,
Infrastructure, Transport, and Tourism (2.8 billion yen in Sasebo
City, Nagasaki Prefecture) and the budget of other ministries; and
(3) shouldering the cost for USFJ realignment, including Guam
"relocation" and the construction of a new base in Henoko, Okinawa
totaling 2-3 trillion yen (according to the U.S. Department of
Defense).

Under USFJ realignment plans, a facility for the use of U.S. Forces
costing 8.8 billion yen is being built at the SDF's Nyutabaru base
(Miyazaki Prefecture) for relocating the training of F-15 fighters
from the Kadena Air Base in Okinawa. For the first time, 34.6
billion yen in construction cost has also been allocated for Guam
"relocation" in the FY09 budget.

9) PM Aso meets Russian presidential office chief of staff, voices
expectations on Northern Territories issue at summit talks

MAINICHI (Page 5) (Full)
June 23, 2009

Naoyuki Inukai, Joichi Sato

Prime Minister Taro Aso met Sergei Naryshkin, chief of staff of the
Russian Presidential Office, at the Prime Minister's Office
Residence on June 22. Aso said: "I look forward to the president's
briefing on the Russian side's work on the Northern Territories
issue" at his meeting with President Dmitry Medvedev during the G-8
Summit in Italy in July, indicating his hope for the president to
present proposals for progress in the territorial issue.

Naryshkin said: "We are preparing for Italy. It is important to have
discussions in a quiet atmosphere." After the meeting, he told
reporters at a hotel in Tokyo that, "I conveyed to the prime
minister that 'we should find a compromise that is in the interest
of both sides and in accordance with public opinion in a quiet and
constructive atmosphere where there is no negative reaction from
either side'."

Democratic Party of Japan President Yukio Hatoyama also met with
Naryshkin in Tokyo on June 22. He said: "Political credibility in a
country is very important for resolving difficult pending issues
such as territorial disputes. This is absent in Japan today. The

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most important thing is to restore political credibility,"
indicating that progress in the territorial issue will be difficult
without a change of government.

10) International Whaling Commission meeting opens, to discuss
framework for future negotiations

MAINICHI (Page 4) (Full)
June 23, 2009

Keisuke Ota

The annual meeting of the International Whaling Commission (IWC)
opened on the Portuguese island of Madeira on June 22. The meeting
will take place for five days until June 26. A decision has already
been made on deferring the question of Japan's continuing research
whaling and the resumption of small-scale coastal whaling to the
2010 annual meeting, so this year's meeting will concentrate on
discussing the framework for future negotiations and how to proceed
with the talks.

Japan and other whaling nations have clashed fiercely with the U.S.,
Australia, and other anti-whaling states at the IWC. A working group
formed at last year's annual meeting discussed a compromise plan for
Japan to reduce and abolish research whaling in stages in exchange
for the resumption of small-scale coastal whaling. However, an
agreement was not reached, and it was decided that these issues be
deferred to the 2010 annual meeting.

11) Brisk exports of petrochemical, nonferrous products to China:
Domestic demand for steel, paper remains sluggish

MAINICHI (Page 3) (Excerpts)
June 23, 2009

Moves to ease production cutbacks are spreading in the material
industry, such as the petrochemical and nonferrous industries,
bolstered by progress in inventory adjustments by supply
destinations of automobiles and home electronic appliances and brisk
exports to Asia, such as China. However, the recovery of demand in
the steel, paper and cement industries, which highly rely on
domestic demand, is lagging behind.

Production of petrochemical goods has begun showing a marked
recovery trend from around March due to an increase in exports to
China. Exports of high-density polyethylene used by supermarkets for
carrier-bags, tripled in comparison with the same month in the
previous year, boosted by robust individual consumption in China.
Sumitomo Chemical's ethylene plant is now in full production.

In the nonferrous industry, exports of zinc to China in April jumped
2.2 times the level of the same month in the preceding year due to
great demand for autos. Demand for copper has also recovered owing
to an increase in public works in China, following the
implementation of stimulus measures taken by its government.
Mitsubishi Materials Corp. plans to raise the operation rate at its
plant from the current 90 PERCENT to 100 PERCENT as early as
August.

12) Cuts in social security spending shelved: Basic policy
guidelines for fiscal 2009 to be adopted at cabinet meeting today


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SANKEI (Page 1) (Excerpts)
June 23, 2009

The government's basic policy guidelines on economic and fiscal
management and structural reforms for fiscal 2009 are expected to be
adopted at a cabinet meeting on June 23. Lawmakers connected with
welfare and labor affairs, who are against a cut in social security
spending, have been opposing the government policy of compiling a
fiscal 2010 budget, based on such guidelines for fiscal 2006. The
government gave in to them and pledged to exempt social security
expenses from its policy of cutting spending. Lawmakers with vested
interests in the welfare and labor areas, who killed Prime Minister
Aso's proposals for splitting the Ministry of Health, Labor and
Welfare (MHLW) and unifying day-care centers and kindergartens, have
again won the battle with the government, giving the impression that
the administration is weakening.

The Liberal Democratic Party (LDP) on the afternoon of June 22 held
a special General Council meeting and adjusted the wording to be
included in the basic policy guidelines for fiscal 2009. However,
lawmakers, such as former MHLW ministers Hidehisa Otsuji and Yuji
Tsushima, who are closely connected with the MHLS, opposed the
guidelines. For this reason, the meeting once again put off adopting
the guidelines.

Finance Minister Yosano had indicated a flexible stance to the
compilation of the fiscal 2010 budget. However, Otsuji did not
agree. He called for the omission of the wording "based on the basic
policy guidelines for fiscal 2006" with a view to the upcoming Lower
House election. The party executives on June 22 gave in to them,
adding wording including, "a framework that is different from last
year's guidelines, which cut social security expenditures." However,
Yosano did not accept the proposal, saying, "The government should
categorically mention that social security spending will not be
cut."

In the end, Yosano in front of Otsuji and others after the general
council meeting stated, "The increased portion of social security
expenses should be approved as is." Otsuji accepted his proposal. As
a result, the basic policy guidelines are set to be adopted at a
cabinet meeting on June 23.

ZUMWALT