DAILY SUMMARY OF JAPANESE PRESS 07/14/09

UNCLAS SECTION 01 OF 12 TOKYO 001599 SIPDIS DEPT FOR E, P, EB, EAP/J, EAP/P, EAP/PD, PA; WHITE HOUSE/NSC/NEC; JUSTICE FOR STU CHEMTOB IN ANTI-TRUST DIVISION; TREASURY/OASIA/IMI/JAPAN; DEPT PASS USTR/PUBLIC AFFAIRS OFFICE; SECDEF FOR JCS-J-5/JAPAN, DASD/ISA/EAPR/JAPAN; DEPT PASS ELECTRONICALLY TO USDA FAS/ITP FOR SCHROETER; PACOM HONOLULU FOR PUBLIC DIPLOMACY ADVISOR; CINCPAC FLT/PA/ COMNAVFORJAPAN/PA. E.O. 12958: N/A TAGS: OIIP KMDR KPAO PGOV PINR ECON ELAB JA SUBJECT: DAILY SUMMARY OF JAPANESE PRESS 07/14/09 INDEX: (1) Aug. 30 mid-summer Lower House election to create long political vacuum; Ship inspection bill to be scrapped and budget requests to be fettered (Nikkei) (2) Moves to oust Aso contained; "Anti-Aso forces" taken by surprise, no time to elect new president (Asahi) (3) Aso pressed to make decision, unable to find good opportunity for advantageous dissolution (Nikkei) (4) Forecast of Lower House election (Part 1): Favorable wind blows for DPJ; Party may win up to 249 seats (Tokyo Shimbun) (5) Amended Organ Transplant Law passed by Diet: Determining brain death of children difficult (Mainichi) (Corrected copy): Competition between Japan and Italy over Nasiriyah oil field development right (Mainichi) ARTICLES: (1) Aug. 30 mid-summer Lower House election to create long political vacuum; Ship inspection bill to be scrapped and budget requests to be fettered NIKKEI (Page 3) (Abridged) July 14, 2009 Now that Prime Minister Taro Aso has decided to dissolve the House of Representatives as early as July 21 for an election on Aug. 30, the political world is likely to revolve solely around election campaigning this summer. The election campaign is expected to leave behind such important policy issues as the handling of key bills and budget requests for fiscal 2010. The Prime Minister's intention to dissolve the chamber before the current Diet session adjourns on July 28 is expected to seriously affect the fate of those bills yet to be discussed in the Diet. It is customary for all bills not yet enacted to go be scrapped when the Lower House is dissolved. A total of 17 government-sponsored bills, including those carried over from the previous Diet session, are likely to die. Included is a bill allowing the inspection of cargo of vessels heading to and from North Korea. Although the ruling bloc intends to have the bill clear the Lower House today, there are no prospects for the opposition-controlled House of Councillors to begin 
discussing the legislation. At yesterday's government and ruling coalition liaison meeting, Prime Minister Aso ordered to make utmost efforts for the enactment of the cargo inspection bill. This was followed by a board meeting of the Lower House antipiracy committee yesterday during which Takashi Fukaya decided to put the bill to a committee vote on July 14 in his capacity as its chairman. The major opposition Democratic Party of Japan (DPJ) submitted yesterday a no-confidence motion against the cabinet to the Lower House and a censure motion against Prime Minister Aso to the Upper House. The party is not going to respond to calls for deliberations on any bills. The cargo inspection legislation is necessary for TOKYO 00001599 002 OF 012 implementing the latest UN Security Council resolution to strengthen sanctions on North Korea. There is a view in the government that Japan's failure to adopt the legislation will raise questions about the stance of Japan, which took the initiative in adopting the UN resolution. There is a good chance that the bills related to reform of the national civil service system and a bill amending the law banning child prostitution and child pornography that are under revision talks between the ruling coalition and the DPJ will not be enacted during the current Diet session. The election planned for Aug. 30 is also likely to affect the government agencies' work to come up with their budget requests at the end of August. Finance Minister Kaoru Yosano indicated to the press corps last evening that he would not change the Aug. 31 deadline for them. Ministries and agencies will examine their budget requests in earnest in line with the budget guidelines determined by the Finance Ministry in early July. Areas that clearly divide the ruling coalition and the DPJ are a headache for officials responsible for policies. An economic division director said, "Given unclear chances for realization, we cannot ask for funding for new policies." In the event the DPJ takes the rein of government, policy officers even envision a situation in which they will be pressed to make major changes to their policies. If economic downturn risks cannot be wiped away, calls for additional economic measures may arise from the United States, for example. There is concern that Kasumigaseki bureaucrats may not be able to deal with matters flexibly if the bedrock of policies remains elusive. LDP, DPJ rushing to formulate their manifestos An agreement was reached yesterday between Prime Minister Aso and the ruling parties to dissolve the Lower House in the week of July 21 to hold the election on Aug. 30. This plan will create the longest interval between Lower House dissolution and a general election under the current Constitution. Dissolution on July 21 will leave election campaigning of 40 days, the maximum under Article 54 of the Constitution. Further, a Lower House election in August will be the first in 107 years. Elections in August are rare due to intense summer heart and the O-bon holiday season. The month also has the atomic bomb and the-end-of-the-war anniversaries and other commemorative events. The LDP and DPJ are rushing to draw up their manifestos that are likely to gather weight with the approach of the "marathon" election campaigning. The LDP's manifesto team will hold its plenary meeting on July 16 ahead of intraparty procedures to determine its framework on July ¶17. Meanwhile, the DPJ generally nailed down its manifesto by the end of June and the party has given its confirmation to the manifesto in outline. The party plans to announce its manifesto featuring support for households immediately after the Lower House dissolution. The period of election campaigning will effectively create a TOKYO 00001599 003 OF 012 political vacuum in which implementing new policies is difficult. The Lower House election will be followed by a special Diet session in which a new prime minister will be elected and a new cabinet will be formed. As such, the new administration will probably not able to move into full action until mid-September or later. It might take two months to establish the new administration after the Lower House dissolution in the face of mounting challenges, such employment insecurity and the North Korean issue. (2) Moves to oust Aso contained; "Anti-Aso forces" taken by surprise, no time to elect new president ASAHI (Page 3) (Full) July 14, 2009 The announcement of Diet dissolution only one day after the crushing defeat in the Tokyo Metropolitan Assembly election took the anti-Aso forces in the Liberal Democratic Party (LDP) and prospective candidates to succeed him by surprise. There is no time to topple the prime minister before the Diet is dissolved next week, and there is even an air of despair about this "do-or-die dissolution." The possibility of desperate Diet members taking reckless measures cannot be discounted, and what is going to happen in the run-up to the general election remains unpredictable. Former Secretary General Hidenao Nakagawa, who had been urging Aso to step down, appeared baffled when he talked to reporters on July 13: "To be honest, I am surprised. I thought he would make an honorable decision after seeing the results of the Tokyo election yesterday. This is very regrettable." Nakagawa had known that it would not be easy to hold the presidential election ahead of schedule, although mid-ranking and junior party members had started a signature campaign to demand holding the election. On the other hand, with less than two months to go in Aso's term, a growing sense of alarm had permeated the whole party that they would not be able to win the election under the prime minister. Nakagawa had hoped that the mounting pressure to "oust Aso" might move former Prime Minister Yoshiro Mori and the other party heavyweights backing the Aso administration to ask him to resign voluntarily. On June 30, Nakagawa called Mori, whom he had parted ways with early in 2009, for the first time in a long while to talk about the Aso administration. He said: "Unless we replace Aso, we are in trouble." He saw a glimpse of hope when Mori asked: "Who else is there (to become the LDP president)?" Former Prime Minister Junichiro Koizumi's remark that, "Mr. Aso will not be able to dissolve the Diet" had also given rise to optimism among the anti-Aso forces that he might "resign voluntarily," causing them to slow down their campaign. The announcement of Diet dissolution came as a complete surprise. Most anti-Aso forces are at a loss. Nine groups of mid-ranking and junior members, including former Chief Cabinet Secretary Yasuhisa Shiozaki, met on the evening of July 12. They were planning to distribute a document entitled "Request for Assessment of Six Consecutive Defeats in Local TOKYO 00001599 004 OF 012 Elections and the Holding of a General Meeting of Members of Both Houses of the Diet" on July 13 and were checking on how things were proceeding that evening. However, now that the Diet will be dissolved on July 21, the mood has suddenly been dampened. According to party rules, a general meeting of Diet members has to be called within seven days when there is such a request from at least one-third of LDP Diet members. Members of these groups lament that "there is not enough time before the dissolution on July 21" and suspect that "the announcement of Diet dissolution is probably meant to avoid the Diet members' general meeting." The fate of the signature campaign is now in limbo. A heavyweight LDP Diet member thinks that the campaign to oust Aso is, in effect, over. He observes that: "There is not enough time to oust Aso. Everybody will be going back to their constituencies. Even though some people will be discontented and will complain, they will not become the mainstream." Even so, there is more time to oust Aso now compared to the prime minister's original scenario to dissolve the Diet right after the Tokyo election and hold the election on August 8. The chairman of a faction supporting Aso worries that, "There is still one week left before July 21. There will be various moves." Junior party members who have a weak political base in their constituencies are bound to fight an uphill battle. They may become so desperate for survival and resort to joining hands with forces outside the party, such as Yoshimi Watanabe, former minister for administrative reform, who has announced his intention to form a new party. Former Secretary General Tsutomu Takebe held an urgent meeting with Lower House member Yukari Sato and the other "Koizumi children" on July 13 to confirm their plan to demand an early presidential election. Sato stressed after the meeting that, "If the election is taking place on August 30, there is still time to hold the presidential election in early August." Another participant in the meeting had not lost hope: "The election was originally supposed to take place on August 8. At least it has been put off to August 30. Mr Aso has decided to dissolve the Diet but has not actually done so." One Diet member who is close to Nakagawa called a senior New Komeito official on July 13 and told him: "The present leadership which lost the Tokyo election has no right to decide on Diet dissolution. We will launch our move to oust Aso tomorrow." Shiozaki and other mid-ranking and junior legislators who supported the Koizumi reforms met at a hotel in Tokyo on the evening of July ¶13. They eventually joined the gathering of former Secretary General Koichi Kato and a group of veteran Diet members who are critical of the Koizumi reforms, who happened to be meeting in the same hotel, because they "share the same thoughts." Cooperation among the anti-Aso groups is also evolving. Contenders to succeed Aso discontented; "Think of Japan's future" The contenders to take over Aso's position also resent the surprise announcement of Diet dissolution. After the crushing defeat in the Tokyo election became a reality on the evening of July 12, Finance Minister Kaoru Yosano, who was elected to the Lower House from the first district of Tokyo, asked an aide to the prime minister who called him on the phone not to TOKYO 00001599 005 OF 012 dissolve the Diet at an early date. "Don't do anything rash. We will be in big trouble." Even in Yosano's constituency, the secretary general of the LDP's Tokyo chapter lost his seat. The aftermath of the election is very serious. If the Diet was dissolved based on Aso's personal wish to contain the moves to oust him, the "complete devastation" of the LDP in Tokyo might become a reality. On the morning of July 13, Yosano made a statement before reporters that could be taken to be a suggestion for the prime minister to resign voluntarily. He said: "Since the party is under this much criticism, Mr. Aso should think of Japan's future with a clear mind." One faction leader cites Yosano as a key person who might stand in the way of Aso's strategy for Diet dissolution. He said that "Mr. Yosano may refuse to sign the documents on dissolution." When reporters asked him about the possibility of refusing to provide his signature, Yosano would only say: "I think the prime minister will reexamine the situation in the party after he gauges public opinion in the party from tomorrow." Deputy Secretary General Nobuteru Ishihara, who was forced to resign as chairman of LDP Tokyo chapter, is as shocked as Yosano by the defeat in the Tokyo election. He stated on a special TV program on the election on the evening of July 12 that "the Tokyo Metropolitan Assembly was made a target of criticism for issues at the national level," criticizing the drifting Aso administration indirectly. Minister of Health, Labor and Welfare Yoichi Masuzoe, who is eyed as a possible candidate for prime minister by the anti-Aso forces, has given no comment on the dissolution announcement of July 13. He even refused to answer reporters' questions on the amended organ transplant law, which comes under his jurisdiction, and was in a foul mood all day. When Aso was making statements about the Tokyo election and national politics being two separate things, Masuzoe stated unequivocally at a news conference that: "It is unthinkable that the Tokyo election will have no impact on politics at the national level. A variety of things could happen depending on the outcome," pointing out the prime minister's responsibility. In his campaign speeches for Tokyo candidates, he talked about "changing Japan centering on Yoichi Masuzoe," revealing his desire to replace Aso. To reporters' question: "Do you intend to fight in the general election under Mr. Aso?" he would not give a positive answer and merely said: "This is for the party to decide." Former Minister of Internal Affairs and Communications Kunio Hatoyama, who parted ways with Aso over the appointment of Japan Post president, reiterated his opposition to Diet dissolution by the prime minister on July 13. He said: "If we go into the general election with the present cabinet and LDP, it is like committing mass suicide." After resigning as internal affairs minister, he had denied any plans of leaving the party, thinking Aso could be forced into resigning, and had indicated he was working toward frontloading the presidential election. The announcement on Diet dissolution came as a surprise. He shifted to a new position on July 13. "I am doing some mental exercises on the assumption of the worst scenario of being unable to remain in the party in the process of pursuing a new LDP," hinting at the possibility of forming a new party. That TOKYO 00001599 006 OF 012 evening, he met with five Diet members close to him to discuss a response. For now, a "core" uniting all the anti-Aso forces is absent in the LDP. However, if one of the cabinet ministers or candidates to succeed Aso in the LDP leadership announces his candidacy openly, it is possible that Diet members who feel insecure about going into the general election under Aso may be drawn to support him all at once. This can be said to be the Achilles heel of the prime minister's dissolution strategy. (3) Aso pressed to make decision, unable to find good opportunity for advantageous dissolution NIKKEI (Page 1) (Full) July 14, 2009 Prime Minister Taro Aso had continued to explore an appropriate timing for the next House of Representatives election over the past 10 months since he assumed office. As a result of delaying a decision, he was finally pressed to decide to set the voting day for Aug. 30, just ahead of the expiration of the Lower House members' terms of office on Sept. 10. A gloomy atmosphere is now sweeping across the ruling camp. In a liaison meeting of the government and the ruling coalition held yesterday midday, Aso said in even tones: "Only 60 days are left until the Lower House members' 4-year term of office expires. I would like to seek the people's judgment in the week starting on July 21." Probably because his careful behind-the-scenes maneuvering worked favorably, no objections were raised from among the senior party members and cabinet members present there. "Treasured sword" loses luster The prime minister's right to dissolve the Lower House, even called "a sword treasured in the family," is completely losing luster as public support ratings of his cabinet have been on the decline and the day of expiration of the Lower House members' terms of office has reached the countdown stage. The prime minister had expected to demonstrate his leadership in determining the election day, but he was actually pressed to make a compromise. Aso initially intended to dissolve the Lower House in the week starting on June 13 and hold an election on Aug. 8 or 9. But the Liberal Democratic Party (LDP) experienced a defeat in the Shizuoka gubernatorial election on July 5 and then suffered a far more devastating defeat than expected in the Tokyo Assembly election on July 12. These poor election results narrowed down his options. Aso was saying: "I am determined to dissolve the Diet on my own discretion," but a number of senior LDP members dissuaded him from carrying out an early election, as one member said: "Why do you want to hold the election in a rush? If you decide to do so, the party might break up." There are various unstable factors, such as a feeling of war-weariness prevailing in the ruling parties, moves to oust Aso, and a no-confidence motion submitted by the opposition camp against the Aso cabinet. Bearing such factors in mind, Aso came up with an unprecedented timetable for officially announcing the election to come one month after the Lower House is dissolved. The Constitution stipulates that an election should be held within TOKYO 00001599 007 OF 012 40 days after Diet dissolution. To avoid a political vacuum, however, the period between Diet dissolution and an election is usually less than one month. In accordance with a plan agreed on between Aso and the ruling parties, if the election is officially announced on Aug. 18 and takes place Aug. 30 after the Diet is dissolved on July 21, this will mark the longest record in terms of the period under the current Constituency. A cabinet member explained why Aso is eager to dissolve the Diet based on his own judgment: "He is taking great pride in having made utmost efforts to cope with the global economic crisis." The ruling coalition had decided to dissolve the Lower House by the end of last year. Many party members are still critical of the prime minister's decision to delay the dissolution. Even so, it is true that the government was able to implement more than 30 trillion yen worth of emergency economic stimulus measures because the ruling coalition was keeping its two-thirds majority in the Lower House. Signs of intraparty conflict Why was Aso pushed to this perilous position? That is because he was unable to demonstrate his leadership in dealing with other matters than the immediate economic crisis. The focus of attention was focused mainly on his confusion in managing his government. For the next general election, Aso was groping for an appropriate timing when he can be sure of his party's victory. Meanwhile, some LDP members, seeing public support ratings of the Aso cabinet sharply declining, began to call for Aso to step down. As signs of intraparty conflict began to appear, the Aso administration was gradually driven into a corner. The LDP is expected to have an uphill battle in the Lower House election. Asked by reporters about his strategy toward the election last night, Aso replied: "It is very vital for us to consider which points we should reflect on, make corrections, and then revamp our election strategy, based on the outcomes of the local elections." In the final phase of formulating the party's policy manifesto for the Lower House election, however, it is said that Aso gave no more clear-cut messages than this instruction: "Remove my photo from the cover of the pamphlet." Under such circumstances, he is apparently unable to demonstrate his presence. Aso has decided to put off the Lower House election until late August. How the remaining time will be used will affect the fate of not only the Aso administration but also the LDP. (4) Forecast of Lower House election (Part 1): Favorable wind blows for DPJ; Party may win up to 249 seats TOKYO SHIMBUN (Page 28) (Abridged slightly) July 14, 2009 Senior members of the ruling Liberal Democratic Party (LDP) probably no longer are sleeping well. A strong tail wind blew for the Democratic Party of Japan (DPJ) in the July 12 Tokyo Metropolitan Assembly election, proving that the LDP has lost its stronghold and record of achievements. Will the public's smoldering discontent with the Aso administration put an end to the LDP? TOKYO 00001599 008 OF 012 LDP, New Komeito lose majority in Tokyo Metropolitan Assembly "The result of the Tokyo election is the opposite of the whirlwind produced by then Prime Minister Koizumi, isn't it? The public has been fed up with the LDP due to such issues as pensions." Hiroshi Miura, an election planner, made this statement, citing the Lower House race in September 2005. Of the 58 candidates on the LDP ticket, 54 were elected, while only four were defeated. The DPJ became the largest party in the Tokyo assembly for the first time in the history of the city's administration. Meanwhile, the LDP suffered a severe setback, the number of seats won cut from 48 to 38. Akita International University Prof. Rei Shiratori (political science) pointed out: "With the resignation of Ichiro Ozawa as president of the DPJ, the old image of the DPJ has disappeared. If it comes to the crunch, Katsuya Okada will be able to stand in for Yukio Hatoyama as president of the DPJ. Naoto Kan is in charge of policy matters. The DPJ has clearly defined the role-sharing system for its executives. Therefore, Yukio Hatoyama, a consensus-oriented politician, can serve as president. That is the difference between the DPJ and the LDP." Will a favorable wind blow for the DPJ again in the next Lower House election? Both Miura and Shiratori predict that a change in government will be realized propelled by the result of the Tokyo election. The full number of the Lower House seats is 480, made up of 304 LDP members, 113 DPJ members, 31 New Komeito members, 9 Japanese Communist Party (JCP) members, 7 Social Democratic Party (SDP) members, five People's New Party (PNP) members, and one New Party Daichi member. The DPJ intends to narrow down the number of single-seat constituencies it will field candidates in the general election, not filing its candidates in all the electoral districts as usual. On the assumption that more than 80 percent of the votes cast for the JCP will go to the DPJ in the districts in which the JCP will not file its candidates, Shiratori predicts that the DPJ will win 232 to 245 seats, while the LDP and New Komeito will jointly secure 207 to 222 seat. Meantime, Miura analyzes that the LDP-New Komeito coalition will secure 217 seats, while the DPJ will gain 229. If the LDP-New Komeito camp loses more than 100 seats, the coalition will lose a majority (241 seats) in the Lower House, following the loss in the Tokyo assembly. Shiratori calls the LDP an arbitrary, inconsistent and irresponsible party. He predicts that since the LDP holds power, it is able to bring politicians together. If the party loses that power, they will break apart because there will be no need for them to remain there. It is conceivable that the LDP, which has existed since 1955, might disappear. The DPJ has gained consecutive victories in recent elections to decide the heads of local governments. In the mayoral election of TOKYO 00001599 009 OF 012 Nara City on July 12, a young man in his 30's was elected as new Nara mayor. Many those who are in their 30's were elected in the Tokyo assembly race. Miura threw a wet blanket, saying: "I approve the assembly being rejuvenated. But they should not be satisfied with just being elected." (5) Amended Organ Transplant Law passed by Diet: Determining brain death of children difficult MAINICHI (Page 2) (Abridged slightly) July 14, 2009 An amended Organ Transplant Law designed to enable children under 15 to be organ donors was enacted on July 13. Patients and family members who have been calling for increasing opportunities for organ transplants in Japan have been looking forward to the enactment of the amended law. Meanwhile, pediatric doctors involved in organ donations have pointed out the difficulty of determining the brain death of children. There are also many challenges to tackle, including emergency medical services and the consolidation of a system of supporting organ donors and their families. Recognizing child abuse cases also important Shizuoka Children's Hospital Pediatric Intensive Care Unit (PICU) Director Ikuya Ueda, who has the experience of taking part in the determination of brain death cases in the U.S., where there are more than 8,000 organ donations by brain-dead persons, said, "Since smaller children tend to have stronger brain recuperative power, it is difficult to determine the brain death of children." Tomoaki Kato, head of the Columbia University Department of Surgery and an expert on transplant surgery, pointed out, "In order to obtain an agreement from the family of a brain-dead patient, it is important for them to be able to realize that brain death is the death of humans." His proposal for the more definite determination of the brain death of children is that an examination to check that there are no flows of blood in the body of a brain-dead child brain must be conducted, although this is not included in the list of items indispensable for the determination of brain death. Another challenge is how to determine child abuse cases. PICU Director Ueda said: "There are cases in which doctors who are inexperienced in emergency pediatric medical treatment could miss some cases of child abuse. It is important to increase doctors who can identify discrepancies between diagnoses and explanations provided families." Dr. Kato pointed out, "In the U.S., an ethics committee of each hospital strictly screens organ donors in order to prevent child abuse cases from mixing in. This system is producing results." Holes in emergency medical services system: Strengthening donor assistance urgent The amended law does not include donors' consent as a condition for organ donations by brain-dead persons. Instead, donors' families decide whether to donate organs of their brain-dead relatives. In order for bereaved families to accept requests for organ donations, TOKYO 00001599 010 OF 012 they need to know that sufficient medical treatment was provided to the patients. However, it has been noted that Japan's emergency pediatric healthcare system is faulty. According to a report compiled in March this year by a research team of the Ministry of Health, Labor and Welfare, about 70 percent of children aged between 1 and 4 who died in traffic accidents or in fall accidents were carried to small medical institutions that had no sophisticated high-degree medical treatment facilities, such as an intensive care unit. It is believed that this is due to shortages of doctors and medical facilities that can provide emergency pediatric healthcare. A survey carried out by the Japanese Society of Intensive Care Medicine in 2005 found that there were only 97 beds at the PICUs throughout the nation. Promoting an assistance system for organ donors and their families is also a challenge. In many cases, donors' families, who are pressed to make a decision whether to donate organs of their brain-dead relatives, continue to distress themselves even after the donations. The eldest daughter of Chairman Yoichi Mazawa, chairman of the Japan Donors' Family Club," consisting of bereaved families that have the experience of organ transplants by their family members, died in the U.S. at the age of 24 and donated her organs. He said, "I am perplexed by such words as 'the right to receive an organ transplant' or 'there are few organ transplants.' I believe it is impossible to expect an increase in donors without fundamental understanding that it is not until an organ donor appears that an organ transplant can be carried out, and a system of supporting the families of donors." The World Health Organization (WHO) plans to revise guidelines for organ transplants. The revised guidelines will likely call on member nations to consolidate regulations on live organ transplants, such as kidney transplants, and tissue transplants, such as skin transplants. The law amended in Japan this time did not include such transplants. Immediate measures on such transplants are sought, as such transplants could trigger organ trade. (Corrected copy): Competition between Japan and Italy over Nasiriyah oil field development right MAINICHI (Page 4) (Full) July 12, 2009 Cooperation between government and private sector A Japanese consortium involving Nippon Oil Corporation (ENEOS) and an Italian firm are competing to secure the right to develop the Nasiriyah oil field in southern Iraq. Japan is aiming to secure the right in a joint effort between the government and the private sector, based on the bitter experience of losing the concession rights for the Khafji oil field in Saudi Arabia, the first oil field developed by a Japanese company. The Iraqi government will designate a contractor shortly. Since the Italian company is pulling out all the stops, the situation is still touch and go. Economy, Trade and Industry (METI) Minister Toshihiro Nikai at a meeting with visiting Iraqi Oil Minister Husayn al-Shahristani on July 9 made a remark backing Japanese companies' efforts to secure the Nasiriyah oil field development right. He indicated the TOKYO 00001599 011 OF 012 government stance of assisting with construction of infrastructure in Iran, such as the building of railroads: "I would like you to confer on the matter with related companies. The Japanese government will provide full assistance." Iraq, which is suffering from the aftereffects of the Iraq War, approved foreign companies' entry into the development of domestic oil and gas field so as to secure funds to finance the reconstruction of the nation. It carried out bidding for eight oil and gas fields in late June. Of those projects, a consortium formed by BP, the largest oil company in Britain, and China National Petroleum Corporation (CNPC) was awarded the contract to develop the Rumaila oil field, one of the largest oil fields in Iraq. Bidding for the Nasiriyah oil field falls under a separate framework from bidding for those eight oil and gas fields. Consortiums of Japan, Italy, and Spain are negotiating with Iraq on the oil field's development. Iraq has narrowed down the bidders to a consortium of Japanese companies' formed by ENEOS (the largest domestic primary oil distributor),Inpex Corporation, and JGC Corporation (a major plant engineering firm); and Italy's Ente Nazionare Idrocarburi. Oil Minister al-Shahristani on the 10th told reporters that he will reach a decision shortly, saying, "We have completed technical screenings. All we have to do now is financial adjustments." Security of esources Securing the Nasiriyah oil development right is of vital significance to Japan. Japan purchases almost all the crude oil it consumes on the oil market. Crude oil prices skyrocketed last year due to emerging countries' economic development and the influx of speculative money into the oil market, dealing a blow to the Japanese economy. It has now become difficult to secure stable supplies of crude oil due to mounting resources nationalism. However, if Japanese companies secure rights to develop oil fields abroad, it will be possible for the nation to procure crude oil on a stable basis even in the event of an emergency. Oil fields, in which Japan has a large ratio of interest, are called "Japanese-flag oil fields." Arabian Oil's Khafji oil field is one of those oil fields. However, Japan's interest in the Khafji oil field expired in 2000, when the Japanese side showed reluctance to accept a condition the Saudi Arabia set in renewing Japan's concession rights - building mining railways. Japan also transferred most of its interest in the Azadegan oil fields in Iran due to pressure from the U.S. to suspend the development of the oil field, making an issue with the nation's nuclear development. The government has set a goal to raise the ratio of oil produced from Japan-developed oil fields to imported crude oil to 40 PERCENT by 2030. According to METI, the ratio as of the end of 2007 stood at about 19 PERCENT . For this reason, securing the Nasiriyah oil field development right is an important issue in terms of energy security as well, according to ENEOS executive. It is also Japan's long-held ambition. Fifty-fifty chance In a bid to secure the Nasiriyah oil field development right, Japan's consortium has proposed that it help Iraq to build infrastructure, such as oil refineries and power plants, and provide TOKYO 00001599 012 OF 012 financial assistance through the Japan Bank for International Cooperation (JBIC). ENEOS Chairman Fumiaki Watari said in confidence, "I have some leads." ENEOS has independently developed oils fields in the North Sea and in the Gulf of Mexico. Daily outputs from those oil fields total 130,000 barrels. Daily production of 600,000 barrels is expected from the Nasiriyah oil field. An ENEOS executive expressed his hopes, saying: "There will be no other opportunity for Japan to become involved in the development of an oil field on this scale." Domestic demand for oil is bound to drop. However, the company wants to lead this opportunity to a pillar of earnings, since overseas demand, mainly in emerging countries, is solid. According to a related source, Japan was ahead of Italy as of May. However, Italy reportedly made additional proposals regarding conditions. The chances of the Japanese consortium to win the development right are said to be about fifty-fifty. POST