JAPANESE MORNING PRESS HIGHLIGHTS 08/13/09

UNCLAS SECTION 01 OF 09 TOKYO 001843

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

SUBJECT: JAPANESE MORNING PRESS HIGHLIGHTS 08/13/09

Index:

Election campaign:
1) Sparks fly over financing campaign promises between two party
leaders - LDP's Aso and DPJ's Hatoyama - in one-on-one debate
(Asahi)
2) Prime Minister Aso, Democratic Party of Japan (DPJ) President
Hatoyama debate consumption tax issue, hinting at future hike in the
rate (Tokyo Shimbun)
3) Aso, Hatoyama spar in debate over foreign and defense policy
issues, including MSDF refueling mission in the Indian Ocean (Tokyo
Shimbun)
4) Survey of candidates in the Lower House election finds clear
split between LDP and DPJ on consumption tax issue, with LDP
favoring hike and DPJ against (Yomiuri) 5
5) Joint ruling camp set of campaign pledges strongly reflect LDP
consideration to coalition partner New Komeito (Yomiuri)

Diplomatic issues:
6) DPJ's Hatoyama says he favors the creation of a national war
memorial where the Emperor could honor the war dead (Tokyo Shimbun)

7) China largely pleased with Hatoyama's pledge not to visit
Yasukuni Shrine (Nikkei)
8) Japan, U.S., Australia agree to cooperate on measures to deal
with Islamic radicals (Yomiuri)
9) Government plans to build a new embassy in Djibouti, which has
become the base of operations for Japan's anti-piracy operations
(Yomiuri)
10) Rally protests proposed FTA between Japan and the United States
(Nikkei)
11) Climate change: Japan proposes creation of teams to assist
developing countries in reducing greenhouse gas emissions (Yomiuri)


Economy:
12) Survey of major companies finds 42% believe that the economy has
bottomed out, and most think recovery will start next fiscal year
(Mainichi)
13) Bank of Japan Governor Shirakawa rebuts remarks about Japan's
economy by foreign economist (Nikkei)

ELECTION CAMPAIGN

1) Aso, Hatoyama clash over fiscal resources

ASAHI (Top Play) (Excerpts)
August 13, 2009

Prime Minister Taro Aso and Democratic Party of Japan (DPJ)
President Yukio Hatoyama faced off in a debate at a Tokyo hotel
yesterday. They discussed mainly such issues as fiscal resources for
the measures in their manifestos (policy platforms) for the upcoming
House of Representatives election, and foreign and security
policies. Aso rapped the DPJ's policies, saying: "It is
irresponsible to propose pork-barrel measures without specifying
where the necessary revenues will come from." Hatoyama claimed:
"(The government and the ruling parties) have done nothing about the
wasteful spending of taxpayers' money," and he emphasized that the
necessary revenues will be squeezed out by means of juggling the
budget allocations:


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The debate was hosted by the National Council for Building a New
Japan (21st ad hoc council),composed of academics, business leaders
and others, and lasted for about 90 minutes. The two party leaders
engaged in a one-on-one debate for the first time after the Lower
House was dissolved.

At the outset of the discussion, Aso said: "The capability to take
responsibility is the biggest different point between the Liberal
Democratic Party and the DPJ." He then criticized the DPJ's pledge
of not raising the consumption tax over the next four years,
remarking: "We must not saddle our children and grandchildren with a
heavier debt." Hatoyama emphasized: "The upcoming election will be
the first election for the voters to choose a government. I want all
the people to take part in the election."

Aso questioned whether the DPJ would be able to secure the fiscal
resources needed to finance its pledges to offer a monthly
child-raising allowance, waive express tolls, and establish an
income indemnity system for individual farming households. Hatoyama
refuted him: "We can secure 9.1 trillion yen by postponing
dam-construction and other projects, eliminating the wasteful
spending of taxpayers' money, and cutting budgetary allocations to
entities that offer jobs for retired bureaucrats.

The DPJ has proposed using the entire consumption tax revenue to
cover the guaranteed minimum pension benefit costs. Taking up this
pledge, Aso pointed out that the consumption tax revenue totals 13
trillion yen while 20 trillion yen is needed for the basic pension
payment. Aso said: "It will be impossible to implement this measure
unless pension payments are significantly reduced or the consumption
tax is largely hiked." Upon recognizing the need for a consumption
tax hike in the future, Hatoyama said: "We will raise the tax over
the next 20 years. The tax burden will not become remarkably heavier
each year."

2) Direct debate between prime minister and Hatoyama on sales tax

TOKYO SHIMBUN (Top Play) (Full)
August 13, 2009

Party head talks between Prime Minister Taro Aso (Liberal Democratic
Party (LDP) President) and Democratic Party of Japan President Yukio
Hatoyama were held at a Tokyo hotel on the afternoon of August 12
prior to the official announcement of the Lower House election on
the 18th. The DPJ's policy is to keep the sales tax rate unchanged
for four years after it takes the reins of government. Touching on
this policy, Hatoyama referred to a possible hike in the future,
saying, "I am fully aware that the situation in Japan does not
permit keeping the tax rate unchanged forever." Referring to a hike
in the sales tax, the prime minister said, "If growth of 2 percent
is attained, the situation will be considered appropriate for
implementing a tax hike without delay." He thus revealed a stance of
raising the tax if growth of 2 percent is attained in the second
half of fiscal 2010.

The prime minister fiercely criticized the DPJ's key policies, such
as child allowance, as pork-barrel largesse that is not backed up by
fiscal resources. Hatoyama rebutted, "Our policy measures can be
implemented through revisions to the budget that have been already
compiled and the elimination of wasteful administrative spending.

Aso, referring to the DPJ's policy shift from opposition to

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refueling operations in the Indian Ocean to extending the operations
until next January, attacked its security policy, noting, "We cannot
relegate security policy to a party that lacks consistency." He thus
expressed his determination to maintain his administration.

Hatoyama criticized the prime minister, who was underscoring the
track record of his administration, "The LDP administration cannot
break out of bureaucracy-oriented politics. That is why a power
transfer is needed."

The debate was hosted by the national council to create a new Japan
(21st century ad-hoc council) consisting of academics and business
leaders.


3) Aso, Hatoyama face off over fiscal resources, security

TOKYO SHIMBUN (Page 2) (Excerpts)
August 13, 2009

In the debate between Prime Minister Taro Aso (Liberal Democratic
Party president) and Democratic Party of Japan (DPJ) President Yukio
Hatoyama yesterday, the two party leaders traded barbs over the
propriety of the Maritime Self-Defense Force's refueling mission in
the Indian Ocean. Aso criticized Hatoyama's wavering position over
this issue, citing his recent about-face to approve the mission for
the time being. In response, Hatoyama made an excuse, citing the
need of "continuity of foreign policy."

Listing, (1) the refueling operation; (2) antipiracy measures in
waters off Somalia; and (3) inspection of cargo on ships traveling
from and to North Korea, Aso stressed: "The DPJ has opposed all
these missions. But its position has become unclear in anticipation
of assuming power in the run-up to the election."

Hatoyama reiterated his willingness to address the issue of cargo
inspection on North Korea ships and antipiracy measures in the event
his party sizes the reins of government, as specified in its
manifesto (policy platform). But on the refueling mission, to which
the manifesto makes no reference, Hatoyama remained on the
defensive.

Hatoyama said: "We do not need to think everything must be changed
immediately after our party takes over power. Continuity is
essential for foreign policy. We will make pragmatic responses." He
stressed his intention again to continue the refueling mission for
the time being. But he added: "I wonder if the refueling service
offered only several times a month has really contributed to
bringing about peace in Afghanistan."

On the question of whether the mission would be continued after its
expiration next January, Hatoyama said: "We have no intention to
extend the mission in a simple way." Secretary General Katsuya Okada
used this tactful language when he referred to the possibility of
extending the mission upon revising the new antiterrorism special
measures law, which endorses the mission.

Aso emphasized that the refueling service is one of a few practical
operations Japan can carry out on its own responsibility. The
mission has won praise from many other countries. Canceling the
mission is impossible." In conclusion, Aso said: "I and the LDP will
protect Japan," indicating his pride about the actual achievements

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the LDP has made so far in the security area.

4) Poll on candidates running in Lower House election: 85% of LDP,
25% of DPJ candidates go along with consumption tax hike

YOMIURI (Page 1) (Full)
August 13, 2009

The Yomiuri Shimbun sent a questionnaire to main candidates running
in the Aug. 30 House of Representatives election, the official
campaign of which will kick off on Aug. 18. The survey found that 86
percent of candidates from the Liberal Democratic Party (LDP)
answered that they would accept a consumption tax hike to maintain
the social security system, including pensions, while only 25
percent of candidates on the Democratic Party of Japan (DPJ) said
that they would concur.

The Yomiuri sent questionnaires to about 1,300 candidates (as of
Aug. 10),and received replies from 1,223 candidates - 303 LDP
candidates, 270 LDP candidates, 33 New Komeito candidates, 166
Japanese Communist Party (JCP) candidates, 36 Social Democratic
Party (SDP) candidates, 16 People New Party (PNP) candidates, 10
Everybody's Party (Minna-no-tou),and 389 other candidates.

Of the 1,223 candidates, 31 percent said that a consumption tax hike
would be unavoidable. Of the 31 percent, 25 percent said that a 10
percent increase would be acceptable.

Regarding a question what policies (three or less items) they want
to take up in the upcoming Lower House election, 67 percent
preferred economic stimulus measures; 33 percent, employment steps;
32 percent, medical system reform; and 29 percent, pension issues.

Of those who said that they wanted to bring up economic measures as
a campaign issue, the percentage of the New Komeito was 94 percent -
the highest, followed by the LDP's 87 percentage. Among the
opposition parties, the PNP was at 63 percent, followed by the DPJ's
46 percent and the JCP's 43 percent.

As to the pension issue, which was fourth highest priority among
campaign issues, 70 percent of the DPJ candidates said that they
wanted to take it up, followed by the SDP's 53 percent, the LDP's 27
percent, and the New Komeito's 21 percent.

Concerning about a question whether political realignment will take
place, more than 80 percent of the candidates said that it was
highly likely or somewhat likely. Thirteen percent of the LDP
candidates said that it was highly likely political realignment
would occur, of whom 70 percent said it would be move forward
somewhat, and 14 percent ruled out the possibility of political
realignment. Sixty-three percent of the DPJ candidates said that
political realignment was highly or somewhat likely, while 34
percent said political realignment would not occur.

5) Package of common pledges of ruling camp reflect "consideration
to New Komeito"

YOMIURI (Page 4) (Abridged)
August 13, 2009

The Liberal Democratic Party (LDP) and the New Komeito released a
package of priority policies of the ruling coalition yesterday. In

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the package, the LDP's consideration to the New Komeito, which gives
priority to welfare and low-income earners, can be detected in many
parts.

A measure to lower the amount paid individually under the high-price
medical care-expense system was added to the package of common
pledges. LDP Secretary General Hosoda said in a press conference
yesterday: "The New Komeito eagerly proposed this measure. It is
forward-looking progress. I want to emphasize this."

Such measures as shortening the necessary period of pension payments
to receive pension benefits from the current 25 years to 10 years
are included in the package. These measures also came from the New
Komeito.

The package also includes a measure to deprive lawmakers accused of
violating the Political Funds Control Law of their civil rights. The
LDP opposed this measure until yesterday morning, but the party had
to accept it in response to the persuasion of the New Komeito, which
wants to underscore its eagerness to address the politics-and-money
problem.

Meanwhile, on the diplomatic and national security areas, the ruling
parties reflected Prime Minister Aso's (Liberal Democratic Party
president) intention to underscore policy differences between the
LDP and the Democratic Party of Japan. The draft package did not
include any pledges in these areas. But as a result of consultations
between the two parties' secretaries general, the package added such
tasks as the Maritime Self-Defense Force's refueling mission in the
Indian Ocean and antipiracy operations in waters off Somalia. The
DPJ has indicated its opposition to or cautious view on these
missions. A senior LDP official commented: "We can stress that if
the DPJ assumes power, Japan's international contributions will
decrease significantly."

DIPLOMATIC ISSUES

6) Hatoyama positive on building a national memorial facility, with
Emperor's visit in mind

TOKYO SHIMBUN (Page 2) (Full)
August 13, 2009

Democratic Party of Japan (DPJ) President Yukio Hatoyama discussed
the question of paying tribute to the war dead on August 12. He
said: "We would like to work on (building) a non-religious national
memorial facility where everyone can pay their respects without any
ill feelings. A facility where the Emperor can pay tribute with
peace of mind is desirable." He thus indicated that he is positive
about constructing a non-religious national memorial facility.

Hatoyama explained: "The Emperor does not visit Yasukuni Shrine. I
think this is really painful for him. A facility where the Emperor
can go with peace of mind is desirable."

A private advisory body to then Chief Cabinet Secretary Yasuo Fukuda
had recommended the creation of such a facility in 2002 in light of
the strong reaction from China and South Korea to then Prime
Minister Junichiro Koizumi's visits to the Yasukuni Shrine. However,
discussions on this have been at a standstill due to the opposition
of the national association of the families of the war dead.


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7) China welcomes Hatoyama's statement on not visiting Yasukuni
Shrine

NIKKEI (Page 2) (Full)
August 13, 2009

Ken Sato, Beijing

The Chinese Foreign Ministry issued a statement by Jiang Yu, deputy
director general of the Information Department, on August 12 on
Democratic Party of Japan President Yukio Hatoyama's statement that
if his party takes over the reins of government after the House of
Representatives election and he becomes the prime minister, he will
not visit the Yasukuni Shrine. China's statement says: "We would
like to develop a stable Japan-China relationship based on the four
political documents, including the Japan-China Joint Communique." It
also indicates appreciation for Hatoyama's remarks which were based
on the 1972 Joint Communique and gave consideration to historical
issues. Japan expressed "deep remorse" for the damages Japan
inflicted on the Chinese people during the Sino-Japanese War in the
1972 document.

8) Japan, U.S., Australia agree to cooperate on measures against
Muslim extremists

YOMIURI (Page 4) (Full)
August 13, 2009

The governments of Japan, the United States, and Australia have
agreed to set up a mechanism for cooperating on preventing the
expansion of Muslim extremist forces in Southeast Asia through such
measures as assigning an official in charge of exchange of
information at the local embassies.

For now, dedicated officials will be assigned in Indonesia, where
there have been terrorist bombings, and the Philippines, where
extremist groups are active, and they will hold regular meetings to
share information on trends of the groups and support for the local
governments.

The three countries believe that poverty is one factor that causes
young people to turn to extremism and have implemented official
development aid for poverty reduction in Southeast Asia. They are
considering conducting a joint public opinion survey on the effect
of official development assistance (ODA).

9) Japan to open embassy in Djibouti

YOMIURI (Page 4) (Full)
August 13, 2009

The government has decided to open an embassy in Djibouti in East
Africa in the next fiscal year.

The Maritime Self-Defense Force (MSDF) contingent engaged in
anti-piracy operations in waters off Somalia is based in Djibouti.
At present, two P-3C reconnaissance planes responsible for
monitoring the pirates and some 150 MSDF officers in charge of
aircraft maintenance and security are deployed there. The Ministry
of Foreign Affairs has judged that the MSDF mission is likely to
become long-term, so an embassy will be opened to take charge of
coordination with the Djibouti government. The embassy will also

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conduct surveys on official development assistance (ODA) to be
provided to Djibouti in return for hosting the MSDF.

10) Rally to oppose FTA with U.S. held

NIKKEI (Page 5) (Full)
August 13, 2009

Agricultural, fisheries and forestry groups, including the Central
Union of Agricultural Cooperatives (JA-Zenchu),held an emergency
rally to oppose a free trade agreement between Japan and the U.S.,
which is included in the Democratic Party of Japan's (DPJ) manifesto
for the Lower House election. According to JA-Zenchu, about 3,000
people took part in the assembly. The DPJ had first said it would
"sign an FTA" (with the U.S.) However, it later revised the wording
to "promote talks." Many participants in the assembly, however,
criticized the manifesto, saying that there "has been no change in
the general direction." The meeting adopted a declaration that they
will promote movements to prevent an FTA with the U.S.

11) Government propose setting up a support team for developing
countries to cut greenhouse gas emissions

YOMIURI (Page 2) (Full)
August 13, 2009

Koya Ozaki, Bonn

In order to let China, India and other countries cut their green
house gas emissions, the Japanese government proposed on Aug. 11 at
the session of the Conference of the Parties to the United Nations
Framework Convention on Climate Change, which is now being held in
Bonn, Germany, that an experts team to support developing countries'
energy-saving strategies. The aim is to urge developing countries to
agree to the next framework, including developing countries'
obligation to reduce emissions and other efforts, in return for
being provided with advanced technologies.

The experts team, composed of engineers and government officials
from developed countries, would give advice to developing countries'
governments how to save their energy consumptions. The team would
research how developing countries use energies, as well as the
effectiveness of advanced technologies when they are introduced in
developing countries. The team would also come up with action plans
for those countries.

The Ministry of Economy, Trade, and Industry (METI) will allocate
500 million yen as related costs in its budgetary request guideline
for fiscal 2010, with an eye on the start of dispatching experts in

2010. Since the introduction of energy-saving technologies in
developing countries is related to increase profits of their
industries, it is very attractive to them. This also will lead to
sales of Japanese' companies' energy-saving technologies to the
world.

Regarding the framework of reducing of global greenhouse gas
emissions, which will replace the Kyoto Protocol after 2013,
international negotiations have been conducted with the aim of
reaching an agreement at the 15th session of the Conference of the
Parties to the United Nations Framework Convention on Climate Change
as the replacement of the Kyoto Protocol.


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Although Japan, the United States, and European Union (EU) aim to
setting a goal of cutting greenhouse gas emissions by all major
emitters, including China and India, developing countries have been
reluctant to set such a goal, citing their economic developments
would be undermined. Therefore, there is a wide gap between the two
sides. In order to avoid a failure in the 15th session, the Japanese
government intends to draw out a compromise from developing
countries by providing them with technical assistance.

ECONOMY

12) Mainichi poll of 120 leading companies: 42 percent say economy
has bottomed out; Most companies believe recovery will be next
fiscal year

MAINICHI (Page 1) (Abridged slightly)
August 13, 2009

The Mainichi Shimbun in late July surveyed 120 leading companies
nationwide. In the survey, 42.5 percent or 51 companies said that
the economy has bottomed out, topping those that disagreed - 23.3
percent or 28 companies. In the poll carried out in April, the
proportion of companies that replied the economy was worsening or
the economy was slowly worsening totaled 75 percent. The survey
conducted this time found that an increasing number of companies now
feel the economy has bottomed out, mainly because there has been a
slowing of decline in industrial output and exports, due to progress
in stimulus measures and inventory adjustments carried out by
various countries, noted Mitsubishi Electric.

There is a view that the government's declaration in June that the
economy has bottomed out served to turn around business sentiment.
However, as many as 32.5 percent of respondents or 39 companies said
that they could not tell whether the economy has bottomed out or
not.

Regarding a timeframe for full economic recovery, only 24.2 percent
or 29 companies said either "the economy is already in the recovery
process" or "within this fiscal year." The largest proportion of
65.8 percent or 79 companies gave the answer of "next summer." The
answer "fiscal 2011 or later" was given by 6.7 percent or eight
companies, showing little difference from the April poll.

To a question about their business performance in fiscal 2009,
respondents who replied that their business performance will
slightly worsen and those who said that their business showings will
worsen totaled 44.2 percent or 53 companies. These replies were
given mainly by retailers.

The poll was carried out in late July, targeting presidents or
chairman of 120 companies. Replies were sent by early August.

13) BOJ governor makes sarcastic remark, "Economists have learned in
the face of a crisis"

NIKKEI (Page 5) (Full)
August 13, 2009

Bank of Japan Governor (BOJ) Masaaki Shirakawa made a sarcastic
remark against foreign economists. According to the gist of a speech
he gave in Shanghai, China, on August 8, which the BOJ released on
the 12th, Shirakawa said, "Given changes in the views of economists,

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I feel that their learning process is coming along steadily." He
referred to changes in the views of overseas economists, comparing
the time when Japan had experienced a financial crisis in the past
and the ongoing economic and financial crisis.

Regarding the Japanese economy being unable to climb out of the
slump for a long period of time since the second half of the 1990s,
when the BOJ adopted a zero interest rate and monetary quantitative
easing policies, European and U.S. economists criticized Japan's
measures, saying, "The BOJ should set an inflation target and buy
everything until it attains it," or "It should make up for fiscal
deficits." Reflecting on those criticisms, Shirakawa said, "Various
proposals, including very bold ones, were made."

However, Shirakawa said that in the ongoing crisis, no bold
proposals, such as those made when the Japanese economy was strapped
in the long-term slump, have been made. He pointed out, "It is not
until economists actually face a crisis that they discuss things,
based on reality." He opined: "Actually faced with the crisis,
European and U.S. economists have realized that it is difficult to
overcome the crisis in a short period of time. Anything-goes-type
money easing arguments are not being heard." Princeton University
Professor Paul Krugman of the U.S., who criticized the BOJ in the
past, reportedly said, "We must apologize to Japan."

ZUMWALT