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; CINCPAC FLT/PA/ COMNAVFORJAPAN/PA. 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: TOKYO 00001843 002 OF 009 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 TOKYO 00001843 003 OF 009 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 TOKYO 00001843 004 OF 009 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 TOKYO 00001843 005 OF 009 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. TOKYO 00001843 006 OF 009 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 TOKYO 00001843 007 OF 009 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. TOKYO 00001843 008 OF 009 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, TOKYO 00001843 009 OF 009 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