JAPANESE MORNING PRESS HIGHLIGHTS 2/18/09

UNCLAS SECTION 01 OF 13 TOKYO 000363

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SUBJECT: JAPANESE MORNING PRESS HIGHLIGHTS 2/18/09

Index:

Secretary Clinton's visit to Japan:
1) Secretary Clinton, Prime Minister Aso in meeting agree to
cooperate on the economic crisis (Asahi)
2) As the U.S. reviews its Afghanistan strategy, Secretary Clinton
seeks Japan's participation and lauds its civilian assistance for
Afghan reconstruction (Mainichi)
3) Interviewed by Yomiuri, Secretary Clinton stresses the importance
of the Six-Party Talks to address the North Korean missile problem
(Yomiuri)
4) Interviewed by the Asahi, Clinton says the U.S. will seek talks
with China on nuclear-arms reduction (Asahi)
5) Democratic Party of Japan President Ozawa tells Secretary Clinton
in meeting that he seeks an equal partnership with the U.S. and aims
to win the election (Sankei)
6) Text of Clinton-Aso meeting (Mainichi)
7) Text of Clinton-Ozawa meeting (Mainichi)
8) Text of Clinton meeting with Defense Minister Hamada (Mainichi)

9) Agreement on an Aso-Obama summit on Feb. 24, requiring the prime
minister to work around the tight Diet schedule (Nikkei)
10) Secretary Clinton meets the families of Japanese abducted by
North Korea (Sankei)
11) Clinton has a happy reunion with the Empress (Yomiuri)

12) Secretary impresses Tokyo University students in town meeting
(Asahi)
13) If Japan cannot implement what it promises to the U.S., another
period of "Japan passing" might begin says Washington observer
(Sankei)

Political meltdown:
14) Finance Minister Shoichi Nakagawa resigns over G-7 incident,
succeeded by Yosano, but Aso government may be on verge of collapse
(Asahi)
15) State of budget deliberations in disarray following sudden
resignation of Nakagawa (Mainichi)
16) Aso administration is in great danger with resignation in
disgrace of key cabinet minister (Tokyo Shimbun)
17) Ruling parties plan to pursue Aso for responsibility in choosing
Nakagawa for cabinet (Nikkei)

Articles:

1) Aso, Clinton agree on cooperation in addressing economic crisis

ASAHI (Page 1) (Abridged slightly)
February 18, 2009

Prime Minister Taro Aso held talks with U.S. Secretary of State
Hillary Clinton at his office on the night of Feb. 17 in which they
confirmed that Aso would meet with President Barack Obama in
Washington on Feb. 24. The two leaders agreed to strengthen the
Japan-U.S. alliance and combine efforts in addressing the global
financial crisis. They also agreed to work together to make North
Korea abandon its nuclear programs and settle the abduction issue.

The prime minister welcomed Secretary Clinton's visit to Japan,
saying: "It shows that the Obama administration attaches importance
to Japan." Aso also expressed his gratitude for the invitation from
President Obama. Secretary Clinton replied: "The President wants to

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hold talks with the prime minister as early as possible."

The prime minister also asked for U.S. cooperation for an early
settlement of the abduction issue, while indicating that the
abduction, nuclear and missile issues must be settled
comprehensively. Meanwhile, Clinton, touching on her meeting with
families of abduction victims, played up the importance of
cooperation between Japan and the United States. Expressing hopes
that China will play a constructive role in the international
community, the two leaders shared the view that getting China
involved in the global warming issue would benefit both Japan and
the United States.

After the meeting with Aso, Secretary Clinton held talks with
Democratic Party of Japan President Ichiro Ozawa at a Tokyo hotel.
It is rare for a U.S. Secretary of State to meet with a Japanese
opposition party leader. According to Ozawa, he indicated that in
the Japan-U.S. alliance, one side should not be subservient to the
other. He also said that he told Secretary Clinton: "China will
become a major challenge for Japan and the United States. How to
guide China's democratization to a soft landing will be the most
difficult task for the two countries." In response, Clinton said:
"That's an extremely important insight. A triangular
U.S.-Japan-China relationship is important."

Clinton also met with Defense Minister Yasukazu Hamada yesterday.
Highly evaluating the decision to dispatch the Maritime Self-Defense
Force on an anti-piracy mission in waters off Somalia, the Secretary
also requested Japan to consider protecting vessels that are not
Japanese. She also called for Japan's active participation in UN
peacekeeping operations.

2) Clinton asks Japan to join U.S. Afghan strategy review

MAINICHI (Page 6) (Full)
February 18, 2009

U.S. Secretary of State Clinton in a joint press conference with
Foreign Minister Hirofumi Nakasone yesterday revealed that she
expressed her appreciation for Japan's contribution to Afghanistan's
reconstruction and asked Japan to participate in the process of
reviewing the United States' Afghan strategy. Clinton is expected to
make a similar request during her visit to South Korea from
tomorrow. This can be taken as a move symbolizing the Obama
administration's diplomatic stance of dealing with pending issues
through strengthened cooperation with allies.

In her press remarks, Clinton said she would like to express
appreciation to Japan for its reconstruction assistance. Citing
school and airport construction, she said the United States wants to
consider Japan's experience.

The Obama administration is now reviewing the United States' Afghan
strategy with former senior Central Intelligence Agency (CIA)
officials, who are experts on Southwest Asian or other regional
affairs. The United States will ask its allies to provide military
backing and contribute to developing Afghanistan's military and
police and providing reconstruction and civilian assistance.

Meanwhile, U.S. Special Envoy to Afghanistan and Pakistan Holbrook
has already obtained an agreement from Afghanistan and Pakistan as
well to participate in this review process. According to a U.S.

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State Department official, Clinton has told Nakasone that the U.S.
government would like to finish reviewing the strategy by the end of
March at the latest.

3) North Korean missile issue should be part of six-party talks,
says Clinton in interview with Yomiuri Shimbun

YOMIURI (Page 1) (Abridged slightly)
February 18, 2009

U.S. Secretary of State Hillary Clinton, 61, gave an exclusive
interview to the Yomiuri Shimbun at a Tokyo hotel on Feb. 17. In it,
the Secretary strongly criticized North Korea's preparations for
launching a Taepodong 2 long-range ballistic missile (with a range
of 4,300 - 6,000 kilometers) as "provocative and unhelpful." She
also made it clear that the United States would deter any attacks on
Japan, saying, "We will defend Japan."

Secretary Clinton articulately said: "We will continue to seek ways
to discourage them from launching a missile for any purpose." She
also expressed her eagerness to discuss the missile issue, which has
not been taken up in the six party talks, in the multilateral
framework to settle North Korea-related issues comprehensively,
including the abduction issue.

Referring to the fact that the main opposition Democratic Party of
Japan is calling for a review of a bilateral agreement on the
realignment of U.S. forces in Japan, the Secretary said: "A
responsible nation follows the agreements that have been entered
into." She thus called for the implementation of the agreement and
applied pressure on the DPJ's call.

As for Japan-U.S. relations, she categorically said: "It is hard to
imagine succeeding without a strong U.S.-Japan partnership." At the
same time, the Secretary presented a policy course to maintain
cooperative relations even if there is change in Japanese politics,
saying: "It is for the Japanese people to determine by whom they
wish to be governed. We look forward to deepening and broadening our
partnership, no matter what the political future might be."

Further, referring to Japan as a "responsible actor in the world,"
Secretary Clinton expressed her expectations for Japan to work
together in addressing such international issues as climate change
and the Middle East situation. She also demonstrated a stance to
jointly deal with the financial crisis, saying: "We have some very
significant responsibilities to try to work our way through this
current economic crisis."

4) U.S. will discuss nuclear arms reduction with China, says Clinton
in interview with Asahi Shimbun

ASAHI (Page 1) (Abridged slightly)
February 18, 2009

U.S. Secretary of State Hillary Clinton, who is visiting Japan, gave
an interview to Asahi Shimbun Editor-in-Chief Yoichi Funabashi at a
Tokyo hotel on Feb. 17. Regarding the nuclear nonproliferation and
arms control issues, the Secretary revealed a plan to hold talks
with China to find out during her upcoming visit to Beijing if it is
possible to enter into continued negotiations, like those with the
Soviet Union during the Cold War. She said: "There is an important
role China must play."

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She indicated that nuclear nonproliferation and arms reduction were
issues she was planning to discuss with China during her visit to
Beijing. She also explained that Washington thinks that such talks
could lead to a continued negotiation process, like the one between
the United States and Soviet Union in the past.

The United States is already in accord with Russia to establish a
new nuclear disarmament pact replacing the Strategic Arms Reduction
Talks 1 (START 1) treaty that will expire at the end of this year.
The Obama administration has made it clear that it would aim at the
ratification of the Comprehensive Nuclear-Test Ban Treaty (CTBT),in
addition to the envisaged new treaty. Secretary Clinton apparently
made these comments in an effort to urge China to join a series of
efforts to reduce the level of dependence on nuclear weapons.

She also indicated that Japan, the United States, and China should
proactively address global warming, describing the approach as an
idea worth exploring. With the establishment of trilateral summit
talks in mind, the Secretary also showed strong interest in building
cooperative relations benefiting each country in such policy
challenges as improving energy efficiency and developing
clean-energy technologies.

As for the North Korean nuclear issue, the Secretary explained a
plan to pursue a direct dialogue with Pyongyang at the same time
based on the notion that the six-party talks are a beneficial venue
for negotiations.

Regarding the increasingly uncertain Japanese political conditions
in the wake of Shoichi Nakagawa's announcement to resign as finance
minister, Secretary Clinton showed consideration to the Aso
administration by simply saying: "The alliance is firm and will
continue regardless of who is in power in the United States and
Japan."

5) Unusual meeting: "We will win the election," says Ozawa

SANKEI (Page 5) (Full)
February 18, 2009

Democratic Party of Japan (DPJ) President Ichiro Ozawa on the
evening of February 17 met with visiting U.S. Secretary of State
Clinton for about 30 minutes at a Tokyo hotel. Both agreed that
Japan and the U.S. make efforts to strengthen their bilateral
alliance. The Ozawa side had indicated an outlook before the meeting
that it would be just to introduce each other, avoiding in-depth
discussion. However, it is viewed that Ozawa concentrated his
efforts on wiping way anxieties felt by the U.S. over himself, by
revealing his pet argument, including his view on the China issue.

Ozawa during the meeting said, "I am one of those who advocated from
the beginning that the Japan-U.S. alliance is important above all
things." He also pointed out: "Our alliance should not be a
relationship in which one side is subservient to the other. Our
relationship must be such in which the two countries exchange views
and abide by decisions reached through discussion."

Regarding the U.S. force realignment, Ozawa said: "It is important
for our two countries to discuss a global strategy as real allies
and deal with individual issues, based on agreements. It has been a
problem that our country's government has been avoiding giving its

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views in a proper way."

Furthermore, regarding China, he stated: "Market fundamentalism and
communism are incompatible in principle. Discrepancies are bound to
surface. The major theme for Japan, the U.S. and the world is how
China will make a soft landing in its democratization. A
communist-dictated China is troublesome." In response, Clinton said,
"It is a very important insight. The U.S. will increasingly commit
itself to China on the political, business and military fronts. The
Japan-U.S.-China triangle is a very important relationship."

Lastly, Ozawa conveyed his resolve to take over the reins of
government, saying, "We will do our utmost to win the election so
that I can continue to have talks like this with the secretary of
state."

It is unusual for a U.S. secretary of state to hold separate talks
with an opposition party leader. According to a person who was
present at the meeting, the amount of time in which Ozawa spoke was
longer than the length of Clinton's remarks.

Ozawa also touched on the North Korea issue, noting, "I do not think
that North Korea will abandon the nuclear card."

Ozawa had earlier rebuffed a meeting with Clinton. However, it was
realized with Diet Affairs Committee Chairman Kenji Yamaoka, his
close aide, working for its materialization.

6) Clinton-Aso meeting

MAINICHI (Page 6) (Full)
February 18, 2009

Japan-U.S. alliance

Prime Minister Taro Aso: Your visit to Japan this time demonstrates
the Obama administration's stance of placing emphasis on Japan, and
I welcome it. Our bilateral alliance with the United States is the
axle of Japan's diplomacy, and I would like to further strengthen
the alliance, while joining hands with President Obama and you.

Secretary of State Clinton: Our bilateral alliance is a cornerstone
for peace and prosperity in the Asia-Pacific region. We want to
strengthen the alliance further.

Japan-U.S. summit

Aso: I appreciate President Obama's invitation (to the White House
for a Feb. 24 summit meeting). Let me ask you to tell the president
that after going through domestic procedures, I will visit the
United States and then I would like to hold a summit meeting with
him.

Clinton: The president also would like to meet with the prime
minister as soon as possible.

Regional situation

Aso: It is in the interests of both Japan and the United States, and
it is also the responsibility of our countries to see that universal
values take root in the Asia-Pacific region and to build a free,
prosperous, stable, and foreseeable region.

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Aso, Clinton: We confirm that Japan and the United States, based on
their alliance, will deal with various challenges in East Asia. We
share expectations of China to play a constructive role in the
international community.

North Korea problem

Aso: It's important to work out a comprehensive solution to the
various pending issues like abductions, nuclear programs, and
missiles. I would like to have the continued cooperation of the
United States in order to resolve the abduction issue at an early
date.

Clinton: I met with the families of abductees. Bilateral cooperation
is important.

Sakhalin visit

Aso: I will visit Sakhalin, Russia, on February 18 to hold a
Japan-Russia summit meeting.

Climate change

Aso, Clinton: We agree to cooperate on such global issues as climate
change, energy resources, and international healthcare. We will
closely consult on climate change in particular.

7) Clinton-Ozawa meeting

MAINICHI (Page 6) (Full)
February 18, 2009

Democratic Party of Japan (Minshuto) President Ichiro Ozawa: I'd
like to say thank you for visiting Japan first. I appreciate you for
considering my schedule so that I can meet with you during an hour
like this.

Secretary of State Clinton: Next year will mark the 50th anniversary
of our bilateral alliance. The alliance between Japan and the United
States has brought good results in all senses not only for our two
countries but also for Asia. In the next 50 years as well, let us
make efforts to further solidify our bilateral alliance.

Ozawa: I totally agree. Concerning what I've recently said, I had
advice from an American friend, and I was told that I am being
misunderstood. However, I am one of those who have said that the
Japan-U.S. alliance is of paramount importance. But an alliance must
not be a relationship for one country to be subordinate to the other
country. We should exchange views about our respective standpoints
and discuss and reach a better conclusion. We should follow that
conclusion and we should have an equal partnership. That can be
called an alliance for the first time.

Clinton: It's important to utilize our bilateral alliance and
friendship in various areas, based on our partnership. Today, we
signed the agreement to relocate the U.S. Marines in Okinawa to
Guam. We can make further contributions to the modernization of
troops in the Pacific region and the maintenance of deterrence in
the region and the defense of Japan.

Ozawa: Concerning the realignment of U.S. forces in Japan, Japan and

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the United States should discuss global strategies, and based on a
bilateral agreement, the two countries should deal with each issue.
That's important. The Japanese government has failed to insist on
its standpoint. That's where the problem is. I think that the reason
for that is because the Japanese people have not been prepared to
fulfill responsibilities while sharing roles even in the face of
difficulties. It does not seem to me that North Korea will give up
its nuclear card. China is a still bigger problem. China has
introduced market mechanisms for its growth. That's significant.
However, market mechanism and communism are incompatible with each
other like a double-edged sword. Contradictions will come out. China
is the biggest problem in the world. How to democratize China is the
biggest task for Japan and the United States.

Clinton: I think that's a very important insight. The triangular
relationship of Japan, the United States, and China is important.
I'd like to continue to talk with you, Mr. Ozawa.

Ozawa: We will do our best in the next election so I can talk with
you and other U.S. leaders.

8) Clinton-Hamada meeting

MAINICHI (Page 6) (Full)
February 18, 2009

U.S. Secretary of State Clinton: I strongly believe that the
alliance between our two countries is one of the most important
relationships in the world. I'd like to make efforts to move the
alliance forward.

Defense Minister Yasukazu Hamada: The realignment of U.S. forces in
Japan is now in a new phase. This is a good opportunity to review
the significance of the bilateral alliance in its entirety and the
way it should be.

Clinton: Japan is playing very important roles. The first role is
providing assistance to Iraq. The second one is refueling in the
Indian Ocean concerning Afghanistan, and the third one is sending
out ships (to waters off the eastern African coast of Somalia)
against pirates. I think the Diet will discuss antipiracy measures,
but we'd appreciate it if Japan will also consider being able to
protect other countries' ships during emergencies.

Hamada: I'm aware of that issue. We're looking into the feasibility
of enacting a new law.

9) Japan, U.S. agree to hold bilateral summit on the 24th: Diet
schedule adjustment to require juggling act; Nakagawa's resignation
unanticipated

NIKKEI (Page 3) (Full)
February 18, 2009

The Japan-U.S. foreign ministerial meeting, held on February 17,
produced a major result with agreement reached to hold the first
summit meeting between Prime Minister Taro Aso and U.S. President
Obama on February 24. In view of Diet deliberations, however,
adjusting the Diet schedule might require a juggling act.

According to the Japanese side, the policy direction for holding the
summit on the 24 was finally set on the 16th, the day before the

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foreign ministerial meeting. The Japanese side had been searching
for a timetable for holding the summit before the financial summit
on April 2. Nobody at first had expected that the bilateral summit
would be realized for later this month.

Late February is a delicate timing in relation to the fiscal 2009
budget bill. The Group of Seven finance ministers and central
bankers meeting (G-7) has just agreed to disburse funds ahead of
schedule to address the global recession. The prime minister's side
wants to appeal his stance of tackling an economic stimulus package,
by having the budget bill approved by the Lower House before his
U.S. visit.

The ruling parties had originally aimed at having the bill approved
by the Lower House on the 20th. After being sounded out about
holding a summit meeting by the U.S., the prime minister presumably
determined that it would be possible for the bill to clear the Lower
House by the 23rd, while turning down demands for the resignation of
Nakagawa.

Nakagawa's resignation must have been beyond the scope of the
assumption for the prime minister. Nakagawa announced his
resignation at a press conference around the same time when the
foreign ministerial meeting, where the date for the summit was set,
ended. Nakagawa's announcement seemed to be a bolt out of the blue
for the U.S. side, as well. Some in the government and the ruling
parties take the view that if Nakagawa had announced his resignation
a day earlier, it would be an open question whether the decision to
hold the summit on the 24th would have been reached or not.

Since Nakagawa quit on the 17th, a situation in which the submission
of a censure motion stalls Diet deliberations completely has been
avoided. However, whether the budget bill can secure approval of the
Lower House is still unclear. It is possible for the ruling
party-dominated Lower House to railroad the bill, citing the
importance of the economic stimulus package. However, should that
occur, the opposition parties are bound to object even more
strongly.

For the U.S., the 24th is the key day, because President Obama will
deliver a speech at a joint plenary meeting of the House of
Representatives and the Senate on his future policy management. The
prime minister will likely be forced to make an ultimate decision
with U.S. side's consideration going straight to his heart.

10) Secretary Clinton to abductees' families: Abduction issue a
priority for U.S.

SANKEI (Page 2) (Full)
February 18, 2009

The family members of Japanese abducted by North Korea met yesterday
with visiting Secretary of State Hillary Clinton at the U.S. Embassy
in Minato Ward, Tokyo. Those who met Clinton include Shigeo Iizuka,
brother of abductee Yaeko Taguchi and representative of the
Association of the Families of Victims Kidnapped by North Korea, and
Shigeru and Sakie Yokota, the parents of abductee Megumi Yokota.

According to the association, Clinton told the three family
representatives that she understands that the abduction issue should
be a priority for the United States, as well, and that she would
like to look into how pressure should be applied to resolve the

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issue. When the abductees' families called for listing North Korea
again as a state sponsor of terrorism, Clinton was quoted as saying:
"I will take action after fully looking into it."

During the 30-minute meeting, Clinton showed strong interest in the
abduction issue, saying: "North Korea is an inhumane country, with
conditions there cannot be understood. I have long been concerned
about this issue and have studied it from various aspects."

Showing the pictures of Taguchi and Megumi, Iizuka and the Yokotas
stressed that U.S. cooperation was indispensable. Clinton reportedly
encouraged them by saying: "I believe it has been difficult for you
to have carried out activities for more than 30 years. But I want
you to continue to do so."

11) Empress delighted to meet Clinton again

YOMIURI (Page 30) (Full)
February 18, 2009

U.S. Secretary of State Hillary Clinton was invited to a tea party
yesterday by the Empress at the Imperial Palace. The Empress greeted
Clinton at the entrance soon before 3:00 p.m. The two women
embraced and they took each other's hands. The Empress was pleased
to meet Clinton again.

According to the Imperial Household Agency, the Empress and Clinton
have met three times so far, including one when the Emperor and
Empress visited the United States in 1994.

Clinton had requested a meeting with the Empress during her visit to
Japan and she was invited to the palace in her capacity as a former
first lady, the agency said.

12) Secretary Clinton holds town meeting at Tokyo University: The
U.S., which did not used to listen, has changed and is listening
now

ASAHI (Page 8) (Excerpt)
February 18, 2009

U.S. Secretary of State Clinton, who is visiting Japan for the first
time since assuming her office, gave a speech last evening at a town
meeting with students and others at Tokyo University. She stressed
that she was taking a stance of giving priority to dialogue, saying:
"Until recently, the United States did not easily turn its ears to
differing views of the peoples of the world. The Obama
administration is changing all that."

After she spoke for about 15 minutes to the assembly of
approximately 270 students and others, she took questions from eight
students.

13) Concerns in Washington about Tokyo's policy implementation
capability; Will there be another "Japan passing" phase?

SANKEI (Page 6) (Excerpt)
February 18, 2009

Takashi Arimoto in Washington

During her meetings with the foreign minister and others on Feb. 17,

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Secretary of State Clinton stressed the importance of even closer
cooperation between Japan and United States. For the Obama
administration, which has criticized the Bush administration for its
unilateralism and vows to cooperate with every country on such
global issues as climate change and the financial crisis, the
presence of Japan as its ally is indispensable. However, with Japan
now unable to swiftly respond due to its political turmoil, there
are voices of concern already rising on the U.S. side, with one U.S.
government responsible official saying, "'Japan passing' may become
inevitable."

14) Nakagawa's resignation accelerating departure from Aso in ruling
camp; Resignation after passage of budget bills now seems possible

ASAHI (Top Play) (Excerpts)
February 18, 2009

Finance Minister and State Minister for Financial Services Shoichi
Nakagawa submitted a letter of resignation to Prime Minister Aso
last night to take responsibility for causing controversy by
appearing to be dazed during a press conference after the Group of
Seven (G-7) finance ministers and central bank governors' meeting in
Rome. Shortly after noon yesterday, he announced his intent to
resign after the fiscal 2009 budget and related bills pass through
the House of Representatives. But since the opposition camp later
submitted a censure motion against Nakagawa to the House of
Councillors in the afternoon, Nakagawa decided to resign immediately
in order to avoid Diet deliberations from falling into chaos. State
Minister in Charge of Economic and Fiscal Policy Kaoru Yosano will
take over Nakagawa's post. A series of blunders by the Aso
administration has accelerated the exodus away from Aso in the
ruling camp. The possibility of his resignation after the budget
bills clear the Diet is now taking on a reality touch.

Aso administration already in collapse process

Although Prime Minister Aso instructed him to stay on, Nakagawa,
Aso's close friend, was driven to step down. This fact shows that
the Aso administration is losing his leadership and has begun to
slowly collapse. Many members of the ruling parties now think they
will not be able to win the next general election under Prime
Minister Aso. Under this situation, there is a strong possibility
that Aso will step down after the fiscal 2009 budget and related
bills are enacted in the Diet.

Aso appointed Nakagawa as finance minister to have him engage in
tackling the prime minister's biggest challenge of unifying the
fiscal and financial systems, but many critics were questioning his
credentials to assume the post from the beginning because he is
notorious for turning nasty when drunk. Although Nakagawa was "a
mental support" for the prime minister, as said by his aide, the
appointment of his friend has ended in failure.

It is unprecedented for a finance minister to resign while budget
bills are under deliberation. In this case, it was because of his
questionable behavior in a press conference. What is worse, Aso
announced he would keep Nakagawa in his post, but the following day,
Nakagawa announce his intention to step down. As for the timing, as
well, "only after the budget bills clear the Lower House" was
changed to "immediately." This signifies that the prime minister has
completely lost his grip on the ruling parties.


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Aso is scheduled to meet U.S. President Barack Obama on the 24th and
also to hold talks with Russian President Dmitry Medvedev on the
18th. But it is unlikely that Aso, who is losing political ground,
will be able to turn the tables through these diplomatic events. He
is considering a plan to compile a supplementary budget bill after
the fiscal 2009 budget is enacted, but even bills related to the
fiscal 2008 second extra budget are still on the table.

His remark, "I did not support the postal privatization plan,"
further weakened his survivability. The dominant view in the ruling
camp is that Nakagawa's resignation just after this controversy has
completely upset the prime minister's scenario of retaining
leadership by recovering his popularity and growing the economy.
Given that there is no potential successor to Aso, many LDP members
have so far refrained from calling for a change of prime minister.
But attention in the party has now shifted to when Aso will resign.

15) Nakagawa's resignation: When deliberations on budget will start
unclear

MAINICHI (Page 5) (Excerpts)
February 18, 2009

The Diet was out of session yesterday due to the resignation of
Shoichi Nakagawa, finance minister and state minister for financial
services. With Nakagawa's resignation, a minimum condition has been
prepared for the opposition camp to return to the Diet. However, it
is true that the uncertainty is looming over how deliberations on
the state budget will turn out. It is uncertain whether the fiscal
2009 will quickly clear the Lower House and whether the second
supplementary budget for fiscal 2008 will be enacted.

The Lower House Budget Committee yesterday took a break from meeting
immediately after the opening of the session because the opposition
parties did not attend it. Therefore, Prime Minister Taro Aso and
Nakagawa were forced to stand by in the committee's reception room
for about two and a half hours intermittently. Media cameras
continued focusing on boot-faced Aso and Nakagawa.

"I apologize for acting disgracefully. I also apologize for failing
to convey before the press conference (at noon I announced my
resignation)," Nakagawa said and bowed on his knees a meeting of the
budget committee directors, which started at 2:00 p.m. After
Nakagawa had walked out of the session, the ruling coalition called
for the initiation of deliberations, but Yukio Edano of the main
opposition Democratic Party of Japan (DPJ) talked fast and furious:
"The finance minister is a person who presented the budget and who
will implement it. Since he has decided to quit his post, he should
not have made responsible replies."

What made the matter complicated was that Nakagawa had said at the
press conference at noon that he would resign after the fiscal 2009
budget and related bills cleared the Lower House. Nakagawa's
statement gave the opposition an excuse to boycott deliberations.

16) Aso administration facing most serious crisis

TOKYO SHIMBUN (Page 1) (Full)
February 18, 2009

Shoichi Nakagawa, Prime Minister Taro Aso's close friend and a
pivotal member of his cabinet, resigned as finance minister

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yesterday. His resignation has driven the Aso administration into
its most serious crisis since it was inauguration. Fearing that the
Nakagawa debacle might act as the trigger to bring down the
administration, which has been suffering low popularity, many
members in the ruling camp have begun to openly call for replacing
Prime Minister Aso.

Liberal Democratic Party (LDP) Diet Affairs Committee Chairman
Tadamori Oshima said of the finance minister's resignation
yesterday, "There will be damage," but many party members do not
take such an optimistic view, probably focusing on Aso's mistake
this time, too. After the questionable press conference, the
dominant view in the party was that the prime minister should let
Nakagawa out of the post immediately, but Aso decided yesterday to
retain Nakagawa in his post for a while.

On the 17th, Nakagawa announced he would step down after the fiscal
2009 budget and related bills clear the House of Representatives but
submitted a letter of resignation under heavy fire last night.

Repeated changes in Aso's remarks on such issues as cash handouts
and a review of the postal privatization plan disappointed the
public, weakening his survivability.

Nakagawa's resignation under such a severe environment for the Aso
administration is upsetting many LDP members. In particular, some
mid-ranking and junior members have severely criticized the prime
minister. Voices questioning his appointment of Nakagawa as finance
minister, despite his alleged alcohol problem, are growing. The
debacle this time has made party members more concerned about the
next general election under the Aso administration. House of
Councillors member Ichita Yamamoto commented: "Most of those around
me have said they would not be able to win the next election under
the current situation." A mid-ranking lawmaker said: "It is
impossible for the prime minister with public support at the 10
PERCENT level to dissolve the House of Representatives." An
atmosphere hoping for a change of prime minister is permeating in
the LDP.

Junior and mid-ranking party members insisted yesterday on the need
to review the party rules on a public election system for the
premiership to facilitate junior members to field their candidacies
in an LDP presidential election. As it stands, moves with an eye on
the post of Aso's successor are gathering momentum.

17) Opposition parties to pursue prime minister's responsibility for
appointing Shoichi Nakagawa as finance minister

NIKKEI (Page 2) (Full)
February 2, 2009

The opposition camp intends to call for intense Diet deliberations
on such issues as the fiscal 2009 budget bill and related bills. In
the deliberations, it will harshly pursue Prime Minister Taro Aso's
responsibility for appointing Shoichi Nakagawa as finance minister,
who has stepped down over the his behavior at the G-7 meeting. The
opposition parties intend to prevent passage of the budget and
related bills prior to the Japan-U.S. summit slated for the 24th.

Democratic Party of Japan (DPJ) Secretary General Yukio Hatoyama on
the evening of February 17 told reporters in Tokyo, "The prime
minister bears heavy responsibility for appointing (Mr. Nakagawa)."

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He played up the DPJ's achievement, saying, "We gave the prime
minister our final word when we submitted a censure motion against
the finance minister." He then revealed the party's decision to
retract the censure motion on the 18th.

Tadayoshi Ichida, head of the Secretariat of the Japanese Communist
Party (JCP),during a press conference criticized Nakagawa, "It is
only natural for him to resign. He does not know when to give up."
Social Democratic Party President Mizuho Fukushima said, "The Aso
cabinet should dissolve the Lower House and go to the people."
People's New Party Secretary General Hisaoki Kamei pointed out in
the Diet building, "His resignation is a natural consequence."

The opposition parties had indicated a stance of boycotting a Lower
House Budget Committee meeting on the 18th. However, following the
resignation of Nakagawa, they have decided to attend it. They intend
to pursue State Minister for Economic and Fiscal Policy Kaoru
Yosano, who is doubling as finance minister having succeeded
Nakagawa, with Hatoyama saying, "I wonder Mr. Yosano can physically
manage it if he serves concurrently in three posts."

ZUMWALT