JAPANESE MORNING PRESS HIGHLIGHTS 03/06/09

UNCLAS SECTION 01 OF 11 TOKYO 000505

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 03/06/09

Index:

North Korea problem:
1) Special Representative for North Korea Policy Bosworth, MOFA
Director General Saiki: Satellite launched by North Korea will not
be tolerated (Asahi)
2) Bosworth, Saiki agree to closely cooperate on North Korea missile
issue (Nikkei)
3) Prime Minister Aso tells Upper House that U.S, ROK understand
Japan's position on the abductions by North Korea (Tokyo Shimbun)
4) Government mulling additional sanctions on North Korea (Sankei)


5) Prime Minister Aso considering traveling to Europe during early
May holidays (Nikkei)

Senkaku Islands dispute:
6) U.S. Department of State officially confirms that the Senkaku
Islands fall under the U.S.-Japan Security Treaty (Yomiuri)
7) Chief Cabinet Secretary Kawamura: U.S. has officially
acknowledged that Senkaku Islands under treaty (Sankei)

Defense and Security Affairs:
8) Nonpartisan group of lawmakers agree on aiming to have the Diet
pass the anti-piracy bill this session (Tokyo Shimbun) 5
9) Democratic Party of Japan (DPJ) Vice President Maehara says party
will cooperate in passing anti-piracy bill (Mainichi)
10) Japanese, Chinese defense ministers during upcoming meeting will
agree to share information on pirate activities during operations in
waters off Somalia (Tokyo Shimbun)
11) Government poll shows 70 PERCENT of public approve of MSDF
refueling operations in the Indian Ocean (Sankei)
12) Prime Minister Aso to visit Okinawa tomorrow (Asahi)

Political scandals:
13) DPJ President Ozawa, whose aide has been arrested for knowingly
accepting illegal donations, to be questioned by the prosecutors
(Yomiuri)
14) In DPJ questionnaire, 70 PERCENT of local chapters fear the
Ozawa scandal will affect the upcoming Lower House election
(Yomiuri)
15) DPJ's Maehara wary about party stance of taking on prosecutors,
but President Ozawa is silent, having ducked out of sight for the
time being (Nikkei)
16) Former Prime Minister Mori to return the donation he had
received from Nishimatsu (Sankei)
17) List of politicians who took donations from shady construction
firm grows (Nikkei)
18) LDP believes that the illegal donation scandal will not
adversely affect the party since it is the "enemy's blunder"
(Nikkei)
19) Members of the ruling camp are calling for a May dissolution of
the Diet (Asahi)

Articles:

1) Saiki, Bosworth agree even launch of satellite not acceptable

ASAHI (Page 4) (Full)
March 6, 2009

Foreign Ministry Asian and Oceanian Affairs Bureau Director General

TOKYO 00000505 002 OF 011


Akitaka Saiki held a meeting yesterday with visiting U.S. Special
Representative for North Korea Policy Stephen Bosworth. Regarding
North Korea's moves that appear to be preparing a launch of a
ballistic missile, the two officials agreed that even if Pyongyang
insisted that it would be a satellite, such is unacceptable based on
a UN Security Council resolution calling for a halt in the ballistic
missile program.

According to the Japanese side, Bosworth explained his outlook for
the six-party talks on North Korea's nuclear issue and U.S.-DPRK
talks, while indicating that U.S.-DPRK talks alone would not move
matters forward that easily.

2) North Korean missile: Japan, U.S. confirm close collaboration

NIKKEI (Page 2) (Full)
March 6, 2009

Special Representative for North Korea Policy Steven Bosworth on
March 5 met with Akitaka Saiki, director general of the Foreign
Ministry Asian and Oceanian Affairs Bureau, at the Foreign Ministry.
Concerning North Korea showing signs of test-launching a ballistic
missile, both agreed to ask that nation to restrain itself. They
confirmed their stance of closely cooperating with each other,
including filing a complaint with the UN Security Council, in the
event the DPRK went ahead with the launch.

This is the first meeting between Japanese and U.S. working-level
officials in charge of the North Korea issue since the inauguration
of the Obama administration.

They confirmed the understanding that the launching of a missile by
North Korea is in breach of a UNSC resolution adopted, following its
launch of ballistic missiles and nuclear test in 2006.

3) Aso on abduction issue: U.S., South Korea understand Japan's
position

TOKYO SHIMBUN (Page 2) (Full)
March 6, 2009

The House of Councillors' Budget Committee held a
question-and-answer session on the fiscal 2009 budget bill
yesterday, participated by Prime Minister Taro Aso and all the
cabinet members. In replying to a question, Aso revealed that the
government has been asking the U.S. and South Korea for cooperation
in its effort to resolve the issue of past abductions of Japanese
nationals by North Korean agents at an early date. Aso said: "We
have won the full understanding of the U.S. and South Korean
leaders. I have told them that we have no time to lose, considering
the ages (of the abduction victims and their relatives).

4) Japan to impose additional sanctions should North launch missile

SANKEI (Page 3) (Excerpts)
March 6, 2009

The government decided yesterday that if North Korea launched an
"artificial satellite" --although it is believed to actually be an
upgraded version of the long-range ballistic missile Taepodong-2 --
Japan would impose additional sanction measures, in addition to its
current ones. The government has in mind such new measures as

TOKYO 00000505 003 OF 011


freezing the assets of the General Association of Korean Residents
in Japan (Chosen Soren) and other North Korea-related organizations,
and to restrict imports from the North. The government judges it
necessary to prevent North Korea from developing nuclear development
and obtaining missile-related parts, as well as to choke off funds
to that end. Given this, it intends to urge the United Nations
Security Council (UNSC) to strengthen sanctions. The government will
also study the possibility of tightening penalties in the Foreign
Exchange and Foreign Trade Control Law to restrict the North's
illegal exports through third countries and remittances abroad.

In their meeting yesterday, Foreign Ministry's Asian and Oceanian
Affairs Bureau Director General Akitaka Saiki and Stephen Bosworth,
U.S. special representative for policy on North Korea, shared this
view: If Pyongyang goes ahead with the launch, even if it announces
it is a satellite, the launch would be a violation of a UNSC
resolution. Saiki explained what measures Japan is planning to take
against North Korea, according to informed sources.

Remembering a case in which the U.S. froze bank accounts related to
North Korea in Macao in reaction to its alleged involvement in money
laundering, a government source said, "A freeze of assets held by
Chosen Soren and other organizations in Japan is expected to have a
major effect,"

The government intends to ban exports to North Korea in principle
and strengthen a system to crack down on North Korea's exports
through Asian countries.

5) Premier plans to visit Europe during early May Golden Week
holidays: Coordination under way for Japan-EU summit in Czech

NIKKEI (Page 2) (Full)
March 6, 2009

The Nihon Keizai Shimbun learned on March 5 that Prime Minister Taro
Aso is considering visiting Europe during Golden Week holidays in
early May. Coordination is now under way for visiting
Czechoslovakia, the host country of the EU, to hold a Japan-EU
summit with Prime Minister Topolanek. He also wants to visit various
east European countries, where economic woes are continuing due to
the global recession.

Economic cooperation with Czechoslovakia, Hungary, Poland and
Slovakia (V4) is one of the pillars of the Arc of Freedom and
Prosperity, a diplomatic strategy the prime minister advocated when
he was foreign minister.

6) Official U.S. view: Senkakus fall under the U.S.-Japan Security
Treaty

YOMIURI (Page 2) (Excerpt)
Eve., March 5, 2009

By Satoshi Ogawa in Washington

The U.S. Department of State on March 4 issued an official view in
connection with the issue of the U.S. government's interpretation of
the U.S.-Japan Security Treaty to see whether the Senkaku Islands
would be applicable in such cases as the obligation to defend Japan
if it is attacked. The official view is that the Senkakus fall under
the treaty. In replying to a question from the Yomiuri Shimbun, a

TOKYO 00000505 004 OF 011


responsible official stated: "The Senkakus Islands since the
reversion of Okinawa have been under the administrative control of
Japan. The U.S.-Japan Security Treaty is applicable to territories
that fall under Japan's administrative control." The view will be
transmitted to the Japanese government as that of the Obama
administration.

7) Gov't confirms U.S. official view to cover Senkakus in security
pact: Kawamura

SANKEI (Page 5) (Full)
March 6, 2009

Chief Cabinet Secretary Takeo Kawamura revealed yesterday evening
that the Japanese government has confirmed as the U.S. government's
official view that the Senkaku islets (Diaoyutai in Chinese) in the
East China Sea will come under the Japan-U.S. Security Treaty if
attacked by a foreign country. "We have confirmed that the United
States' view is the same as before and remains unchanged," Kawamura
said. He was replying to a question from reporters at the prime
minister's office.

"The United States stated, 'The Senkaku Islands have been under the
administrative control of the Government of Japan since having been
returned as part of the reversion of Okinawa (in 1972). Article 5 of
the (1960) Japan-U.S. Security Treaty applies to the territories
under the administration of Japan.'" With this, Kawamura underscored
the U.S. government's conventional view.

Concerning the Japan-U.S. Security Treaty's application to the
Senkaku islets, Seiji Maehara, vice president of the leading
opposition Democratic Party of Japan (Minshuto),interpellated the
government in a Feb. 26 meeting of the House of Representatives
Budget Committee and requested the Senkakus fall within the ambit of
the security pact. Prime Minister Taro Aso indicated that the
security pact covers the islets.

8) Nonpartisan group agrees to aim at enactment of anti-piracy
legislation in current Diet session

TOKYO SHIMBUN (Page 3) (Full)
March 6, 2009

The Young Parliamentarians' League to Establish a Security System
for a New Century, a nonpartisan group composed of junior lawmakers,
agreed at its meeting yesterday to aim at the enactment of new
anti-piracy legislation in the current Diet session which the
government is scheduled to present.

The meeting was attended by Liberal Democratic Party lawmaker Gen
Nakatani and New Komeito member Shigeki Sato, who are co-chairs of
the ruling bloc's project team, plus Democratic Party of Japan Vice
President Seiji Maehara and the People's New Party Diet Affairs
Committee Chairman Masaaki Itokawa.

Maehara said in his speech: "There is no distinction between ruling
and opposition parties when it comes to protecting Japanese vessels,
crewmembers, and cargoes."

9) DPJ Maehara expresses cooperation for anti-piracy bill

MAINICHI (Page 5) (Full)

TOKYO 00000505 005 OF 011


March 6, 2009

Democratic Party of Japan (DPJ) Vice President Seiji Maehara
yesterday indicated a willingness to cooperate in enacting an
anti-piracy bill that the government will soon adopt in a cabinet
meeting. Delivering a speech at a general meeting of the
suprapartisan group "Association of junior lawmakers to establish a
security system for the new century" held at a Tokyo hotel, he
said:

"To ensure the safety of Japanese ships, crew, and freights, a
distinction should not be made between the ruling and opposition
camps. I think all the DPJ lawmakers here are supportive of the
legislation. We would like to commit ourselves to establishing a
better law."

10) Somalia anti-piracy operation; Agreement to be reached in
defense ministers' meeting to allow MSDF to work together with
Chinese military

TOKYO SHIMBUN (Page) (Abridged slightly)
March 6, 2009

The government decided yesterday to work together with China in
dealing with piracy in waters off Somalia by exchanging information
between the Maritime Self-Defense Force and the Chinese Navy.
Defense Minister Yasukazu Hamada is expected to visit China and
confirm the policy direction with his Chinese counterpart Liang
Guanglie on March 21, according to several government sources. It
will be the first joint operation between the SDF and the Chinese
military. Reciprocal visits by commanders of the two countries to
MSDF and Chinese vessels are also under consideration.

The two countries, already in accord in outline through
administrative-level coordination, intend to strengthen anti-piracy
activities, such as protecting vessels, by working together at sea.
At the same time, the step is intended to build mutual confidence
between Japan and China.

The Japanese government is scheduled to invoke a maritime policing
action provision next week to dispatch two MSDF destroyers on March

14. The two destroyers are expected to begin activities by early
April in waters off Somalia.

Under the maritime policing clause, only Japan-registered vessels
and vessels carrying Japanese cargoes are subject to projection, and
foreign-registered vessels not connected with Japan are outside the
scope. New anti-piracy legislation expected to be adopted by the
cabinet as early as March 13 is designed to allow the MSDF to
protect foreign vessels, as well. For this reason, once the law is
enacted, the MSDF might opt to escort China-connected vessels and
the Chinese Navy do likewise for Japan-connected vessels, based on
information exchanged between the two countries.

China dispatched three vessels -- two destroyers and a fueler --
late last year, and they have been conducting activities in waters
off Somalia since early January.

They have been escorting vessels of China, Taiwan, Hong Kong, and
international organizations, such as the World Food Program (WFP).

11) Gov't poll: 70 PERCENT appreciate MSDF mission in Indian Ocean

TOKYO 00000505 006 OF 011



SANKEI (Page 5) (Full)
March 6, 2009

The Cabinet Office yesterday released findings from its recent
public opinion survey regarding the Maritime Self-Defense Force's
refueling activities in the Indian Ocean. In the poll, respondents
were asked if they appreciated the MSDF's refueling activities. To
this question, "yes" added up to 70.4 PERCENT , broken down into
"highly appreciate" at 23 PERCENT and "somewhat appreciate" at 47.2
PERCENT . "No" accounted for 22.6 PERCENT .

The most common reason given for "yes" was "Japan will gain a high
reputation in the international community" at 65.2 PERCENT ,
followed by "it's helpful to Japan's peace and security" at 43.1
PERCENT and "it's helpful to Japan's stable securing of oil" at
32.8 PERCENT . In the breakdown of reasons for "no," the most common
reason was "against the Self-Defense Forces' overseas dispatch" at
43.3 PERCENT , followed by "it's not helpful to eradicate terrorism"
at 39.4 PERCENT and "the SDF will be involved in a battle" at 35.2
PERCENT .

The survey was conducted from Jan. 22 through Feb. 1 on a
face-to-face basis, with a total of 3,000 persons chosen from among
male and female adults across the nation. The response rate was 56.1
PERCENT .

12) Prime minister to visit Okinawa tomorrow; Futenma tour to be
skipped

ASAHI (Page 4) (Abridged slightly)
March 6, 2009

Prime Minister Taro Aso is going to make a one-day visit to Okinawa
tomorrow for the first time after assuming office. While in Okinawa,
he is scheduled to hold talks with Governor Hirokazu Nakaima and
Liberal Democratic Party support groups. The prime minister,
however, is likely to forgo his plans to tour the U.S. Marine Corps'
Futenma Air Station in Ginowan and the Henoko district in Nago, the
Futenma relocation site, which are now in the spotlight as part of
the realignment of U.S. forces in Japan.

An informed source indicated that while in Okinawa, the prime
minister will spend some time at a Naha hotel besides visiting such
places as the Peace Memorial Museum in Itoman, a fierce battleground
during the Battle of Okinawa. He reportedly will not deliver an
outdoor speech.

The Japanese and U.S. foreign ministers signed the Guam
International Agreement last month. In Okinawa, there is strong
criticism of the pact as having gone over the heads of local
communities. Although a source connected with the Liberal Democratic
Party cited time constraints as the reason for giving up the Futenma
tour, there seems to have been a judgment not to be seen as deeply
involved in the base issue.

When Foreign Minister Hirofumi Nakasone visited Okinawa last month,
Governor Nakaima asked for a thorough explanation on the agreement
to the Okinawa public, but the government inked the pact without
offering an explanation or setting a venue to hear local opinions.

Governor Nakaima has also called for moving the envisaged Futenma

TOKYO 00000505 007 OF 011


replacement facility to an offshore area. But the government has not
shown a positive stance, with Foreign Minister Nakasone saying,
"Without a rational reason, altering the plan is difficult." There
are no prospects for an agreement between the government and
Okinawa.

13) Nishimatsu Construction scandal: Former Ozawa private secretary
from the beginning demanded political donations; Ozawa to be
questioned as reference witness

YOMIURI (Top play) (Excerpt)
March 6, 2009

In the case of the violation of the Public Funds Control Law by
Rikuzankai, the political funds control organization of Democratic
Party of Japan (DPJ) President Ichiro Ozawa, it has been learned
from talking to sources connected with Nishimatsu Construction that
the series of political donations from dummy political organizations
that Nishimatsu Construction, a second-tier general contractor from
Tokyo, had set up, the impetus from the start was a demand from the
Ozawa secretary who preceded the suspect Okubo as accountant at
Rikuzankai. The special investigation unit of the Tokyo Prosecutors
Office knows this fact. Prosecutors in charge of the case plan to
question as a reference witness, DPJ President Ozawa, who heads the
Rikuzankai, on the facts.

14) DPJ poll: 70 PERCENT say Ozawa issue to affect general
election

YOMIURI (Page 1) (Abridged)
March 6, 2009

In the wake of a Tokyo District Public Prosecutors Office
taskforce's recent raid of Democratic Party of Japan (Minshuto)
President Ozawa's fund-managing body over its alleged receiving of
illicit political donations from a second-tier construction company,
the Yomiuri Shimbun conducted a questionnaire survey of the DPJ's
local chapter executives.

In the survey, the DPJ's local leaders were asked if they thought
the incident would affect the next election for the House of
Representatives. In response to this question, "yes" came from 32 of
the DPJ's prefectural federations or nearly 70 PERCENT , broken down
into "somewhat" (29 prefectural federations, including Tokyo and
Hokkaido) and "very much" (3 prefectural federations). "Very much"
came from the DPJ's Gifu, Tottori, and Kochi prefectural
federations. The DPJ's Gifu prefectural federation noted: "The
public eye would be severe. We will have to reconstruct our strategy
for the lower house election."

In the breakdown of negative answers, "not at all" came from none of
the DPJ's prefectural federations, accounting for 0 PERCENT . "Not
very much" came from only 14 of the party's prefectural federations.
These figures clearly show that the DPJ's local organizations are
increasingly becoming concerned about their election campaign. When
asked if Ozawa should resign as DPJ head, "no" came from 28
prefectural federations, including Tokyo and Hokkaido. Meanwhile, 17
prefectural federations answered that the party should make a
judgment after seeing the progress of investigations and the trend
of public opinion. Ozawa has ruled out the possibility of his
resignation, maintaining that there is nothing illegal about the
political donations. However, the survey results imply that Ozawa

TOKYO 00000505 008 OF 011


may be faced with a rise of calls for his resignation, depending on
how the incident will turn out from now on.

The survey was conducted March 4-5 of the DPJ's prefectural
federation secretaries general and other local executives.

15) Confusion in DPJ over stance of full-scale confrontation with
prosecutors; Ozawa remains silent

NIKKEI (Page 2) (Full)
March 6, 2009

Some in the main opposition Democratic Party of Japan (DPJ) are
hesitating about locking horns with the Tokyo Public Prosecutors
Office over the arrest of party head Ichiro Ozawa's first
public-funded secretary by opening criticizing the investigation.
They are concerned that if new facts come up after the party
protects Ozawa, the party's image will be damaged even further.

When asked by reporters about senior DPJ members' criticism of
prosecutors, Seiji Maehara, a vice president, said in Tokyo
yesterday: "We should refrain from speaking that way. In general
terms, remarks that give the public doubts in investigations by
prosecutors should not be made."

Regarding Secretary General Yukio Hatoyama's statement that the DPJ
will harshly pursue the prosecutors for an unjust investigation,
junior and mid-level lawmakers took the view that there was no need
for the party to go that far in protecting (Ozawa).

Lower House member Akihisa Nagashima said in a fund-raising party
held yesterday in Tokyo: "Should there be facts contradicting
President Ozawa's statement that he has nothing to feel guilty
about, we will have to make a different judgment." He indicated that
depending on how the case will turn out, there may be no other way
except for Ozawa to step down from the presidency.

Meanwhile, Ozawa remains silent since he held a press conference on
March 4. Yesterday he went his office and returned home. Although he
met Upper House Steering Committee Chairman Takeo Nishioka, he did
not show up the Diet and DPJ headquarters.

16) Mori to return 3 million yen given by Nishimatsu-related groups

SANKEI (Page 3) (Full)
March 6, 2009

Former Prime Minister Yoshiro Mori of the Liberal Democratic Party
revealed a plan yesterday through his lawyer to return 3 million yen
in donations made by political groups related to Nishimatsu
Construction Co.

Meanwhile, Chief Cabinet Secretary Takeo Kawamura said in a press
briefing yesterday that Shunichi Yamaguchi, a special advisor to the
prime minister, and Vice Minister of Land, Infrastructure, Transport
and Tourism Tokio Kano will return money they had received from
Nishimatsu-related political groups. Yamaguchi has decided to return
shady money amounting to 2 million yen, and Kano will give back the
2 million yen paid for fund-raising party tickets.

Kawamura explained: "They decided to return money from a moral
viewpoint. They think it is undesirable to leave doubts among the

TOKYO 00000505 009 OF 011


people."

17) LDP's Nikai faction members found to have received donations
from Nishimatsu

NIKKEI (Page 2) (Full)
March 6, 2009

Chief Cabinet Secretary Takeo Kawamura revealed yesterday in a press
conference that cabinet ministers who had received donations from
the political organizations headed by former Nishimatsu Construction
Co. officials were Tokio Kano, senior vice minister of land
infrastructure and transport, and Shinichi Kano, special advisor to
Prime Minister Taro Aso. Economy, Trade and Industry Minister
Toshihiro Nikai admitted the Nishimatsu-linked political bodies had
bought fund-raising party tickets from a faction he heads in the
Liberal Democratic Party (LDP). The three cabinet members have
expressed their intentions to return the donations.

After confirming the three cabinet members' intents that they will
return the money to the political groups, Kawamura stated in the
press meeting yesterday: "There should be no suspicion left in
people's minds." Prime Minister Aso told reporters last night: "I
think each politician and political organization should make a
decision on its own."

Kano held a press briefing in the Ministry of Land, Infrastructure
and Transport, where he revealed that he had received 2 million yen
as payments for party tickets from the Nishimatsu-linked political
groups. He stated: "I don't want to be suspected of having committed
improper actions." Yamaguchi's political fund-management
organization got 2 million in donations in 2004. The Nikai faction
received a total 8.38 million yen as payments for party tickets in
three years until 2006.

However the Nishimatsu-linked political groups have been disbanded.
A source familiar with the ministry pointed out:

"Since the political groups were dissolved, they can't return the
money. It is strange that the money will be returned to such
individuals as former officials of the Nishimatsu Construction Co."

The Nikai faction says that lawyers will be consulted on the
matter.

Former Prime Minister Moro considering returning donations

Former Prime Minister Yoshiro Mori, a member of the ruling Liberal
Democratic Party (LDP),began yesterday considering returning
donations and payments for fund-raising party tickets by political
groups, which were headed by former Nishimatsu Construction Co.
officials. This was revealed through a lawyer, proxy of Mori. The
lawyer explained the reason for returning the money that the money
would be returned from an ethical point of view, but the donations
were not illegal.

18) Government official: Nishimatsu donation scandal will never
affect LDP

NIKKEI (Page 2) (Full)
March 6, 2009


TOKYO 00000505 010 OF 011


A high-level government official yesterday revealed the outlook that
the donation scandal involving Nishimatsu Construction Co. would
have no impact on the ruling Liberal Democratic Party (LDP). The
official stated yesterday:

"There will no negative impact on the LDP. If there were something
like receipts, things would be different. There is a big difference
in the amounts of donations (received by LDP members compared to
those received by Democratic Party of Japan President Ichiro Ozawa).
So prosecutors will not file charges (against LDP lawmakers)."

It is extremely unusual for a government official to refer to how a
political scandal will develop. The remark will likely create doubts
about the neutrality and fairness of investigations.

The official commented on the arrest of Ozawa's first state-funded
secretary: "Prosecutors must have obtained convincing evidence. If
they don't have it, they would not have gone that far."

19) Calls for Diet dissolution in May mounting in ruling camp:
Bullish views hear one after another due to opposition party's
troubles

ASAHI (Page 4) (Full)
March 6, 2009

Calls for dissolving the Lower House in May are gaining ground in
the ruling camps. The lawmakers see a golden opportunity, once the
fiscal 2009 budget is passed, because the Democratic Party of Japan
(DPJ) has been dealt a heavy blow by the arrest of President Ozawa's
state-funded secretary. Prime Minister Aso will likely look for the
right timing to dissolve the Diet, while watching developments in
the public prosecutors' investigation and the DPJ's response.

Former Liberal Democratic Party (LDP) Secretary General Taku
Yamasaki at a plenary meeting of his faction on March 5 insisted:
"The greatest item on the political agenda is an economic stimulus
package. Shouldn't we go out and appeal to the country by dissolving
the Lower House for a snap election in May?" Among leadership
members, Secretary General Hiroyuki Hosoda at a Lower House members'
party held the same day said, "The election will be held soon."
General Council Chairman Takashi Sasagawa noted, "There will be an
election when cherry blossoms are in bloom."

A New Komeito official told reporters, "There could be Diet
dissolution once items for the fiscal 2009 supplementary budget are
submitted in early May."

The distribution of cash handouts will have been carried out widely
by May. The scenario is to compile a large-size supplementary budget
that includes an additional stimulus package between April and May,
after having the fiscal 2009 budget-related bills enacted before the
end of April, and then dissolve the Lower House, by presenting that
budget draft before the people.

If dissolution is put off until the enactment of the large-scale
extra budget due to opposition by the opposition camp, there could
be a double election together with the Tokyo metropolitan assembly
election in July. There is concern that if dissolution takes place
at a time close to the end of the current term for Lower House
members, a good opportunity might be missed, because the DPJ will
have regained its position by that time.

TOKYO 00000505 011 OF 011



However, a view that the Lower House should be dissolved after
passage of a large-size supplementary budget is also deep-rooted in
the LDP. Former Chief Cabinet Secretary Machimura on the 5th told
reporters, "It will give a negative impression if we dissolve the
Diet, taking advantage of the DPJ's troubles, since we have played
up our determination to implement economic stimulus measures." He
took a negative stance toward early Diet dissolution.

ZUMWALT