JAPANESE MORNING PRESS HIGHLIGHTS 03/18/09

UNCLAS SECTION 01 OF 09 TOKYO 000594

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TAGS: OIIP KMDR KPAO PGOV PINR ECON ELAB JA

SUBJECT: JAPANESE MORNING PRESS HIGHLIGHTS 03/18/09

Index:

"Ozawa shock":
1) Yomiuri poll: DPJ head Ozawa drops to 5th place on question of
being "appropriate to be prime minister," while rival Okada jumps
from 10th to 3rd place (Yomiuri)
2) Ozawa likely to decide on March 24 whether he will stay on or
resign as DPJ president (Tokyo Shimbun)
3) Ozawa announces that party will now promote complete ban on
political donations from corporations and organizations (Asahi)
4) Akita governor aware that public works projects being arranged by
Ozawa side in return for political donations (Sankei)

Political scene:
5) New Komeito, worried about low support rates, now wants to put
off next general election as long as possible (Asahi)
6) Asahi poll finds 60 PERCENT of public "greatly dissatisfied"
with politics, 90 PERCENT convinced "politics does not reflect the
popular will" (Asahi)

Diplomatic scene:
7) Prime Minister Aso's China trip put off over Beijing's sharp
reaction to statements about Senkakus covered by the U.S.-Japan
security treaty (Sankei)
8) Defense officials of Japan and ASEAN agree to pursue security
cooperation (Yomiuri)

9) Former Prime Minister Mori, South Korean premier agree to block
launching of North Korea's "satellite" (Yomiuri)
10) Government perplexed by possibility that Pyongyang may agree to
restart abduction investigation after it launches provocative
missile (Sankei)

Economy in trouble:
11) Bank of Japan ready to pump 1 trillion yen into ailing major and
regional banks (Nikkei)
12) LDP proposes 14-trillion yen scale additional stimulus package,
centered on frontloading public works (Tokyo Shimbun)

Articles:

1) Poll: Ozawa falls to 5th in popularity ranking for premiership

YOMIURI (Page 2) (Full)
March 18, 2009

In a recent Yomiuri Shimbun poll conducted across the nation on
March 14-15, respondents were asked who they thought was most
appropriate among Dietmembers to become prime minister. In this
popularity ranking for premiership, former Prime Minister Koizumi
topped all other lawmakers at 12.9 PERCENT , following the last poll
taken Jan. 31 and Feb. 1. Democratic Party of Japan (Minshuto)
President Ozawa, who was second in the last poll, retreated markedly
to fifth place at 6.0 PERCENT . Health, Labor and Welfare Minister
Masuzoe came around to take the place of Ozawa and ranked second at
10.6 PERCENT . Prime Minister Aso, who ranked second in the last
poll, fell down to eighth place at 3.5 PERCENT .

The proportion of those who chose Ozawa shrank from 13.7 PERCENT in
the last poll. His downfall in the popularity ranking possibly
reflects the recent arrest of his secretary for an alleged violation
of the Political Funds Control Law. DPU Vice President Katsuya

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Okada, who is said to be one of the "post-Ozawa" candidates in the
DPJ, ranked third at 6.8 PERCENT , rising from 10th place at 1.7
PERCENT in the last poll.

Among DPJ supporters, Ozawa was slightly above Okada, with Ozawa
reaching 22 PERCENT and Okada at 20 PERCENT . In the last poll,
however, Ozawa overwhelmed Okada, with Ozawa getting 40 PERCENT and
Okada at 4 PERCENT . It is clear that Ozawa has fallen in
popularity.

In the Liberal Democratic Party, Koizumi (14.4 PERCENT in the last
poll) and Masuzoe (7.5 PERCENT in the last poll) ranked high,
followed by LDP Deputy Secretary General Nobuteru Ishihara at 6.2
PERCENT (2.7 PERCENT in the last poll). Finance Minister Kaoru
Yosano, serving concurrently in the posts of financial services
minister and economic and fiscal policy minister, was at 4.3 PERCENT
(1.4 PERCENT in the last poll). Aso (4.7 PERCENT in the last
poll) was below these four persons. Among LDP supporter, Koizumi was
at 19 PERCENT , Masuzoe at 14 PERCENT , Ishihara at 12 PERCENT , and
Aso at 11 PERCENT .

Among those with no particular party affiliation, Koizumi was at 12
PERCENT , followed by Masuzoe at 11 PERCENT and Okada at 6 PERCENT
. Ozawa was at 6 PERCENT , and Aso at 1 PERCENT .

For the poll, a total of 3,000 persons were chosen from among the
nation's voting population. Answers were obtained from 1,755 persons
(58.5 PERCENT ).

Popularity ranking for prime minister
1 (1) Junichiro Koizumi 12.9 PERCENT
2 (3) Yoichi Masuzoe 10.6 PERCENT
3 (10) Katsuya Okada 6.8 PERCENT
4 (7) Nobuteru Ishihara 6.2 PERCENT
5 (2) Ichiro Ozawa 6.0 PERCENT
6 (6) Naoto Kan 4.3 PERCENT
6 (12) Kaoru Yosano 4.3 PERCENT
8 (4) Taro Aso 3.5 PERCENT
9 (5) Yoshimi Watanabe 2.5 PERCENT
10 (9) Seiji Maehara 2.2 PERCENT
(Note) Top 10 ranking tabulated. Figures in parentheses denote
previous ranks.

2) Ozawa likely to decide on March 24 whether he will stay on as
party head or resign

TOKYO (Page 2) (Excerpts)
March 18, 2009

Speaking to the press corps yesterday afternoon, Democratic Party of
Japan (DPJ) President Ichiro Ozawa commented on his own course of
action regarding the case against his public secretary for allegedly
receiving huge political donations from Nishimatsu Construction Co.
"In the not too distant future, the prosecutors will make their
judgment, and I will make my decision at the time when they reach
their conclusion," he said.

Tokyo prosecutors will decide whether to indict the secretary on or
after March 24, the date being the legal limit for confinement after
an arrest is made. The statement indicated his view that if the
secretary is indicted, he would look hard to see whether there was a
possibility of the prosecutors continuing to investigate the Ozawa

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side and then make his decision as to whether to stay on or resign.
At the same time, he also said, "I would like to give though to my
decision while listening to views and judgments within the party."

Regarding the impact on his decision of the Chiba gubernatorial race
on March 29 and the Nagoya mayoralty race in April, Ozawa stated:
"Although the regional elections are extremely important, they
should not be equated to what I do next."

3) DPJ President Ozawa calls for total ban on donations by companies
and organizations

ASAHI (Page 1) (Full)
March 18, 2009

Commenting on a revision to rules on political fund donations in the
wake of an illegal donation scandal involving Nishimatsu
Construction Co., Democratic Party of Japan (DPJ) President Ozawa
during a regular news conference on March 17 said, "Corporate
donations and donations by organizations at issue should be banned
totally." He indicated his intention to consider amending the
Political Funds Control Law to totally ban donations by companies
and organizations regardless of whether donations are intended to
receive orders for public works.

He pointed out that it is impossible to ban donations by companies
that undertake public works, because almost all companies have
something to do with the state, prefectures and municipalities in
some way or other. He then said that if a lesson is to be learned
from the incident this time, donations by companies and
organizations should be banned.

Regarding whether to step down or not, Ozawa indicated his intention
to make a decision, after examining the judgment reached by public
prosecutors, saying, "Public prosecutors will make their judgment in
the not-so-distant future. I will make a decision on my future when
their conclusion is reached." He made that statement having in mind
March 24, when the custody period for his arrested stated-funded
secretary expires.

4) Akita governor and aides suspected of having known Nishimatsu's
donations to Ozawa office; Company wins contracts for several
prefecture-ordered projects

SANKEI (Top Play) (Excerpts)
March 18, 2009

Akita Governor Sukeshiro Terada and his aides are now suspected of
having known that general contractors, including Nishimatsu
Construction Co., were making illegal donations to Democratic Party
of Japan (DPJ) Ichiro Ozawa's fund-management organization,
Rikuzan-kai, under the name of subcontractors in the Tohoku
District, according investigators yesterday. Nishimatsu has received
orders for several projects ordered by the Akita prefectural
government. It has been reported that Takanori Okubo, who was
responsible for accounting for Rikuzan-kai and has been arrested on
charges of violating the Political Funds Control Law, was involved
in prearranging winners of contracts for these projects. Focusing on
this fact, the special investigation squad of the Tokyo District
Public Prosecutors Office is investigating to find whether the
governor and his aides had learned that there were prearrangement
consultations behind the political donations through dummy bodies.

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After serving as president of Sowa Construction Co., in Yokote City,
where the Omatsugawa Dam, which Nishimatsu constructed, is located,
Terada became Yokote mayor in 1991. He ran in the Akita
gubernatorial election in 1997 at the request of Ozawa. Backed by
Shinshinto (New Frontier Party),he won the election and has served
his third term.

His second son is a DPJ House of Representatives member. His eldest
son also ran in the Lower House election in 1996 on the ticket of
Shinshinto but was defeated.

According to government gazettes, Sowa donated 2 million yen to
Rikuzan-kai between 1995 and 1999 and 7.2 million yen to the Jiyuto
(Liberal Party) chapter in Tohoku No. 3 proportional representation
constituency, which was represented by the person who was in charge
of accounting for Rikuzan-kai before Okubo, between 2000 and 2002.
The Iwate branch of Sowa in Oshu, Ozawa's electoral district, also
donated 500,000 yen to Rikuzan-kai in 1997 and then 1.2 million yen
to the Jiyuto chapter in Iwate No. 4 Constituency, which was
represented by Ozawa, in 2002 and 2003. In addition, the company
purchased tickets worth 240,000 yen for a party held in 2003 by the
Ozawa Ichiro's study group on politics and economics, represented by
Okubo. The company provided a total of 11.14 million yen to the
Ozawa side.

According to prefectural gazettes, Association to Create a New
Akita, the governor's political group, received 680,000 yen in
donations from the then Akita branch office head of Nishimatsu
between 2001 and 2006.

5) Komeito wants Diet dissolution put off

ASAHI (Page 4) (Abridged)
March 18, 2009

The New Komeito used to call for a "springtime dissolution" of the
House of Representatives, but the ruling Liberal Democratic Party's
coalition partner seems to have changed its mind and is seeking to
delay the Diet dissolution. That is because the cabinet support rate
still remains low in spite of a political money scandal involving
the leading opposition Democratic Party of Japan (Minshuto) and the
ruling coalition would inevitably suffer a crushing defeat if the
Diet is dissolved this spring. The New Komeito is absolutely opposed
to a general election that is coincident with this July's Tokyo
metropolitan assembly election. The party therefore does not want
the House of Representatives to be dissolved for a general election
until sometime near its current membership's expiry in September.

Last fall, the idea of "a general election in November" was forgone.
Then, the New Komeito, locking on a "springtime dissolution," has
patiently shored up the Aso cabinet. All the more for this reason,
and as DPJ President Ozawa's secretary was arrested for an alleged
violation of the Political Funds Control Law, the New Komeito deemed
it likely for the House of Representatives to be dissolved in late
April and a general election to be set for May 24, according to one
of the party's lawmakers who have experienced a cabinet ministerial
post. The party now wants the Diet to be dissolved after the Diet
approves the fiscal 2009 budget and after the government comes up
with an additional economic stimulus package in April.

In the meantime, however, Deputy Chief Cabinet Secretary Iwao

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Uruma's gaffe came up. In addition, there were news reports implying
that a taskforce of the Tokyo District Public Prosecutors Office
could next target LDP lawmakers in its investigations. In such
circumstances, the ruling coalition lost a momentum to take the
offensive against the DPJ. The approval ratings for the Aso cabinet
remained low in various other media polls as well. As far as cabinet
support is concerned, most of the New Komeito's lawmakers are
optimistic.

6) Poll: 60 PERCENT "greatly dissatisfied" with politics

ASAHI (Top play) (Abridged)
March 18, 2009

An estimated 60 PERCENT of the public are extremely unhappy with
the current state of politics. The Asahi Shimbun conducted a
nationwide public opinion survey on a mailing basis to probe the
public's political and social attitudes, and the survey found that
the public is generally growing dissatisfied with politics. In the
survey, about 90 PERCENT gave negative answers when they were asked
if they thought politics showed a future image and reflects public
opinion.

The survey was conducted from February through mid-March, with a
total of 3,000 persons chosen from among the nation's voting
population. The response rate was 79 PERCENT .

Among four choices given for the degree of satisfaction with
politics, even those "somewhat satisfied" accounted for only 6
PERCENT , and those "greatly satisfied" accounted for 1 PERCENT .

"Greatly dissatisfied" accounted for 60 PERCENT , and "somewhat
dissatisfied" was at 31 PERCENT . The results of previous polls and
the one taken this time cannot be simply compared due to different
polling methodologies. However, a similar question was asked in a
face-to-face survey taken in December 2006 when the Abe cabinet was
in office. In that survey, those "greatly dissatisfied" with
politics accounted for 27 PERCENT , with those "somewhat
dissatisfied" were at 45 PERCENT .

Meanwhile, the public is paying keen attention to politics. Those
"very interested" in politics accounted for 31 PERCENT and those
"somewhat interested" were at 48 PERCENT , totaling about 80 PERCENT
. The survey shows that those highly interested in politics are also
strongly dissatisfied with politics.

The public's dissatisfied feelings can be seen from their answers to
questions asking about the future image of this country and the
reflection of public opinion. Respondents were asked if they thought
politics now shows a future image or course for society. In response
to this question, negative answers totaled 91 PERCENT . When asked
if public opinion is reflected in politics, negative answers added
up to 87 PERCENT , broken down into "not at all" at 35 PERCENT and
"not very much" at 52 PERCENT .

Respondents were also asked if they trust politicians. To this
question, negative answers totaled about 80 PERCENT , broken down
into "not at all" at 21 PERCENT and "not very much" at 57 PERCENT .
Those who have no expectations for the currently existing political
parties also accounted for 61 PERCENT .

7) Aso's visit to China postponed due to China's strong reaction to

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his reference to application of U.S.-Japan Security Treaty to
Senkakus

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

Prime Minister Taro Aso's plan to visit China in late March has been
postponed, it was learned yesterday. China informally informed Japan
of its difficulty in arranging the schedule, but the real reason
seems to be Beijing's strong reaction to the latest flap over
sovereignty over the Senkaku Islands in the East China Sea. Finding
it increasingly difficult to run the government due to the impact of
the global economic crisis, China's leaders apparently are taking a
hard-line stance on the sovereignty issue and marine interests.

Chinese Premier Wen Jiabao officially invited Prime Minister Aso to
visit China during their December 13 summit. Coordination was
underway for Aso's visit on March 27-29, following failed efforts to
coordinate one for March 20-21.

Chinese Foreign Ministry spokesman Qin Gang made this comment on
March 17 about Prime Minister Aso's China visit: "The two countries
are discussing a specific timeframe through diplomatic channels, and
the question of postponing or calling it off does not exist." But
several Government sources admitted that China had asked Japan
through diplomatic channels to postpone the prime minister's visit.
At the same time, China has expressed its unhappiness about the Aso
administration's latest stance on the Senkaku Islands, according to
the sources.

In connection with the Senkakus, Prime Minister Aso, during the
Japan-China summit meeting that took place ahead of the
Japan-China-ROK summit in December, lodged a protest with China over
a Chinese marine research vessel's incursion into Japanese waters.
Although Premier Wen rebutted Aso, the matter did not escalate into
a serious problem as Wen did not dwell on it any further.

Prime Minister Aso made this statement about the Senkakus in the
Lower House Budget Committee on Feb. 26: "They are part of Japan's
territory, so they are subject to the (U.S.-Japan) Security Treaty."
This prompted China to immediately take a hard stance. Chinese
Foreign Ministry spokesman Ma Zhaoxu in a press conference on the
same day rebutted Aso: "We express our strong dissatisfaction.
Diaoyu is part of China's territory, and China has indisputable
sovereignty over the islands."

In his speech to a military panel of the National People's Congress
on March 11, Chinese President Hu Jintao urged the Chinese military
to defend the country's sovereignty, security and territory. China's
hard-line stance to secure marine interests also has now become
clear. On March 8, a Chinese naval vessel interfered with the
navigation of a U.S. Navy research vessel in China's exclusive
economic zone (EEZ) in the South China Sea. A Hong Kong civic group
announced on March 13 a plan to set out in May and land on the
Senkaku Islands.

The governments of Japan and China intend to coordinate the
timetable for Aso's China visit by May. But if the Senkaku issue
rekindles, the plan is certain to face difficulties.

8) Japan, ASEAN agree on cooperation on security front


TOKYO 00000594 007 OF 009


YOMIURI (Page 4) (Full)
March 18, 2009

The Defense Ministry held a security meeting by national defense
vice minister-level officials from Japan and Association of
Southeast Asian Nations (ASEAN) countries for the first time at a
Tokyo hotel yesterday. The participants agreed to promote
cooperation in dealing with their common security challenges, such
as damages from piracy and natural disasters. Vice Defense Minister
Kohei Masuda chaired the meeting, which was joined by
representatives from the nine ASEAN countries, except for Burma.
Views were exchanged on ways for cooperation in these three areas:
(1) natural disasters, including earthquakes; (2) maritime safety,
such as anti-piracy; and (3) international peacekeeping operations.

9) Mori, South Korean premier agree on need to prevent North's
"satellite" launch

YOMIURI (Page 4) (Full)
March 18, 2009

Hajime Furukawa, Istanbul

Former Prime Minister Yoshiro Mori of the Liberal Democratic Party
and South Korean Prime Minister Han Sung-chu agreed on the view in
their meeting on the afternoon of March 17, local time, that Japan,
the U.S. and South Korea should take joint steps to prevent North
Korea from launching a missile, which Pyongyang calls a "satellite."


Mori met with Turkish President Abdullah Gul on the night of the
16th, local time. In reference to the additional economic package
that Prime Minister Taro Aso had instructed the ruling coalition to
work out, he said: "The prime minister gives priority to boosting
the economy over holding an election or dissolving the House of
Representatives."

10) North may announce reinvestigation into abductees around launch
of "satellite" in effort to avoid sanctions; Government having hard
time

SANKEI (Page 5) (Abridged slightly)
March 18, 2009

The government is having a hard time over how to deal with the
expected launch of a long-range ballistic missile, which North Korea
claims to be a satellite. The reason is because there has been
information that either before or after the missile launch,
Pyongyang might inform Tokyo that it is ready to conduct a
reinvestigation into the fate of Japanese nationals abducted to the
North. Once a missile is launched, the government intends to step up
its sanctions against the North. But if Japan takes a hard-line
stance, the North might harden its stance regarding the abduction
issue.

In bilateral working-level meeting last August, the North promised
to set up an abduction issue reinvestigation committee, but the
North has yet to deliver on its promise. Once the envisaged
committee is set in motion, Japan would have to lift the ban on
personnel exchanges and charter flights from North Korea.

If the North launches a missile, the government intends to step up

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sanctions against the North by for instance totally prohibiting
exports to that country. But in the event a reinvestigation is
conducted, Japan would have to strengthen and ease its sanctions at
the same time -- contradictory steps. "The North's intention to
apply pressure on Japan is clearly looming over the rumor," a
government source said.

At the same time, the North seemingly intends to drive a wedge
between Japan, the United States, and South Korea, which are united
over North Korea policy. Another government source took this view:
"China and Russia are already reluctant to adopt a sanctions
resolution against the North in a UN Security Council meeting to be
held after the missile launch. The North intends to prompt Japan to
soften its stance in the meeting with the aim of lowering the level
of condemnation to a chairman's statement."

Regarding the relationship between the missile launch and the
abduction issue, Prime Minister Taro Aso simply said on March 16:
"There is no need to show our hand." At the same time, there is this
view in the Foreign Ministry: "The missile and abduction issues are
fundamentally two separate matters. We must deal with them
separately." In any case, the government is being vexed by the
expected missile launch.

11) BOJ to provide up to 1 trillion yen in subordinated loans to
help leading and regional banks reinforce their capital: Prevention
of credit crunch eyed

NIKKEI (Page 1) (Excerpts)
March 18, 2009

The Bank of Japan (BOJ) during a regular meeting of the Policy Board
on March 17 decided to consider extending subordinated loans to
banks with the aim of helping them reinforce their capital. A total
of 1 trillion yen will be loaned to leading banks that are engaging
in international operations. BOJ Governor Shirakawa told a news
conference on the evening of the same day that there is concern that
if stock plunges continue, banks would constrain lending in
compliance with their capital ratios. The central bank will create a
framework that will compliment the injection of public money by the
government with aim of stabilizing the financial system and shoring
up the economy, by helping banks reinforce their capital ratios.

With the recent plunges in stock prices in mind, Governor Shirakawa
expressed a sense of alarm, "(The financial crisis) is beginning to
have a negative impact on the overall management of financial
institutions, as can be seen in losses in the values of securities
and increased credit costs. The BOJ is alarmed that if stock plunges
continue toward May, when many companies release interim settlement
of accounts, due to worsening corporate performances, banks would
strengthen their credit crunch policy out of concern about a decline
in their capital ratios.

The BOJ is considering extending subordinated loans to commercial
banks. Subordinated loans are given lower repayment priority than
credited loans in exchange for higher borrowing rates. Banks can
include subordinated loans as part of their capital. This way, they
can make up for a decline in their capital caused by plunges in
stocks they hold. According to the gist of the loan proposal
released by the BOJ, banks eligible for such loans are those that
are required to maintain a capital ratio needed for international
operations -- over 8 PERCENT . Fourteen leading and regional banks

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will be eligible for the scheme. A total amount of such loans is 1
trillion yen. The upper limit of loans that can be extended to one
bank will be set. A lending interest rate and the period of lending
will be decided later. Though Shirakawa did not specify when to
implement the plan, he said, "I would like to look into the plan as
soon as possible."

12) LDP proposes 14 trillion yen scale additional economic stimulus
package

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

The Liberal Democratic Party's International Competitiveness
Research Council, chaired by former Finance Minister Koji Omi,
finalized on March 17 a set of interim proposals that would total
roughly 14.7 trillion yen in public spending. The package focuses on
the improvement of social infrastructure in local areas and
information technology infrastructure. The report was presented at a
meeting of the LDP Japanese Economy Revitalization Strategic Council
last evening, bringing efforts to compile additional economic
stimulus measures into full gear.

This is the first time for the government and the ruling parties to
indicate the specific scale of (real water) spending for the
additional stimulus package that would entail fiscal action. The
proposals lists projects that would be carried out in a single year
and the amount of public spending involved.

Specifically, the report calls for the use of approximately 11.6
trillion yen to improve social infrastructure in local areas,
speeding up the timetable. In addition to projects to improve road
systems, such as the building of highways and measures to deal with
busy railroad crossings that are rarely open, the package also
proposes: (1) increasing the number of runways at local airports;
(2) improving ports and harbor facilities to enable port calls by
large vessels; and (3) building a linear motor system between Haneda
and Narita, and Tokyo and Osaka.

The package also includes a proposal for consolidating information
technology infrastructure (about 900 million yen),such as antenna
installations for public buildings in the run-up to the overall
shift of the TV broadcasting system to the terrestrial broadcasting
system, and new R&D (approximately 1.7 trillion yen).

Construction bonds have been proposed as a funding source. The LDP
will now expedite the compilation of the additional package, using
the proposals offered by the LDP panel as reference.

ZUMWALT