JAPANESE MORNING PRESS HIGHLIGHTS 03/18/09

UNCLAS SECTION 01 OF 09 TOKYO 000594 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 03/18/09 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 TOKYO 00000594 002 OF 009 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 TOKYO 00000594 003 OF 009 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. TOKYO 00000594 004 OF 009 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 TOKYO 00000594 005 OF 009 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 TOKYO 00000594 006 OF 009 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 TOKYO 00000594 008 OF 009 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 TOKYO 00000594 009 OF 009 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