JAPANESE MORNING PRESS HIGHLIGHTS 03/27/09

UNCLAS SECTION 01 OF 09 TOKYO 000691 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 03/27/09 Index: Opinion polls: 1) Yomiuri: 68 PERCENT "unconvinced" by Ozawa's decision to stay as DPJ head despite aide's indictment; Aso seen now as more appropriate to be prime minister (Yomiuri) 2) Kyodo poll: 66 PERCENT want Ozawa to quit post as DPJ head; Prime Minister Aso's stock rises in the public's eye (Tokyo Shimbun) Scandal after scandal: 3) Cries for Ozawa to resign are rising in the Democratic Party of Japan after his aide is indicted for accepting illegal donations (Yomiuri) 4) METI Minister Nikai received falsified donations from Nishimatsu Construction disguised as personal contributions (Asahi) 5) Nikai's office paid for by Nishimatsu: Whenever rent was late, Nishimatsu contacted for payment (Mainichi) 6) Senior Vice Finance Minister Koichi Hirata quits after shady stock sales revealed (Mainichi) Diet agenda: 7) Tug of war again in the LDP over whether to have an early Diet dissolution (Mainichi) 8) Fiscal 2009 budget to pass the Diet today, making way for quick action to ready the supplementary budget bill (Nikkei) 9) Extra budget to contain 2 trillion yen for solar energy (Sankei) 10) Government plans to provide 1.6 trillion yen in trade insurance to help developing countries (Tokyo Shimbun) North Korea problem: 11) Defense Minister Hamada says that even if North Korea-launched missile is intercepted, Japan could suffer some damage (Asahi) 12) Deputy Chief Cabinet Secretary Konoike on the hot seat for disparaging remark about Japan's missile defense capability to intercept DPRK missiles (Mainichi) Articles: 1) Poll: 68 PERCENT disagree with Ozawa's decision to stay on YOMIURI (Top play) (Abridged) March 27, 2009 According to a spot nationwide opinion survey conducted by the Yomiuri Shimbun over the telephone from the afternoon of March 25 through yesterday evening, a total of 68 PERCENT of the public said they did not agree with Democratic Party of Japan (Minshuto) President Ozawa's decision to stay on as his party's head even after his state-funded secretary had been indicted over political donations from a construction company. A total of 22 PERCENT of the respondents said they agreed with his decision. Respondents were also asked whether they thought Prime Minister Aso or Ozawa was more appropriate to be premier. In response, 32 PERCENT chose Aso, with 23 PERCENT preferring Ozawa. Aso also outstripped Ozawa in the last survey taken March 6-8. In the public's preference of political parties for proportional representation in the next election for the House of Representatives as well, the DPJ tallied 31 PERCENT , down 3 points from the last survey, while the Liberal Democratic Party caught up with the DPJ to also log 31 PERCENT , up 7 points. TOKYO 00000691 002 OF 009 Ozawa has recently clarified his intention to stay on as DPJ president. However, the poll shows the public casting a severe eye on his decision. This will likely spur moves in the DPJ to "dump Ozawa." Ozawa's publicly-paid secretary has now been indicted for allegedly violating the Political Funds Control Law over a construction contractor's payoffs to Ozawa's fund-managing body. In the survey, respondents were asked if they thought Ozawa has fulfilled his accountability on this incident. To this question, a total of 84 PERCENT answered "no," with only 26 PERCENT saying "yes." In popularity ranking for prime minister, Aso topped Ozawa (32 PERCENT to 23 PERCENT ) for the first time since the question was first asked in November 2008. In the survey this time, respondents were asked who they thought was appropriate to become DPJ president. In the breakdown of their answers to this question, DPJ Vice President Katsuya Okada topped all others, tallying 19 PERCENT . Ozawa was at 9 PERCENT , ranking fifth. DPJ Deputy President Kan was at 17 PERCENT , DPJ Vice President Seiji Maehara 16 PERCENT , and DPJ Secretary General Hatoyama 13 PERCENT . Cabinet support rebounds to 23 PERCENT In the spot poll, the Aso cabinet's support rate increased to 23.2 PERCENT (from 17.4 PERCENT in the last survey) and its nonsupport rate decreased to 64.5 PERCENT (from 74.8 PERCENT in the last survey). In the breakdown of public support for political parties, the LDP stood at 31.0 PERCENT (24.1 PERCENT in the last survey), with the DPJ at 21.2 PERCENT (23.8 PERCENT in the last survey). The proportion of floating voters with no particular party affiliation was 36.9 PERCENT (42.6 PERCENT in the last survey). 2) Poll: 66 PERCENT urge Ozawa to quit party post TOKYO SHIMBUN (Top play) (Abridged) March 27, 2009 In a recent telephone-based Kyodo News spot poll taken across the nation on March 25-26, a total of 66.6 PERCENT answered that Democratic Party of Japan (Minshuto) President Ichiro Ozawa should resign from his party post, with 28.9 PERCENT backing him. Ozawa has clarified his intention to stay on even after his state-funded secretary has been indicted over Nishimatsu Construction Co.'s huge illicit payoffs to Ozawa's fund-managing body. In the survey, respondents were also asked if Ozawa's account on the incident was convincing. To this question, negative answers added up to 79 PERCENT , with affirmative ones accounting for only 12.0 PERCENT . The public approval rating for the Aso cabinet was 23.7 PERCENT , up 7.7 points from the last survey taken March 7-8. The disapproval rating was 63.5 PERCENT , down 7.3 points. When it comes to popularity ranking for premiership, Ozawa was above Aso in the previous surveys from the one taken in December last year to the last survey. In the survey this time, Ozawa was at 31.2 PERCENT , down 2.4 points from the last survey. Prime Minister Taro Aso scored 33.1 PERCENT , up 7.5 points. Aso again outstripped Ozawa. TOKYO 00000691 003 OF 009 Asked about the desirable form of government, 44.2 PERCENT preferred a "DPJ-led coalition," with 36.6 PERCENT choosing an "LDP-led coalition." The gap has shrunken from the last survey, but the DPJ was above the ruling Liberal Democratic Party in the public's preference of a coalition government. In the public's preference of political parties for proportional representation in the next election for the House of Representatives as well, the DPJ stood at 34.1 PERCENT , with the LDP at 30.5 PERCENT . Basically, it may safely be said that the DPJ remains above the LDP even in the aftermath of the incident this time. In the breakdown of public support for political parties, the LDP tallied 29.7 PERCENT , with the DPJ at 28.4 PERCENT . The New Komeito, the LDP's coalition partner, was at 2.7 PERCENT . Among other parties, the Japanese Communist Party was at 1.5 PERCENT , the Social Democratic Party at 2.2 PERCENT , the People's New Party at 0.9 PERCENT , the Reform Club at 0.2 PERCENT , the New Party Nippon at 0.1 PERCENT , and "none" at 32.1 PERCENT . 3) Calls for Ozawa's resignation spreading in DPJ YOMIURI (Page 1) (Full) March 27, 2009 Democratic Party of Japan (DPJ) President Ichiro Ozawa will attend today a meeting of the DPJ House of Councillors members and a meeting of the party's House of Representatives members to seek support on his decision to continue serving as party leader. However, since the result of a nationwide survey conducted by the Yomiuri Shimbun indicates more than 60 percent of the respondents are not satisfied with his decision to remain in his post, concerns that Ozawa's continued leadership could negatively affect the party in the next Lower House election are spreading in the main opposition party. Calls for Ozawa to voluntarily quit his post are growing, which could press him to reconsider his decision. Ozawa met yesterday with DPJ Secretary General Yukio Hatoyama at party headquarters and discussed what to do next. Ozawa told Hatoyama: "I'm sorry; I will explain my decision again." Hatoyama then replied: "I assume that various opinions will be raised, but I would like you to listen to them carefully. I'll bring people around in the end." He said that he would work on winning back the support of party members. The meeting of the DPJ Upper House members is expected to run for about 30 minutes and the meeting of Lower House members, for about 40 minutes. The two meetings will take place in the Diet building ahead of plenary sessions of both chambers of the Diet. Giving considerations to the view that the meetings won't be concluded for a short time, the party leadership is looking into the possibility of extending the meetings. In addition to lawmakers close to former President Seiji Maehara, who has distanced himself from Ozawa, junior and mid-level DPJ members are now calling for Ozawa's exit. Referring to the results of the Yomiuri poll, Maehara yesterday said: "I think Mr. Ozawa will judge based on consideration of various matters," indicating that Ozawa's voluntarily resignation as party leader is desirable. Among those expressing their understanding for Ozawa's bid to stay on in his post, the view has been raised that Ozawa should fulfill TOKYO 00000691 004 OF 009 his accountability. The outlook is that if DPJ lawmakers take that Ozawa's explanation today is insufficient, Ozawa is certain to find it difficult to manage the party. 4) Nishimatsu gave 6 million yen to Nikai office, disguising the money as individual donations ASAHI (Page 1) (Slightly abridged) March 27, 2009 Nishimatsu Construction Co., a second-tier general contractor, made donations worth 6 million yen to a political group represented by Economy, Trade and Industry Minister Toshihiro Nikai in 2006 and 2007, disguising the money as individual donations, according to sources related to Nishimatsu. It has also been revealed that a consultant firm in Tokyo, in which a former Nishimatsu executive serves as president, had bought a condominium unit in Osaka for a Nikai-related political group and later rented it to the organization. It is now suspected that Nishimatsu had made monetary gifts in various forms to the Nikai side in anticipation of its favor. The Political Funds Control Law prohibits donations under other people's names. The donations by Nishimatsu to Nikai, disguising them as individual ones, might be in violation of the said law. The Liberal Democratic Party's Wakayama Constituency No.3 chapter, represented by Nikai, entered a total of 3 million yen in 2006 and 2007 in its political fund reports' individual donations section. According to Nishimatsu-related sources, the company used about 60 employees' names and falsely recorded 50,000 yen from each employee every year. The law does not require a political office to enter the name of a donator if the amount is less than 50,000 yen. The consultant firm in Tokyo purchased a condominium unit in Osaka in 1999. Later, the firm rented the condo to the Nikai-related organization, Kansai Shinpu-kai (Kansai New Wind Association),at an annual rent of nearly 3 million yen up until February. Kansai Shinpu-kai is effectively operated by Nikai's younger brother. The unit intended for a family reportedly was remodeled to be used as an office. Furthermore, it has been unveiled that Nishimatsu paid 8.38 million yen for tickets for parties held by the LDP Nikai faction (headed by Nikai) between 2004 and 2006 through two dummy political groups headed by an ex-Nishimatsu executive. Nikai commented yesterday regarding the donations disguised as individual ones and the office rental problem: "We do not have such a perception. I recognize that each political organization has provided political-funding records correctly in compliance with the Political Funds Control Law." 5) Condo renter contacted Nishimatsu when Nikai office fell behind with rent payments MAINICHI (Page 1) (Excerpts) March 27, 2009 Nishimatsu Construction Co., a second-tier general contractor based in Minato-ward, Tokyo, allegedly covered rental charges for the TOKYO 00000691 005 OF 009 political organization related to Economy, Trade and Industry Minister Toshihiro Nikai in Osaka, Kansai Shinpu-kai. According to informed sources, a design company in Tokyo, which was renting out a condominium unit to the Nikai-related organization, contacted Nishimatsu's general affairs department when the Nikai office's rent payments fell behind. In response, Nishimatsu allegedly covered the rent by providing the Liberal Democratic Party's Wakayama Constituency No.3 chapter, represented by Nikai, with money disguised as individual donations, using employees' names. It has also been revealed through questioning persons concerned that Nishimatsu covered the total cost of approximately 40 million paid by the design firm for the purchase and reform of the condo unit. It is now alleged that Nishimatsu was providing Kansai Shinpu-kai with financial aid to cover its office expenses. According to informed sources, when Kansai Shinpu-kai's rent payments were in arrears in 2006, the design firm informed Nishimatsu's then general affairs department chief of the delay in payments. After examining the situation, the general affairs department found that the company had not sent money to the Wakayama Constituency No.3 chapter for two years. Upon contacting a person concerned on the Nikai side, the department chief sent 3 million yen each in 2007 and 2008, disguising the money as 60 employees' donations. 6) Senior Vice Finance Minister Hirata quits over shady stock sale MAINICHI (Top Play) (Excerpts) March 27, 2009 Senior Vice Finance Minister Koichi Hirata on March 26 resigned, taking the responsibility of selling his stocks in violation of an ethics code for ministers, which bans stock trading by politically appointed ministers. Hirata held a press conference at the Finance Ministry the same evening. He said, "If Diet deliberations come to a standstill, it would cause great trouble for the people." He underscored that the reason for his resignation was to prevent Diet deliberations on such issues as bills related to the fiscal 2009 budget from being thrown into turmoil. Concerning the ethics code for ministers, he noted, "I have made no profits or losses in the stock trading. In my view, it is delicate whether my action has infringed on the ethics code." Finance Minister Shoichi Nakagawa in mid-February resigned after the meeting of finance ministers and central bank governors from the Group of Seven Nations (G-7). Hirata's resignation will likely deal a blow to the Aso administration. Prime Minister Taro Aso told reporters on the evening of the 26th, "The stock sale took place after the appointment of Hirata. If you ask his responsibility, I am responsible for the matter, as it is I who appointed him." Hirata on March 2 sold 1.12 million stocks amounting to 8.68 PERCENT of the total outstanding shares of Chiyoda Ute (listed on the Jasdaq stock market),based in Yokkaichi, Mie Prefecture, for 550 yen per share, a price nearly double its market value (290 yen per share),to Zero System, an oil wholesaler, which he himself actually owns. Chiyoda Ute was founded by Hirata's father. He himself once served as president of the company. The sales amount is 616 million yen. The profits are about 300 million yen larger than the amount that would have been made by selling them on the market. This will likely draw criticism that the trading was nontransparent. TOKYO 00000691 006 OF 009 The government in 2001 compiled the ethics code that calls on ministers, vice ministers and parliamentary secretaries to self-refrain from stock trading. Hirata's case infringes on the code. Hirata during the press conference revealed that the Cabinet Secretariat in November or December last year pointed out that he had yet to entrust his stocks and stock sale could infringe on the ethics code for ministers, but he sold his stock without making inquiries about the specifics. He said that he does not feel guilty about the stock sale itself. 7) Bargaining over Lower House dissolution rekindling in LDP MAINICHI (Page 5) (Excerpts) March 27, 2009 While the main opposition Democratic Party of Japan (DPJ) is in disarray due to President Ichiro Ozawa's announcement that he will remain in his post, a tug-of-war flared up again in the ruling Liberal Democratic Party (LDP) over the timing of dissolution of the House of Representatives and the general election that would follow. In a meeting yesterday of his faction, LDP Election Strategy Council Chairman Makoto Koga mentioned the possibility of an early dissolution of the Lower House, noting: "We should feel the tension in May." On the other hand, former Chief Cabinet Secretary Nobutaka Machimura, who also heads a faction in the LDP, took a cautious stance toward early dissolution. "Unless we first implement policy measures to help support the livelihoods of the people, the Lower House should not be dissolved." Referring in the regular meeting yesterday to a supplementary budget for fiscal 2009 that would include another economic stimulus package, Koga stressed: "The timing of the submission and enactment of the extra budget to the Diet is crucial for the political situation." He asserted that the Lower House should be dissolved only after the extra budget for fiscal 2009 clears the Diet. Taku Yamasaki, former LDP vice president, appearing yesterday on a BS11 digital news show, took the view that the Lower House should be dissolved before the supplementary budget clears the Diet. He said: "By showing the general framework of additional economic stimulus measures, the extra budget should be a campaign issue for the next Lower House election." With the illicit donations scandal involving Nishimatsu Construction Co. in mind, Yamasaki said: "Since (national politics) has reached an impasse, a vote of national confidence should be sought." Meanwhile, the illegal donations scandal has left the DPJ shocked and shaken, and criticism of Ozawa is rising in the party. The outlook is that the fiscal 2009 budget and related bills will clear the Diet today as the government and ruling coalition had expected. The largest opposition party's blunder and a sense of respite in the Diet schedule have prompted calls for an early Lower House dissolution in the LDP. In a meeting yesterday of his faction, Machimura pointed out: "Giving consideration to the present economic situation, it is not good that the Lower House will be dissolved, just to show the public a blueprint (the extra budget)." Asked by reporters about the possibility of the Lower House being dissolved in May, Machimura TOKYO 00000691 007 OF 009 took a cautious stance, saying: "(With the Tokyo Metropolitan Assembly election coming up in July) the New Komeito will probably not accept such an idea. It is necessary to give consideration to our partner (in the coalition government)." 8) Fiscal 2009 budget to clear Diet today NIKKEI (Page 2) (Full) March 27, 2009 The fiscal 2009 budget bill and four related bills, now being deliberated in the House of Councillors, will be enacted today. These bills will be rejected in the opposition-controlled Upper House the same day, but the fiscal 2009 budget bill will be enacted into law after deliberations by a joint committee of both Houses, based on a constitutional rule of a decision in the House of Representatives taking precedence over an Upper House decision. The related bills will be brought back into the Lower House and there be enacted by an override vote. After the bills pass the Diet, the government and the ruling parties intend to work out additional economic measures. The fiscal 2009 budget totals 88.548 trillion yen, which includes a record high of 51.731 trillion yen in general expenditures. Outlays for job-increase measures amounting to 500 are incorporated in it. One of the four related bills is a tax reform bill-related bill, which include a policy of raising the consumption tax in fiscal 2011 in an additional clause. 9) Additional economic stimulus package drafted by ruling camp: 2 trillion yen for solar energy generation; Subsidies for raising salaries of caregivers SANKEI (Top Play) (Excerpts) March 27, 2009 A large-scale additional economic stimulus package draft, which the government and the ruling parties will finalize in April, was revealed on March 26. The draft includes the installation of solar energy generation panels at public elementary, middle and high schools and government and other public offices throughout the nation. It also includes providing subsidies for raising salaries of caregivers for three years with the aim of reducing out-of-pocket medical costs and improving caregivers' working conditions. The government and the ruling parties intend to speed up efforts to secure Diet approval for the package, by compiling a fiscal 2009 extra budget for measures that do not require legal amendments and therefore can be implemented immediately. The government intends to make the envisaged package large in order to address the worsening economy. The package will be implemented over the next three years. The draft report notes that employment will be secured and the economy will be shored up with investment in the environment, strengthened social security, implementation of public works earlier than scheduled and an expanded financial and tax systems. In the environment area, approximately 2 trillion yen will be disbursed for the promotion of the installation of solar energy generation panels at public schools and government and other public offices. The breakdown is: 400 billion yen for the installation of TOKYO 00000691 008 OF 009 such panels at public elementary, middle and high schools that have completed anti-quake works; 1.1 trillion yen for government and other public offices; and 880 billion yen for public housing. In order to allay anxieties people are feeling about the medical system, over-the-counter payments of medical fees will be reviewed with a budget between 500 billion yen and 600 billion yen a year. The government is also looking into establishing an additional basic pension system (tentative name) in response to the New Komeito's call for an increase in the basic pension payment as a measure to deal with low income earners. National pension worth 66,000 yen is currently paid to households whose annual income is less than 2 million yen. A plan to raise the amount to 80,000 yen, which is more than welfare benefits, has been floated. As measures related to public works, works to make elementary and middle school buildings throughout the nation quake-resistant will be implemented earlier than scheduled. An increase in the installation of air conditioners and in-school LAN system will also be incorporated. 10) Government to disburse 1.6 trillion yen for trade financing to boost export and import insurance related to developing countries TOKYO SHIMBUN (Page 3) (Full) March 27, 2009 The government on March 26 decided to extend financial assistance topping 1.6 trillion yen over the next two years with a focus on expanding insurance underwriting by Nippon Export and Investment Insurance. The aim is to prevent a decline in trade between Japanese companies and emerging countries or developing countries. Prime Minister Taro Aso will announce the plan at the G-20 financial summit to be held in London on April 2. Developing countries, which have suffered a serious setback from the financial crisis, are finding it difficult to secure funds needed for exporting and importing goods. The government intends to speed up procedures for expanding financial assistance. Trade financing is an arrangement under which financial institutions lend funds necessary for foreign trade settlement to trading companies. Vitalizing trade financing will likely be on the agenda of the financial summit. Nippon Export and Investment Insurance, an independent administrative agency, underwrites insurance policies necessary for trade transactions by private companies. Under the envisaged assistance package, which targets Japanese companies, insurance underwriting in readiness for failure in payments for exported goods will be expanded. Assistance will also be provided for the management of cash flows using liquidation of receivables. The government along with the Japan Bank for International Cooperation (JBIC) will also provide insurance to Japanese banks that extended loans to financial institutions in developing countries. Assistance for trade financing to be provided by the Japanese government will top 2 trillion yen over two years, when combined with other assistance measures using the JBIC, which have already been announced. TOKYO 00000691 009 OF 009 The World Bank estimates that a shortage of trade-related funds throughout the world is 200 billion dollars or approximately 20 trillion yen at the most. 11) Missile debris could cause damage ASAHI (Page 4) (Full) March 27, 2009 Defense Minister Hamada, sitting in yesterday on the House of Councillors Budget Committee, indicated that if the Patriot Advanced Capability 3 (PAC-3),a land-based ground-to-air guided missile, intercepted a missile launched by North Korea, its debris could fall to the ground and cause damage. He stated: "If we hit a projectile in outer space, it will almost completely burn up and will not fall, but I cannot tell whether we will be affected if something destroyed in the sky over our area were to fall." 12) Difficult to hit a bullet fired by a pistol: Konoike MAINICHI (Page 5) (Full) March 27, 2009 Asked about Japan's missile defense (MD) shield against North Korean long-range ballistic missiles in a House of Councillors Budget Committee session yesterday, Deputy Chief Cabinet Secretary Yoshitada Konoike stated: "It is extremely difficult to hit a bullet fired by a pistol." He took a view similar to the one taken by a high-level official on March 23. That official remarked: "If you shoot a gun and then shoot at the bullet with another gun, you won't hit it. Once (a missile) is shot, it is impossible to hit it." ("Teppou wo uttekita no wo, teppou de utte mo, ataranai. (Misairu wo) uttekitara ataru wake ga nai.") Social Democratic Party Chairperson Mizuho Fukushima asked Konoike: "What do you think of the view that it is impossible to hit a bullet fired by a pistol by firing at it with another pistol?" Konoike first avoided answering the question, saying: "I'm not in a position to answer your question here." Mizuho then pressed on, asking him again: "Have you ever made this kind of remark?" The deputy chief cabinet secretary finally just said: "I think it would be difficult." POST