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Cablegate: Japanese Morning Press Highlights 01/23/08

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UNCLAS SECTION 01 OF 14 TOKYO 000166

SIPDIS

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 01/23/08


Index:

1) Top headlines
2) Editorials
3) Prime Minister's daily schedule (Nikkei)

Global economy:
4) Japanese government feels helpless as global stock markets,
including Japan's, plummet (Mainichi)
5) Bank of Japan issues cautious statement about state of the
economy (Nikkei)
6) Government unable to put out fire caused by panicky markets
(Tokyo Shimbun)
7) Government, ruling parties reacted too slowly to falling stock
market (Nikkei)
8) BOJ revises economic growth estimate down to 1 - 1.5 PERCENT
range for fiscal 2007 (Yomiuri)

Diet fiddles while economy burns:
9) LDP split on timing of passing gasoline tax bill by the Lower
House (Tokyo Shimbun)
10) If provisional gasoline tax scrapped, Hokkaido would lose 57.8
billion yen in revenues from central government (Mainichi)
11) Democratic Party of Japan (DPJ) wants to scrap all special
accounts in its counterproposal budget bill (Yomiuri)
12) DPJ outlines proposals countering government's budget draft
(Asahi)
13) DPJ President Ozawa to pick party's candidate for Bank of Japan
governor (Asahi)

Davos Conference:
14) Prime Minister Fukuda to make appeal for international financial
cooperation in speech at Davos Conference (Asahi)
15) Fukuda to call for country-specific greenhouse-gas emission cuts
in speech at Davos Conference (Yomiuri)
16) Ozawa not going to Davos but will send DPJ Secretary General
Hatoyama instead (Nikkei)

Japan takes whaling on whaling:
17) Greenpeace activists try to prevent Japanese whaler from
refueling on high seas (Asahi)
18) Interview with Australia's trade minister on Japan's whaling
issue (Asahi)

Defense and security issues:
19) Additional indictments against former Defense Vice Minister
Moriya (Yomiuri)
20) New Komeito starting to warm up to the idea of Japan having a
permanent SDF overseas dispatch law (Mainichi)

Political agenda:
21) If ruling and opposition camps deadlock in Diet, Upper House
speaker proposes deputy speakers in both chambers be consulted to
arbitrate (Yomiuri)
22) Fukuda panel's proposed ban on officials and politicians wining
and dining together to be shelved and existing rules tightened
(Asahi)

Articles:

1) TOP HEADLINES


TOKYO 00000166 002 OF 014


Asahi, Mainichi, Yomiuri, Nikkei, Sankei, & Tokyo Shimbun:
U.S. Fed slashes key interest rate by 0.75 points to 3.5 PERCENT as
emergency measure to deal with global stock plunges

Akahata:
JCP Chairman Shii proposes measures to place emphasis on
people-focused economic measures

2) EDITORIALS

Asahi:
(1) We oppose both government and DPJ plans on gasoline tax rate
(2) Start of teaching by cram schools at public junior high schools
shows poor educational environment

Mainichi:
(1) Collusive ties between government and bureaucracy: Politicians
first must change themselves
(2) Resignation of NHK chairman: Be aware of responsibility as
public broadcaster

Yomiuri:
(1) Stock price falls: Key lies in U.S. economic measures
(2) Handball replays: Judge must be fair

Nikkei
(1) Cooperative action urged to overcome crises in financial and
stock markets

Sankei:
(1) Reconsider before Japan decides to introduce emission-trading
system
(2) Establish a trustworthy medical incident research system

Tokyo Shimbun:
(1) We must share a sense of alarm about global-scale equity falls
(2) NHK's lack of awareness as news organ allows political
intervention

Akahata:
(1) Save all A-bomb victims by setting new recognition standards

3) Prime Minister's Official Residence (Kantei)

Prime Minister's schedule, Jan. 22

NIKKEI (Page 2) (Full)
January 23, 2008

07:55
Met with Deputy Chief Cabinet Secretary Iwaki at Kantei.

09:00
Attended a cabinet meeting. State Minister in Charge of Financial
Services Watanabe remained.

10:01
Attended an Upper House plenary session.

12:13
Met with Deputy Chief Cabinet Secretary Ono at Kantei.


TOKYO 00000166 003 OF 014


13:39
Met with Finance Minister Nukaga.

14:02
Attended a Lower House plenary session.

16:35
Met with MSDF's First Escort Division Commander Saeki at Kantei,
joined by Joint Staff Council Chairman Saito and others. Afterwards,
met with Vice Foreign Minister Yabunaka, joined by Deputy Foreign
Minister Sasae.

17:30
Attended a New Year meeting hosted by the LDP's political fund
organization Kokumin Seiji Kyokai at Hotel New Otani.

19:30
Met with Cabinet Office's Policy Planning Director Saito.

20:16
Arrived at residential quarters in Kantei.

4) Government helpless as share prices fall

MAINICHI (Page 3) (Full)
January 23, 2008

"Under the current situation, we do not need to react nervously (to
stock price falls)," Finance Minister Fukushiro Nukaga said.

"The current market conditions originate from the U.S., so it is
difficult for Japan to take any action alone," State Minister in
Charge of Economic and Fiscal Policy Hiroko Ota said.

Seeing Tokyo stocks plunge for two days in a row, many market
players felt disappointed yesterday. Mizuho Securities chief market
economist Yasunari Ueno commented: "Remarks made by government
sources imply their sense of helplessness."

Officials in the Prime Minister's Office conferred with
representatives from the Finance Ministry and the Internal Affairs
Ministry on measures to shore up share prices. However, they failed
to find effective measures and agreed to watch the market for the
time being. Given that the global-scale equity plunges have their
origins in the U.S., Finance Ministry officials take the view that
buying shares with public funds or a fiscal stimulus will not be
effective.

The remaining means is quantitative easing. In response to the U.S.
Federal Reserve Board's decision to slash interest rates as an
emergency measure to deal with the ongoing equity plunges, an
economic minister suggested: "The Bank of Japan also should lower
its key interest rate." But there is strong resistance to this idea
in the central bank. In a press conference, BOJ Governor Toshihiko
Fukui expressed his negative view about a cut in the interest rate,
saying: "It is important to make a judgment from a long-term
viewpoint."

Fukuda stresses steady underpinnings of Japanese economy

Asked about the ongoing global-scale share price falls, Prime
Minister Yasuo Fukuda emphasized yesterday that the underpinnings of

TOKYO 00000166 004 OF 014


the Japanese economy remain steady. He said: "Stock prices have
plunged on a global scale. The falls were not triggered by fears
about the Japanese economy." He added that economic problems, in
addition to environmental issues, will be high on the agenda at the
up coming annual assembly of the World Economic Forum, or the Davos
Conference, in which he plans to participate.

5) Economic situation delicate: BOJ governor looking at situation
carefully

NIKKEI (Page 1) (Full)
January 23, 2008

The Bank of Japan (BOJ) yesterday decided to leave interest rates
unchanged at its policy-setting meeting. Governor Toshihiko Fukui
during a press briefing held after the meeting expressed his
perception that the economic and financial situations are at a
delicate stage in terms of judging their future. Regarding the
global stock plunges, he pointed out that the situation could
negatively affect the Japanese economy by lowering the value of
assets and dampening consumer sentiment. He thus indicated a stance
of carefully keeping watch on the global economic and financial
situation.

Fukui told the press conference that the domestic economy is on the
verge of losing steam. However, he added that it is highly likely
that the economy will continue sustained growth. The BOJ has managed
monetary policy in a manner of normalizing interest rates. Fukui
said, "There will be no change in that basic stance." However, he
indicated concern over commotion in the financial markets, noting,
"The market is strongly aware of uncertainties in the global
economy."

6) Government desperately trying to ease concerns about effect of
plummeting stock market on Japanese economy; Calls for urgent
measures growing, even from ruling party members

TOKYO SHIMBUN (Page 2) (Excerpts)
January 23, 2008

In the face of recent sharp drops in stock prices, the government
and the ruling camp have been desperately trying to alleviate
growing concerns about the future of the economy. Since the plunge
was triggered by the slowdown of the U.S. economy, the government
feels it just has to carefully watch the situation for now. Even so,
stock prices have fallen so sharply that many are seriously
concerned about its effect on the Japanese economy. Some members of
the ruling camp have begun to call on the government to take some
measures to lift stock prices.

Prime Minister Yasuo Fukuda reiterated in replying to questions in a
representative interpellation session yesterday:

"Our nation's economy has been on a recovery path. But we will
continue to closely watch risks from the slowing U.S. economy, as
well as the effects of changes in the financial and capital markets
and rising oil prices on the Japanese economy."

After seeing the 225-issue Nikkei Stock Average losing 752 points
from the previous day, Deputy Chief Cabinet Secretary Iwashiro
issued the government's view that "We expect the recovery (of the
economy) will continue into the future."

TOKYO 00000166 005 OF 014

The government and the ruling bloc take the ongoing equity drops as
"a result of being affected by the U.S. bubble economy," as said by
Liberal Democratic Party Secretary General Bunmei Ibuki. On the U.S.
subprime mortgage crisis, as well, LDP Policy Research Council
Chairman Sadakazu Tanigaki, in an attempt to calm down the
situation, commented: "Japan has been damaged the least."

Contrary to their surface calmness, many participants called for
measures to stop the equity falls during an executive liaison
meeting and an Executive Council meeting in the LDP yesterday.

Former Secretary General Hidenao Nakagawa of the Mori faction, to
which the prime minister belongs, also said before reporters in the
Diet building: "The government should come up with policy goals that
can have the international community feel that Japan is continuing
to grow."

7) Government, ruling parties slow to respond to falling share
prices; Premier finds it difficult to display leadership

NIKKEI (Page 2) (Excerpts)
January 23, 2008

The government and the ruling camp have been slow to respond to
global stock plunges. Prime Minister Yasuo Fukuda finds it difficult
to display leadership, preoccupied with Diet affairs. Given the fact
that the nation is strapped with huge fiscal deficits, the idea of
making fiscal disbursements is not realistic. It is also difficult
to implement further deregulation. Related sources are trying to
sound calm, with one noting, "I will closely watch the situation."
However, unable to find any breakthrough in the situation, they are
increasing becoming impatient.

Fukuda yesterday evening said, "What is taking place is global stock
plunges, which do not stem from the actual condition of the Japanese
economy." He also noted, "The impact of the subprime loan crisis on
Japan is far smaller compared with its impact on Europe and the
U.S." He made those comments in response to questions asked by
reporters at the Prime Minister's Office (Kantei). Fukuda said that
he wants to implement a growth strategy. However, since his growth
strategy lacks specific, it has not affected the market.

Fukuda yesterday morning called in State Minister in Charge of
Financial Services Yoshimi Watanabe and ordered him to analyze the
present situation. Given the falling stock prices, which show no
sign of touching bottom, the Kantei has thus at last moved and
started considering holding a meeting of related cabinet ministers.
The U.S. Federal Reserve Board (FRB) yesterday evening lowered the
interest rate as an emergency measure. Watanabe simply commented,
"It will produce effects as a stopgap measure."

There is a growing sense of alarm in the Liberal Democratic Party
(LDP) as well. Shoichi Nakagawa during a study meeting with
lawmakers who are distancing themselves from the administration,
such as Takeo Hiranuma, raised his voice, saying, "To be honest, I
am getting impatient. Does Japan have to do nothing?"

Some junior LDP members pinned hopes on Taro Nakagawa with one
saying, "It is Taro Nakagawa who is collecting information at a time
like this."


TOKYO 00000166 006 OF 014


However, those discussions went no further than that. Yuji Tsushima
during a General Council meeting held yesterday afternoon said,
"Patiently taking a wait-and-see attitude would serve our national
interest." Mitsuo Horiuchi countered, "We must not remain
unconcerned. We must show that we are tackling the issue
seriously."

8) Bank of Japan decision board revises downward growth prediction
for fiscal 2007 to 1 - 1.5 PERCENT level (Yomiuri)

YOMIURI (Page 2) (Excerpt)
January 23, 2008

The Bank of Japan (BOJ), at a meeting yesterday of its monetary
policy decision board, decided to revise downward the real GDP
growth estimate for fiscal 2007 from the current 1.8 PERCENT to
between 1 and 1.5 percent, as indicated in the BOJ mid-term outlook
on the economic and price situations. One of the chief factors was
the drag on the economy from sluggish housing investments.

9) LDP at odds over timing of House of Representatives passing
gasoline tax bill, with Lower House caucus favoring mid-February and
Upper House members opting for late January

TOKYO SHIMBUN (Page 2) (full)
January 23, 2008

There is now discord in the ruling Liberal Democratic Party (LDP)
over when a bill revising the Special Tax Measures Law designed to
maintain the provisional gasoline tax rate should be passed by the
House of Representatives. The reason is that the LDP caucus in the
Lower house aims to push it through the Lower House in mid-February,
but its members in the House of Councillors have called on the Lower
House to pass it by the end of January. The LDP's Lower House caucus
is determined to get the bill passed by the chamber in an amicable
manner and to enact it before the end of March by securing
cooperation from the main opposition Democratic Party of Japan (DPJ
or Minshuto).

The party's caucus in the Upper House, however, has argued that if
the Lower House passes the legislation within January, enacting it
before the end of March will be possible by resorting an article of
the Constitution, which allows a bill to be sent back to the lower
chamber if the bill has not been voted on within 60 days, even if
the DPJ drags it feet in putting it to a vote. The Upper House side
is determined that some confusion in the Lower House is inevitable.

If the bill to revise the Special Tax Measures Law, a bill related
to the budget, is sent to the Upper House earlier than the budget
bill, which is usually passed by the Lower House from late February
to early March, the DPJ is certain to react strongly against such a
move.

A senior LDP Lower House member pointed out: "If deliberations are
discontinued for a long time, the prime minister might be forced to
dissolve the Lower House."

Hidehisa Otsuji, chairman of the LDP's Upper House caucus,
rebutted:

"The possibility is strong that the prime minister will be forced to
dissolve the Lower House over the confusion caused by raising again

TOKYO 00000166 007 OF 014


gasoline prices after they are reduced (because of the expiration of
the Special Tax Measures Law on March 31), rather than uproar to be
caused by passage of the bill in January."

The Upper House caucus is looking into a possibility of having a
senior member directly appeal its assertion to Prime Minister Yasuo
Fukuda.

In the previous extraordinary Diet session, the LDP's views were
divided in the two chambers over whether they would go straight
through the New Year in the extra session.

10) Internal Affairs and Communications Ministry estimates that
elimination of provisional gasoline tax rate would dent Hokkaido's
revenues by 57.8 billion yen

MAINICHI (Page 1) (Abridged slightly)
January 23, 2008

The Ministry of Internal Affairs and Communications, projecting that
a possible abolition of the provisional tax rates in March would
reduce local revenues by 906.4 billion yen, revealed its breakdown
by prefecture (including municipalities). Hokkaido tops the list at
57.8 billion yen, and Tottori is at the bottom at 5.2 billion yen.
The abolition would hit harder local governments whose fiscal scales
are the smallest.

The largest opposition Democratic Party of Japan (DPJ or Minshuto)
is calling for the abolition of the provisional gasoline tax rate,
saying that the decline in revenues would be reduced by cutting
local governments' costs of state-controlled projects and building
only the roads that are absolutely vital for local areas. The DPJ is
locking horns with the government and local governments that are
calling for the maintenance of the provisional tax rates.

The fiscal 2008 local fiscal plan includes 906.4 billion yen that is
expected to result from the provisional tax rate to be used for road
projects. The ministry divided this amount by the prefectures in
proportion to their fiscal 2006 account settlements to give a rough
idea about declines in revenues. There are discrepancies in the
amounts independently worked out by each local government.

Hokkaido (39 billion yen for the prefecture, 18.8 billion yen for
municipalities) tops the list, followed by Aichi at 56.3 billion yen
(38.5 billion yen for the prefecture, 17.8 billion yen for
municipalities), Tokyo at 50.5 billion yen, Saitama 41.5 billion
yen, and Osaka 39.3 billion yen.

In terms of rate to the fiscal 2005 tax revenues (local taxes and
local tax grants), Hokkaido was 6.5 PERCENT , Tokyo 0.6 PERCENT ,
and Aichi 3.4 PERCENT . Declines in revenues would be small in such
prefectures as Tottori, Kochi, and Wakayama, but their ratios to the
total tax revenues would be higher than urban prefectures at 5-7
PERCENT .

Revenues from the provisional tax rate are designed to fund road
projects in local areas, but general revenues and local bonds are
also used to cover shortfalls in such revenues. According to the
ministry, the prefectures' and municipalities' loan repayments for
road projects amounted to 2.1 trillion yen and 1.3 trillion yen,
respectively, in fiscal 2006. In order to maintain road projects at
the current level under reduced revenues, the costs of welfare,

TOKYO 00000166 008 OF 014


education and other areas must be reduced, according to the
ministry.

11) DPJ readies outline of counterproposal to government's budget
bill that contains proposed scrapping in principle of special
accounts

YOMIURI (Page 2) (Full)
January 23, 2008

It was learned yesterday that the Democratic Party of Japan (DPJ or
Minshuto) has readied an outline of a bill to change the function of
the budget that will be presented to the regular Diet session as the
party's counterproposal to the government's budget bill. Until now
the party has been considering a bill to change the function of
outlays, aiming to demonstrate a future-oriented image of the
national budget in the event that the DPJ assumed the reins of
government.

In order to develop specific policies for road construction and the
like, the outline would not only scrap in principle the general
account budget and the special accounts under it, it also would
create a "debt management agency," which would manage on the same
plane the country's assets and debt.

On the expenditures front, it was decided to allocate the budget
heavily in five areas, including 1) reform of the public pension
system; 2) expansion of child-rearing assistance; and 3) creation of
a system of income compensation for family farmers.

In order to secure resources for such proposals, the draft suggests
seven policy measures, including realignment and consolidation of
budget allocation by scrapping in principle the special accounts; a
basic revision of the special corporations, and activation of
government-possessed funds.

Regarding the path to fiscal reconstruction, the target for the time
being would be to basically review fiscal management, and then
implement a plan in stages over four years starting in fiscal 2008.
The draft states: "With fiscal 1011 as the target, the plan aims to
achieve a basic fiscal surplus in revenues over expenditures."

Moreover, the draft states: "A body for comprehensive consultations
will be established in the cabinet that would investigate and
deliberate on such matters as fiscal management and a basic policy
direction related to budget compilation."

12) DPJ outlines proposals countering government's budget draft

ASAHI (Page 4) (Full)
January 23, 2008

The Democratic Party of Japan (DPJ or Minshuto) yesterday outlined a
bill to change budgetary functions, which it will introduce during
the regular Diet session as a proposal countering the government's
budget draft. The package cites a goal of bringing the primary
balance into the black by fiscal 2011, which is similar to the
government's. It also notes that funding resources needed to realize
policies included in its Upper House election manifesto can be
secured by abolishing special account budgets. The DPJ aims to show
what it would do after taking the reins of government, highlighting
problems with the government's draft budget.

TOKYO 00000166 009 OF 014

The outline proposes reforming the structure of revenues and
expenditures, featuring abolition in principle of special account
budgets, including special-purpose road construction revenues,
through abolition or privatization of special public corporations
and independent administrative agencies. The package also includes a
proposal for reforming the budget compilation process in the event
of the DPJ assuming the reins of power, including shifting the
budget compilation authority centered now on the Finance Ministry to
the Cabinet Office.

According to the outline, the DPJ would intensively distribute
budget funds by realizing proposals for policies directly related to
people's lives and measures to correct social disparities. It also
indicates such policies as reforming the pension system, improving
measures to assist child-rearing and establishing a system of
compensating individual farmers.

However, the package does not include any specific figures, though
the DPJ calls it a counterproposal. "Next Cabinet" finance minister
Masaharu Nakagawa cited boiling down ideas on fiscal resources as
the issue to tackle. He said, "I want to come up with convincing
figures so that people can have a vision under the DPJ's framework.

Main points of outline of bill to change budgetary functions

(Basic ideals)
Bring the primary balance into the black by fiscal 2011. Procure
funding necessary for new projects by taking a second look at
existing projects.

(Spending cuts)
Drastically review public works. Introduce a proper contract
process. Take necessary measures regarding special public
corporations and independent administrative agencies with the
possibility of abolishing or privatizing them. Abolish in principle
special account budgets.

(Budget compilation)
The Cabinet Office should be in charge of budget compilation to
enable the cabinet to take the initiative. Establish a debt control
agency that will be in charge of both assets and liabilities.

13) DPJ gives free hand to Ozawa on issue of picking new BOJ
governor

ASAHI (Page 4) (Full)
January 23, 2008

The main opposition party Democratic Party of Japan (DPJ or
Minshuto) has stopped making comments regarding the appointment of a
successor to Bank of Japan Governor Toshihiko Fukui, whose term will
expire in March. Amid concern about the negative impact of the U.S.
subprime mortgage crisis, the DPJ has determined that the
appointment of a new BOJ governor should be decided without
confusion since there is a possibility that it will come under
criticism from within and outside Japan if it disagrees with the
government's appointment plan. Many in the largest opposition party
are against the idea of promoting Vice Governor Toshiro Muto to the
governorship, which the government and ruling parties favor.
Therefore, some DPJ members are now looking for a candidate other
than Muto.

TOKYO 00000166 010 OF 014

The DPJ intends to call on the government and ruling coalition to
pick several candidates. It will also recommend more than one
candidate in order to have negotiations with them behind closed
doors. President Ichiro Ozawa held a meeting yesterday with Deputy
President Naoto Kan and Secretary General Yukio Hatoyama, in which
he asked them to make sure: "Is it OK for you that former
bureaucrats are acceptable as candidates for the BOJ governorship?"
Kan and Hatoyama then replied: "Yes." The two executives reportedly
entrusted the matter entirely to Ozawa.

DPJ lawmakers connected the matter have told Ozawa that: (1) former
administrative vice finance ministers should not be picked as
candidates in view of the principle of the separation of fiscal and
financial sectors; and (2) candidates' financial policy should be a
criterion for deciding the new governor." If the choice of (1) is
adopted, there would be no possibility for Muto to replace Fukui.

The DPJ is, however, nervous about information control because there
is a possibility that it will come under criticism, if the Japanese
economy deteriorates triggered by the appointment of new BOJ
governor.

Ozawa stated in a press conference yesterday:

"There is a principle that placing retired senior bureaucrats into
the post is not good. I will accept anybody who is competent to
bring about the stable financial situation for the daily lives of
people."

14) Prime Minister Fukuda intends to call for credit control at
Davos conference

ASAHI (Page 2) (Abridged slightly)
January 23, 2008

Prime Minister Yasuo Fukuda is scheduled to address the annual World
Economic Forum (Davos Conference) on Jan. 26. The prime minister has
begun considering calling for international monetary and credit
control, in addition to environmental issues, bearing in mind the G7
conference of finance ministers and central bank governors to be
held in Tokyo in early February. He is apparently aware of the
observation that plunging stocks in Tokyo comes in part from
mistrust in the Fukuda administration.

Norihiro Fujito of Mitsubishi UFJ Securities said: "As seen in the
stalemated reform policy course, a sense of stagnation regarding
Japanese politics has triggered selling of Japanese stocks." But at
present, what the administration can do about the market is limited.
A person close to the prime minister said: "People say that the
government has done nothing, but what step is available?" Economic
and Fiscal Policy Minister Ota also noted, "Basically, the situation
resulted from the United States, so it is difficult for Japan to
take any effective means." The prime minister aims to play up at
least the government's keen sense of alarm at the Davos conference.

15) Prime Minister Fukuda to propose at Davos meeting the setting of
country-specific greenhouse- gas-emission reduction targets

YOMIURI (Page 2) (Full)
January 23, 2008


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Prime Minister Fukuda decided to call on major greenhouse gas
emitter nations to set their respective mid-term targets for
greenhouse gas emission reduction in a speech he will deliver at the
World Economic Forum in Davos, Switzerland, which is to begin today.
Fukuda already declared he would express the need to set mid-term
goals for greenhouse gas reduction, but he has now judged it is
indispensable to set country-by-country mid-term reduction targets
in order to meet the long-term goal of halving the current levels of
world greenhouse gas emissions by 2050.

By demonstrating Japan's willingness to work together with the
European Union, which has called for country-specific restrictions,
Fukuda aims to dispel the criticism that Japan is unwilling to take
action against climate change and that it will seek to lead climate
change debate at the upcoming Group of Eight (G8) Hokkaido Toyako
Summit in July.

Mid-term country-specific goals are based on a post-Kyoto Protocol
framework to be applied in 2013 after the Kyoto Protocol expires in
2012. Possible levels of greenhouse gas emission reduction by
industry and by sector will be computed on a country-by-country
basis and both will be added up. This way of calculation has an
advantage because it can show how much greenhouse gas emission can
be reduced in the same industry, even though each country has its
own reduction criteria. So, this calculation can be used as a ground
to call on countries that set low reduction goals to raise them.

16) DPJ Secretary General Hatoyama to attend Davos Conference in
President Ozawa's place

NIKKEI (Page 2) (Full)
January 23, 2008

Democratic Party of Japan (DPJ or Minshuto) President Ichiro Ozawa
stated yesterday at a press conference: "Because of the (tense)
situation in the Diet, I have no plans now to attend the World
Economic Forum (Davos Conference)." The largest opposition party has
repeatedly changed its policy of having Ozawa attend the
international conference since it officially announced that Ozawa
would go to Davos. Secretary General Yukio Hatoyama will attend the
session in Ozawa's place.

According to a senor DPJ member, Ozawa made a final decision on Jan.
21 not to attend the conference due to his poor physical condition.

Ozawa underscored at yesterday's press meeting: "I said from the
beginning that I was uncertain whether I would go or not." When
asked by reporters about his physical condition, he responded: "I
cannot do what I could do when I was young. But I can do anything
for election campaigns."

17) Greenpeace obstructs research whale ship's refueling

ASAHI (Page 7) (Full)
January 23, 2008

According to the Fisheries Agency's (FA) information, around 9:30
a.m. on Jan. 22, when a supply ship was approaching the whaling ship
Nisshinmaru of the Institute of Cetacean Research in the Southern
Ocean to refuel it, a rubber raft from Greenpeace, an environmental
activist group opposing whaling, obstructed the refueling by
intruding into waters in between Nisshinmaru and the supply boat.

TOKYO 00000166 012 OF 014


The rubber raft at one point was entangled in wire linking buffers
of the two ships, but no one was injured. The refueling went ahead,
and the rubber raft left the scene immediately, the FA said.

18) In interview, Australian trade minister says whaling issue must
not affect relations

ASAHI (Page 7) (Full)
January 23, 2008

Visiting Australian Trade Minister Crean gave an interview with an
Asahi Shimbun reporter in Tokyo, and when asked about the whaling
issue, over which Japan and Australian have differing opinions,
Crean said, "We must prevent this issue from spilling over into
other sectors," and indicated he would pay due consideration so that
it would not have any impact on the entire bilateral relationship.

Crean is the first Australian cabinet member to visit Japan since
the Labor Party-led government was launched in last December. The
Labor Party criticized the former Howard administration for its
lukewarm antiwhaling attitude. The party is prodded by the Greens
and environmental groups to take a tough stance against Japan.

In the interview, Crean noted, "The people of Australia are of the
opinion that the whaling issue should not be linked to other
issues," and indicated he drew a clear line between hardliners and
himself.

On negotiations with Japan on an economic partnership agreement,
Crean said, "Generally, talks are going well," but he added, "We
understand the difficulties facing Japan, but if Japan is unable to
compromise in the agriculture sector, no progress can be expected."

19) Moriya indicted on additional charges

YOMIURI (Page 1) (Full)
January 23, 2008

A task force of the Tokyo District Public Prosecutors Office
indicted to the Tokyo District Court former Administrative Vice
Defense Minister Takemasa, 63, and Motonobu Miyazaki, 69, a former
managing director of Yamada Corporation, a trading firm dealing in
defense equipment, on additional charges for bribery over the
Defense Ministry's procurement of equipment for the Self-Defense
Forces. Moriya is charged with taking bribes. He allegedly was
treated by Miyazaki to golfing outings worth about 4.97 million yen
when he was in the post of vice defense minister. Miyazaki is
charged with giving bribes. Moriya is further charged with violating
the Diet Testimony Law (perjury) for falsifying his testimony when
summoned to the Diet as a sworn witness.

Prosecutors have now ended their investigation of Moriya's bribery
case. However, the task force will continue to investigate collusion
involving politicians, bureaucrats, and businesses.

20) New Komeito discusses permanent law for SDF missions overseas

MAINICHI (Page 5) (Abridged)
January 23, 2008

New Komeito-the ruling Liberal Democratic Party's coalition
partner-held a joint meeting of its panels on foreign affairs,

TOKYO 00000166 013 OF 014


national security, and cabinet affairs yesterday to kick off a
full-fledged discussion of permanent legislation for Japan to send
the Self-Defense Forces for overseas missions. Prime Minister Yasuo
Fukuda, in his recent policy speech before the Diet, indicated that
the government would consider creating a permanent law. The
government is now about to move on permanent legislation, and New
Komeito will therefore prepare itself for the move. New Komeito has
so far remained cautious about the idea of creating a permanent law
for SDF dispatches, with its President Akihiro Ota maintaining that
the Diet should separately handle each case. However, the leading
opposition Democratic Party of Japan (Minshuto), as well as the LDP,
is positive about permanent legislation. New Komeito took a step
forward, fearing that it could be isolated if it does not join in
the discussion.

However, Soka Gakkai, the religious body that backs New Komeito, is
cautious about permanent legislation for SDF activities overseas.
New Komeito premises its discussion on three points: 1) SDF
activities overseas should be within the bounds of
constitutionality; 2) civilian control should be ensured with the
Diet's involvement; and 3) SDF personnel's use of weapons overseas
should be allowed in limited cases.

21) Diet chairs, vice chairs to consult if ruling, opposition
parties get nowhere

YOMIURI (Page 2) (Full)
January 23, 2008

House of Representatives Speaker Kono and House of Councillors
President Eda met in the Diet yesterday to discuss what to do if and
when the ruling and opposition parties are bogged down in their
talks over Diet steering. In the meeting, the two Diet chairs
concurred that they will meet to consult in that event, with the
lower chamber's vice speaker and the upper chamber's vice president
also attending. The Diet is currently lopsided with the ruling
coalition of the Liberal Democratic Party and New Komeito holding a
majority of the seats in its lower chamber and the opposition bench
dominating the House of Councillors. This is the first time for the
two Diet chairs to hold a formal meeting and exchange views on how
to steer the Diet.

Kono called the meeting. House of Representatives Vice Speaker
Takahiro Yokomichi and House of Councillors Vice President Akiko
Santo were also present at the meeting.

Later in the day, Kono and Eda met the press. According to their
accounts, the two in their meeting took up the fact that a
now-enacted new antiterrorism special measures law was passed in a
second vote of the House of Representatives after it was voted down
in the House of Councillors as the first case of overriding the
upper chamber's decision in a half century. "It was not a
praiseworthy process," Eda said. Kono and Eda agreed to meet and
consult, with their respective deputies attending from both houses,
if the ruling and opposition parties ever get nowhere in their
talks.

Kono and Eda did not talk about the propriety of taking a second
vote on a once-rejected bill, according to their press remarks. The
two also said they did not talk about how to handle specific bills,
such as a bill revising the Special Taxation Measures Law to keep
the current provisional rate of taxation on gasoline, which is a

TOKYO 00000166 014 OF 014


point of contention in the current Diet session.

The Diet has just convened an ordinary session. The two top
parliamentary leaders' unusual meeting at this point is believed to
be intended to appeal on the importance of building a consensus
through talks. However, they also agreed that the four Diet leaders
would not meet regularly. Some ruling and opposition lawmakers are
concerned about their meeting this time, with one of them saying:
"There's no guarantee that the ruling and opposition parties will
accept the results of their meeting. If they get involved too
deeply, they may hurt the Diet's authority as well as their own."

22) Civil servant reform panel decides to forgo plan to ban contacts
between lawmakers and bureaucrats, recommend strict rules instead

ASAHI (Page 1) (Excerpts)
January 23, 2008

The council on comprehensive reform of the civil servant system
chaired by Toshiba Chairman Tadashi Okamura, an advisory panel to
Prime Minister Fukuda, reached a broad agreement yesterday on its
final report. The original draft had been designed to prohibit civil
servants from making contacts with politicians in principle. This
part was eliminated from the final report, allowing civil servants
to make contacts under "strict rules" when there are orders by
cabinet ministers. The report also clearly specifies that what is
tentatively called the "cabinet personnel agency" to exclusively
handle the personnel affairs of national civil servants be
established in fiscal 2009. The panel will present the report to the
prime minister after its final decision on Jan. 31.

Modeling after Britain, the original draft was designed to ban "in
principle" the general civil servants, except for the parliamentary
affairs specialists to be established to assist the senior
vice-ministers, parliamentary secretaries, and cabinet ministers
with their Diet responses, from making direct contacts with
lawmakers.

But drawing fire from the LDP and other parties, the report was
modified into "centrally control contacts between politicians and
bureaucrats by establishing strict rules, such as limiting to cases
with orders by cabinet ministers." The panel says that lawmakers'
influence peddling toward civil servants can be eliminated, with one
council member saying, "The system allowing civil servants to
contact lawmakers on an individual basis is a problem. Problems can
be eliminated if contacts are controlled under the leadership of
cabinet minister." But the "strict rules" might become toothless
depending on what will go into it.

SCHIEFFER

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