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Cablegate: Japanese Morning Press Highlights 01/24/08

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UNCLAS SECTION 01 OF 13 TOKYO 000180

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 01/24/08


Index:

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

4) Ambassador Schieffer attends ceremony at Iikura House for major
Japan culture event to be launched in Washington (Yomiuri)

G8 Summit:
5) Government studying responses to possible terrorist attacks on G8
Summit at Lake Toya in Hokkaido (Yomiuri)
6) Japan as host country taking security measures for G8 seriously
(Yomiuri)

Davos Conference:
7) Prime Minister Fukuda in Davos speech will call for priority
assistance to Africa (Tokyo Shimbun)
8) Fukuda at Davos Conference will propose reversal of
global-warming emissions situation in 10-15 years (Tokyo Shimbun)
9) mergency assistance for PKO training in Africa will not use
Japan's ODA funds (Sankei)

10) First of two MSDF destroyers sets sail for Indian Ocean to
resume refueling mission (Tokyo Shimbun)

11) Democratic Party of Japan (DPJ) President Ozawa coordinating
schedule for a visit to South Korea next month (Mainichi)

The economy:
12) Stock market after dropping three days in a row, finally
recovers somewhat (Nikkei)
13) Prime Minister Fukuda: If global stock markets continue to drop,
will seek international cooperation to halt the slide (Nikkei)

Diet agenda:
14) DPJ lawmaker blasts Upper House Speaker Eda for courtesy meeting
with visiting U.S. Congressman Mike Honda (Sankei)
15) DPJ heading in direction of approving package of supplementary
budget bills (Mainichi)
16) Mid-February seen as timeframe for passage of tax bills by Lower
House (Yomiuri)
17) To check DPJ, Government calls passing budget by end on March
"greatest measure to help keep the stock market at high level"
(Nikkei)
18) -- Heated criticism starts in the Diet on the gasoline tax issue
(Asahi)
19) Diet interpellations see heated exchange on the tax issue
(Mainichi)
20) Thirty percent of local DPJ chapters dissatisfied with party's
stance on gasoline tax (Nikkei)
21) LDP-sponsored rally to back maintaining road revenues from
gasoline tax joined by 19 local DPJ chapters (Nikkei)
22) LDP's Koichi Kato predicts that a Lower House election this fall
would trigger political realignment (Mainichi)
23) People's National Party head Watanuki may link up with
Hiranuma's new party (Sankei)

Articles:

1) TOP HEADLINES


TOKYO 00000180 002 OF 013


Asahi:
Debate kicks off in Diet on gasoline tax rate

Mainichi:
Government eyes system to pay 20 million yen in compensation to
cerebral palsy babies even without proof of obstetrician negligence

Yomiuri:
Government to study shooting down hijacked planes heading toward
Lake Toya Summit in July

Nikkei:
Government to boost trade insurance for resource development to one
trillion yen

Sankei:
Prime minister plans to hold party head talks to select new BOJ
governor

Tokyo Shimbun:
Questions about road construction: Unprofitable roads opened

Akahata:
JCP Secretary General Ichida in question-and-answer session calls
for change in politics to protect human lives

2) EDITORIALS

Asahi:
(1) Uncertainty looming large over U.S. economy.
(2) Japan should review strategy on aid and countering global
warming to support the future of developing countries.

Mainichi:
(1) Reallocating road tax revenues for general expenditures is
rational
(2) Additional notices on pension records amaze us

Yomiuri:
(1) Don't allow people's lives to be disturbed by tax reform bill
(2) Spring wage offensive: Produce results that will lead to
revitalizing Japanese economy

Nikkei:
(1) Prime minister should speak on strategy to stabilize market and
grow economy
(2) Proceed with wage-hike negotiations from long-term viewpoint

Sankei:
(1) U.S. urged to study pouring public funds into tumbling stock
market
(2) Detailed explanation needed on social security card system

Tokyo Shimbun:
(1) Special notices on pension records: Social Insurance Agency
should deal with issue from people's standpoint
(2) Spring wage-hike negotiations: Correct income disparity by
hiking wages

Akahata:
(1) Switch focus of economic policy from major companies to
households and people.

TOKYO 00000180 003 OF 013

3) Prime Minister's Official Residence (Kantei)

Prime Minister's schedule, Jan. 23

NIKKEI (Page 2) (Full)
January 24, 2008

07:53
Met with Deputy Chief Cabinet Secretary Iwaki at Kantei.

09:01
Attended a special cabinet meeting.

10:01
Attended an Upper House plenary session.

12:01
Arrived at Kantei.

13:01
Attended an Upper House plenary session.

15:40
Met with Cabinet Office International Peace Cooperation Headquarters
Secretariat Chief Ozawa at Kantei.

SIPDIS

16:01
Met with Ambassador to Bahrain Kondo and other ambassadors who
attended a meeting of ambassadors assigned to African nations.
Afterwards, met with Japan Center for International Finance Advisor
Hiroshi Watanabe.

17:13
Met with Deputy Foreign Minister Kono, MOFA Economic Affairs Bureau
Director-General Otabe, Environment Ministry Global Environment
Bureau Director-General Minamikawa and others, joined by Chief
Cabinet Secretary Machimura.

18:04
Interview with BBC. Afterwards, met with Deputy Chief Cabinet
Secretary Futahashi, joined by Machimura.

SIPDIS

19:33
Arrived at residential quarters in Kantei.

4) The power of Japanese culture

YOMIURI (Page 4) (Full)
January 24, 2008

A "Japan: Culture and Hyperculture" reception was held by Foreign
Minister Masahiko Koumura last night at the Foreign Ministry's
Iikura Guesthouse in Tokyo's Azabudai district.

"Japan!" is an event that will take place in Washington for two
weeks from Feb. 4. The event is designed to introduce Japanese
culture, from traditional arts, such as the Kyogen play and Japanese
drums, to modern subcultures, such as anime and robots, through over
40 programs. From Japan, over 450 artists will take part in the
event.


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The reception was attended by fashion designer Junko Koshino, U.S.
Ambassador to Japan Thomas Schieffer, and former Foreign Minister
Taro Aso, who is known for his love of comic books. Foreign Minister
Koumura made a speech in which he said: "I am certain that the event
will serve as a driving force for Japan-U.S. cultural exchanges." In
response, Ambassador Schieffer said: "Cultural exchanges are
imperative for fostering friendship between the Japanese and
American peoples."

The foreign minister afterwards attended a photo shoot with the
Ambassador, holding a seal-shaped "healing robot" in his arms. Will
the power of culture be able to strengthen Japan-U.S. relations
further?

5) GOJ considering shooting down hijacked airplanes

YOMIURI (Top play) (Full)
January 24, 2008

The government is now studying countermeasures to deal with
terrorist attacks in anticipation of a situation where a commercial
aircraft is hijacked and flown toward the venue of the Group of
Eight (G-8) summit meeting scheduled to be held at Toyako (Lake
Toya) in Hokkaido on July 7-9. These countermeasures include
shooting down the aircraft, Defense Ministry sources said yesterday.
After the Sept. 11, 2001, terrorist attacks on the United States,
previous G-8 host countries, such as Britain and Germany, took
highest-level counterterrorism measures, including deploying fighter
planes and antiaircraft missile batteries around the summit venues.
Japan will also take all possible measures.

In order to prevent airborne terrorism targeting the Toyako summit,
government ministries and agencies-including the Land,
Infrastructure and Transport Ministry, the Defense Ministry, and the
National Police Agency-have decided to set up a no-fly zone around
the summit venue, put sky marshals on commercial flights, and
tighten baggage checks at airports. However, the government has yet
to decide on how to deal with major terrorist attacks that target
vital facilities like the 9/11 attacks.

In the 9/11 terrorist attacks, American Airlines Flight 77 was flown
into the Pentagon. With this event as an example, the Defense
Ministry and the Self-Defense Forces have been making case studies
since last fall. Specifically, the Air Self-Defense Force-if and
when a commercial plane is hijacked-will scramble F-15s from its
Chitose base in Hokkaido and repeatedly warn the hijacked plane to
land at a nearby airport. If the plane does not obey and reaches a
point one minute from the summit venue, then the government could
order the ASDF to shoot it down.

However, if a commercial airplane is hijacked after its takeoff from
a domestic airport, it could reach the summit venue in only 30
minutes. Accordingly, the government has concluded that it has to
determine procedures in advance for the SDF to take actions in that
event, or it will be extremely difficult to prevent such airborne
terrorism.

In order to avoid such a situation, the government needs to work out
an emergency action plan in advance and adopt it in a cabinet
meeting. In this plan, the government would regard a major terrorist
attack using a hijacked plane as a noncontingency emergency under
the Armed Attack Contingency Security Law. In this case, the SDF

TOKYO 00000180 005 OF 013


will be mobilized for public security operations. Furthermore, the
plan will have to get Diet approval within 20 days. "We're studying
what we can do under the current law if and when the government
judged it would be unavoidable to shoot down a hijacked plane," a
senior official of the Defense Ministry said.

6)Commentary: Japan must work out antiterror plan as G-8 host

YOMIURI (Page3 2) (Abridged)
January 24, 2008

In November 2001, shortly after the Sept. 11, 2001, terrorist
attacks on the United States, the government adopted a course of
action in a cabinet meeting against potential major terrorist
attacks like hijacking a commercial plane and flying it into a
targeted building. In this cabinet-endorsed course of action, the
government says it will take strong countermeasures as needed to
ensure public security. This was incorporated in the Armed Attack
Contingency Security Law of 2003.

The law is intended to deal with armed suspicious ships' incursions,
large-scale terrorist attacks, and other events. Under this law, the
government will prepare to work out a counteraction plan and step up
its interdepartmental cooperation involving the National Police
Agency, the Japan Coast Guard, and the Self-Defense Forces. The law
requires the government to work out a counteraction plan in advance
if it recognizes a state of emergency.

This July's G-8 summit in Hokkaido is expected to focus on global
warming. Even so, the G-8 leaders used to discuss antiterror
measures in their past summit meetings, and the G-8 summits were
targeted by terrorists. When Britain hosted the G-8 summit three
years ago, there were terrorist attacks in London. The country
hosting the G-8 summit must determine a course of action in advance
to deter various conceivable terrorist attacks.

7) Prime Minister Fukuda to emphasize Africa in speech at Davos

TOKYO SHIMBUN (Page 3) (Full)
January 24, 2008

Prime Minister Yasuo Fukuda yesterday firmed up the outline of a
speech he will deliver at the World Economic Forum, now in session,
in Davos, Switzerland. In it, Fukuda will emphasize the importance
of measures to counter climate change, as well as the need for
international cooperation to deal with the global slide in stock
prices. The speech's third major theme is development assistance for
African nations. Fukuda in the speech wishes to show a global
audience that Japan is tackling this problem.

Reacting to the worldwide fall in stock prices, Fukuda modified the
initial draft of the speech regarding economic conditions in order
to emphasize that the Japanese economy is "in very good shape and
continues to be on an expansion track." The prime minister is
expected to mention the importance of international cooperation on
monetary policy. On development assistance for Africa, Fukuda will
refer to the upcoming Tokyo International Conference on Africa's
Development (TICAD), which Japan, along with the United Nations,
will co-host in Tokyo in May, and stress giving priority to Africa's
development needs.

In the measures he will list to counter climate change, Fukuda will

TOKYO 00000180 006 OF 013


call for "peak-out targets," from which greenhouse gas emissions
will decline. The prime minister will leave Japan tomorrow afternoon
for Davos and will deliver the speech on Jan. 26.

8) Prime Minister Fukuda to propose at Davos meeting setting targets
for peak greenhouse gas emissions in 10-15 years, after which
emissions will decline

TOKYO SHIMBUN (Page 1) (Full)
January 24, 2008

It was learned yesterday that Prime Minister Yasuo Fukuda in a
speech he will deliver at the World Economic Forum (so-called Davos
meeting) will suggest setting "peak targets" for greenhouse gas
emissions 10-15 years from now. Fukuda has decided not to propose
setting mid-term numerical targets to be included in a post-Kyoto
Protocol framework, although he initially planned to propose such
targets.

The United Nations Climate Change Conference in Bali (COP13)
discussed including targets for peak emissions in the Bali Roadmap,
which charts the course after the expiration of the Kyoto Protocol,
but after much heated discussion, the conference decided not to
adopt such targets.

The International Panel on Climate Change (IPCC) analyzed in its
fourth assessment report that whatever measures may be taken, a rise
in temperature will be unavoidable. As a measure to hold down a
temperature rise to two degrees C, the IPCC's report points out the
necessity of bringing greenhouse gas emissions to their peak in a
10-15 timeframe and halving them by 2050 from 2000 levels.

In part because Japan is the host country of the Group of Eight (G8)
Hokkaido Toyako Summit in July, Fukuda, by emphasizing the
importance of setting targets for peak emissions, which were not
included in the Bali Roadmap, apparently intends to demonstrate his
leadership to an international audience.

However, Fukuda decided not to declare Japan's own emission
reduction targets despite international environmental groups' calls
on Japan to do so. This attitude is likely to cast doubts on the
host nation's persuasiveness.

9) Japan to train PKO members as part of emergency assistance to
Africa but not using ODA funds

SANKEI (Page 3) (Excerpts)
January 24, 2008

The government revealed yesterday the contents of its emergency
assistance for Africa that it is considering implementing from funds
in the fiscal 2008 supplementary budget. It will provide funding for
a PKO training facility in Africa, but the money will not come from
the official development assistance (ODA) program. In addition to
assisting Africa nurture trained peacekeepers, the government will
provide humanitarian aid in the form of food supplies for refugees
fleeing disputes, as well as for the victims of droughts and floods.
In particular, the funding provided for PKO training would be the
first such aid that bypassed the conventional ODA framework, since
ODA projects linked to military organizations are prohibited. Japan
has thus decided to take a new step in the direction of building
international peace.

TOKYO 00000180 007 OF 013

The package of emergency assistance to Africa totals $264.5 million
(approximately 29.1 billion yen). Aid for the PKO training facility
comes to $17 million (approximately 1.9 billion yen. In addition,
there is a total of $64.5 million (approximately 7.1 billion yen) in
refugee aid allocated for such disputed areas as Darfur and southern
Sudan; $45.66 million (approximately 5 billion yen) for Somalia, and
$43.8 million (approximately 4.8 billion yen) for the Congo. The
refugee aid will be provided through international organizations,
and likely to be in the form of food and water supplies, as well as
health care.

10) MSDF destroyer to set sail today for refueling mission

TOKYO SHIMBUN (Page 2) (Full)
January 24, 2008

The Murasame, a 4,550-ton destroyer of the Maritime Self-Defense
Force, will set sail this morning from the MSDF's Yokosuka base in
Kanagawa Prefecture to resume refueling activities in the Indian
Ocean under a newly enacted antiterrorism special measures law.
Defense Minister Shigeru Ishiba and Chief Cabinet Secretary Nobutaka
Machimura will attend a ceremony at the base to send the MSDF ship
off.

Prime Minister Yasuo Fukuda will not attend the ceremony. "I have a
lot of things to do, so I cannot be there," Fukuda told reporters
yesterday evening. The Murasame is one of the two MSDF ships to be
sent to the Indian Ocean. The other vessel is the Oumi, a 13,500-ton
supply ship. The Oumi will set sail tomorrow morning from the MSDF's
Sasebo base in Nagasaki Prefecture. The two vessels will arrive in
the Indian Ocean in mid-February to resume the MSDF's refueling
mission that has been discontinued since the old antiterror law's
expiry in November last year.

11) Coordination underway on visit by Ozawa to South Korea next
month

MAINICHI (Page 2) (Full)
January 24, 2008

Ichiro Ozawa, president of the main opposition Democratic Party of
Japan (DPJ or Minshuto), yesterday began looking into a plan to
visit South Korea in late February immediately before the
presidential inauguration on Feb. 25 of President-elect Lee Myung
Bak. If realized, Ozawa may meet with Lee before Prime Minister
Yasuo Fukuda holds talks with him.

Ozawa has clarified his support for local suffrage for permanent
foreign residents. If a meeting with Lee is realized, Ozawa will
take up this issue in a bid to point up the difference between his
party and the government-ruling coalition. He met last December with
Chinese President Hu Jintao ahead of Fukuda.

12) Nikkei index rebounds, closes, up 256 yen

NIKKEI (Page 1) (Full)
January 24, 2008

The Tokyo Stock Exchange (TSE) started with almost across-the-board
rise in share prices and the Nikkei Average rebounded after a
three-day hiatus. The market reacted favorably to the U.S. Federal

TOKYO 00000180 008 OF 013


Reserve Board's surprise rate cut and eased concerns for the time
being about a worldwide financial crisis. Prime stocks, such as
electric power, automobile, and bank, were bought back widely.
During the trading hours, however, share prices notably fluctuated
widely in reaction to Asian stocks and exchange rates, keeping
investors alert to the future. The Nikkei Average closed at
12,829.06, up 256.01 (2.04 PERCENT up) from the previous day.

13) Prime Minister Fukuda: If stock prices continue to fall,
international cooperation will be needed; Japan still concerned
about chain reaction of stock market drops

NIKKEI (Page 3) (Full)
January 24, 2008

In response to an interview by British Broadcasting Corporation
(BBC) at his office, Prime Minister Yasuo Fukuda said yesterday:

"If the worldwide fall in stock prices is prolonged, it will
inevitably have an impact on actual economy. There are no special
measures that we should take now, but should the trend moves the
wrong way, cooperation among (various countries) will be necessary
to deal with the matter."

He also pointed out: "Financial institutions should be pressed to
post their new losses."

An increase in the percentage of delinquency in U.S. consumer loans
is another source of concern. Citigroup declared that 5.4 billion
dollars of consumer loans for the October-December period last year
were uncollectible. Nomura Securities Chief Strategist Seiichiro
Iwasawa made this comment: "Given the negative impact on the U.S.
actual economy, it will take some time to dispel anxieties."

14) Upper House President Eda criticized for meeting with U.S. Rep.
Honda

SANKEI (Page 5) (Full)
January 24, 2008

Hideo Watanabe, a House of Councillors member of the Democratic
Party of Japan (DPJ or Minshuto), criticized Upper House President
Satsuki Eda in a general meeting yesterday of the DPJ Upper House
members for meeting on Jan. 8 with U.S. Rep. Mike Honda, who took
the lead in adopting a resolution criticizing Japan over the wartime
"comfort women" issue. Watanabe said: "It might be different if he
were an ordinary congressman, but he is a legislator who has
challenged our Diet. I cannot accept the thoughtless meeting."

15) Some DPJ members likely to support supplementary budget bill

MAINICHI (Page 5) (Full)
January 24, 2008

The Democratic Party of Japan (DPJ) is having difficulty dealing
with bills related to the fiscal 2007 supplementary budget bill,
including one amending the Local Allocation Tax Law. That is because
failure to enact related bills before the end of the current fiscal
year is bound to affect the finances of local governments.
Furthermore, if they are voted down in the Upper House, the
government would adopt the set of bills in a second vote in the
Lower House, following the new antiterror legislation, making this

TOKYO 00000180 009 OF 013


practice a custom. Some DPJ members have begun to look into the
possibility of approving those bills in order to concentrate on a
battle over the fiscal 2008 budget bill, to which the party is
giving priority.

The bill amending the Local Allocation Tax is intended to approve 30
billion yen in local tax grants, which the government distributed
more than the due amount, because of a mistake in estimating tax
revenues for fiscal 2007. Kazuhiro Haraguchi, internal affairs
minister of the DPJ's "Next Cabinet," criticized the government,
saying, "I will harshly pursue the government for essentially
window-dressing accounts."

However, if the bill fails to secure Diet approval before the end of
the current fiscal year, local governments would be asked to return
the grants. If the DPJ allows things to get to this point, it could
come under fire as slighting local administration, especially at a
time when local governments are negatively reacting to the idea of
abolishing provisional tax rates.

The ruling camp will most likely adopt the bill in a second vote in
the Lower House, backed by support from heads of local governments.
As such, the DPJ finds it difficult to submit a censure motion
against the prime minister, even if the bill is approved again in
the Lower House.

16) Government, ruling camp plan Lower House passage of tax-related
bills in mid-February; Possibility of three-month's extension of
provisional tax rate

YOMIURI (Page 2) (Excerpt)
January 24, 2008

The government yesterday presented to the House of Representatives a
package of tax-system-related bills, including the special measures
tax bill that would maintain the provisional tax rate on gasoline.
The plan is to have the Lower House pass the bills around
mid-February and have the Diet pass the package before the deadline
in late March when the original measures will expire. However,
within the ruling parties, there is concern that if the Democratic
Party of Japan (DPJ) drags out deliberations on the bills in the
House of Councillors, the provisional tax rate will expire, causing
great confusion. As a result, the idea has been floated of
submitting a lawmaker-sponsored bill that would extend the
provisional tax for three months beyond the deadline and have the
Lower House pass this bill this month.

17) Government, ruling parties pressuring opposition bloc, arguing
that enacting budget bill in current fiscal year is best way to
boost stock prices

NIKKEI (Page 2) (Full)
January 24, 2008

There is growing momentum in the government and ruling parties to
apply pressure on the opposition camp by using the global stock
plunges as an excuse for enacting the fiscal 2008 budget bill and
related bills within the current fiscal year. The opposition bloc is
reacting strongly, contending that they are shifting the blame onto
the global stock plunge.

In yesterday's Upper House plenary session, Prime Minister Yasuo

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Fukuda said: "Ensuring an early enactment of the fiscal 2008 budget
bill and related bills is the best step." This was preceded by DPJ
member Masako Okawara's critical comment that described a plunge in
stock prices as "Fukuda selling." An agreement was also reached at
the ruling bloc's executive meeting yesterday that the enactment of
the budget bill and related bills before March 31 was the best way
to boost stock prices.

Meanwhile, Upper House DPJ Diet Affairs Committee Chairman Susumu
Yanase categorically said: "People are selling stocks from
disappointment in the Fukuda administration, which lacks any
effective economic measures."

18) LDP, DPJ kick off battle in Diet on gasoline tax rate to win
public support

ASAHI (Top Play) (Excerpts)
January 24, 2008

The government submitted a tax reform bill that includes a measure
to extend the current provisional high gasoline tax rate to the
House of Representatives yesterday. Following this, maneuvering
started in the "gasoline price-cutting Diet," as dubbed by the
Democratic Party of Japan (DPJ).

Yesterday, 450 members of 44 prefectural assemblies, including 19
representatives from the DPJ, gathered at the Constitution Memorial
Hall near the Diet building for a rally calling for maintaining the
provisional road-related tax rates. Local members of the Liberal
Democratic Party arranged the rally with the aim of making an appeal
to the public the importance of keeping the provisional tax rates
and forming a coalition against the DPJ.

Attention there was focused on House of Councillors members of the
DPJ, who sat next to senior ruling party members. The DPJ members
who openly defied their party's policy are Yasuhiro Oe, Hideo
Watanabe, and Yasuo Yamashita. Oe stated: "If our party cannot sense
the atmosphere and enthusiasm in this rally, the party may have lost
its senses. For those of us who live in rural areas, roads are part
of our lives." This remark came out in response to LDP Secretary
General Bunmei Ibuki's remark that "I don't want to believe that the
party will be swayed only by party interests, taken advantage of
stupid populism. I would like to listen to a sensible policy from
the DPJ."

In debates on the new antiterrorism bill, future options for Japan's
international contribution took center stage. But the major point of
contention in dispute on the tax reform bill is whether priority
should be given to "gasoline price" or "roads," an issue closely
linked to people's lives. Given this, public opinion will greatly
affect the result of the battle. The ruling camp intends to
spotlight local voices calling for road constructions, while the DPJ
underscore that it is a party opposing the ruling camp's policy. One
Lower House member of the LDP who attended the rally confidentially
said: "This gathering was effective. I believe it will affect the
DPJ."

The Ministry of Internal Affairs and Communications (MIAC) produced
a list of local governments' estimated decreased amounts of revenues
unless the provisional high tax rates are maintained. Based on this
list, the ruling camp intends to persuade local government heads and
assembly members to support its policy. Osaka Mayor Kunio Hiramatsu,

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who was just elected with the recommendation of the DPJ, said in a
press conference yesterday: "If the current tax rates are
discontinued, a huge amount of money will disappear from the
municipal government's coffers. In such a case, it will become
impossible to continue the budget-compilation work."

Meanwhile, the DPJ criticized in its general affairs section's
meeting yesterday a remark made in a press conference by MIAC
Administrative Vice Minister Takino raising a question about the
DPJ's plan to secure fiscal resources to cover shortfalls expected
from tax cuts. The main opposition party called the lawmaker who
made the remark a "demagogue out to spoil the DPJ plan." In its Diet
Affairs Committee meeting, a senior party member made this request:
"The rally today was a gathering 'disguised' by the ruling camp and
the bureaucrats. Fake gatherings calling for maintaining the high
road-related tax rates will be held across the nation. At the same
time, our party also should hold gatherings or deliver street-corner
speeches."

19) Diet interpellations: Confrontation over provisional gas tax
rate; Little interest in consumer policy

MAINICHI (Page 5) (Excerpts)
January 24, 2008

With the end of a Diet question session yesterday by heads of all
political parties on Prime Minister Yasuo Fukuda's policy speech
both in the Lower and Upper Houses, which lasted three days, the war
of words will shift on Jan. 25 its forum to the Budget Committees of
both House. Points of confrontation will include whether to abolish
provisional tax rates, such as one on the gas tax. However, the
prime minister has failed to show his presence, as he apparently
replied to questions using texts prepared by bureaucrats. As such,
deliberations on key issues, including pensions and consumer policy,
lacked enthusiasm.

One of the points at issue is whether it is necessary to build more
roads, even by retaining the provisional tax rate. The government
late last year mapped out a 10-year road construction plan worth 59
trillion yen over 10 years. However, Japanese Communist Party (JCP)
Chair Kazuo Shii criticized the plan for constructing unnecessary
roads. New Komeito member Toshiko Hamayotsu also called for a full
account of the plan, saying, "The people would suspect that the
government has taken the view that a road construction budget must
be compiled.

The prime minister stressed that constructing roads that are helpful
for the independence of regional areas or settling the problem of
railroad crossings that rarely open will continue to be necessary. A
flurry of criticism was made by opposition party members, with
Kentaro Kudo of the Democratic Party of Japan (DPJ) noting, "The
10-year plan is like a declaration prohibiting the use of special
road-construction revenues for other purposes for the next decade."

20) Poll on provisional tax rates: 30 PERCENT of DPJ chapters
dissatisfied with party's explanation on alternate financial
resources

NIKKEI (Page 2) (Excerpts)
January 24, 2008

The Nikkei conducted on Jan. 21-23 an opinion survey on Democratic

TOKYO 00000180 012 OF 013


Party of Japan (DPJ or Minshuto) local organizations to learn their
views on the continuation of the provisional tax rates as a
financial resource for road projects and other matters. Although
there was no opposition to the party's policy of abolishing the
provisional tax rates, 30 PERCENT of the respondents expressed
discontent with the measures to secure financial resources compiled
by the party leadership with the aim of averting a drop in tax
revenues for local governments. The survey exposed a difference in
views between the party leadership and local chapters, with over 50
PERCENT calling for policy talks with the ruling camp and a
one-third pointing to a delay in preparations for the next
election.

Representatives and secretaries general of the 47 prefectural
chapters were asked questions in a written form or on the telephone.
Valid answers came from them all.

Seven prefectures strongly calling for road construction, such as
Yamagata, Fukushima and Tochigi, withheld their views about the
party's policy of abolishing the provisional tax rates. A Fukushima
representative said, "A sudden decline in tax revenues would cause
confusion." A Miyazaki member commented, "The government should
transfer more financial resources to local regions."

Local regions are discontent with the party's measures for alternate
financial resources, though they do not oppose them outright. The
party leadership is considering submitting to the Diet a bill
designed to make up for tax revenue shortfalls by abolishing the
local burden for state projects. Despite that, eight prefectures,
including Aomori, Ibaraki, and Nagano, answered that the step was
insufficient, and six prefectures withheld their answers.

Behind their responses is a fact that local governments will lose
revenues if the DPJ plan fails to clear the Diet. Unless the DPJ can
clear the two hurdles of forcing the prime minister into dissolving
the Lower House for a snap general election and realizing regime
change, turbulence would result in and the party would find itself
under fire.

To a question on forming a grand coalition with the LDP, 51 PERCENT
said that they were against it, though the party should respond to a
call for policy talks. Although no one supported the option, a Gunma
representative said, "The party should consider it after the next
Lower House election."

Their decisions are apparently affected by a delay in preparations
for the election. Thirty prefectures, or 64 PERCENT of the total,
said preparations have been made steadily, while 15 prefectures, or
32 PERCENT , pointed out a delay in preparations.

21) 19 DPJ-affiliated prefectural assemblymen attend road tax
revenue maintenance rally

NIKKEI (Page 2) (Full)
January 24, 2008

A rally seeking the maintenance of road-related tax revenues was
held yesterday at the Kensei Memorial Hall near the Diet building by
prefectural assemblymen and others. In the session, Upper House
Democratic Party of Japan member Yasuhiro Oe, who was present as a
guest along with Liberal Democratic Party Secretary General Bunmei
Ibuki, made a speech in which he said, "I am terribly sorry for

TOKYO 00000180 013 OF 013


causing you trouble," and bowed deeply. This was met with applause,
with someone shouting, "You should join the LDP."

The rally brought together 444 prefectural assemblymen from 44
prefectures. Included in them were 19 DPJ-affiliated members from
eight prefectures, including Wakayama and Fukuoka. Oe, touching on
signatures by 39 DPJ lawmakers opposing the party's policy to
abolish the provisional tax rates, praised DPJ Upper House members
Hideo Watanabe and Yasuo Yamashita who were also present, by
referring them as the lawmakers not yielding to party pressure.

The government plan will clear the Diet and be enacted if 17 Upper
House opposition party members support it. According to the
organizer, DPJ Upper House Rules and Administration Committee
Chairman Takeo Nishioka had indicated that he would attend the
rally, but he did not show up.

22) General election this fall, followed by political realignment,
Koichi Kato predicts

MAINICHI (Page 5) (Full)
January 24, 2008

Former Liberal Democratic Party (LDP) Secretary General Koichi Kato
during a speech given at the Midland Mainichi Forum held in Nagoya
on Jan. 28, hosted by Mainichi Shimbun, predicted that the Lower
House would be dissolved for a snap election this fall. He then
pointed to the possibility of political realignment after the
election, saying: "There might be major changes in Japanese politics
this fall. I have a feeling that it will be the greatest political
juncture in decades."

In connection with political realignment, Kato noted: "Such a change
is not possible in the current single-seat constituency system. I
believe discussions are going on with the possibility of reinstating
the multiple-seat constituency system." Specifically, he claimed
that there is a plan to create 150 three-seat constituencies.

23) PNP leader Watanuki may form coalition with "Hiranuma New
Party"

SANKEI (Page 5) (Full)
January 24, 2008

People's New Party (PNP) leader Tamisuke Watanuki yesterday held a
press conference at the Japan National Press Club. Referring in it
to his party's response to the political situation after the next
House of Representatives election, the PNP leader revealed that his
party would aim to become the third largest force, following the
ruling Liberal Democratic Party and the largest opposition
Democratic Party of Japan. He stated: "I think it would be better to
form a third force by making a group in which lawmakers from both
ruling and opposition camps can take part. I will do my best in that
direction." In a question-and-answer session, asked about his view
on an alliance with a new party, something former MITI Minister
Takeo Hiranuma has mentioned, Watanuki responded: "I won't rule out
the possibility."

SCHIEFFER

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