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Cablegate: Japanese Morning Press Highlights 01/28/08

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UNCLAS SECTION 01 OF 14 TOKYO 000214

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WHITE HOUSE/NSC/NEC; JUSTICE FOR STU CHEMTOB IN ANTI-TRUST DIVISION;
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CINCPAC FLT/PA/ COMNAVFORJAPAN/PA.

E.O. 12958: N/A
TAGS: OIIP KMDR KPAO PGOV PINR ECON ELAB JA

SUBJECT: JAPANESE MORNING PRESS HIGHLIGHTS 01/28/08


Index:

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

Opinion polls:
4) Mainichi poll finds 54 PERCENT of public want tougher stance
toward North Korea (Mainichi)
5) 83 PERCENT of Japanese are worried about the safety of the food
they eat in Yomiuri poll (Yomiuri)
6) Cabinet Office survey: 45 PERCENT of the public feel uneasy
about using the Internet for fear of personal information being
leaked (Mainichi)

Environmental diplomacy:
7) Prime Minister Fukuda at Davos Conference calls for infusion of 3
trillion yen into technological innovation to halt global warming
(Yomiuri)
8) Former British Prime Minister Blair tells Fukuda at Davos that
Japan should take leadership in drive to reduce greenhouse gases
(Tokyo Shimbun)

Energy and the environment:
9) Government simulation to be announced next week finds reduction
of global greenhouse gases possible (Nikkei)
10) Energy ministers of Japan, U.S., Europe agree to develop new
energies (Nikkei)

Security and defense affairs:
11) U.S., Japan sign special measures agreement on host-nation
support (Asahi)
12) Japan wants to discuss with ROK President-elect Lee during his
upcoming visit the possibility of a trilateral Japan-U.S.-South
Korea security dialogue (Nikkei)
13) Japan, Australia, U.S. high-level talks to discuss joint missile
research (Nikkei)
14) Defense Ministry plans to start construction of a new system for
missile interception of highly accurate cruise missiles (Yomiuri)


15) Whaling issue could spill over into the upcoming G8 summit
(Tokyo Shimbun)

16) Panel of experts to report proposals on 30th for promoting
inward investment (Nikkei)

Diet agenda:
17) Ruling camp will present a bill extending the gasoline tax for
two months beyond its end of March expiration date (Yomiuri)
18) Democratic Party of Japan (DPJ) will not compromise in its
opposition to the gasoline tax bill, even a short extension (Tokyo
Shimbun)
19) Ruling and opposition camps to clash today in the Lower House
Budget Committee (Tokyo Shimbun)
20) Fukuda resolved to reduce turmoil in the Diet over bill impasse,
but the opposition camp is equally resolved to continue to cause
trouble (Yomiuri)

Osaka gubernatorial race:
21) Win by LDP-backed Hashimoto in Osaka governor's race a blow for
Ozawa's DPJ (Asahi)

TOKYO 00000214 002 OF 014


22) Exit poll in Osaka gubernatorial race shows 59 PERCENT of
women, a majority of unaffiliated votes cast ballots for LDP-backed
Hashimoto (Tokyo Shimbun)

Articles:

1) TOP HEADLINES

Asahi, Mainichi, Yomiuri & Tokyo Shimbun:
Lawyer and TV personality 38-year-old Hashimoto elected Osaka
governor

Nikkei:
Nissan Motor, Toyo Engineering to hire large numbers of engineers in
Asia to complement manpower shortages in Japan

Sankei:
Prime minister to decide today to submit bridge bill to maintain
provisional higher tax rates

Akahata:
Poll: Japan's measures to fight global warming found worst among
industrialized countries

2) EDITORIALS

Asahi:
(1) Proposals for creating desirable country (Part 14): Find ways to
protect equality in medical services

Mainichi:
(1) Start of spring wage negotiations: Boost consumption by
increasing wages
(2) Hashimoto should do best to revitalize battered finances as new
Osaka governor

Yomiuri:
(1) New Osaka governor expected to reconstruct finances
(2) We expect Tourism Agency to come up with effective measures

Nikkei:
(1) Substantial discussion urged for consumer affairs
administration
(2) New Osaka governor must urgently tackle reconstructing finances

Sankei:
(1) New Osaka governor expected to take lead in rehabilitating
Kansai area
(2) Attractive teaching materials necessary for moral education

Tokyo Shimbun:
(1) 100 PERCENT reuse of wastepaper not a bad idea, but we need to
think about the purpose of recycling
(2) Handball situation: Regain fair stance

Akahata:
(1) Rewrite report on environment assessment methods for new U.S.
base relocation site in Okinawa

3) Prime Minister's Official Residence (Kantei)

Prime Minister's schedule, Jan. 25

TOKYO 00000214 003 OF 014

NIKKEI (Page 2) (Full)
January 26, 2008

07:54
Met with Deputy Chief Cabinet Secretary Ono at Kantei.

09:01
Attended a cabinet meeting.

10:00
Attended a Lower House Budget Committee session.

12:04
Arrived at Kantei.

13:00
Attended a Lower House Budget Committee session.

15:19
Met with Chief Cabinet Secretary Machimura at Kantei.

16:00
Arrived at residential quarters in Kantei.

18:20
Left Haneda Airport aboard a government plan to attend the World
Economic Forum in Davos, Switzerland.

Prime Minister's schedule, Jan. 25 & 26

NIKKEI (Page 2) (Full)
January 27, 2008

Jan. 25
Night
(Local time)
Arrived at Zurich Airport, Switzerland, by a government plane.
Stayed at Movenpick Hotel.
Jan. 26
Early morning
Left Zurich by a helicopter. Arrived at Davos and had preliminary
discussion at Congress Hotel.
Morning
Met at Congress Center with President of Senegal Wade, former
British Prime Minister Blair, U.S. Microsoft Chairman Bill Gates,
rock bank U2's Bono, World Bank President Zoellich, and Japan
International Cooperation Agency President Sadako Ogata. Addressed
an audience at an annual general meeting of the World Economic Forum
in Davos.
Noon
Attended a luncheon hosted by the forum.
Afternoon
Responded to interviews with reporters accompanying him at Congress
Hotel. Met with Blair. Had an interview with CNN TV. Afterwards, met
with Swiss President Couchepin..
Evening
Left Davos by a helicopter.

Prime Minister's schedule, Jan. 26 & 27

NIKKEI (Page 2) (Full)

TOKYO 00000214 004 OF 014


January 28, 2008

Jan. 26
Night
(Local time)
Left Zurich Airport.
Jan. 27
(Japan time)
15:00
Arrived at Haneda Airport.
15:31
Made a return home report at Imperial Palace.
15:44
Arrived at residential quarters in Kantei.

4) Poll: 54 PERCENT see need to heighten pressure on N. Korea

MAINICHI (Page 1) (Full)
January 27, 2008

The Mainichi Shimbun conducted a telephone-based public opinion
survey on Jan. 19-20, in which respondents were asked what stance
they thought the government should take toward North Korea. In
response, a total of 54 PERCENT answered that the government should
step up Japan's pressure on North Korea, with a total of 39 PERCENT
saying the government should prioritize dialogue with North Korea.

Among men, more than half of those in all age brackets wanted the
government to heighten pressure. Meanwhile, among those who support
the Fukuda cabinet, public opinion was split, with 47 PERCENT
prioritizing dialogue and 46 PERCENT emphasizing pressure. Among
those who do not support the Fukuda cabinet, more than 60 PERCENT
prioritized pressure.

A similar question was asked in a previous survey taken in October
last year, one month after the Fukuda cabinet came into office. To
that question, 36 PERCENT answered that Japan should further
strengthen its pressure on North Korea, with 30 PERCENT saying
Japan should continue the Abe cabinet's pressure-oriented stance and
29 PERCENT saying Japan should switch to a dialogue-oriented
attitude.

In the previous survey, a total of more than 60 PERCENT answered
that Japan should toughen its pressure on North Korea. In the survey
this time, however, the proportion of pressure-oriented answers
decreased. Instead, there was an increase of 10 PERCENT in the
proportion of dialogue-oriented answers.

5) Poll: 83 PERCENT concerned about food safety

YOMIURI (Page 2) (Abridged)
January 28, 2008

A total of 83 PERCENT are concerned about food safety, the Yomiuri
Shimbun found from its face-to-face nationwide public opinion survey
conducted Jan. 12-13. A similar question was asked in an earlier
survey that was taken in September last year when a number of food
makers were found to have falsified their date marking to prolong
the shelf life of their products. In that survey, a total of 84
PERCENT were concerned about food safety. In the survey this time,
there was almost no improvement, showing the public's deep-seated
distrust.

TOKYO 00000214 005 OF 014

Those concerned about food safety were asked to pick one or more
reasons. The most common answer, accounting for 71 PERCENT , was
that there were many cases that falsified food labeling. Among other
reasons, Japan's increasing food imports accounted for 57 PERCENT ,
with residual agricultural chemicals at 50 PERCENT and food
additives also at 50 PERCENT .

6) 45 PERCENT feeling uneasy about Internet: gov't poll

MAINICHI (Page 2) (Full)
January 27, 2008

The Cabinet Office yesterday released findings from its public
opinion survey on Internet security. In the survey, respondents were
asked if they felt uneasy about using the Internet. To this
question, 45.4 PERCENT answered "yes," with 36.3 PERCENT saying
"no" and 18.3 PERCENT saying they "don't know."

The survey was conducted in November last year on a face-to-face
basis with a total of 5,000 persons chosen from among men and women
aged 20 and over. Answers were obtained from 3,006 persons. "Yes"
accounted for 55 PERCENT among those in their 40s and also topped
50 PERCENT among those in their 30s and 50s. However, those in
higher age brackets do not access the Internet so often. "People in
these generations might feel uneasy about their children's access to
dating sites," a government public relations official of the Cabinet
Office analyzes.

In the survey, respondents were asked to pick one or more concerns.
To this question, 66.5 PERCENT cited personal data leakage with
computer virus infection. Among other answers, phishing scams
accounted for 52.1 PERCENT , with false or illegal charging at 50.5
PERCENT .

Respondents were also asked to pick one or more about what they
wanted police to watch to crack down. To this question, 64.5 PERCENT
picked sex crimes victimizing children. Among other answers,
obscene images accounted for 56.4 PERCENT , with murder and bomb
threats at 53.3 PERCENT .

7) Fukuda in Davos speech reveals plan to invest 3 trillion yen in
technical innovation to fight global warming

YOMIURI (Page 1) (Full)
January 27, 2008

Davos, Switzerland, Makoto Miura

Prime Minister Fukuda delivered a speech at the World Economic Forum
in Davos, Switzerland, on the morning of Jan. 26, local time. He
demonstrated his resolve to address the task of forming a post-Kyoto
framework to combat global warming as chair of the Lake Toya Summit
(the Group of Eight summit) in Hokkaido in July. Fukuda also
announced a "Cool Earth" promotion initiative that calls for setting
nation-specific targets to reduce greenhouse gas emissions. On the
economic front, he reiterated: "It is important that all countries
take necessary measures to deal with the chain of global share price
drops."

Referring to the issue of climate change, which will take center
stage in the July summit, the prime minister detailed the "Cool

TOKYO 00000214 006 OF 014


Earth" initiative, which aims at halving emissions by 2050. He then
proposed expediting (1) formation of a post-Kyoto regime; (2)
international environmental cooperation; and (3) innovation.
Regarding a post-Kyoto regime, Fukuda stressed: "I will address in a
responsible manner the tasks of creating a framework in which all
major emitters will participate, as well as of setting emission-cut
targets that are fair for all countries." He also revealed a plan to
set mid-term targets for cutting emissions for each participating
country, remarking: "The targeted years (for reduction goals) should
be reviewed to ensure fairness."

In reference to international environmental cooperation, Fukuda
proposed that Japan will provide other countries with its advanced
energy-conservation technology, saying: "It is necessary for all
countries to share the goal of improving energy efficiency by 30
PERCENT by 2020." To urge developing countries to take part in a
new international framework, Fukuda said that Japan would disburse
10 billion dollars, or 1.76 trillion yen, in new financial aid. As
measures to promote innovation, the prime minister announced that
Japan will inject funds totaling about 30 billion dollars, or 3.23
trillion yen, in research and development in the environmental and
energy areas over the next five years.

Touching on the worsening global economy, Fukuda defined the U.S.
subprime mortgage crisis as a 21st century crisis and then called
for cooperation among countries. He said: "The monetary authorities
of industrialized countries are engaged in quickly analyzing the
causes for the confusion in the financial markets and working out
medium- and long-term countermeasures." Upon saying that the impact
of the crisis on the Japanese economy was limited, the prime
minister stressed that Japan will make efforts to open up its market
further.

9) Japan should display leadership in cutting greenhouse gas
emissions, says Blair to prime minister

TOKYO SHIMBUN (Page 2) (Full)
January 28, 2008

Prime Minister Yasuo Fukuda attended the Davos Conference, an annual
meeting of the World Economic Forum. On the sidelines of the
meeting, he on the afternoon of Jan. 26 (evening of the same day,
Japan time) met with former British Prime Minister Blair.

Referring to the creation of a new international framework aimed at
reducing greenhouse gas emissions (post-Kyoto Protocol), Fukuda
said, "I will do my utmost to have the U.S. and China, major
emitters, take part in the new framework."

He also noted, "However, the overall framework should not be
weakened on that account."

Regarding the G-8 summit in July (Lake Toya Summit in Hokkaido),
Blair said, "The issue is up to the leadership of Japan, the host
country." He thus asked Fukuda to display leadership to realize a
framework joined by major emitters, based on the principle of
tackling environmental issues.

10) Environment Ministry to estimate and announce attainable
reduction of greenhouse gas emissions possibly next month in
preparation for talks on post-Kyoto Protocol framework


TOKYO 00000214 007 OF 014


NIKKEI (Page 3) (Full)
January 28, 2008

The Ministry of Environment (MOE) intends to make a trial
calculation of greenhouse gas emission reduction at home during a
2020-2030 timeframe in preparation for negotiations on a post-Kyoto
Protocol framework, which will be applied to the years beyond 2013.
MOE will announce the result during February. For Japan, the most
urgent task is to chart the course to achieve in 2050 the long-range
goal of halving the levels of greenhouse gas emissions from the
current levels. By estimating an attainable reduction amount of
greenhouse gas emissions during that timeframe as a mid-term goal,
Japan aims to use that goal as a basis for discussion of setting the
total reduction amount of greenhouse gas emissions.

By tallying attainable reduction volumes as proposed by Prime
Minister Yasuo Fukuda at the latest World Economic Forum in Davos,
Switzerland, MOE will announce the attainable volumes. Tallying will
be made in a sector-selective way, for instance, on an industrial
basis like electric power and steel, or on a business basis or at
home. How far emission volumes can be reduced will be estimated.

The calculation will be made by using the climate change simulation
model developed by the National Institute for Environmental studies.
This simulation was also used by the Intergovernmental Panel on
Climate Change (IPCC). Several scenarios will be set by taking into
consideration progress on development of energy-saving technology
and forecasts about corporate business activities. Under each
scenario, attainable reduction volumes will be computed.

Estimated attainable reduction volumes will be presented to a
Central Environment Council meeting, which is to be held possibly in
February. Based on those estimated attainable volumes, the
government and industrial circles will advance debate and lead the
result of the debate to set a new reduction goal for Japan to
declare as its own goal in future negotiations on a post-Kyoto
Protocol framework.

11) Energy ministers of Japan, U.S., Europe agree to develop new
energies

NIKKEI (Page 2) (Full)
Evening, January 26, 2008

Energy ministers of Japan, the U.S. and Europe on Jan. 25 held a
meeting in Davos in eastern Switzerland. Participants agreed on the
perception that it is important to develop new energies and
energy-conserving technologies as measures to combat climate change
and soaring crude oil prices. They also agreed that each nation ask
oil producers to increase production, emphasizing problem
consciousness to them that high crude oil prices will have an
adverse effect on the global economy.

The meeting brought together Economy, Trade and Industry Minister
Akira Amari, Secretary of Energy Bodman of the U.S. and European
Commission (EC) Energy Commissioner Andris Piebalgs. They also
shared the perception that it is important for China, India, and
some other countries, large energy users and carbon dioxide (CO2)
emitters, to take part in a set of countermeasures. In this
relation, they confirmed a policy of inviting cabinet misters of
China, India and South Korea to a G-8 energy ministerial meeting to
be held in Aomori in June and asking them to come up with specific

TOKYO 00000214 008 OF 014


measures to combat climate change.

12) Japan, U.S. sign "sympathy budget" - three-year extension of
special agreement, but review talks will be difficult (Asahi)

ASAHI (Page 4) (Full)
January 26, 2008

The Japanese and U.S. government have signed a special measures
agreement extending for three years Japan's host-nation support
("sympathy budget") that covers the cost of stationing U.S. forces
in Japan. The pact would have expired at the end of March. Based on
an agreement reached between Japan and the United States last
December, the contents generally maintained Japan's burden as it
was, reaching an annual 140 billion yen. Now, the Japanese side in
order to bear the weight of U.S. force realignment, which is
estimated to cost a separate 3 trillion yen, is thinking of putting
the scalpel to the structure of its burden in comprehensive review
talks with the U.S. after April. But negotiations with the U.S.,
which is reluctant to make cuts, are likely to face rough going.

In the revision talks this time, the Japanese side sought
step-by-step ending of the utility costs (25.3 billion yen in fiscal
2007), but the U.S. objected, citing the increase war costs of the
Iraq war. The cuts went no further than to shave off a total of 800
million yen over three years starting in fiscal 2008.

On the other hand, the Japanese side has sought a 9.5 billion yen
cut in the facilities improvement program, such as housing for U.S.
forces, which is outside the parameters of the special measures
agreement. This would bring it to 36.2 billion yen per fiscal year.
It also proposed a staged-in scrapping of additional pay
compensations for base workers employed at U.S. facilities
(currently 10.2 billion per fiscal year).

13) Government plans to build framework for dialogue between Japan,
U.S. and South Korea

NIKKEI (Page 2) (Abridged slightly)
January 26, 2008

With South Korea scheduled to install a new administration by Lee
Myung Bak on Feb. 25, Tokyo will embark on an effort to launch a new
framework allowing Japan, the United States, and South Korea to
discuss security and other issues. Tokyo specifically envisages a
venue for periodic talks among vice-minister- and bureau-chief-level
officials. The aim is to take the initiative in Northeast Asia
diplomacy by rebuilding the Japan-U.S.-ROK cooperative system that
collapsed under the Roh Moo Hyun administration, which has taken a
conciliatory policy toward North Korea.

Japan pins great hopes on the establishment of a conservative
administration in South Korea for the first time in 10 years. The
next South Korean administration also thinks that cooperation with
Japan and the United States is essential for resolving the North
Korean nuclear issue and revitalizing the South Korean economy. An
agreement has been reached between Foreign Minister Masahiko Koumura
and South Korean National Assembly Vice-Speaker Lee Sang Deuk, who
visited Japan earlier, on strengthening the trilateral cooperative
system. They also agreed to resume reciprocal visits by the two
countries' leaders.


TOKYO 00000214 009 OF 014


To begin with, bureau-chief-level officials of Japan, the U.S. and
South Korea often met to coordinate policies toward North Korea and
other matters. But such meetings have not been held since 2003 due
to the Roh administration's policy not to irritate North Korea,
while promoting large-scale support to Pyongyang.

The Bush administration, too, shifted toward a dialogue policy
course toward North Korea last year, expanding differences in views
between Japan and the U.S. and South Korea. Japan's presence in the
six-party talks has been weak. The trilateral cooperation revival
plan is also being helped by an observation that a hard-line stance
is returning to the Bush administration over the North's declaration
of nuclear programs. Renewed unity among the three countries will
help Tokyo pursue the North on the abduction issue.

A senior Foreign Minister official expressed eagerness for building
a consultative framework to discuss wide-ranging issues, saying, "We
would like to handle not only the North Korean nuclear issue but
also a wide range of issues."

14) Japan, U.S. and Australia to jointly research missile defense
system, ministerial dialogue also eyed

NIKKEI (Page 2) (Full)
January 26, 2008

Japan, the United States, and Australia will strengthen joint
research on a missile defense (MD) system to intercept ballistic
missies. In addition to the existing bureau-chief-level talks, they
will establish a venue for vice-minister and cabinet minister
ministers to closely exchange views. They will also raise the level
of Australia, which has announced to introduce the MD system in 2014
based on operational information on the Japan-U.S. MD system.

The MD system is designed to shoot down incoming ballistic missiles
with Standard Missile-3 (MS-3) missiles from Aegis vessels outside
of the earth's atmosphere, and any missed ones with ground-based
Patriot Advanced Capability 3 (PAC-3) missiles.

Japan, the U.S. and Australia reached an agreement on the joint MD
research during talks among the foreign ministers and defense bureau
chiefs, held in Tokyo last April. The three countries intend to
study the MD system, envisaging North Korean new mid-range ballistic
missiles and Chinese ballistic missiles traveling to Guam and
mainland Australia.

China and North Korea are highly alarmed at the MD system.

15) Defense Ministry plans intercept net against cruise missile
attacks, using special-type radar, long-range missile

YOMIURI (Top play) (Excerpt)
January 27, 2008

The Defense Ministry yesterday decided to start working on a new
system for intercepting cruise missiles, which are used for their
pin-point accuracy in attacking major installations. In order to
increase the capability for early detection, the ministry will
increase the number of deployed AWACS-equipped aircraft, and it will
install a new type of high-proficiency radar. In addition, it will
build a new intercept system centered on the development of a
long-range surface-to-air missile. The plan is to include the new

TOKYO 00000214 010 OF 014


system in the revision of the mid-term defense buildup plan that
will be revised next fiscal year. The reason for the changes is
there has been increased analysis that China its capability to
attack enemy targets with cruise missiles.

16) Government troubled by increasing criticism of research whaling
with G-8 summit just ahead

TOKYO SHIMBUN (Page 2) (Full)
January 28, 2008

The government is frustrated with the whaling issue. Amid a flurry
of protests by environmental groups against Japan's research whaling
in the Southern Ocean, Japan's research whaling, rather than the
obstruction of it, is drawing criticism from the international
community. With the G-8 summit (Lake Toya Summit in Hokkaido) close
at hand in July, the government is struggling to prevent criticism
from developing into a diplomatic issue.

Giving a reply in an Upper House plenary session on Jan. 23, Prime
Minister Fukuda harshly criticized the protest of a U.S.
environmental group, whose members climbed aboard Japan's research
whaling vessel. He noted: "Research whaling is a legal activity. It
is important for us to pursue discussions based on scientific
grounds without being swayed by emotional confrontation.
Interference is an impermissible illegal act that could endanger the
lives of persons involved." The government plans to prevent a
recurrence of such interference with Chief Cabinet Secretary
Nobutaka Machimura noting, "We will properly deal with the situation
so that dangerous acts will not be repeated in the run-up to the G-8
summit." In the meantime, Machimura also admitted to the difficulty
of dealing with the whaling issue, saying, "We must bear in mind
that we are dealing with whales, a unique kind of issue."

In the International Whaling Commission (IWC), the number of members
in favor of whaling and those against it are at present about equal.
However, Japan's allies, such as the U.S. and Australia, and major
European countries are among the countries against whaling.

In particular, among seven Group-of-Eight countries excluding
Canada, which is not an IWC member, only Japan and Russia support
whaling. Antiwhaling countries characterize whales as a symbol of
environmental conservation. If Japan mishandles the matter, it could
be labeled as a country that is not enthusiastic about the
environment. It wants to avoid becoming isolated in the
international community with the G-8 summit close at hand.

For this reason, the government is beginning to show a flexible
stance. It decided not to catch humpback whales for the next one to
two years in research whaling in the Southern Ocean. Japan has
stressed that the measure is in response to the fact that the IWC
has become dysfunctional as a resource control organization due to
the emotional confrontation between pro-whaling and antiwhaling
members. It is, however, clear that it has made that decision in
response to international criticism.

Many lawmakers in both ruling and opposition parties are in favor of
protecting and promoting whaling. The government will find it
difficult to steer the situation concerning whaling with its
diplomatic consideration likely coming under fire on the domestic
front.


TOKYO 00000214 011 OF 014


17) Cabinet Office to convene first meeting of panel of experts on
Jan. 30 to discuss promotion of foreign investment in Japan

NIKKEI (Page 3) (Full)
January 27, 2008

The Cabinet Office will hold a first meeting of an advisory council
consisting of experts on the tax system and regulatory affairs on
Jan. 30 as part of the effort to promote foreign investment in
Japan. This plan was revealed by State Minister in Charge of
Economic and Fiscal Policy Hiroko Ota at a press briefing in Sapporo
City after a local session of the Council on Economic and Fiscal
Policy (CEFP).

The ratio of foreign direct investment in Japan to gross domestic
product (GDP) is 3 PERCENT , far lower than Britain's 44 PERCENT
and the United States' 13 PERCENT . The government aims to raise
this figure to 5 PERCENT by 2010.

The advisory council will be chaired by Haruo Shimada, president of
Chiba University of Commerce. The council will send a delegation to
European and other countries to see what has prevented foreigners
from investing in Japan. The council will form a report. Based on
the report, the Cabinet Office will include specific measures in
"big-boned" policy for this year.

The local session of the CEFP was joined by the minister in charge
of economic and fiscal policy and CEFP member Naohiro Yashiro. They
exchanged views with corporate managers in Hokkaido about how to
revitalize the economy and attract companies.

18) Ruling parties to submit today to Diet bill extending gasoline
tax rate by two months

YOMIURI (Page 1) (Excerpts)
January 28, 2008

The ruling parties decided yesterday to submit to the Diet a bill to
extend by two months the provisional tax rate imposed on gasoline,
which is set to expire on March 31. The legislation is sponsored by
lawmakers from the ruling coalition. The ruling camp plans to
present it possibly today to the House of Representatives in order
to get it passed by the Lower House before the end of January. With
this move, it is highly like that gasoline prices will remain at
current levels after April 1.

Liberal Democratic Party (LDP) Secretary General Bunmei Ibuki told a
meeting in Kiyoto on the issue:

"If the Democratic Party of Japan (DPJ or Minshuto) refuses to pass
(a bill revising the Special Taxation Measures Law) by March 31,
some measures should be taken before the end of January."

The lawmaker-initiated bill includes measures to extend by two
months the deadline for the provisional rate and for preferential
tariffs, among other items. The ruling camp intends to ask the DPJ
and other opposition parties to support the bill, but if it fails to
get support from the opposition bloc, it may press ahead with a
vote.

19) DPJ reacts negatively to LDP's move to introduce even stopgap
bill in connection with provisional gasoline tax rate with DPJ

TOKYO 00000214 012 OF 014


secretary general saying, "We'll not compromise"

SIPDIS

TOKYO SHIMBUN (Page 2) (Full)
January 28, 2008

At a meeting yesterday of Kumagaya City, Saitama Prefecture, the
major opposition Democratic Party of Japan's (DPJ) Secretary General
Yukio Hatoyama revealed that his party will strongly oppose a
stopgap bill intended to keep in place the provisional gasoline tax
rate, by arguing, "We have no intention of compromising when it
comes to the public's livelihood." DPJ Policy Research Council
Chairman Naoyuki Naoshima, as well, noted on an NHK TV program
yesterday: "It's outrageous. If that happens, it would only lead us
to boycott every discussion on the budget bill. We definitely can't
accept it."

The Japanese Communist Party's Policy Committee Chairman Akira Koike
and the Social Democratic Party's (SDP) Policy Research Council
Chairperson Tomoko Abe also criticized (a stopgap bill), arguing
that it would be "outrageous and the same as forcing a vote at the
beginning of (debate)."

20) Tug of war to start today between ruling and opposition parties
at Lower House budget panel

TOKYO SHIMBUN (Page 2) (Full)
January 28, 2008

In the Diet, a question-and-answer session for the fiscal 2007
supplementary budget bill will start in the Lower House Budget
Committee with Prime Minister Fukuda and all cabinet members in
attendance. The major opposition Democratic Party of Japan (DPJ)
will send Deputy President Naoto Kan as the questioner. A full
showdown between the ruling and opposition parties will begin over
such problems as whether to maintain the provisional gasoline tax
rate.

Kan will point out that other key policy measures for education and
medical services have no dedicated revenue sources; it is only
highway expenditures that have such a revenue source. He will then
seek to scrap the provisional rate and incorporate the special
revenue sources for road construction into general revenues.

The supplementary budget bill will clear the Lower House on Jan. 29,
and debate on the bill in the Upper House Budget Committee will
begin on Jan. 30.

21) Prime Minister Fukuda decides to submit bill extending
provisional tax rates; Opposition's backlash inevitable

YOMIURI (Page 2) (Slightly abridged)
January 28, 2008

The ruling parties have decided to a bill sponsored by lawmakers to
extend by two months the deadlines of the provisional tax rates,
including the gasoline tax rate, which will expire on March 31. The
decision is the expression of Prime Minister Yasuo Fukuda's
determination to avoid tax confusion (if the tax expires and is
later reinstated). However, since the opposition camp is bound to
react strongly against the ruling bloc, it is highly likely that the
Diet itself will be thrown into turmoil.


TOKYO 00000214 013 OF 014


The government and ruling camp aim to enact before the end of March
a bill revising the Special Tax Measures Law, including provisions
to maintain the provisional tax rates. The main opposition
Democratic Party of Japan (DPJ or Minshuto) and other opposition
parties have indicated their intention to drag out deliberations on
the legislation.

The ruling coalition initially planned to enact the revision bill
before the end of March by resorting to Article 59 of the
Constitution after having it passed by the House of Representatives
before the end of January. If it adopted this method, there was the
possibility that it would be criticized by the public for having
rammed the bill through the Lower House. The ruling camp plans to
explain that the purpose of the two-month extension bill is to avoid
confusion at the end of current fiscal year and to secure enough
time for deliberations.

Fukuda has told his aides that any adverse impact on the daily lives
of people should be avoided at all cost. This view reportedly is now
gaining ground in the ruling coalition. Appearing on a TV Asahi talk
show yesterday, New Komeito Policy Research Council Chairman Tetsuo
Saito said: "I understand that there is such a view in the LDP."

Appearing on an NHK talk show yesterday, DPJ Policy Research
Committee Chairman Masayuki Naoshima, however, stressed: "I
absolutely cannot accept the idea." Asked by reporters about what
action his party would take if the ruling camp pressed ahead with a
vote on the bill, Naoshima indicated that his party would not
respond to deliberations on the bill on fiscal 2008. He responded:
"Normal debate won't be conducted. Deliberations on the budget bill
in the Lower House won't be held."

22) Osaka gubernatorial race deals blow to DPJ, also giving weak
sense of victory to ruling camp

MAINICHI (Page 2) (Excerpts)
January 28, 2008

Toru Hashimoto's victory in yesterday's Osaka gubernatorial election
has dealt a serious blow to the major opposition Democratic Party of
Japan (DPJ or Minshuto), which took an all-party approach. The
outcome is likely to force the DPJ to review its strategy for the
next House of Representatives election. Hashimoto's victory has also
brought about only a weak sense of victory to the ruling coalition,
stopping short of giving momentum to the divided Diet in which the
ruling coalition parties have a majority in the House of
Representatives and the opposition DPJ controls the House of
Councillors.

Looking back at the Osaka race, a senior DPJ member pointed out the
need to give serious thought to urban areas. Defining the Osaka race
as a prelude to the next Lower House election, the DPJ had envisaged
another victory following the Osaka mayoral race last November.

The DPJ lost urban areas in the previous 2005 Lower House election.
As seen in DPJ President Ichiro Ozawa's display of his determination
to win both rural and urban areas in the next Lower House election,
the Osaka race was a test case for the party's urban strategy.

After the official campaign kicked off, Ozawa stumped for the party
candidate twice in Osaka. On Jan. 11, he even skipped a Diet vote on
new antiterrorism legislation in order to canvass Osaka downtown

TOKYO 00000214 014 OF 014


shopping streets to make an appeal to unaffiliated voters along with
New Party Japan Representative Yasuo Tanaka. Deputy President Naoto
Kan and Secretary General Yukio Hatoyama also stumped for the DPJ
candidate twice and five times, respectively. The party leadership
ordered all DPJ lawmakers to stump for its candidate at least once.

Hatoyama indicated to reporters last night: "(Ozawa's abstention
from the Diet vote) might be one reason for the party's defeat in
the Osaka race." The DPJ's decision to back Sadatoshi Kumagai for
the Osaka race may raise questions. Of the 300 single-seat
constituencies, the DPJ has yet to determine its candidates for 64
districts for the next Lower House election. Ozawa said that the
party would field only winning candidates, alluding to the
possibility of replacing candidates the party has already endorsed.
The outcome of the Osaka race might affect the DPJ's final decision
on its candidates for the Lower House race.

Meanwhile, the ruling camp has been cautious, as seen in LDP
Secretary General Bunmei Ibuki's comment: "No matter how the Osaka

SIPDIS
race turns out, it will not be linked to a national election." In
view of Hashimoto's unique personality, the outcome is unlikely to
have a direct impact on the provisional tax rate issue and the stock
plunge that are likely to force the ruling coalition to adhere
firmly to its defensive stand.

23) 59 PERCENT of women vote for Hashimoto in Osaka race

TOKYO SHIMBUN (Page 2) (Abridged)
January 28, 2008

Tohru Hashimoto, a lawyer and TV personality, won yesterday's Osaka
gubernatorial election for the first time with votes from 59.5
PERCENT of women, according to an exit poll conducted by Kyodo
News. Among other candidates, Sadatoshi Kumagai was at 25.4 PERCENT
and Shoji Umeda at 13.8 PERCENT . Hashimoto's overwhelming
popularity among women was a major factor behind his victory in the
race.

In addition, Hashimoto won support from 55.1 PERCENT of floating
voters. He was also supported by 79.5 PERCENT of those who support
the Liberal Democratic Party, which backed him, and he won support
from 95.3 PERCENT of those who support New Komeito.

SCHIEFFER

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