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Cablegate: Japanese Morning Press Highlights 02/06/08

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UNCLAS SECTION 01 OF 12 TOKYO 000308

SIPDIS

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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 02/06/08


Index:

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

Diplomatic agenda:
4) Afghanistan's foreign minister in interview seeks Japan's
participation in PRT (Asahi)
5) Japan to provide Afghanistan with 12.8 billion yen in new aid
(Asahi)
6) Japan to recognize an independent Kosovo (Asahi)
7) President Putin in letter to Prime Minister Fukuda wants to raise
bilateral relations to a "higher dimension," acknowledges difficulty
of territorial issue (Sankei)
8) Japan proposes to China development of two gas fields first in E.
China Sea (Yomiuri)
9) Japan aims at pragmatic approach to resolving gas-field issue
with China (Yomiuri)

Defense affairs:
10) Japanese government in notes signed with four countries,
including U.S., on refueling services in Indian Ocean, omits
specifying restrictions on fuel usage (Tokyo Shimbun)
11) Okinawa defense bureau presents additional material on
environmental assessment of site for relocation of Futenma base
(Mainichi)
12) Survey shows two candidates in Iwakuni mayoral race are neck and
neck, as voters go to the polls Feb. 10 with issue of relocation of
Navy jets in mind (Asahi)

Political agenda:
13) Democratic Party of Japan head Ozawa puts priority on scrapping
provisional tax rates partly to pressure LDP for revision talks
(Nikkei)
14) DPJ is stepping up efforts to capture the rural vote by setting
up Diet leagues, public discussions, and policy groups (Nikkei)
15) Channels being built between ruling and opposition camps,
including joint mission to South Korea (Nikkei)
16) Kishida picked as minister in charge of consumer affairs
(Mainichi)

Economic affairs:
17) -- Chief Cabinet Secretary Machimura indicates that proposed
restriction on foreign investment in airports might be shelved
(Mainichi)
18) -- Government is split over the issue of restricting foreign
investment in airports (Tokyo Shimbun)
19) -- Government ready to announce Muto as new Bank of Japan
governor, as DPJ backs away to avoid vacuum in that post (Tokyo
Shimbun)

Articles:

1) TOP HEADLINES

Asahi, Mainichi, Yomiuri & Tokyo Shimbun:
New pesticide found in gyoza dumplings made last June

Nikkei:
Money transfers between private banks, Japan Post Bank to be
introduced as early as next January

TOKYO 00000308 002 OF 012

Sankei:
Russian president agrees with Prime Minister Fukuda's proposal for
"higher bilateral relationship"

Akahata:
JCP lawmaker urges government to strengthen inspections on imported
food

2) EDITORIALS

Asahi:
(1) Time to reconsider Afghan aid
(2) Microsoft's buy-up of Yahoo weaken Internet vitality?

Mainichi:
(1) Prime Minister Fukuda should show more zeal for reform of civil
servant system
(2) Bio bank: Need for strategy of effectively utilizing samples

Yomiuri:
(1) Rebuild regime encircling North Korea
(2) Prepare for "new type" flu

Nikkei:
(1) Overall picture for civil servant system reform remains unclear
(2) AU should show determination to settle conflicts

Sankei:
(1) Day of Northern Territories should be added to agenda at G8 Lake
Toyo summit

Tokyo Shimbun:
(1) Gyoza dumplings scare: Bringing the truth to light will lead to
dispelling distrust
(2) G7: Tackle seriously crisis response

Akahata:
(1) U.S. Budget Message: "Twin deficit" would expand

3) Prime Minister's Official Residence (Kantei)

Prime Minister's schedule, February 5

NIKKEI (Page 2) (Full)
February 6, 2008

07:40
Met with Deputy Chief Cabinet Secretary Iwaki at the Kantei.

08:31
Cabinet meeting in the Diet building.

09:00
Upper House Budget Committee meeting.

14:02
Met with Chief Cabinet Secretary Machimura.

15:04
Met with Indian Congress member Rahul Gandhi. Then issued an
appointment letter to Special Advisor to Cabinet Kusaka. Machimura

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was present.

15:56
Met with former LDP Secretary General Nakagawa, followed by Special
Advisor to Cabinet Nishimura.

17:03
Received a report from Chairman Okamura of the advisory body on
comprehensive reform of the public servant system. State Minister
for Administrative Reform Watanabe was present. Then met with Deputy
Chief Cabinet Secretary Futahashi.

18:43
Met with Albanian Prime Minister Berisha. Then dinner meeting hosted
by the prime minister. Former Prime Minister Mori attended.

20:51
Met with Mori at the official residence.

4) At JCMB meeting, Japan announces it will freshly offer 12.8
billion yen in aid to Afghanistan

ASAHI (Page 4) (Slightly abridged)
February 6, 2008

Kazuhito Tsukamoto

The Joint Coordination and Monitoring Board (JCMB), a group of
bureau director-level officials from 24 countries and international
institutions engaged in assistance to Afghanistan to discuss the
rehabilitation of that country, kicked off its two-day meeting in
Tokyo yesterday. Joining the meeting from Afghanistan were 13
cabinet members including Foreign Minister Spanta. The meeting
adopted a communiqu revealing that the participants agreed to step
up efforts together to deal with such tasks as terrorism and
narcotics.

Foreign Minister Koumura delivered an opening speech, in which he
declared Japan would newly offer a total of 110 million dollars
(12.8 billion yen) in aid, including 9 million dollars for improving
border management via the Afghan government and 13 million dollars
for literacy education via the United Nations Educational,
Scientific and Cultural Organization (UNESCO).

5) Foreign Minister Spanta asks Japan for dispatching PRT consisting
of civilians

ASAHI (Page 4) (Full)
February 6, 2008

Tsutomu Ishiai

SIPDIS

Visitng Foreign Minister Spanta yesterday responded to an interview
with an Asahi Shimbun reporter, in which the foreign minister
indicated that he expects Japan to consider sending a provincial
reconstruction team (PRT) consisting mainly of civilians. On the
issue of narcotics, which have been financial sources for radical
groups, such as the Taliban, Spanta noted: "The ongoing meeting will
come up with a comprehensive action plan. By obtaining international
cooperation, we will eliminate them in a 7-8 year timeframe."

The PRT is a group composed of military personnel and civilians. The

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group establishes a base for activities in an area where conflicts
are still continuing and engages in reconstruction assistance while
securing safety and public order. In Afghanistan, European countries
belonging to the North Atlantic Treaty Organization (NATO) have
mobilized their PRTs.

Spanta cited the case of Turkey's PRT consisting mainly of
civilians, including troops for noncombat purposes, and deployed in
mid-Afghanistan's province of Wardak and noted: "There are various
types of PRTs. Most areas in
Afghanistan are safe and stable. I think it is not a serious issue
whether civilians engage in reconstruction assistance."

Spanta added, "The important thing is for Japan to work together
with us in reconstruction, as well as in the peace-building process.
It is Japan that will decide in what form it will join."

As for Japan's resumption of the refueling mission in the Indian
Ocean, Spanta expressed gratitude by noting: "It is indirect support
for the operations against terrorism. It is very important for
Afghanistan, as well."

6) Japan to recognize Kosovo as independent state early, following
EU and U.S.

ASAHI (Page 1) (Excerpts)
February 6, 2008

In the event the Autonomous Province of Kosovo, now under the United
Nations Interim Administration Mission, declares its independence,
the government intends to recognize it as a state swiftly, following
Western countries. The autonomous government of Kosovo with a huge
Albanian population is set to declare independence possibly later
this month in cooperation with the United States and the European
Union. Prime Minister Yasuo Fukuda held a meeting last night with
visiting Albanian Prime Minister Sali Berisha and exchanged views on
the situation in Kosovo as well.

As the chair of the G8 Summit this year, the government is in a
position to coordinate views with other countries. For this reason,
the government is cautious about recognizing Kosovo as an
independent state at the same time as the EU and the U.S. But in the
wake of the reelection of Serbian President Boris Tadic who is on
friendly terms with Western countries, the government has begun
discussions on recognizing Kosovo as a state early, thinking buds of
a peaceful settlement have begun to sprout.

Kosovo was initially expected to declare independence immediately
after a victory by the far-right candidate in the Serbian
presidential race. But with Tadic's reelection, the declaration of
independence is likely to delay. Japan intends to make a decision
based on the case of Bosnia and Herzegovina that have become
independent of the former Yugoslavia.

7) In response to "Fukuda's personal letter," Russian president
agrees to put bilateral relations on higher level

SANKEI (Top play) (Excerpts)
February 6, 2008

It was learned yesterday that Russian President Putin had responded
to Prime Minister Yasuo Fukuda's personal letter handed by former

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Prime Minister Yoshiro Mori when Putin and Mori met in last
December. Putin in his written reply gave his assent to Fukuda's
proposal indicated in his personal letter to put Japan-Russia
relations on a higher level, by saying, "I agree." This is taken to
mean "an expression of the president's strong enthusiasm to resolve
the Northern Territories issue," one Foreign Ministry official
explained.

The Fukuda cabinet has set a goal of putting Japan-Russia relations
on a higher level. Specifically, according to a government official,
it means "to resolve the Northern Territories issue, conclude a
peace treaty and dramatically improve Japan-Russia relations as a
whole."

Fukuda in his policy speech delivered in the Diet on Jan. 18
emphasized: "I will facilitate territorial negotiations in order to
raise relations with Russia to a higher level." At a press briefing
yesterday, Foreign Minister Masahiko Koumura noted, "If the Northern
Territories are not returned to Japan, we can't expect to have a
higher level of relations (with Russia)."

Reportedly, during a teleconference held in last October, Putin told
Fukuda that "I would like to meet with Prime Minister Fukuda and
discuss (the territorial issue) with him."

The Russian government has asked Koumura to visit to Russia as soon
as possible. In this regard, coordination is underway in the
Ministry of Foreign Affairs to realize Koumura's visit to Russia in
March, if the Diet calendar allows him to do so. There is also an
argument in the government that the Northern Territories issue
should be put on agenda for the upcoming Group of Eight Summit in
Lake Toya, Hokkaido, (G8 Toyako Summit) in July.

The government has welcomed a positive response from Putin to
Fukuda's personal letter calling for a resolution of the Northern
Territories issue, as well as an expression of Putin's strong
enthusiasm about territorial talks. However, the government does not
have any prospect for territorial talks at present because it
remains to be seen how far the president, who at one point had
hardened his attitude, noting, "There are no islands to return,"
will come to terms with Japan.

"We have been making a number of efforts, but frankly speaking, our
efforts have failed to bear fruit so far," Chief Cabinet Secretary
Nobutaka Machimura said at a press conference on Feb. 4 ahead of
"Northern Territories Day" on Feb. 7. He admitted that territorial
talks have been rough going.

8) Government offers new proposal to China for jointly developing
two of four gas fields first

YOMIURI (Page 1) (Excerpts)
February 6, 2008

The Japanese government has offered a new proposal in negotiations
on joint development of disputed natural gas fields in the East
China Sea, according to informed sources yesterday. Japan had
initially called on China for the joint exploration of four gas
fields - Shirakaba (Chunxiao in Chinese), Asunaro (Longjing),
Kusunoki (Duanqiao), and Kashi (Tianwaitian). But the new proposal
suggests developing first Shirakaba and Kashi, as well as areas
around the gas fields, putting off the development of the other two

TOKYO 00000308 006 OF 012


fields. The government aims to minimize points at issue between the
two countries by giving priority to reaching an agreement on the
joint exploration of the Shirakaba and Kashi gas fields, where China
has already made preparations for the start of production.

A senior Japanese government official made the new proposal to China
early this month. The two governments hope to reach a conclusion on
the issue prior to the planned visit to Japan by Chinese President
Hu Jintao this April. They have decided to hold a vice ministerial
meeting in Beijing within this month to iron out differences in both
sides' views.

9) Government presents new practical proposal for developing two gas
fields first in bid for early agreement with China

YOMIURI (Page 2) (Full)
February 6, 2008

(Commentary)

The Japanese government has made a new proposal under which Japan
and China would give priority to reaching an agreement on the joint
exploration of Shirakaba (Chunxiao) and Kashi (Tianwaitian), two of
the four disputed natural gas fields in the East China Sea. By
offering a practical proposal, the government aims to reach an
agreement prior to the deadline for concluding negotiations, that
is, the planned visit to Japan by Chinese President Hu Jintao in
April.

A Japanese official involved in negotiations with China said: "It is
desirable for both sides to reach a complete settlement by
subjecting areas including the four gas fields to joint development
and then drawing a boundary line. But this idea is not practical.
The two-stage approach is more feasible."

The Japanese government fears that the new proposal may put its
initial proposal for joint development of the four gas fields on the
back burner. At the same time, Japan has said that it wants to see
areas subject to joint exploration widened to cover areas on the
Chinese side of the demarcation line that Japan claims, even if only
slightly.

Late last year, China made a policy switch to approve Japan's
joint-development proposal, limiting areas for joint exploration to
locations on the Japanese side of the demarcation line. Recently,
China reportedly has begun to indicate a willingness to approve
development of areas that cover almost up to the demarcation line. A
government source said that the gap in Japanese and Chinese views on
areas subject to joint development is narrowing. Will both sides be
able to gain a foothold toward joint development of a wider area?
Last-minute negotiations will start soon.

10) Dip note fails to ban fuel diversion

TOKYO SHIMBUN (Page 2) (Full)
February 6, 2008

The Japanese government yesterday exchanged diplomatic notes with
the governments of the United States, Britain, France, and Pakistan
on arrangements for the Maritime Self-Defense Force's refueling
activities in the Indian Ocean. The exchange of notes says the
MSDF's refueling services to be resumed there are only for their

TOKYO 00000308 007 OF 012


naval vessels engaging in antiterror maritime interdiction
operations. However, the government did not expressly prohibit fuel
diversion in the exchange of notes. The government will now need to
create an operational mechanism that will make it possible to grasp
how MSDF fuel is used.

In November last year, the Antiterrorism Special Measures Law
expired. Under that law, Japan exchanged notes with these four
countries. That exchange of notes only described that the MSDF would
provide fuel to foreign naval vessels under the law. MSDF fuel,
however, was alleged to have been used for other purposes, such as
military operations for the Iraq war.

The exchange of notes this time prescribes that the MSDF will
provide fuel to foreign naval vessels operating in the Indian Ocean
for antiterror maritime interdiction operations. The government says
the MSDF will identify foreign vessels for its refueling services to
prevent fuel diversion.

However, there is no denying the case where a foreign naval vessel
engaging in different activities could be indirectly refueled
through another country's supply ship.

The government failed to prescribe a "no fuel diversion" clause in
the exchange of notes. Instead, the government wants to cover that
portion in MSDF operations. The MSDF will arrange its refueling
services in Bahrain, where Japan will receive documents from their
countries about their missions and supply ship refueling schedules.

However, that documentation is not binding unlike an exchange of
note. Japan has no choice but to depend on their countries for
information.

11) Defense Ministry submits additional documentation to Okinawa on
assessment for Futenma relocation

MAINICHI (Page 2) (Full)
February 6, 2008

The Okinawa Defense Bureau of the Defense Ministry yesterday
submitted an additional document to the Okinawa prefectural
government regarding the planned relocation of the U.S. Marine
Corps' Futenma Air Station in Okinawa Prefecture's central city of
Ginowan to a coastal area of Camp Schwab, a U.S. military base in
the island prefecture's northern coastal city of Nago. The 383-page
document is the Defense Ministry's revised plan for how to carry out
an environmental impact assessment.

The Okinawa prefectural government will call a meeting of its review
panel on Feb. 8. After that, the prefectural government will comment
on the revised plan.

The Okinawa Defense Bureau submitted the original plan to the
Okinawa prefectural government on Aug. 7 last year. However, the
prefectural government asked the bureau to rewrite the plan,
explaining that it was insufficient in substance.

According to the revised document, the government plans to build a
new airfield with a total area of about 210 hectares. The new
airfield's runway is about 30 meters wide. The revised document also
revealed that the new airfield is for four helicopter types,
including the CH-53, and two fixed-wing aircraft types. Meanwhile,

TOKYO 00000308 008 OF 012


the Defense Ministry has explained the traffic pattern of aircraft
to be stationed at the new airfield. However, the revised document
says their flight routes have yet to be determined. The defense
bureau has forgone its answer about actual flights for noise
monitoring.

12) Iwakuni race a dead heat between Fukuda, Ihara

ASAHI (Page 25) (Abridged)
February 6, 2008

The city of Iwakuni in Yamaguchi Prefecture will elect its new mayor
on Feb. 10. The point at issue is whether to accept the proposed
redeployment of U.S. carrier-borne fighter jets to the U.S. Marine
Corps' Iwakuni base. The Asahi Shimbun conducted a telephone-based
survey of the city's voters on Feb. 4-5 and analyzed the situation.
The race has now become a dead heat between Yoshihiko Fukuda, a
pro-redeployment candidate who was a House of Representatives member
of the Liberal Democratic Party, and former Iwakuni Mayor Katsusuke
Ihara, who is opposed to the transfer of U.S. jets to Iwakuni base.
In the survey, however, about 20 PERCENT of those polled remained
undecided. The Fukuda and Ihara camps are desperately trying to lock
on the city's voting population.

Fukuda, backed by the LDP and New Komeito, are expected to garner
votes from more than 70 PERCENT of LDP supporters. He is now
steadily gaining support from more of New Komeito's supporters. He
has also gained support from a little over 40 PERCENT of those who
have no party to support. He has support from 60 PERCENT of those
in their 30s and those in their 40s.

Meanwhile, Ihara is supported by Democratic Party of Japan
(Minshuto), Japanese Communist Party, and Social Democratic Party
(Shaminto) supporters. He has now gained support from more than 70
PERCENT of the DPJ's supporters and is also about to gain support
from almost all of the JCP's supporters and the SDF's supporters. He
is above Fukuda among the floating voters. Among homemakers and
those aged 70 and over, there are many in support of Fukuda.

The survey was conducted Feb. 4-5 over the telephone on a
computer-aided random digit dialing (RDD) basis with the aim of
calling a total of 1,000 voters in Iwakuni City. Respondents were
chosen on a three-stage random-sampling basis. Valid answers were
obtained from 1,091 persons (66 PERCENT ).

13) Ozawa puts priority on abolishing the provisional tax rates
partly to apply pressure on LDP regarding taxation measures law
revision talks

NIKKEI (Page 2) (Excerpts)
February 6, 2008

Democratic Party of Japan President Ichiro Ozawa, holding a press
conference in Osaka yesterday, made the following comment regarding
a response to a plan to revise the Special Taxation Measures Law
over the provisional tax rates as road-construction revenues: "If
the ruling bloc can come to terms (with us), the matter can be dealt
with without the provisional tax rates. It is not that the subject
of using road-related tax revenues for general purposes and the
abolition of the provisional tax rates should absolutely go hand in
hand." Ozawa revealed a view that it is possible to make concessions
first on abolishing the provisional tax rates.

TOKYO 00000308 009 OF 012

About the reason to give priority to abolishing the provisional
rates, Ozawa said: "Although using road-related tax revenues for
general purposes and abolishing the provisional tax rates are
inseparable, the provisional taxes have been introduced over 30
years ago. And oil prices are soaring." Ozawa is also obviously
trying to apply pressure on the LDP, which has been reluctant to
hold revision talks due to resistance by its members with ties to
road construction interests.

About the agreement to "reach a certain conclusion within the
current fiscal year," worked out by mediation by the Lower House
speaker and the Upper House president, Ozawa said: "As far as what I
learned, the matter will not necessarily have to be brought to a
vote straightforwardly."

14) DPJ working upon local areas by holding open forums and
establishing policy groups

NIKKEI (Page 2) (Abridged)
February 6, 2008

The major opposition Democratic Party of Japan (DPJ or Minshuto) is
working strongly on local governments on the issue of abolishing the
road-construction provisional tax rates. Deputy President Naoto Kan
will hold an open forum with Miyazaki Governor Hideo
Higashikokubaru. A group of Lower House members who formerly served
as local heads, such as former Izumo Mayor Tetsundo Iwakuni, also
launched a policy group yesterday. But already, Lower House
Vice-Speaker Takahiro Yokomichi has left the group due to a protest
from the LDP.

Launched yesterday is a group called itself Gyousei Demokurattsu no
Kai (Group of Administrative Democrats). Its members are Akio
Fukuda, Katsumasa Suzuki, and Seiji Osaka. Their strategy is to
persuade local regions strongly opposed to abolishing the
provisional tax rates by utilizing their experience in local
administration. In a press conference, Osaka said: "We would like to
speak on behalf of local heads who really want to see the
road-related tax revenues be incorporated into general revenues."
The group is studying ways to cooperate with former local heads.

In addition to the open forum with nationally well-known
Higashikokubaru, the party plans to hold a forum later this month
with Fukuoka Governor Wataru Aso, chair of the National Governors'
Association. The party is aiming to stir public opinion by playing
up the general revenue approach allowing local governments to
determine the use of tax revenues freely.

15) Communication channels developed between ruling and opposition
parties

NIKKEI (Page 2) (Excerpts)
February 6, 2008

Diet members from different parties are now actively working to form
suprapartisan study groups and parliamentarian leagues with an eye
on the lingering notion that "a grand coalition" of the ruling
Liberal Democratic Party (LDP) and largest opposition Democratic
Party of Japan (DPJ or Minshuto) will eventually be formed. They are
carefully watching the possibility of political realignment
occurring should the House of Representatives be dissolved and a

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snap election called. There is a mood in political circles that
something is still afoot, even though the prevailing view is that
the possibility of an early Lower House dissolution, triggered by
the issue of the provisional tax rates for road projects, has
slipped away.

"I am glad that the media are paying attention even though they are
getting the wrong idea," said DPJ Secretary General Yukio Hatoyama
in a study session on promotion of computerized local governments.
Former LDP Secretary General Taro Aso is a co-organizer of the
session. Hatoyama and Aso aim to set up in March a parliamentary
group to help local governments promote computerized administrative
procedures.

Hatoyama's denial of the connection between their move and the idea
of forming "a grand alliance" evoked laughter from participants, all
of who are members of the Aso faction in the LDP. Shunichi
Yamaguchi, an Aso faction member, told reporters: "There is a
possibility that the wrong idea that Hatoyama mentioned will become
the right idea."

It has often happened in the capital district of Nagatacho that
politicians deepen cooperation through study sessions and
parliamentarian groups. Closeness of ties between Aso, who is
regarded as strongest candidate to succeed Prime Minister Yasuo
Fukuda, and the DPJ secretary general means "assurance" for any
possible political realignment after the Lower House election.

In contrast to the conservative Aso, a group of liberals, including
Taku Yamasaki and Koichi Kato, who were often at odds with the
former Abe administration, will visit South Korea on Feb. 10-11.
They will be part of a suprapartisan mission that includes DPJ
lawmakers Yoshito Sengoku and Yukio Edano.

Yamasaki's pet argument is that a political realignment of forces in
the LDP and DPJ that share the same values is possible. Yamasaki and
Kato appear to be paving the way for a liberal alliance, which would
serve as a countermove against "a grand coalition" of the LDP and
DPJ.

Another reason for the formation of parliamentarian groups is an
effort to find a way for smoothly managing the politically divided
Diet, in which the opposition camp controls the Upper House and the
ruling coalition holds the majority in the Lower House.

Taro Kono and Kenichi Mizuno of the LDP and Sumio Mabuchi and Goshi
Hosono of the DPJ will announce today a joint statement calling for
Diet reform. The group of junior Diet members is expected to seek
aggressive utilization of lawmaker-sponsored bills, as well as
abolition of the pre-screening system on cabinet-initiated bills.

16) Kishida to be in charge of consumer administration

MAINICHI (Page 1) (Full)
February 6, 2008

Prime Minister Yasuo Fukuda yesterday decided to appoint State
Minister for People's Life to double as state minister for unifying
consumer administration. It is also most likely that Takeshi Sasaki,
professor at Gakushuin University, will chair an experts council to
consider the specifics of a new entity that will have unified
functions of related government agencies under its umbrella. The

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decision is expected to be announced possibly on Feb. 6.

The prime minister had originally planned to consider the specifics
of the envisaged new organization over six months. However,
following the poisoning incident from Chinese-made gyoza dumplings,
he decided to speed up the schedule. The experts council "Consumer
Administration Promotion Council" will be set up in the Cabinet
Office Secretariat. The membership will likely be about 10,
including Sasaki, Kumamoto Governor Yoshiko Shiotani. The panel will
hold its first meeting possibly next week and reach a conclusion
around April or May. Kishida will spearhead efforts to unify
consumer administration, based on discussions pursued by the panel.

17) Adoption of bill regulating foreign investment in airports:
Chief cabinet secretary hints at postponement

MAINICHI (Page 2) (Full)
February 6, 2008

Commenting on a bill amending the Airport Development Law, which
incorporates a restriction on foreign investment in airport
operators, drawing criticism from cabinet ministers and the LDP,
Chief Cabinet Secretary Nobutaka Machimura during a press conference
on the afternoon of Feb. 5 noted, "We must come up with an answer on
a timely basis. We will coordinate views on the bill at some point."
He thus hinted at a possible delay in the adoption of the bill at a
cabinet meeting, which was originally slated to be held on the 8th.

State Minister for Financial Policy Yoshimi Watanabe, State Minister
for Economic and Fiscal Policy Hiroko Ota and State Minister for
People's Life Kishida expressed their opposition during a press
conference yesterday, saying that such a bill could give the
impression that Japan is closing itself to the outside. The LDP has
also postponed intraparty procedures.

18) Row over restricting foreign ownership of airports between form
Abe team and Transport Ministry

TOKYO SHIMBUN (Page 2) (Full)
February 6, 2008

A bill amending the Airport Development Law, compiled by the Land,
Infrastructure, and Transport Ministry based on its plan to limit
foreign stakes in airport operators, was discussed at a joint
meeting yesterday of the Liberal Democratic Party's Land and
Transportation Division and Special Committee on Aviation. In the
meeting, members of the former Abe team composed of those who
assumed key posts in the Abe administration, including former Chief
Cabinet Secretary Yasuhisa Shiozaki, strongly opposed the proposed
regulations, on the grounds that the plan contradicts the policy of
opening up the aviation market. As a result, the bill
unprecedentedly was not approved in the meeting.

In the former Abe cabinet, Abe Shiozaki engaged in drawing up the
Asia Gateway Initiative, which called for aviation liberalization,
such as a measure to open Haneda Airport to international flights.
State Minister in Charge of Financial Policy Yoshimi Watanabe, State
Minister in Charge of Economic and Fiscal Policy, and State Minister
in Charge of Regulatory Reform, all of whom had also assumed the
current respective posts under the Abe cabinet, expressed in
opposition to the proposed regulations in press conferences.


TOKYO 00000308 012 OF 012


Chief Cabinet Secretary Nobutaka Machimura said yesterday that he
will make efforts to coordinate views, but it seems difficult to
coordinate views between the Transport Ministry and the former Abe
team.

At the outset of the joint meeting, House of Representatives member
Kenji Harada presented a list of signs of 67 lawmakers calling
foreign-ownership regulations. Aviation Bureau Director General
Hisayasu Suzuki of the Transport Ministry emphasized the necessity
of regulations, remarking: "Japanese companies give consideration to
the safety of the Japanese people, but foreign firms do not."

Members of the former Abe team fiercely reacted to Suzuki's remark,
with Hironari Seko, former special assistant to the prime minister,
asserting: "Airport operators have been offering lucrative
post-retirement jobs for Transport Ministry officials. They have
established a high-cost structure, so such companies are targeted by
domestic and foreign firms." Shiozaki also claimed: "A wrong message
will be sent." With no agreement reached, it was decided to hold
talks again today.

19) Next BOJ governor: Coordination underway in DPJ with possibility
of approving promotion of Muto to stave off vacuum if post unfilled

TOKYO SHIMBUN (Page 1) (Full)
February 6, 2008

The term of Bank of Japan Governor Toshihiko Fukui expires on March
19. The government plans to promote Deputy Governor Toshiro Muto
(64) to replace him. The Democratic Party of Japan (DPJ or Minshuto)
has started undertaking coordinating internally with the possibility
of approving Muto's promotion, if the government proposes it.

The DPJ in 2003 opposed the appointment of Muto as deputy governor,
citing his experience of serving as administrative vice finance
minister. The party based its argument on the notion of separation
of fiscal and monetary administration. However, amid growing
uncertainty about the future of the economy, it has leaned toward
the judgment that in order to avoid possible economic turmoil should
the BOJ governor's post be unfilled, it would be unavoidable to
adopt a flexible stance regarding the selection of a new governor.

One senior DPJ member close to President Ichiro Ozawa said, "We do
not mind approving Muto, if he is independent and free from any
influence from the Finance Ministry."

However, some members are opposing such a decision, noting, "The
party opposed his taking office as vice governor (in 2003). It is
strange for it to approve him now." The partly leadership, including
Ozawa, is expected to reach a final judgment, after proceeding with
the coordination of views in a cautious manner. However, growing
opposition to approving Muto could affect the decision of Ozawa and
other leadership officials.

The selection of BOJ governor requires approval of the Lower and
Upper Houses. Unlike bills, there is no regulation allowing the
Lower House to hold a second vote. Chances are high that if the DPJ,
which became the dominant party in the July Upper House last year,
opposes, the Upper House would disagree with his selection. As such,
the DPJ's response has been drawing attention.

DONOVAN

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