Cablegate: Japanese Morning Press Highlights 02/27/08

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P 270135Z FEB 08





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

Secretary Rice in Beijing:

4) Secretary Rice in meetings with Chinese leaders stresses
cooperation in Six-Party Talks, working on North Korea to report
nuclear plans (Yomiuri)
5) Rice urges China to use influence of North Korea to achieve
progress on nuclear issue (Asahi)

6) Progress in Six-Party Talks is up to Pyongyang: Washington
sources (Sankei)

7) Israel's Prime Minister Olmert promises to provide Tokyo with
information on North Korea (Asahi)

8) Government to implement global warming countermeasures at Lake
Toya Summit and 10 related conferences (Tokyo Shimbun)

9) Government planning new aid initiative in Burma (Myanmar) to help
eradicate poverty (Asahi)

10) Former Prime Minister Nakasone meets ROK President Lee (Sankei)

Aegis collision fallout:
11) Skipper of Aegis ship that collided with fishing boat was
questioned by Defense Minister Ishiba and others before the Japan
Coast Guard started its investigation (Mainichi)
12) Aegis' captain to be replaced (Yomiuri)
13) Ruling camp backing up Ishiba, concerned that the Aegis flap
could hamper passage of the state budget by the Diet (Yomiuri)
14) Dissatisfaction with Ishiba growing in the ruling camp

15) New PKO dispatches eyed (Nikkei)

Economic affairs:
16) Decision on new Bank of Japan governor put off after next week
17) Team of 11 experts, including business leaders, launch effort to
draft a new "Maekawa plan" for restructuring the economy (Nikkei)



IHI aware of losses last spring before issuance of corporate bonds

Defense minister found to have questioned captain of Aegis destroyer
Atago on the day of collision

Prof. Yamanaka reveals idea of establishing laboratory for clinical
application of embryonic stem cells


TOKYO 00000508 002 OF 012

FTC to cooperate with other government offices to crack down on
unfair transactions

NY Philharmonic concert in Pyongyang produces suggests thaw for
chilly relations

Tokyo Shimbun:
Government intends to take up measures to deal with climate change
at 10 ministerial meetings related to G-8 Toyako Summit

MOD, without permission, questioned captain of Aegis destroyer Atago
before JCG investigation


(1) Aegis destroyer collision: Is defense minister aware of his
(2) Castro's retirement: Need to rebuild country with generational

(1) MOD's delayed announcement raises suspicions
(2) Applying government-created guidelines to evaluation of
private-sector-sponsored certificate exams improper

(1) Aegis destroyer collision: A full inspection of SDF essential to
prevent recurrence
(2) NY Philharmonic concert in Pyongyang should not be used by DPRK
as political propaganda

(1) Prevention of recurrence more vital than reorganization of MOD
(2) Castro leaves much to be done

(1) Health of the Emperor: Need to establish system to reduce his
official duties
(2) Falling cabinet approval ratings: Prime Minister Fukuda needs to
be proactive

Tokyo Shimbun:
(1) Defense Minister Ishiba certain to face question of resignation

(2) Hearings on selection of new BOJ governor in Diet should be

(1) Aegis destroyer collision: Defense minister's heavy
responsibility for concealment of information

3) Prime Minister's Official Residence (Kantei)

Prime Minister's schedule, February 26

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


TOKYO 00000508 003 OF 012

Met Deputy Chief Cabinet Secretary Ono at the Kantei.

Attended a cabinet meeting. Chief Cabinet Secretary Machimura stayed

Attended a Lower House Budget Committee session.

Met Ono.

Attended the Lower House Budget Committee session.

Signed in at the Imperial Palace to report his return.

Met State Great Hural Speaker Lundeejantsan of Mongolia at the

Met LDP Upper House Caucus Chairman Otsuji, Upper House Secretary
General Yamazaki, Machimura and others at his official residence.

4) Rice, Yang confirm cooperation to move six-party talks forward;
China asked to urge North Korea to make full nuclear declaration

YOMIURI (Page 7) (Full)
February 27, 2008

U.S. Secretary of State Condoleezza Rice, now visiting China, held
talks with President Hu Jintao, Premier Wen Jiabao, Foreign Minister
Yang Jiechi and others in succession on Feb. 26. In their meeting in
the morning, Rice and Yang agreed to urge North Korea to make a
complete and full declaration of its nuclear programs, which has
missed the end-of-2007 deadline.

In a joint press conference with Yang, Rice said: "We are expecting
North Korea to make a complete and full declaration of its nuclear
programs, respecting its promise (six-party agreement). The United
States and China have agreed to make efforts toward the final phase,
completing the second-phase actions (a full declaration of the
North's nuclear programs and the disablement of its nuclear
facilities)." Yang also said, "We want to push the matter forward as
soon as possible, overcoming difficulties."

Rice also reiterated U.S. opposition to Taiwan's plan to hold a
referendum on U.N. entry in tandem with the March 22 presidential
election, saying: "I have repeated (the U.S. position) upholding the
one-China policy. This referendum is not going to help anyone." Yang
said, "China praises Secretary Rice's announcement on U.S.
opposition to the planned referendum."

Rice also indicated that she had expressed concern over human rights
and the freedom of religion in China.

The two foreign ministers also discussed the dying spy satellite
that was recently shot down by a U.S. navy missile.

5) Rice urges China to use influence on North Korean in order to end

TOKYO 00000508 004 OF 012

nuclear standoff

ASAHI (Page 7) (Full)
February 27, 2008

Nobuyoshi Sakajiri, Beijing

U.S. Secretary of State Condoleezza Rice, now visiting Beijing, held
talks on Feb. 26 with Chinese President Hu Jintao, Premier Wen
Jiabao, Foreign Minister Yang Jiechi and others in succession. After
her meeting with Yang in the morning, Rice spoke about the North
Korean nuclear standoff: "We are at an extremely critical juncture."
She urged China to apply pressure on North Korea so as not to pass
up a good opportunity for denuclearizing the Korean Peninsula.

At the Diaoyutai State Guesthouse in Beijing, Rice indicated to the
press corps traveling with her that she had told China that in order
to convince North Korea that it is time to move forward, each county
must use all of its influence, according to AP and other news

Chinese press officer Liu Chienchao also revealed in a regular press
conference on the dame day that Foreign Minister Yang had conveyed
to Rice Beijing's intention to respond to a call for resuming
U.S.-China human rights dialogue but stopped short of setting a
concrete timeframe.

In her talks with President Hu and Premier Wen in the afternoon as
well, Secretary Rice reportedly have urged Beijing, the largest
backer of North Korea, to use influence on Pyongyang, which has been
slow to fulfill its disablement pledge.

6) Progress on Six-Party Talks hinges on what Pyongyang does

SANKEI (Page 6) (Full)
February 27, 2008

Takashi Arimoto, Washington

The United States government hopes that the New York Philharmonic
Orchestra's concert in Pyongyang yesterday will break the impasse in
the Six-Party Talks on the North Korean nuclear issue. The situation
is similar to what was called "ping-pong diplomacy" in the past,
which thawed out the icy relations between the U.S. and China after
an American team of ping-pong players visited China in 1971.

The leading player in realizing this concert was U.S. Assistant
Secretary of State Christopher Hill, America's chief negotiator in

the Six-Party Talks. Hill has stressed: "North Korea argues that it
possesses nuclear arms because of America's hostile policy to that
country, but holding this concert is a kind of proof that the U.S.
does not adopt such a policy."

Washington has shown its willingness to take steps to normalize
diplomatic ties with Pyongyang, for instance, resolving such
outstanding issues as delisting North Korea as a state sponsor of
terrorism and as a country subject to the Trading with the Enemy Act
-- both requested by the North -- as well as opening a liaison
office, once the North declares all its nuclear programs.

Presumably, Hill's ulterior motive is to make landmark progress on
the North Korean issue, something never achieved by the past

TOKYO 00000508 005 OF 012

administrations, by having the North disable its nuclear facilities
in Yongbyon and by facilitating the North's declaration of its
nuclear programs.

A growing view in the U.S. government, however, is that it is
questionable how far Pyongyang is ready to engage in talks with
Washington in a serious manner, given that the Bush administration
will leave office next January.

An idea being floated is to first resolve plutonium-based nuclear
programs while shelving for the time being the uranium
enrichment-based nuclear programs, over which the U.S. and North
Korea have conflicting views, and the issue of nuclear proliferation
to other countries. At present, however, there are no signs that
Washington will accept that idea.

At one point Hill indicated his willingness to accept a gradual
declaration of nuclear programs, but there is a strong opposition to
that declaration particularly in the National Security Council.

According to an involved U.S. official, President Bush is highly
concerned that if North Korea is allowed to declare its nuclear
programs piecemeal and given something in return, the U.S. will end
up following North Korea's pace.

During his stay in Japan, Hill indicated that "North Korea, which
faces difficult economic conditions, may give in sooner or later." A
source familiar with the six-party talks also indicated that the New
York Philharmonic Orchestra's performance this time could set the
stage to resume the Six-Party Talks. But the source noted also:
"Negotiations will not progress if the U.S. and North Korea stick to
their respective positions."

7) Israeli prime minister to propose closer cooperation with Japan
on North Korea information

ASAHI (Page 7) (Full)
February 27, 2008

Visiting Israeli Prime Minister Ehud Olmert is scheduled to hold a
meeting with Prime Minister Yasuo Fukuda today, in which the Israeli
prime minister will propose an expanded exchange of information with
Japan on North Korea, which is pushing ahead with military
cooperation with such countries as Iran and Syria that are hostile
toward Israel. This was revealed by prime ministerial spokesman
Regev in an interview to the Asahi Shimbun yesterday.

Regev expressed strong concern about North Korea's activities in the
Middle East, saying: "North Korea has nuclear weapon and ballistic
missile technologies. We fear that such a country will join hands
with reckless governments in the Middle East." He also indicated
that (Prime Minister Olmert) will propose expanded dialogue with
Japan on the political, diplomatic and security fronts, noting that
combining Israel's information on North Korea in the Middle East
with Japan's information on the North would benefit the two

8) Government to implement global warming countermeasures at Lake
Toya Summit and 10 related conferences

TOKYO SHIMBUN (Top Play) (Full)
February 27, 2008

TOKYO 00000508 006 OF 012

The government has decided to implement global warming
countermeasures in the Lake Toya Summit this July and related 10
cabinet ministerial conferences to be held in the nation. In the
G-20 Climate Change Conference to be held in March by the state
ministers for the environment and the economy at the Makuhari Messe
in Chiba Prefecture, the government plans to use renewable energy as
electric power. In other major cabinet ministerial meetings, a
carbon offset method will be made use of. The government aims to
demonstrate advanced measures to contain global warming.

Climate change will be high on the agenda at the Lake Toya Summit.
Prior to the summit, 10 conferences will be held in the nation,
including the G-20, the Environment Ministerial Conference in Kobe
and the Africa Development Conference in Yokohama both in May, and
the Foreign Ministerial Conference in late June.

The Environment Ministry worked out guidelines on global warming
countermeasures in running the conferences and distributed their
copies to the ministries and agencies concerned. For the G-20, the
government plans to purchase a green electricity certificate, which
has the same meaning as using wind power, besides introducing the
carbon offset mechanism.

The government is also considering adopting the carbon offset
mechanism in the Africa Development Conference and the Energy
Ministerial Conference in Aomori Prefecture in June. Further, it
will look into using energy-saving resources, such as letting
natural wind into conference halls and avoiding the use of
disposable drink bottles.

A government source said: "The Lake Toya Summit and the cabinet
ministerial conferences will provide a good opportunity for Japan to
play up its global warming countermeasures as its message. We would
like to device ways for these measures to be effectively used also
in the future."

9) UN assistance to Burma: Government to support new initiative;
Special Advisor Gambari visiting Japan

ASAHI (Page 4) (Full)
February 27, 2008

The government has decided to support the National Economic Forum
Initiative, which Special Advisor of the UN General Secretary on
Burma Gambari will propose as a new framework for helping Burma
combat poverty. The proposal is part of UN efforts to promote the
nation's democratization. The envisaged initiative is a new
framework for extending in consultation with the junta economic aid
centered on the humanitarian area with a focus on the nation's
economic, social and minority issues involving poverty and social
disparities. Foreign Minister Koumura and Vice Foreign Minister
Mitoji Yabunaka will convey Japan's decision to Gambari during talks
with him on Feb. 27-28.

According to a government source, the junta has announced a plan to
enact a constitution by holding a national election in May, and
transfer power to a civilian government. The same source also said
that the government is aiming at indirectly supporting Burma's
democratization through aid in broad-based areas.

Japan will listen to the views of Gambari during the two-day talks

TOKYO 00000508 007 OF 012

with him and exchange opinions on a specific framework for how aid
should be extended and the feasibility of aid. Following the slaying
of journalist Kenji Nagai in Burma, Japan put on hold part of its
humanitarian aid to that nation. The government views that it would
be possible to extend assistance through a UN-led framework.

Gambari will visit Burma in early March, after winding up his Japan
visit, and hold talks with the junta. According to a diplomatic
source, a Burmese cabinet minister in charge has shown a negative
stance toward the proposal in the belief that European countries and
the U.S. might intervene in the country's democratization process
through the Forum.

It is now an open question whether the UN can get involved in
assistance to Burma while preventing its efforts from becoming
assistance to the junta, as well as whether European countries and
the U.S., which are adopting a harsh stance to the junta, including
the implementation of sanctions, will take part in the Initiative.
Some take the view that there is no knowing whether the Initiative
can be realized.

Japan has pursued diplomacy in its own way, while keeping a limited
channel with the junta. It released a comment by a Foreign Ministry
spokesman hailing the junta for indicating a democratization
schedule. Regarding the slaying of Nagai, the government dispatched
a police official to Burma in mid-February. Tough talks aimed at
shedding light on the incident are continuing, according to a senior
Foreign Ministry official. The government wants to proceed with the
investigation separately from the assistance plan.

10) Former Prime Minister Nakasone meets with ROK President Lee

SANKEI (Page 5) (Full)
February 27, 2008

Morimichi Imabori, Seoul

Former Prime Minister Yasuhiro Nakasone, now visiting Seoul, met
yesterday with new South Korean President Lee Myung Bak at the Blue
House presidential office. Nakasone expressed strong hopes for
President Lee, saying: "The spring season has come to Northeast
Asia. With the inauguration of President Lee, Japan-South Korea
relations will likely improve and progress significantly." He
continued: "The support of the public is key to any administration.
I hope to see you overcome difficulties with confidence so that you
won't lose public support."

President Lee responded: "I would like to improve South Korea-Japan
relations. I want you to give me advice whenever you visit my

Nakasone told Lee: "I want you to take the initiative as president
of South Korea, which is located between Japan and China," and he
sought an early summit meeting of the leaders of Japan, China and
South Korea. Lee spoke positively about it: "It was regrettable that
there has been a lack of regional cooperation in Northeast Asia,
although such cooperation has been promoted elsewhere in the

11) Ishiba personally quizzed Atago's chief navigator

MAINICHI (Top play) (Abridged)

TOKYO 00000508 008 OF 012

February 27, 2008

In connection with last week's collision between the Maritime
Self-Defense Force's Aegis destroyer Atago and the tuna trawler
Seitoku Maru in waters off Chiba Prefecture's Nojima Point, four
Defense Ministry leaders, including Defense Minister Shigeru Ishiba,
had directly heard from the Atago's chief navigator in the defense
minister's room about the accident before authorities from the Japan
Coast Guard's 3rd Regional Coast Guard Headquarters questioned him
about the factual circumstances, informed sourced revealed. The
chief navigator was airlifted by helicopter to the Defense Ministry.
On that occasion, the MSDF had permission from the JCG to airlift an
"injured person." However, the MSDF did not tell the JCG that the
chief navigator would be taken as well. The chief navigator was on
duty before the accident and knows well about what happened before
and after the accident. Ishiba has given no account of the fact that
he heard from the chief navigator in person about the circumstances.
The four defense officials' closed-door questioning of the chief
navigator will likely spark criticism.

The MSDF Maritime Staff Office, headquartered in Tokyo's Shinjuku
Ward, planned to call in an Atago-based officer right after the
accident to hear details about the accident due to the lack of
information from the Atago out at sea, according to informed
sources. At around 10 a.m., Feb. 19, about six hours after the
accident, a helicopter that arrived at the Atago from the MSDF's
Yokosuka base in Kanagawa Prefecture headed for MSO headquarters
with the chief navigator onboard. At that time, the MSO had
permission from the JCG to "carry an injured crewmember."

The chief navigator was questioned at MSO headquarters for about one
hour. He is believed to have stated with a note that he "saw a green
light two minutes before the collision, spotted the fishing boat one
minute before the collision, and tried to avoid colliding by
reversing engines at full throttle."

Apart from that hearing, four officials from the Defense Ministry
and the Self-Defense Forces also heard from the chief navigator
about the circumstances. The four were Ishiba, Administrative Vice
Defense Minister Kohei Masuda, SDF Joint Staff Office Chief Takashi
Saito, and MSDF Chief of Staff Eiji Yoshikawa. The chief navigator
is believed to have given a similar explanation to the four. The
chief navigator flew back on a helicopter at around 2:30 p.m.,
according to the sources.

So far, Ishiba has explained that he only received a report from the
MSO about its hearing from the chief navigator. The Defense Ministry
also explained that the MSDF had permission in advance from the JCG
to airlift and question the chief navigator. However, the JCG's 3rd
Regional Coast Guard Headquarters ruled out that account, saying:
"We received a report from the Defense Ministry about its hearing
(of the chief navigator). It was after that hearing."

12) Defense Minister Ishiba to dismiss Atago captain

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

Defense Minister Shigeru Ishiba revealed yesterday in a House of
Representatives Security Committee session his intention to dismiss
Ken Funato, the captain of the Maritime Self-Defense Force Aegis
destroyer Atago, which collided with the fishing boat Seitoku Maru.

TOKYO 00000508 009 OF 012

Asked how he would treat Captain Funato, Ishiba said: "It's matter
of course to consider (punishing him). I don't think it's
appropriate for him to remain a captain."

Ishiba made the remarks in response to a question by Keisuke Tsumura
of the main opposition Democratic Party of Japan (DPJ or Minshuto).

In regard to a report that Funato was resting at the time of
collision, Ishiba said, "It was not advisable," adding that it is
not certain whether there is a link between the accident and
Funato's rest. Regarding the timing for the dismissal, Ishiba said:
"Since I have not directly met (with the captain and other crew
members), I can't punish him without getting sufficient
information." He indicated that he would make a decision after the
Defense Ministry investigates the cause of the accident following
the investigation currently being conducted by the Third Regional
Coast Guard Headquarters.

The Third Regional Coast Guard questioned Funato on Feb. 25.

13) Ruling parties back defense minister, worried about effect on
budget deliberations

YOMIURI (Page 4) (Excerpts)
February 27, 2008

With another revelation that the Defense Ministry bungled the
handling of communication and release of information on the
collision of a Maritime Self-Defense Force Aegis destroyer and
fishing boat, the ruling parties are concerned about the negative
impact on Diet deliberations. The ruling coalition, however, has not
budged from its stance of supporting Defense Minister Shigeru
Ishiba, premised that the public has not been calling for his
resignation, even though the opposition camp has demanded it.

The Diet affairs committee chairmen of the ruling Liberal Democratic
Party (LDP) and its coalition partner New Komeito agreed yesterday
that they would hold concentrated deliberations on the collision of
the Aegis ship and fishing boat in a House of Representatives Budget
Committee meeting on Feb. 29. In the wake of the revelation of a
string of bungled efforts by the Defense Ministry, a senior LDP Diet
affairs committee member said: "Since the public is now critical of
the Defense Ministry, the matter has to be carefully dealt with."
Following this, the ruling camp yesterday withdrew its proposal that
a vote be taken on the fiscal 2008 budget bill on Feb. 28 in a Lower
House Budget session.

The ruling bloc aimed to pass the FY2008 budget bill and
taxation-related bills through the Lower House by Feb. 29, but it is
now uncertain whether the bills will be put to a vote in the
committee and Lower House plenary sessions on the 29th, since
concentrated debate will be held the same day. A senior LDP member
yesterday expressed concern that the passage of the bills by the
Lower House might be delayed to March. He said: "The collision
incident will become a good material for the opposition camp to
prolong deliberations on the budget bill."

The dominant view on Ishiba's course of action in the ruling camp is
that he should place priority on making efforts to provide comfort
to the family of the victims, shed light on the truth, and take
steps to prevent a recurrence of similar incidents.

TOKYO 00000508 010 OF 012

Ishiba's alleged involvement in a cover-up of information on when
the fishing boat was first spotted has given the opposition a weapon
to pursue his responsibility for the accident. However, it seems
that many ruling coalition members support Ishiba because the family
members of the fishing boat crewmembers want Ishiba to remain in
office and because a number of opinion polls found the public
wanting reform of the Defense Ministry.

14) Calls for Ishiba's resignation may grow over ministry's
mishandling of information; Criticism welling up even in ruling

MAINICHI (Page 2) (Excerpts)
February 27, 2008

On the collision accident between the Maritime Self-Defense Force
(MSDF) Aegis destroyer Atago and a fishing boat, it has been
revealed that the correct information that the fishing boat was
spotted 12 minutes before the crash had been held back for about 20
hours. It has also been unveiled that four top Defense Ministry
officials had secretly questioned (the captain of the Atago) about
the accident (on the day of the accident). The revelation may spur
calls for Defense Minister Shigeru Ishiba's resignation. Ishiba
indicated on Feb. 22 his intention to resign if the ministry was
found to have attempted to conceal the truth. The opposition camp
will inevitably pursue Ishiba's responsibility for the ministry's
manipulation of information if such is found true. Criticism of the
Defense Ministry is welling up even in the government and the ruling

In a House of Representatives' Security Committee meeting yesterday,
Ishiba said: "It is my responsibility to respond to the feelings of
the family (of the missing fishermen)," rejecting the idea of
resigning from his office. He emphasized that the ministry had not
intended to conceal truth or falsify information. Ishiba also
stressed his determination to fulfill his duty as defense minister
by taking the initiative in reforming the Defense Ministry.

In the meeting, though, there was a scene in which Ishiba admitted
his responsibility, saying: "I am the person responsible for
ministry affairs." Occasionally having a fit of coughing, he also
said: "I have to admit (the lack of cooperation in the ministry)." A
look of fatigue seemed to have settled in his face.

15) Gov't mulls sending additional SDF troops for PKO missions

NIKKEI (Page 1) (Full)
February 27, 2008

The government is now considering sending Self-Defense Forces
personnel for United Nations peacekeeping operations in addition to
those currently on PKO missions. In the run-up to sending SDF
troops, the government will send SDF personnel to PKO headquarters
in the Middle East, Asia, and other areas. Prime Minister Yasuo
Fukuda has advocated a "peace cooperative nation" to take positive
part in international peace-building efforts. His cabinet will adopt
an implementational plan for this peace cooperative initiative
before this July's Group of Eight (G-8) summit (Toyako Summit).

The government has plans to send SDF personnel to the headquarters
of the United Nations Integrated Mission in Timor-Leste (UNMIT) in

TOKYO 00000508 011 OF 012

East Timor and to the headquarters of the United Nations Truce
Supervision Organization (UNTSO) in the Middle East. In addition,
the government is also planning to send SDF personnel to the
headquarters of the United Nations Missions in Sudan (UNMIS). A
group of several SDF members will be posted to each of these
headquarters, where they will look into what the SDF can do. Based
on their fact-findings, the government will make a feasibility study
of SDF troop dispatches.

In March 2007, Japan sent six SDF personnel for a PKO mission in
Nepal as military observers. Japan currently posts 51 SDF members to
PKO missions in Nepal and the Golan Heights in the Middle East.
Japan ranks 82nd among 119 countries on PKO missions. China
currently posts about 2,000 troops to PKO missions and South Korea
about 420. The prime minister and the Foreign Ministry are concerned
about a lowering of Japan's standing in the international community.
The government will therefore hurry to send SDF batches for PKO
missions overseas.

16) Selection of new GOJ governor: Submission of proposal to Diet
postponed until next week or later

ASAHI (Page 4) (Full)
February 3, 2008

The government decided to postpone the submission of its selection
of a new Bank of Japan governor, which requires Diet approval, to
the Diet until next week or later. It is now undergoing final
coordination with an eye to promoting Deputy Governor Toshiro Muto.
In order to determine the situation in the Democratic Party of Japan
(DPJ or Minshuto), which is strongly opposing the selection of Muto,
it decided to leave the matter to Prime Minister Fukuda to make a
final decision regarding when to submit its decision and its
details. A senior government official revealed the government's
decision yesterday evening.

The government at first had undertaken coordination with the
possibility of submitting its decision to the Diet within this week.
However, the confrontation between the ruling parties, which aim at
securing Lower House approval for the fiscal 2008 budget bill within
this week, and the opposition camp, which is seeking more
deliberations, has escalated. The DPJ has yet to consolidate the
views of its members on the propriety of promoting Muto as governor.
As such, the government has made the judgment that it would be
inadvisable to submit a proposal (promoting Muto) now to the Diet,
because it will likely create turmoil.

17) Heisei period equivalent of 1980s Maekawa (Structural Reform)
Report to be mapped out: Eleven-member experts panel including
business leaders starts discussion

MAINICHI (Page 3) (Full)
February 27, 2008

The government's Council on Economic and Fiscal Policy (chaired by
Prime Minister Yasuo Fukuda) yesterday held a first meeting of its
experts panel tasked with mapping out new guidelines for economic
structural reforms. The panel is expected to compile in June a
report, which will prop up the Fukuda cabinet's growth strategy on
the theoretical front. It will aim at mapping out a Heisei period
equivalent of the Maekawa Report, issued in April 1986, which called
for a shift from an export-dependent economy to a domestic

TOKYO 00000508 012 OF 012

demand-led economy.

The name of the panel is the Experts Panel on Structural Changes and
the Japanese Economy, consisting of 11 private-sector members, such
as academics, economists and business leaders. Fukuda appointed
Tokyo University Graduate School Professor Kazuo Ueda as chairman.
At the outset of the meeting, State Minister for Economic and Fiscal
Policy Hiroko Ota, who spearheaded the establishment of the panel,
explained the objective of the meeting, "I want to contemplate what
kind of economy can sustain substantive domestic demand amid the
dwindling birthrate."

The panel will probe into challenges facing the Japanese economy
stemming from a spreading division of labor throughout the world and
changes in the capital flow as a result of the economic
globalization. Members will discuss 11 issues, including the roles
to be fulfilled by both companies and households to build a domestic
demand-led economic structure.

The panel will map out a report before the Lake Toya G-8 (Summit) in
Hokkaido. The Fukuda cabinet will underscore its stance of attaching
importance to economic growth.


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