Cablegate: Japanese Morning Press Highlights 03/07/08

DE RUEHKO #0601/01 0670117
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E.O. 12958: N/A



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

Diet in disarray:
4) Ruling and opposition camps, concerned about rising public
criticism about stalled Diet proceedings, are seeking way to
normalize session (Mainichi)
5) Government to submit to the Diet today Muto's name as candidate
for Bank of Japan governor, with Shirakawa being proposed as deputy
6) Strong Democratic Party of Japan (DPJ) opposition to Muto as
candidate for BOJ governor (Yomiuri)
7) If there is vacuum in post of BOJ governor, the absence could
affect markets and Japan's diplomacy (Asahi)
8) LDP Secretary General Ibuki wants to find compromise solution to
the stalemate between ruling and opposition camps over
highway-funding issue (Sankei)
9) DPJ Secretary General Hatoyama sees Diet dissolution possible
right after the G-8 summit in Hokkaido, dismisses political group
Sentaku as a "performance" (Sankei)

Defense and security affairs:
10) Government is expanding candidate countries for PKO by the
Self-Defense Forces, starting with the Sudan (Nikkei)
11) Japan to forgive 3.2 billion yen of Sudan's debt to it (Asahi)

12) Defense Ministry may revamp is press briefing system to make it
more effective (Nikkei)
13) U.S.-Japan Sea-power Symposium in Washington discusses responses
to China's military expansion (Yomiuri)

14) LDP's Yamasaki says his group will not send a delegation to
North Korea unless there is a payoff from it (Sankei)

Whaling row:
15) Possible activist from the Sea Shepherd breaks into the Japanese
Embassy in London (Yomiuri)
16) IWC meets to discuss ways to end violent confrontation between
anti-whaling groups and whaling countries (Tokyo Shimbun)

17) Prime Minister Fukuda in unusual move calls of big business
organization Keidanren to agree to raise employee wages during
spring labor talks (Asahi)



Government to nominate Muto as BOJ governor today: Coordination
underway with selection of Shirakawa as his deputy

Mainichi, Yomiuri, Tokyo Shimbun:
"Juki Net" national resident registry network constitutional: "There
are no substantial risks of information leakages," Supreme Court
rules for first time


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Foreign currency reserves top 1 trillion dollars as of end of
February: Concern about drop in value of assets due to weak dollar

ShinGinko Tokyo extended large amount of loans to account-rigging
companies: Negligence by former management to check borrowers'
nonperforming loans

Chairman Shii proposes talks between ruling and opposition camps for
thorough Diet deliberations, by finding breakthrough in stalled
Upper House session


(1) "Juki Net" national resident registry network: Can
constitutional ruling ensure peace of mind?
(2) China's National People's Congress: Transparency is basic
element in food safety

(1) Court decision on "Juki Net" is not universal approval
(2) U.S. presidential election: Brisk campaign battle will create

(1) Special-purpose road construction revenues: Both ruling and
opposition camps should explore ways to revise highway tax-related
(2) Supreme Court decides that "Juki Net" is constitutional

(1) Make effective use of "Juki Net" based on ruling
(2) Markets and OPEC moving based on investors' estimations

(1) China's military build-up: Is Japan's defense capability
(2) "Juki Net" ruling: Tackle the system's dissemination more

Tokyo Shimbun:
(1) Top court decides "Juki Net" constitutional: Fear of leakage of
personal information
(2) OPEC decides not to increase crude oil production: Get
overheated oil market under control

(1) Medical services for elderly patients 75 and over: Drop
abnormally discriminatory system

3) Prime Minister's Official Residence (Kantei)

Prime Minister's schedule, March 6

NIKKEI (Page 2) (Full)
March 7, 2008

Entered the Upper House First Committee Room in the Diet Building.

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Met Lower House member Taro Nakayama at the Kantei.

Met Chief Cabinet Secretary Machimura.

Met Public Security Investigation Agency Director General Yanagi.
Followed by former Finance Minister Omi.

Met Machimura.

Met METI Vice Minister Kitabata and Resources and Energy Agency
Director General Mochizuki.

Met Machimura. Followed by Lower House Antiterrorism Special
Committee Chairman Fukaya.

Met International Cooperation Fund President Kazuo Ogura. Later, met
New Komeito President Ota and others.

Met Cabinet Intelligence Director Mitani.

Cabinet Special Advisor Nishimura and Forestry Agency Director
General Ide. Attended a meeting of the Overseas Economic Cooperation

Met Keidanren Chairman Mitarai and Vice Chairman Kusakari, and
Economic and Fiscal Policy Minister Ota. Joined by Machimura. Later
met Special Advisor Ito.

Met Deputy Chief Cabinet Secretary Futahashi.

Returned to his official residence.

4) Some ruling members exploring ways to normalize Diet business

MAINICHI (Page 5) (Abridged slightly)
March 7, 2008

The Democratic Party of Japan and Social Democratic Party again
boycotted yesterday's session of the House of Councillors Budget
Committee, forcing the committee to cancel deliberations for the
third consecutive day. The ruling bloc independently convened a
directors' meeting yesterday, and Chairman Yoshitada Konoike decided
in his capacity to open a session on March 7. The confrontation
between the ruling and opposition camps has been underway since the
Lower House's approval of the fiscal 2008 budget on February 29.
Concerned about public criticism, some in the two sides have begun
looking for ways to normalize Diet business.

"It's foolish, so we should stop it," Konoike described the ruling
coalition's strategy of keep convening sessions before the press

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corps yesterday morning.

DPJ Deputy President Naoto Kan, too, yesterday criticized the three
days of sessions held in the chairman's capacity, saying, "The LDP's
strategy of rattling the opposition camp in an effort to break the
impasse won't work." Kan, however, did not go any further,
apparently in a bid to avoid adding fuel to the confrontation.

Meanwhile, Japanese Communist Party Diet Affairs Committee Chairman
Keiji Kokuta held a meeting with his LDP counterpart, Tadamori
Oshima, last evening in the Diet building and requested talks
between the two camps for resuming deliberations. People's New Party
Diet affairs chief Masaaki Itokawa, too, conveyed a similar view to
Oshima on the phone. With such a war-averting mood in the backdrop,
the view has cropped up in the Upper House LDP calling for a
reversal in the traditional hostile approach to the opposition
bloc's boycott strategy. There is growing momentum in the ruling
bloc to create a mood for holding talks with the opposition camp by,
for instance, calling off the March 7 committee meeting.

5) Government to nominate Muto as BOJ governor today: Coordination
underway with selection of Shirakawa as his deputy

ASAHI (Top Play) (Excerpts)
March 7, 2008

The government yesterday decided to nominate Toshiro Muto as a
successor to incumbent Bank of Japan (BOJ) Governor Toshihiko Fukui,
whose term expires on March 19, at a joint meeting of
representatives of the Lower and Upper Houses to be held today.
Coordination is also underway with the possibility of picking
Masaaki Shirakawa, former BOJ director and a Kyoto University
Graduate School professor, to fill one of the two deputy governors'
posts. The Democratic Party of Japan (DPJ or Minshuto) is determined
to disagree with the promotion of Muto, former administrative vice
financial minister, based on the notion of separation between fiscal
and monetary policies. The prime minister intends to seek
understanding from the opposition camp with possible party head
talks with DPJ President Ozawa in mind.

The government will present its nominations for the new governor and
two new deputy governors at the joint meeting of both chambers of
the Diet slated for 1:00 p.m. today and a meeting of directors of
the Committees on Rules and Administration of the Lower and Upper
Houses to be followed. After determining what action the DPJ will
take until the very last minute, Prime Minister Fukuda will finally
fix three candidates and submit their names to the Diet.

Prime Minister Fukuda yesterday evening told reporters at the Prime
Minister's Office (Kantei), "Please leave the selection of BOJ
governors to my care." Regarding the notion of separation of fiscal
and monetary administration as sought by the DPJ, Fukuda indicated
his perception that there will be no problem for a former Finance
Ministry official to serve as BOJ governor. He said: "It depends on
the person, regardless of where he comes from. The point is whether
that person can fulfill his responsibility."

The prime minister also stated, "It is unforgivable to allow the
post to become vacant even for a day." He continued, saying that it
would be natural to willingly seek talks with the DPJ head, if
necessary. He thus clarified his stance of being prepared to hold
party head talks with Ozawa.

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The DPJ is determined to oppose the promotion of Muto, with a senior
official noting, "If we agree on the selection of Muto, the public
would see that we have tacitly cooperated with the government." The
government and the ruling parties appear to see that amid the global
financial market becoming unstable reeling from the U.S. subprime
loan mortgage crisis and other issues, Muto with a proven track
record of having supported Governor Fukui as his deputy over the
past five years is appropriate as the central command for Japan's
monetary policy.

6) Government to submit plan on selection of new BOJ governor today,
but DPJ opposed to promotion of Muto

YOMIURI (Page 2) (Excerpts)
March 7, 2007

The government will submit to the Diet today its plan on
appointments for a new governor and two new deputy governors of the
Bank of Japan (BOJ). A focal point is what response the Democratic
Party of Japan (DPJ) will make to the plan. The government will
propose promoting BOJ Deputy Governor Toshiro Muto to the
governorship. But in the DPJ, which controls the House of
Councillors, there is strong opposition to Muto's promotion. Because
its rejection would create a vacancy in the post of BOJ governor,
the DPJ is being hard pressed to make a difficult decision.

DPJ Secretary General Hatoyama indicated in a speech yesterday that
his party would make a decision, focusing on whether the policy of
separating fiscal and financial policies is maintained. He said:
"Our focus is on whether a nominee takes a stance of distancing
himself from the Liberal Democratic Party and the Finance

Upper House Chairman Azuma Koshiishi told a press conference: "There
will be no problem if the government picks a person whom (the DPJ)
can accept."

Such negative responses by the DPJ executive members reflect strong
objections in the party to the proposed promotion of Muto. A party
executive member commented: "Although we were going to unify views
and support the appointment of Muto, the ruling camp's way of
passing the budget bill for FY2008 in the House of Representatives
in the absence of the opposition bloc discouraged us. There will be
no merit for us even if we make efforts to unify internal party

However, once the government presents its plan, "the DPJ will have
to be ready to be criticized for refusing it," a mid-ranking
official said. Koshiishi emphasized: "The government should have
presented the plan earlier. We are not to blame." But in such a
case, the DPJ will inevitably come under fire from the ruling
parties and others.

7) Vacancy in BOJ governor's post may adversely affect market and

ASAHI (Page 4) (Excerpts)
March 7, 2008

The government has decided to submit to the Diet today a plan to
promote Bank of Japan Deputy Governor Toshiro Muto, 64, to succeed

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incumbent Governor Toshihiko Fukui, 72, whose term expires on March
19. The Democratic Party of Japan, the largest party in the House of
Councillors, however, remains opposed to promoting Muto, a former
vice finance minister, citing the rule of separating financial
policy from monetary policy. Some began to voice concern that the
post of BOJ governor would become vacant due to a lack of Diet

In determining the new BOJ governor and deputy governors, the
government will: (1) first present at 1:00 p.m. March 7 its
nominations to the six-member council of representatives of two
chambers of the Diet including the LDP and DPJ chairmen of the rules
and administration committees of the two chambers, and (2)
officially present its nominations to a meeting of the directors of
the rules and administration committees of the two chambers that
will immediately follow the previous meeting.

On March 11, the nominated governor, along with the two nominated
deputy governors, will present their views before the rules and
administration committee in each chamber. This will be followed by a
closed-door question-and-answer session. The two chambers are
expected to convene plenary sessions later next week to determine
whether to approve the presented plan.

In the event the personnel plan is disapproved by the
opposition-controlled Upper House, the government will have to
present a new plan. In such a case, the government basically comes
up with a new lineup. There is the view in the LDP though that even
if Muto fails to obtain Diet approval, the government should
resubmit the list of nominees, as is.

With the deadline just around the corner, a vacancy in the BOJ
governorship is becoming a real possibility. Under the Bank of Japan
Law, when the post of governor is vacant, the deputy governors are
required to perform duties in place of the governor. Nevertheless,
chances are slim that the Diet will approve the deputy governor
nominees alone without the one for the governorship. In such a case,
the acting BOJ governor must be selected from among the six
executive directors, though the procedures for that are not
specified in the law.

A vacancy might adversely affect the market, resulting in, for
instance, a plunge in stock prices. Mitsui Sumitomo Asset Management
chief economist Akiyoshi Takumori said, "Some people are already
beginning to regard a possible vacancy as a bearish factor."

The G7 meeting of finance ministers and central governors will take
place in Washington in mid-April. The government and ruling
coalition fear that "Japan's absence from international conferences
would end up sending the bad message to the international
community," as LDP Policy Research Council Chairman Sadakazu
Tanigaki put it.

Meanwhile, the DPJ says that the government is to blame for any

8) LDP Secretary General Ibuki: Compromise needed on road issue

ASAHI (Page 4) (Full)
March 7, 2008

Referring to the confrontation between the ruling and opposition

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parties over the issue of road construction revenues special
measures legislation stipulating an extension of the provisional tax
for gasoline, Liberal Democratic Party Secretary General Bunmei
Ibuki last night said at a meeting in Tokyo: "Substantial compromise
is necessary." The LDP secretary general made his position clear
that he would launch discussion on a revision of the
government-drafted bill, including a mid-term road construction and
repair program to which the government plans to spend up to 59
trillion yen, as well as the extension of the provisional tax rates.
This was revealed by a senior member of the Tsushima faction, who
had dinner with Ibuki. Ibuki was quoted as saying:

"The mediation effort by the leaders of the two Diet houses (in lat
January) should be taken in a serious manner. I think it would be
difficult to resume Diet deliberations as long as the (government
and ruling parties) continue to remain entrenched in their

In response, Yuji Tsushima, chairman of the Tsushima faction, was
quoted as saying: "Without substantial compromises, this difficult
situation will not be overcome."

9) DPJ's Hatoyama indicates possible snap election after G-8 Summit,
defines establishment of suprapartisan group "Sentaku" as a show

SANKEI (Page 5) (Full)
March 7, 2008

Delivering a speech in Tokyo yesterday, Democratic Party of Japan
(DPJ) Secretary General Yukio Hatoyama predicted that the House of
Representatives would be dissolved after the Lake Toya Summit in
Hokkaido in early July, saying: "Dissolution just after the G-8
Summit is considered to be the likely timing."

Hatoyama said: "Regarding the dissolution of the Lower House, the
sooner, the better." On the reason why he cited immediately after
the summit as the timing for a snap election, he explained:

"If Prime Minister Fukuda continues to stay in power, discussion
would be conducted on the consumption tax in September and October.
His administration would raise the consumption tax next April to use
the revenues to finance basic pension payments. The freeze of the
medical system for very old patients will be lifted around this
October. . . . Even if dissolution is delayed, we will not be

In reference to the formation of the suprapartisan parliamentary
group "Sentaku," which has been joined by 107 legislators, Hatoyama
said: "Reorganizing the political world before the public is a show.
They are already doing something akin to an advertising campaign
before political realignment has started."

In connection with his assumption of the post of advisor to the
nonpartisan parliamentary group on revisions to the Constitution,
headed by former Prime Minister Yasuhiro Nakasone, Hatoyama

"The task of revising the Constitution has become a dead issue under
the Fukuda cabinet. We are not necessarily moving eagerly to set
rules for establishing a Constitution screening panel (in the

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10) Gov't mulls SDF dispatch to Sudan, other countries for PKO

NIKKEI (Page 2) (Abridged)
March 7, 2008

The government is planning to send the Self-Defense Forces to the
southern part of the Sudan and some other overseas locations for
participation in United Nations peacekeeping operations. The prime
minister's office and the Foreign Ministry invited high-ranking
officials from the Sudan to hear about the local situation. However,
the Defense Ministry is still cautious about the idea of sending SDF
members to that country. As it stands, the government will need to
coordinate its SDF dispatch plans.

Foreign Minister Masahiko Koumura met with Sudanese Presidential
Assistant Nafi yesterday at the Foreign Ministry's Iikura guesthouse
in Tokyo and exchanged views on the security situation in Darfur, a
disputed area in the Sudan's western part. Koumura said he was
thinking about what to do about sending SDF personnel to the United
Nations Mission in Sudan (UNMIS), a PKO unit in the southern part of
the Sudan. Nafi expressed hopes for Japan's contribution.

The UNMIS has now surfaced as a likely candidate in the government.
Japan will host the Tokyo International Conference on African
Development (TICAD) in May and the Group of Eight (G-8) summit in
July. In these two events, Africa aid will be a main agenda item.
The government is expecting that Japan, if it can send SDF members
to the UNMIS before these two conferences, can make an appeal to the
world on Japan's international contribution as part of Prime
Minister Fukuda's "peace-cooperating nation" initiative.

Meanwhile, the Defense Ministry remains cautious about sending SDF
personnel for PKO missions in Africa. "The Ministry of Defense has
no plans at this point to send the SDF to the Sudan," Administrative
Vice Defense Minister Kohei Masuda stressed in a press conference
yesterday. The Sudan is reportedly unstable, so the Defense Ministry
wants to watch the local security situation.

In addition to the Sudan, the government is also looking into the
feasibility of sending SDF personnel to East Timor and reinforcing
an SDF detachment that is currently on a PKO mission in the Golan
Heights in the Middle East. The prime minister's office and the
Foreign Ministry are hurrying to work out SDF dispatch plans.
However, the Defense Ministry is reportedly malfunctioning in the
aftermath of a recent collision between a Maritime Self-Defense
Force Aegis ship and a fishing boat. "The Defense Ministry is not
coolheaded enough to consider this matter," a Foreign Ministry
source said. The government's internal coordination is facing rough

Japan's current PKO participation
Area/country Outline
United Nations Mission in Nepal (UNMIN) Nepal 6 SDF members for
military surveillance
(The current SDF dispatch is to end at the end of March. The
government is planning to extend it until the end of September.)
United Nations Disengagement Observer Force (UNDOF) Golan Heights 45
SDF members for logistics
(The government is looking into the possibility of reinforcing the

Japan's options for future PKO participation

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United Nations Mission in Sudan (UNMIS) Sudan The government is
looking into the possibility of posting SDF members to UNMIS
United Nations Integrated Mission in Timor-Leste (UNMIT) East Timor
The government is looking into the possibility of sending personnel
from the Japan Coast Guard, etc.
United Nations Truce Supervision Organization (UNTSO) Syria,
Lebanon, Israel, Egypt The government is looking into the
possibility of sending SDF members to UNTSO headquarters

11) Government to forgive 3.2 billion yen of Sudan's debt

ASAHI (Page 4) (Full)
March 7, 2008

Foreign Minister Masahiko Koumura, meeting yesterday with Sudan's
Presidential Assistant Narfa, told him that Tokyo would forgive 3.2
billion yen of Sudan's 45 billion yen in debt with Japan. The aim is
to play up Tokyo's effort to deal with the Africa problem.

The Japanese government has suspended yen loans to Sudan since 1983
for the reason of the civil conflict and the country being in
arrears in its debt repayment. The government will implement its
plan on the condition that Sudan will make efforts to bring about
peace to the country by resolving the Darfur issue.

Koumura requested Narfa: "Your government needs to work on the
anti-government force to get them to sit at the negotiation table"
on the Darfur issue.

12) Defense Ministry to review press conferences

NIKKEI (Page 2) (Abridged)
March 7, 2008

Vice Defense Minister Kohei Masuda, meeting the press yesterday,
indicated that the Defense Ministry would review its press
conferences due to its confused briefing over the recent collision
between an Aegis destroyer of the Maritime Self-Defense Force and a
fishing boat that has left its two crewmen missing. The Defense
Ministry will consider reducing the number of senior officials
attending press conferences or consider reducing the number of press
conferences. The Defense Ministry has cited its plan to unify
information as a reason. However, the Defense Ministry's plan to
reduce the number of press conferences will likely be called into
question from the perspective of fulfilling public accountability.
At present, the Defense Ministry's seven senior officials-the
defense minister, administrative vice minister, press secretary,
Joint Staff Office chief, Ground Self-Defense Force chief of staff,
Maritime Self-Defense Force chief of staff, and Air Self-Defense
Force chief of staff-regularly meet the press.

13) Japan-U.S. Sea Power Dialogue discusses response to Chinese

YOMIURI (Page 2) (Slightly abridged)
March 7, 2008

Shin Nagahara, Washington

The Japan-United States Sea Power Dialogue, a symposium to explore
ways for Japan and the U.S. to work together to deal with maritime

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issues, ended its first day session on the evening of March 5
(morning of March 6, Japan time). In the session, participants
discussed how to strengthen the Japan-U.S. alliance and how to
respond to China's increased naval power. The symposium will last
for three days in Washington.

In the discussion, responding to the question of the possibility
that China would expand (its naval power) into the high seas of the
Indian Ocean in the future, Michael Green, former senior director
for Asian affairs at the National Security Council (NSC), said,
"Concerns about such are mounting in Japan and India." He went on to
say, "We need to consider ways to cooperate with the Chinese Navy."
He also suggested that in order to avoid causing any unnecessary
disputes at sea, it will be essential for Japan and the U.S. to
conclude a pact on prevention of maritime accidents and
search/rescue in the event of accidents.

Former Japanese Ambassador to the U.S. Shunji Yanai chairs the
Council on Rebuilding the Legal Basis for Security, a
government-sponsored panel to discuss the question of the right to
collective self-defense right in the government. Bearing in mind the
restrictions currently imposed on the Maritime Self-Defense Force's
(MSDF) missile defense cooperation, Yanai pointed out: "Japan needs
to review the current interpretation of the Constitution's Article 9
(related to the right to collective self-defense). Amending the
article is essential so that missile defense cooperation will work
adequately and effectively."

14) Yamasaki would not visit N. Korea if no results expected

SANKEI (Page 5) (Full)
March 7, 2008

Taku Yamasaki, former vice president of the ruling Liberal
Democratic Party, said during the taping yesterday of a commercial
TV program that he would not visit North Korea if he could not
expect any results. Yamasaki is planning to visit North Korea with a
nonpartisan group of lawmakers. Meanwhile, former Prime Minister
Junichiro Koizumi is rumored to be considering a visit to North
Korea. "Mr. Koizumi has a strong interest and desire to normalize
diplomatic relations between Japan and North Korea," Yamasaki said.
"But for now," he added, "I think he is placing his hopes on Prime
Minister Yasuo Fukuda to take a positive stance and carry out
action." With this, Yamasaki ruled out the possibility of a Koizumi
visit to North Korea.

15) Possible Sea Shepherd activists trespass on Japanese embassy's
premises in London

YOMIURI (Page 2) (Full)
March 7, 2008

St. Ives, Keiichi Honma

On the morning of March 6 (evening of that day, Japan time), two
male and female activists believed to be associated with Sea
Shepherd, an American environment protection group opposing Japan's
research whaling, trespassed on the Japanese embassy's premises and
filed a protest with Japan. This protest was apparently made with an
eye on the ongoing midterm conference of the International Whaling
Commission (IWC), which kicked off in London the same day.

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According to embassy officials, the male activist (50) bound himself
to a balcony of the embassy and brandished a banner reading "Japan
should stop illegal whaling." The man apparently scrambled up the
outer wall of the embassy. Embassy officials told the man to leave
the premises but he would not. He was taken away by police officers
who rushed to the spot.

Afterwards, a female activist cried against whaling at the entrance
of the embassy but she went away soon after the embassy's guards
told her to leave.

16) IWC interim meeting starts in order to resolve confrontation;
Research whaling likely to be discussed, as well

TOKYO SHIMBUN (Page 3) (Full)
March 7, 2008

Daisuke Okayasu, London

A three-day interim meeting of the International Whaling Commission
(IWC) began in London yesterday in an effort to bring to normalize
the organization, which has ceased to function properly because of
the conflicting views between pro-whaling and anti-whaling
countries. The purpose of the conference is to exchange frank views
behind closed doors ahead of the 60th annual IWC general meeting and
to explore ways to break the stalemate.

Some 40 countries are participating in the meeting. While criticism
of Japan's research whaling is on the rise, Japan is expected to
bring up a U.S. environmental protection group's acts obstructing
Japan's research whaling.

Yesterday morning, a man opposing whaling intruded into the Japanese
Embassy in London and climbed onto the balcony. He was later
arrested by the police.

17) Prime Minister Fukuda asks JBF chairman for employee pay raises

ASAHI (Page 4) (Full)
March 7, 2008

As this year's annual spring labor-management negotiations reach a
final stage, Prime Minister Yasuo Fukuda yesterday invited Business
Federation Chairman Fujio Mitarai and other business leaders to his
office (Kantei) and requested them to cooperate with him on a plan
to increase wages. It is extremely unusual for a prime minister to
directly ask the management side for employee wage hikes. Mitarai
said: "I felt fully the prime minister's sense of alarm." Therefore,
Fukuda's move will likely affect the spring negotiations.

Fukuda told Mitarai: "I want you to do your best (so that companies
will make efforts to raise wages)." The Cabinet e-mail magazine
yesterday noted: "Corporations and households are the two axles of
the same vehicle. Business circles must consider the need for pay
increases." The prime minister appears to be trying to lead to
regaining his popularity by showing his stance of giving priority to
improving the daily lives of the people.

The e-magazine went:

"There would be no problem if wages are increased more than the
levels of price hikes. However, the average level of wages has

TOKYO 00000601 012 OF 012

remained nearly unchanged for the ninth consecutive year or has even
been on the decline. So the burden on the people's lives has become
increasingly heavy."

Noting that major companies have earned record high profits as a
result of structural reform, the mail magazine stated: "It is time
for the firms' profits to be shared with the public and households
in the form of pay raises."

After his meeting with the prime minister, Mitarai as top leader of
the business community showed a stance of going along with pay
raises, saying: "I want companies that have reserve capacities to
give consideration (to Fukuda's request) as much as possible."
However, he indicated there would be differences in pay raises based
on the company.

Japan Trade Union Confederation (Rengo) Chairman Tsuyoshi Takagi
welcomed (Fukuda's move), saying: "We are grateful." But he added:
"I wonder whether business managers will listen to the prime
minister's request."


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