Cablegate: Japanese Morning Press Highlights 03/13/08

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

Diet in turmoil:
4) Lower House to vote to accept all of the government's Bank of
Japan candidates today, with Shirakawa expected to be appointed
interim governor (Asahi)
5) Three Democratic Party of Japan (DPJ) lawmakers abstained when
party voted down BOJ governor candidate in Upper House (Mainichi)
6) To avoid a vacuum at the Bank of Japan, ruling parties are
considering a bridging bill allowing interim management of monetary
policy (Tokyo Shimbun)
7) Ruling parties to revise tax-related bills to lower road-related
outlays to 40 trillion yen over 10 years (Asahi)
8) Diet normalizes but stalemate over tax bills remains unchanged,
with DPJ still eager to hand the public a 25 yen cut in gas prices
at the pump (Mainichi)
9) DPJ Ozawa predicts Diet dissolution before the G8 summit in July
(Tokyo Shimbun)

China affairs:
10) President Hu now scheduled to visit Japan starting May 8
11) PACOM Commander Adm. Keating testifies that China during his
visit last May offered to "divide control of the Pacific" (Sankei)

Defense affairs:
12) DPJ drafts revision of the U.S.-Japan SOFA that would have USFJ
hand over all crime suspects to Japan before indictment (Yomiuri)
13) Government to slash 500 billion yen in outlays in new National
Defense Buildup Plan, giving up plan to frontload spending
14) Defense Ministry to provide Iwakuni with subsidy to build a city
hall as part of city's acceptance of USFJ realignment plan (Tokyo
15) U.S. airman at Misawa Air Base suspected of hit-and-run charge
last October when driving under the influence (Mainichi)

16) Japan reveals simulation that concludes the feasibility of
reducing global warming gases by 10 billion tons by 2020 (Yomiuri)

17) U.S. beef imports are now one eighth of the volume in 2003,
exacerbated by consumer shift to Australian beef (Nikkei)



Ruling parties to present next week revised version of road tax plan
projecting 40 trillion yen reduction in road construction outlays

New aviation routing method to determine shortest traveling distance
to be introduced in Japan today

Japan estimates greenhouse gas emissions can be cut worldwide by 10

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billion tons by 2020

Mitsubishi Corp, others to start selling vehicles, other products
with emission quotas to corporate clients

Public opinion disagrees with DPJ's opposition to the government's
nomination of new BOJ governor

Tokyo Shimbun:
Small- and medium-size companies say they have no plans to borrow
from ShinGinko Tokyo

Land, Infrastructure, and Transport Minister Fuyushiba: Feasibility
studies on six large-scale bridges to be cancelled


(1) Upper House's rejection of nomination of Muto as new BOJ
governor: Prime Minister Fukuda should make efforts to resolve the
(2) Japan's first lab "Kibo": Make the best use of 1 trillion yen

(1) Opposition's disapproval of Muto as new BOJ governor: Ruling,
opposition parties should have meeting of minds to avoid vacancy in
the post
(2) Ishihara Bank: Tokyo Gov. Ishihara must take responsibility

(1) DPJ should handle BOJ appointment responsible
(2) Can cooperation of central banks of U.S. and European countries
prevent dismay in the markets?

(1) Japan must avoid vacancy in BOJ governor post
(2) Low wage increases to slow down economic growth

(1) Nomination of Muto as new BOJ governor should not be changed
(2) Make clear where responsibility lies for ShinGinko Tokyo

Tokyo Shimbun:
(1) This year's pay raises will not give momentum to the economy
(2) Ishihara Bank should not increase the red any more

(1) Muto unsuitable to serve as BOJ governor

3) Prime Minister's Official Residence (Kantei)

Prime Minister's schedule, March 12

NIKKEI (Page 2) (Full)
March 13, 2008

Met with State Minister for Consumer Affairs Kishida and Assistant

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Deputy Chief Cabinet Secretary Saka.

Met with Chief Cabinet Secretary Machimura. Then met with New
Komeito head Ota.

Met with Deputy Chief Cabinet Secretary Futahashi.

Met with Vice MEXT Minister Zeniya, followed by METI Deputy Vice
Minister Toyoda and Trade Policy Bureau Director General Ishige.

Met with Vice Cabinet Office Minister Uchida, followed by Finance
Minister Nukaga and Special Advisor to the prime minister Ito.

Experts Council "Rising Agriculture, Mountain and Fishing Villages"

Met with Kishida, Saka and Attorney Toshihide Kubo at Intellectual
Property Strategy Headquarters. Then met with Health, Labor and
Welfare Minister Masuzoe.

Dined with Nikkei Shimbun columnist Yasuhiro Tase and Mainichi
Shimbun Special editorial committee member Kishii at a French
restaurant in Roppongi.

Arrived at the official residence.

4) Selection of BOJ governor, deputy governors: Lower House to
approve three nominees; Shiraka to serve as acting governor in event
of governor's post becoming vacant

ASAHI (Page 1) (Excerpts)
March 13, 2008

The Lower House is expected to approve at a plenary session the
government proposal for appointing Toshiro Muto (64), incumbent
deputy Bank of Japan (BOJ) governor and a former administrative vice
finance minister, as governor, and Takatoshi Ito (57), professor at
Tokyo University graduate school, and Masaaki Shirakawa (58),
professor at Kyoto University graduate school, as deputy governor
with a majority approval by the ruling parties. The Upper House has
already decided by an opposition-camp majority to disagree with the
nominations of Muto and Ito. In an effort to avoid the post of BOJ
governor from becoming vacant, the ruling camp plans to call on the
DPJ to respond to talks.

Only Shirakawa hailing from the BOJ is expected to secure approval
from both houses of the Diet. If Shirakawa takes office as deputy
governor, he can perform the task of BOJ governor in compliance with
the BOJ Law, in the event the post of governor becomes vacant.

The secretaries general and Diet Policy Committee chairmen of the
LDP and the New Komeito yesterday discussed in the Diet how to deal
with the situation. They agreed to work on the DPJ to agree to hold
talks on the matter. However, the DPJ is determined not to respond

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to the call unless the government replaces the two candidates in

5) Three members of DPJ parliamentary group abstain from voting on
appointment of BOJ governor

MAINICHI (Page 5) (Full)
March 13, 2008

Nariyuki Tanaka

Three members of the major opposition Democratic Party of Japan
(DPJ) parliamentary group -- Yoshihiro Kawakami, Hajime Hirota, and
Takashi Morita - abstained from a vote on the appointments of the
Bank of Japan (BOJ) governors and deputy BOJ governors taken
yesterday in the Upper House plenary session.

Kawakami told reporters: "I think Mr. Muto should assume the post of
BOJ governor, but out of consideration for our party's policy, I
abstained from voting." Hirota and Morita are both independent
lawmakers joining the DPJ parliamentary group. Yasuhiro Oe and
Yoshitake Kimata, both belonging to the DPJ, were absent from the
plenary session, citing such reasons as illness.

DPJ Secretary General Yukio Hatoyama, when asked about Kawakami's
abstention, said, "That was unavoidable. I do not necessarily think
that such a behavior is an act of rebellion." He s implied that he
would not punish him.

6) Ruling coalition eyes stopgap bill to avoid creating vacancy in
BOJ governorship

TOKYO SHIMBUN (Page 1) (Full)
March 13, 2008

The government's nomination of Toshiro Muto for the post of Bank of
Japan (BOJ) government was voted down in the opposition-controlled
House of Councillors yesterday. Following this, a plan to revise the
Bank of Japan Law floated in the ruling camp yesterday to enable the
incumbent governor to continue his duties even after his term of
office expires on March 19 until his successor is appointed.

In its plenary session vote yesterday, the Upper House rejected the
government's nominations of BOJ Deputy Governor Muto for the
governorship and of Tokyo University Professor Takatoshi Ito for the
post of deputy governor, though it approved the appointment of Kyoto
University Professor Masaaki Shirakawa as deputy governor. With the
rejection of the nomination of Muto, the post of governor is now
likely to be left unoccupied.

Under the current BOJ Law, a deputy governor serves as acting
governor if the governor's post is vacant.

Many members in the ruling parties have voiced concern about a case
in which a deputy governor or a board member serves as acting
governor for a long period of time. A senior Liberal Democratic
Party member said: "The international community sees such a
situation as Japan becoming dysfunctional. In this sense, (even if
the deputy governor serves as acting governor,) the situation will
not be different from the state of the governorship being left
vacant." Reflecting such voices, the ruling camp mulled
countermeasures. As a result, the plan to revise the BOJ Law to

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extend the incumbent's term of office as a temporary measure

7) Road funds: Ruling camp to present revised plan possibly next
week; Total cut to come to 40 trillion yen level

ASAHI (Top Play) (Excerpts)
March 13, 2008

Concerning the special-purpose road construction revenue issue,
including an extension of the provisional gas tax rate, the Liberal
Democratic Party (LDP) and the New Komeito yesterday decided to
compile a plan to revise the government proposal and present it to
the opposition bloc as early as next week. The draft revision will
focus on a revision of the mid-term road construction program,
including a cut in the total project expenses. The ruling parties
had called on the Democratic Party of Japan (DPJ or Minshuto) to
come up with a definite plan. However, with the expiration of the
provisional tax rate close at hand at the end of March, it changed
that policy with the aim of providing an opportunity for the
opposition camp to respond to revision talks.

According to more than one senior ruling party officials, the draft
revision will consist of three main proposals: (1) shortening the
mid-term road consolidation program with a funding target of up to
59 trillion yen over a 10-year period; (2) cutting the total project
expenses secured in the mid-term program to the 40-trillion yen
level; and (3) shortening a period of an extension of the
provisional rates on the gas tax, etc.

The current proposal for the reallocation of special-purpose road
construction revenues is reallocating a surplus of the current
fiscal year's budget for other use. This policy will be, in
principle, maintained in the draft. However, the ruling parties will
not reject discussions on this issue with the opposition camp to
leave room for further efforts to reallocate road funds for other

A senior ruling party official responsible for policy-making said,
"We will come up with a drastic plan so that the people would think
why the DPJ does not respond to our proposal for revision talks,
when we have made concessions to such an extent."

8) Lowering gasoline price by 25 yen again becomes a real
possibility, with Diet returning to normal now

MAINICHI (Page 5) (Excerpts)
March 13, 2008

Kaori Onaka

With agreement reached yesterday between the ruling and opposition
camps to commence in general a question-and-answer session on the
fiscal 2008 budget, the Diet, which had been stalled, has now
returned to normal. The question-and-answer session is likely to
focus on making modifications to the amendment to the Special
Taxation Measures Law, including what to do about the provisional
tax rate for gasoline, but it appears difficult for the amendment to
be approved by the end of this fiscal year given the Diet calendar.
In part because of the showdown between the ruling and opposition
blocs over the appointment of a new Bank of Japan (BOJ) governor,
the move for revising the amendment is unlikely to gather momentum.

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The possibility of lowering the gasoline price by 25 yen per liter
is again becoming more likely.

The Lower House Land and Transport Committee yesterday adopted by a
majority of votes from the ruling parties a bill amending the Law
for Special Measures on Road Construction, which stipulates that of
the tax revenues from the gasoline tax and other related taxes,
money not used for the construction of road shall be incorporated
into general revenues. Minister of Land, Infrastructure and
Transport Tetsuzo Fuyushiba said in his Diet replies: "We must make
every effort to get the two bills, including the amendment to the
Special Taxation Measures Law, adopted by the end of this fiscal

Regarding the amendment to the Special Taxation Measures Law, the
Lower House speaker and the Upper House president mediated between
the ruling and opposition blocs by suggesting that a certain
conclusion should be reached by the end of the fiscal year. However,
there are no prospects for the amendment to be discussed in the
Upper House. In terms of the Diet calendar, it is hopeless for the
amendment to be approved by the end of the fiscal year. When asked
yesterday by reporters about the possibility of the term of the
provision tax rate expiring, the major opposition Democratic Party
of Japan's (DPJ) Upper House Caucus Chairman Azuma Koshiishi said:
"That would be what we desire."

The expiration of the provisional tax rate would be averted if the
ruling and opposition parties agree on modifications to the
amendment, but it is difficult for the ruling bloc to add
modifications to the amendment with their own hands. In addition,
the question of who will become a new BOJ governor has made it
difficult for the ruling and opposition parties to have discussion.
On the appointment of a new BOJ governor, because the government is
poised to again presenting the same plan to promote Deputy BOJ
Governor Toshiro Muto to the top BOJ post, a former cabinet minister
expressed concern: "It has become more difficult to modify the
amendment to the Law for Special Measures on Road Construction."

9) Ozawa points to Lower House dissolution before Summit

TOKYO SHIMBUN (Page 2) (Full)
March 13, 2008

Democratic Party of Japan President Ichiro Ozawa held a meeting in
Tokyo yesterday with junior members close to him and prospective
candidates running in the next Lower House election. In the session,
Ozawa ordered them to speed up preparations for the next election,
saying: "Lower House dissolution could occur early. We cannot rule
out the possibility that (the prime minister) will dissolve the
Lower House before the G8 Lake Toya Summit."

One of the attendants quoted Ozawa as saying: "The Fukuda cabinet
lacks the ability to run the government. Something could happen, and
that is certain to result in a favorable wind for the DPJ. You must
be prepared to ride on that wind."

10) Coordination focused on May 8 for visit to Japan by Chinese
President Hu

ASAHI (Page 4) (Full)
March 13, 2008

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The Japanese and Chinese governments have launched final
coordination on a visit to Japan by Chinese President Hu Jintao
around May 8. It will be the first time for a Chinese president to
come to Japan in a decade since then President Jiang Zemin visited
in 1998. The two governments are looking into the possibility of
drawing up a document summarizing the results of the summit meeting
between Prime Minister Yasuo Fukuda and President Hu. This would be
the "fourth political document" between the two countries, the last
being the 1998 Japan-China Joint Declaration.

Fukuda and Hu agreed in their meeting last December that Hu would
visit Japan "in the cherry blossom season." But Tokyo and Beijing
are now rescheduling the presidential Japan visit to realize it in
May because of the difficulty of arranging their schedules and the
bilateral row over poisoned dumplings imported from China.

During his five-day Japan visit, Hu is expected to meet the Emperor,
as well as the leaders of the two houses of the Diet. He may give a
speech and visit local areas.

If a political document is drawn up, it will be the fourth in a
series after the 1972 Japan-China Joint Statement, the 1978
Japan-China Peace and Friendship Treaty, and the 1998 Japan-China
Joint Declaration. However, since there remain such pending issues
as the dispute over exploration rights in the East China Sea where
there are gas fields in waters between the two countries, the
respective foreign ministries are carefully considering as to
whether the fourth political document should actually be drawn up.

11) PACOM testifies that China proposed dividing Pacific control
between U.S. and China; Beijing's ambition for maritime hegemony

SANKEI (Page 3) (Full)
March 13, 2008

U.S. PACOM Commander Admiral Timothy Keating testified before the
Senate Armed Services Committee yesterday that during his visit to
China last May, a senior Chinese Navy officer proposed a plan for
the United States and China to divide and control the Pacific Ocean
into east and west sections, centered on Hawaii. The PACOM commander
expressed a sense of alarm at this "strategic concept," saying,
"China wants to expand the area under its influence."

According to Keating, the Navy officer asked him if it was possible
to reach an agreement on a scenario in which the United States
controls the area east of Hawaii and China the area west of Hawaii
when "we (China) possess aircraft carriers." Keating said, "Even if
it was a joke, the proposal reflected the People's Liberation Army's
strategic vision," adding that he was "keeping an extremely close
eye" on Chinese military and foreign policies.

The commander also indicated that the military exchanges with China
have fallen short of U.S. expectations. Expressing his
dissatisfaction with China's unclear defense spending, Keating also
said, "We don't have a relationship to have drinks at a club with

Last August, the Washington Times reported on the Pacific Ocean
east-west division plan as a U.S. military source's story.

The paper reported that although the U.S. side had rejected the

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proposal, some pro-China individuals in the U.S. government,
including intelligence organizations, reacted positively to it.

Chinese Navy submarines, including nuclear-powered submarines, have
been actively conducting activities over the last several years in
waters near Japan, Taiwan and Guam in the Western Pacific.

Drawing a line at the west of Hawaii clearly reflects China's
ambition to significantly overstep its previous national defense
zone set at the west of Okinawa.

Although Commander Keating did not reveal who made that proposal, he
also had a meeting with Chinese Navy Command Wu Shengli during is
visit to China last May, his first since taking office.

12) DPJ works out SOFA revision plan

YOMIURI (Page 4) (Full)
March 13, 2008

In the wake of a U.S. Marine's alleged rape of a junior high school
girl in Okinawa Prefecture, the leading opposition Democratic Party
of Japan (Minshuto) worked out a plan yesterday to revise the
Japan-U.S. Status of Forces Agreement (SOFA), which governs the
legal status of U.S. forces in Japan. The plan calls for the United
States to turn over all military suspects in incidents and accidents
to Japanese investigative authorities even before they are indicted.
In addition, it requires U.S. military personnel living off base and
their families to register with their local host governments under
the Foreign Resident Registration Law.

The DPJ will coordinate the plan today with the People's New Party
and the Social Democratic Party to create a joint plan and will call
for the government to revise the SOFA.

In 1995, the Japanese and U.S. governments improved the SOFA's
implementation. The United States is to pay "sympathetic
consideration" to Japan for the pre-indictment handover to Japanese
investigative authorities of U.S. military suspects in serious
criminal cases even though they are held at U.S. military bases and
under U.S. custody.

Meanwhile, the DPJ plan suggests the need to revise SOFA provisions
in order to define procedures, specifying that "U.S. military
authorities are to agree" to Japanese investigative authorities'
request to hand over U.S. military suspects before they are

13) Gov't gives up frontloading next midterm buildup defense plan;
500 billion yen cut eyed

MAINICHI (Page 2) (Abridged)
March 13, 2008

In the wake of scandals involving the Defense Ministry over its
procurement, the government decided yesterday to scale back on its
current mid-term defense buildup plan for the period of five fiscal
years from 2005 through 2009 and will cut at least about 500 billion
yen from its total amount estimated at 24.24 trillion yen. The
government will give up on its initial plan to compile the next
midterm defense buildup plan one year earlier than scheduled. The
decision is aimed at making an appeal on the government's efforts to

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reform its procurement system through cost cuts.

14) MOD to provide Iwakuni with city hall construction subsidies

TOKYO SHIMBUN (Page 2) (Full)
March 13, 2008

The Ministry of Defense decided yesterday to unfreeze within this
month subsidies to the city of Iwakuni in Yamaguchi Prefecture, for
the construction of a new city hall. Meeting Defense Minister
Shigeru Ishiba and others yesterday, Iwakuni Mayor Yoshihiko Fukuda
conveyed his decision to accept a plan to relocate U.S.
carrier-based air wing to the U.S. base in the city. The mayor then
asked for an early provision of 3.5 billion yen city hall subsidies
and U.S. military realignment subsidies. In response, Defense
Minister Ishiba said, "In order to comply with your request, we will
hold talks with relevant organizations to begin necessarily

Because the city hall subsidies are not included in MOD's fiscal
2007 budget, the ministry is considering funding the project with a
different set of unimplemented subsidies. The ministry will also
designate Iwakuni as a local government entitled to receive U.S.
force realignment subsidies.

15) U.S. serviceman suspected of hit-and-run driving

MAINICHI (Page 30) (Abridged)
March 13, 2008

In October last year, a U.S. serviceman stationed at the U.S. Air
Force's Misawa Air Base in the city of Misawa, Aomori Prefecture, is
suspected of a hit-and-run accident in the city. In that accident, a
local resident was slightly injured. The Misawa Police Station did
not arrest the airman but only questioned him, stating there was no
fear of his destroying evidence or fleeing. On Mar. 10, the local
police sent papers to the Aomori District Public Prosecutors
Office's Hachinohe branch on the charges of violating the Road
Trucking Vehicle Law. The U.S. serviceman is believed to have driven
while under the influence. The accident took place within only a
month after Sept. 19 last year when the revised Road Trucking
Vehicle Law was enforced with severer punishment for hit-and-run
driving, drunk driving, and other violations.

According to the investigation, the airman is in his 20s. His car
hit a 62-year-old man when he was driving out of a parking lot in
the city of Misawa at around 6 a.m. Oct. 14. The man fell down and
was suffered a slight head injury. The U.S. serviceman is alleged to
have fled the scene.

The Misawa Police Station later identified the individual, based on
the car's Y license plate and other circumstances.

16) Japan to announce calculation that greenhouse gas emissions
could be reduced by 10 billion tons by 2020

YOMIURI (Top Play) (Excerpts)
March 13, 2008

The Environment Ministry will announce at the upcoming Group of 20
(G-20) climate talks starting on March 14 that worldwide greenhouse
gas emissions could be reduced by about 10 billion tons by 2020. The

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estimates were worked out based on joint studies by Kyoto
University, the National Institute for Environmental Studies, and
other organizations. China tops the list of nations and regions that
have the potential to cut gas emissions, followed by the U.S. and
Russia. The ministry's report estimates that the measures to achieve
this target will cost about 132.1 billion dollars, or about 13.6
trillion yen. It is rare to make such global calculations, so they
are expected to have a major influence in debate at the
international conference on long-term targets to cut global
greenhouse gas emissions.

The studies classified the world into 21 countries and regions.
Based on the premise that the levels of economic growth in 2000 and
the current industrial structures across the world will not change,
researchers calculated how much the current technologies and
countermeasures could reduce gas emissions as of 2020.

The total amount of global gas emissions as of 2000 was about 25
billion yen. If emissions continue to increase at the current rate,
the amount is calculated to grow to approximately 43 billion tons in
2020. But if the carbon dioxide (CO2) emissions-trading system
becomes more popular, with gas emissions traded at 100 dollars per
ton, and if a 200 dollars tax is imposed on every ton, companies and
individuals will become eager to contain gas emissions. The report
concludes that as a result, global emissions will be reduced to
about 33 billion tons by 2020.

17) US beef imports in 2007 drop to one-eight of 2003 level, as
consumers shift to Australian beef

NIKKEI (Page 5) (Full)
March 13, 2008

U.S. beef imports remain sluggish. According to the Ministry of
Agriculture, Forestry and Fisheries, Japan imported 34,000 tons of
beef from the U.S. in 2007, about one-eighth of the 267,000 tons
recorded in 2003, when there was little impact of a ban on imports
imposed following the discovery of the first case of BSE in the U.S.
The decrease is attributed probably to the requirement set to import
only beef from cattle 20 months of age or younger and a drop in
domestic consumption.

After Japan lifted the ban in July 2006, the volume increased more
than about five times in 2007 over the level in 2006 but
significantly declined if compared with the levels in 2003 and

In 2003, the volumes of beef imported from the U.S. and Australia
were almost same, but the share of Australian beef has significantly
increased after the outbreak of BSE in the U.S. The share of
Australian beef was more than 80 PERCENT in 2007.


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