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Cablegate: Japanese Morning Press Highlights 03/31/08

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UNCLAS SECTION 01 OF 15 TOKYO 000868

SIPDIS

SIPDIS

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 03/31/08

Index:

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

Defense and security affairs:
4) U.S. Navy deserter to be questioned by police in connection with
slain cab driver; Sailor told friend by phone: "I stabbed him"
(Yomiuri)
5) First time ever for a vacuum in Japan's host-nation support for
U.S. forces stationed in Japan; U.S. postponing training moves
(Yomiuri)
6) Japan to foot the bill for off-base facilities in relocation of
Okinawa Marines to Guam (Mainichi)

Foreign affairs:
7) Israel's premier told Prime Minister Fukuda last month that North
Korea was aiding Syria with its nuclear program (Yomiuri)
8) U.S. Senate and both chambers of the Diet to engage in
parliamentary exchange in June (Nikkei)
9) Kickbacks went to employee of Indonesian embassy in Japan for
help in visa applications (Yomiuri)
10) Fukuda in press remarks cautious about criticizing China for its
actions against Tibetan rioters (Tokyo Shimbun)

Political affairs:
11) Text of Prime Minister Fukuda's press interview (Yomiuri)
12) A bridging bill to cover tax-related bills other than gasoline
tax to be enacted today to avoid vacuum (Nikkei)
13) New Komeito comes out with its own proposal to put road-related
taxes into general coffers in return to Lower House override of
defeated gas-tax bill (Tokyo Shimbun)
14) As provisional tax rate runs out, government to assist strapped
oil suppliers with subsidies (Nikkei)
15) Government is taking pains selecting third candidate for Bank of
Japan governor to prevent another veto by the opposition-controlled
Upper House (Nikkei)
16) Fukuda says his administration will ready an economic stimulus
package in April (Yomiuri)
17) Fukuda not traveling during Golden Week holidays due to turmoil
in the Diet (Sankei)
18) Relic from the Abe administration, the "Second Chance Office" in
the Prime Minister's Office, quietly closed (Asahi)

Polls:
19) Asahi poll: 58 PERCENT of public approve prime minister's
proposed integration of road-relaved taxes into general coffers
(Asahi)
20) Yomiuri poll: 70 PERCENT of public feel fearful about the
worsening crime environment around them (Yomiuri)

Articles:

1) TOP HEADLINES

Asahi:
Poll: 58 PERCENT of respondents favor Prime Minister Fukuda's
proposal to move road-specific revenues into general account, 55
PERCENT opposed to keeping the status quo on using revenue for road
construction


TOKYO 00000868 002 OF 015


Mainichi:
Survey: Cost of producing refuse-derived fuel at 52 facilities
across the country twice the cost of incineration, increasing
taxpayers' burden by 20 billion yen

Yomiuri:
Police to question U.S. Navy deserter about murder of taxi driver

Nikkei:
Dai Nippon Printing and other materials production companies to
invest a total of 300 billion yen in production increase in liquid
crystal for filters and glass substrate

Sankei:
Excellent Japan: Japan's shot-put manufacturer boycotts Beijing
Olympics by rejecting order for production of shot put

Tokyo Shimbun:
MHLW to launch survey of welfare institutions across the country to
examine situation of abused children

Akahata:
It is possible to incorporate road-specific revenue into general
revenues immediately, JCP Diet policy chief Kokuta and policy chief
Koike assert on TV programs

2) EDITORIALS

Asahi:
(1) Proposals for society of hope: Create vigorous community
everybody can take part in

Mainichi:
(1) Decrease in money lending firms means consumer banking is
recovering health
(2) Rules on police questioning: Review of criminal justice system
essential

Yomiuri:
(1) Kyoto Protocol: Simply making both ends meet meaningless
(2) We hope the post of information analyst will be the first step
toward breaking the vertically-segmented administrative system

Nikkei:
(1) Falling share prices a challenge for Japanese firms
(2) Pay attention to reform in Bhutan

Sankei:
(1) Riots in Tibet: Japan needs to pressure Beijing to have
dialogue
(2) Japan should lead the way in medical checks for metabolic
syndrome

Tokyo Shimbun:
(1) Beijing needs to meet with Dalai Lama so as to celebrate Beijing
Olympics
(2) Regional system council needs to have in-depth discussion on
decentralization

Akahata:
(1) Turning point in hiring temporary workers has come


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3) Prime Minister's Official Residence (Kantei)

Prime Minister's schedule, March 28

NIKKEI (Page 2) (Full)
March 29, 2008

08:25
Attended an anti-global warming promotion taskforce meeting at the
Kantei, followed by a cabinet meeting. Health, Labor and Welfare
Minister Masuzoe stayed on.

09:30
Met Deputy Chief Cabinet Secretary Iwaki at the Kantei.

10:22
Met Finance Ministry Budget Bureau Director-General Sugimoto.

13:00
Attended an Upper House Budget Committee session.

16:06
Attended an Upper House plenary session.

17:01
Met former LDP Secretary General Nakagawa at the Kantei, followed by
Deputy Chief Cabinet Secretary Futahashi, joined in by Chief Cabinet
Secretary Machimura and Assistant Deputy Chief Cabinet Secretary

SIPDIS
Saka.

18:09
Met Machimura.

18:32
Attended a Lower House plenary session.

18:37
Met LDP Secretary General Ibuki, Finance Minister Nukaga, and
Machimura in the LDP presidential office. Ibuki stayed on.

19:01
Arrived at his official residence.

20:57
Attended the Lower House plenary session.

21:03
Paid courtesy visits to Lower House Speaker Kono, Upper House
President Eda and ruling party leaders in the wake of Diet approval
of the fiscal 2008 state budget.

21:53
Returned to his official residence

Prime Minister's schedule, March 29

NIKKEI (Page 2) (Full)
March 30, 2008

Morning
Spent time at his official residence.


TOKYO 00000868 004 OF 015


16:03
Gave an interview to Nikkei and other news organizations at the
Kantei.

16:38
Returned to his official residence.

17:43
Dined at a Grand Prince Hotel Chinese restaurant with his wife,
Kiyoko, and secretaries.

19:57
Returned to his official residence.

Prime Minister's schedule, March 30

NIKKEI (Page 2) (Full)
March 31, 2008

Morning
Spent time at his official residence.

17:00
Appeared on the NHK program "An interview with the prime minister"

4) U.S. Navy deserter to be questioned by police in connection with
laying of cab driver; Sailor told friend, "I stabbed him"

YOMIURI (Top play) (Excerpts)
March 31, 2008

In connection with the murder in Yokosuka City in Kanagawa
Prefecture of Masaaki Takahashi (61), a taxi driver from Shinagawa
Ward in Tokyo, it was learned on March 30 from the investigation of
the special investigation unit of the Yokosuka Police Department
that after the incident, the seaman (22) stationed at Yokosuka Naval
Base whose name was on a credit card left in the taxi, called a
friend who lived close to the crime scene and said, "I did it." The
call indicates that he was involved in the incident. The sailor is
now in custody of the U.S. Navy for the crime of desertion. The
police investigative unit will soon formally ask the U.S. forces in
Japan for investigative cooperation under the Japan-U.S. Status of
Forces Agreement (SOFA) and question the sailor as in important
witness in this murder case.

According to a source in the investigative unit, the sailor is a
U.S. citizen of Nigerian origin. The unit discovered from telephone
records and other information that on March 19, immediately after
the incident, the seaman called by cell phone a Nigerian friend. The
sailor told him in the conversation such words as, "I did it," and,
"I stabbed him."

5) Sympathy budget to expire, experiencing vacuum period for 1st
time; U.S. military training relocation put on hold

YOMIURI (Page 2) (Full)
March 29, 2008

The House of Representatives Foreign Affairs Committee held a
meeting of its directors yesterday, during which they agreed to take
a vote on a new special agreement for the Japanese government to
continue its sharing of costs for the stationing of U.S. forces in

TOKYO 00000868 005 OF 015


Japan (omoiyari yosan or literally "sympathy budget"). The current
special agreement is to expire at the end of this month, so there
will be a blank period during which the budget cannot be executed
until the new agreement comes into effect. The sympathy budget will
experience a vacuum period for the first time since it was started
in 1978.

The Democratic Party of Japan (Minshuto) and other opposition
parties have been raising questions about waste in the budget and
have called for full-scale deliberations on the sympathy budget. At
the same time, the ruling and opposition parties have been clashing
over tax-related bills which led to a delay in committee
deliberations on the sympathy budget.

The government-proposed special measures agreement is a kind of
treaty. In this case, the House of Representatives' decision takes
precedence over the House of Councillors' decision as provided by
the Constitution. The agreement will therefore automatically receive
Diet approval 30 days after its passage through the House of
Representatives. Accordingly, it is expected to come into effect in
early May even if the House of Councillors' deliberations are
protracted.

During the blank period, however, the United States will have to
shoulder wages for base workers, as well as charges for utilities.
In addition, the U.S. military will also have to pay for relocating
its fighter jet training. The Japanese and U.S. governments are now
coordinating to postpone U.S. military training from Okinawa to
other prefectures in Japan until May or later.

The Japanese government, after the special agreement is approved,
will reimburse the U.S. for wages and utilities paid. The Japanese
government thinks the sympathy budget will not be substantially
affected, according to a Foreign Ministry official. Meanwhile, the
Japanese government has asked the U.S. government to pay temporarily
for the costs during the blank period. However, the U.S. government
has been withholding its answer.

"There's no doubt that America's confidence (in Japan) will
decline," Foreign Minister Koumura told reporters yesterday. "The
Japan-U.S. alliance's deterrence (in the security area) may weaken,"
he added, "and I'm worried about that."

6) Japan to bear burden of off-base facilities as well as part of
expense to relocate U.S. Marines to Guam

MAINICHI (Page 1) (Excerpts)
Eve., March 29, 2008

In connection with the relocation expenses of U.S. Marines on
Okinawa to Guam under the realignment of U.S. forces in Japan, it
was learned today that Japan and the United States are coordinating
a plan for Japan to cover the construction of off-base
infrastructure, such as a power generator to be used by local
population in Guam as well. This would amount to one-tenth of the
total infrastructure expenses at Guam of 740 million dollars
(approximately 74 billion yen) that Japan will bear. At the time of
the Japan-U.S. (force-realignment) agreement in May 2006, the
Japanese government explained that infrastructure subject to the
agreement would be facilities only within the base. It was
anticipated that if it expanded any more, there would be criticism
from the opposition parties and others.

TOKYO 00000868 006 OF 015

With the total expense of 10.27 billion dollars for relocating the
Marines from Okinawa to Guam, Japan's share was 59 PERCENT ,
amounting to 6.09 billion dollars (approximately 609 billion yen)
This included the facilities related to the headquarters and living
quarters, involving financing of 2.8 billion dollars (approximately
280 billion yen) and 740 million dollars in infrastructure.
According to source in the Japanese government, coordination is
continuing on Japan financing such infrastructure outside the Marine
base as the power generator, water pipes and sewerage, and a
garbage-disposal facility.

In addition, regarding facilities within the base, it has been
firmed up anew that such would include recreation facilities,
including a golf course, as well as a hospital and fire station.
These facilities, too, will most likely be discussed now as part of
Japan's burden.

7) Israeli prime minister told Fukuda in February that Israel bombed
nuclear facility in Syria that used DPRK help

YOMIURI (Page 2) (Full)
March 31, 2008

It became clear yesterday that during his visit to Japan in
February, Israeli Prime Minister Ehud Olmert told Prime Minister
Yasuo Fukuda that the military installation in Syria Israel bombed
last September was a nuclear facility that received technological
assistance from North Korea. According to a Japanese government
source, Fukuda and Olmert discussed the issue between the two of
them only via interpreters. Prime Minister Olmert called for close
cooperation between the two countries in dealing with North Korea's
nuclear proliferation, explaining that the "facility was under
construction with assistance in information on design and engineers
from North Korea," according to the source.

8) Japanese Diet to launch exchange program with U.S. Senate in
June

NIKKEI (Page 2) (Full)
March 31, 2008

The two Diet houses will launch a parliamentary exchange program
with the U.S. Senate as early as June. Upper and Lower House members
plan to hold annual meetings with U.S. senators to exchange views on
security and economic issues. According to the Secretariat of the
House of Representatives, the Japanese Diet has this kind of annual
meeting with the European Parliament and China's National People's
Congress.

Kenji Kosaka, vice chairman of the Liberal Democratic Party (LDP)
Diet Affairs Committee, Jun Azumi, deputy chair of the Democratic
Party of Japan (DPJ or Minshuto) Diet Affairs Committee, and others
visited Washington on March 21 and discussed the matter with Senator
Daniel Inouye and senators. They have reached a basic agreement to
formally launch the program after the current Diet session ends.

Japanese and U.S. legislators will boil down items on the agenda.
Japanese lawmakers have discussed with European Parliament members
cooperation between Japan and the European Union, as well as
economic and trade issues.


TOKYO 00000868 007 OF 015


9) Two firms paid 20 million yen in visa rebates to employee at
Indonesian Embassy in Japan

YOMIURI (Page 1) (Excerpts)
March 31, 2008

The Yomiuri Shimbun has learned through its investigations that two
Japanese companies handling commercial and other types of visas
required in entering Indonesia had transferred large sums of money
into a bank account of a 50-year-old Japanese employee of the
Indonesian Embassy in Japan in Shinagawa Ward, Tokyo. The amount
totaled approximately 20 million yen in five years through 2006. One
of the two firms has admitted that the funds were rebates on issuing
visas. The act might be a violation of the Law against Unfair
Competition (bribery to a foreign civil servant). Investigative
authorities are collecting information.

The companies in question are National Business Support (NBS), a
travel agency in Chuo Ward, and Far East Development Corp., a
company in Minato Ward affiliated with a major Indonesian oil firm.

According to the Yomiuri Shimbun's investigation, the Japanese
worker has been responsible for issuing visas for over 10 years at
the Indonesian Embassy, and 100,000 to 300,000 yen had been
transferred from the two firms a month to his major bank account. It
has been confirmed that in the five-year period through 2006, the
NBS had remitted approximately 14 million yen and Far East about 6
million yen to his bank account.

The embassy's official visa application fees range from 2,500 to
11,500 yen. According to Far East, the company transferred the money
to the Japanese worker's bank account in compliance with his request
to pay 4,000 yen per person apart from the application fees.

10) Fukuda cautious about criticizing China over Tibet situation

TOKYO SHIMBUN (Page 1) (Full)
March 30, 2008

Some European leaders have announced they will not attend the
opening ceremony of the Beijing Olympics in August in reaction to
China's continued crackdown in Tibet. In an interview to reporters
assigned to the cabinet at his official residence yesterday, Prime
Minister Yasuo Fukuda commented on this issue: "We must fully
consider whether it would be proper at the present stage to voice
criticism or to link the current tense situation over Tibet to the
Olympics."

Fukuda emphasized: "I expect a dialogue to be held between the
parties concerned in a way acceptable to both sides." Citing the
planned visit to Japan by Chinese President Hu Jintao in May, Fukuda
said: "This year is important for Japan-China relations. It will be
a good opportunity for both countries to develop bilateral
relations."

11) Interview with Prime Minister Fukuda

YOMIURI (Page 4) (Full)
March 30, 2008

The following are main points of an interview with Prime Minister
Fukuda:

TOKYO 00000868 008 OF 015

Provisional tax rate for gasoline

In order to avoid any confusion from arising with the end of this
fiscal year just around the corner, I am making efforts in the hope
of resolving the issue. If the provisional tax rate is scrapped as
of April 1, as called for by the major opposition Democratic Party
of Japan (DPJ), we will suffer a revenue shortage. We will need to
get revenues from somewhere. A revenue shortfall in local
governments would only interrupt business operations by such
industries as road construction. I don't think the current level of
the provision tax rate is higher than those of other industrialized
countries. I wonder whether it is a good thing for our country to
move in the direction of encouraging more carbon dioxide to be
emitted by lowering the price of gasoline. I think it is imperative
to keep at least the current level of the provisional gasoline tax
rate.

Selection of new Bank of Japan (BOJ) governor

Given the unstable international monetary market, it is never
desirable to leave the top BOJ post vacant. I hope (the DPJ) will
pay as much respect as possible to the government's way of
thinking.

Possibility of a grand coalition

As long as the current state of the divided Diet continues, some
ideas are necessary. One idea would be for the ruling and opposition
parties to hold policy talks. Forming a partial coalition aimed at
dealing with a limited number of policy issues or other forms of a
coalition is conceivable. Looking back on the past half year (since
taking office), I've really thought things would not move forward.
Making tenacious efforts to move politics forward is the only way
for me to continue.

Cabinet reshuffle

I am not thinking at all about shuffling the cabinet at present,
when the Diet is in session and tax system-related bills are yet to
be approved.

Possible dissolution of the Lower House

Now that the economy is leveling off and monetary and economic
situations are disturbing us, a judgment as to whether it is
appropriate to (dissolve the Lower House) should take precedence
over other matters.

Tibet issue

Speaking for Japan. we are worried about the current situation in
Tibet. We hope the riots will be calmed down swiftly in a peaceful
manner. We've already urged (Beijing) to secure transparency and
also conveyed our position of welcoming a dialogue among relevant
parties. We need to think whether now is appropriate to loudly
criticize (Beijing) or link (Beijing's way of suppressing the riots)
to the Beijing Olympics.

Joint gas field development in East China Sea

I want to make my utmost efforts to realize (joint development)

TOKYO 00000868 009 OF 015


while protecting Japan's sovereignty. I'd like to resolve this
matter as quickly as possible.

Permanent legislation for overseas deployment of SDF

I think it is essential to have a general law (or permanent law) on
the overseas dispatch of Self-Defense Forces (SDF) in order for
Japan to take part in international peacekeeping operations swiftly
and effectively. If such legislation is enacted, Japan will be able
to demonstrate its fundamental policy at home and abroad. This kind
of law needs to be prepared as quickly as possible. But given the
current situation in the Diet, doing so at present is quite
difficult.

12) Stopgap bill on special tax measures except for those tied to
roads to clear Diet today

NIKKEI (Page 1) (Full)
March 31, 2008

Of the government-presented bills amending the Special Taxation
Measures Law, a stopgap bill extending the expiration of the
provisional tax rates other than the road-related rates until the
end of May is expected to clear the Diet today with approval by the
ruling and opposition blocs. Besides the seven items on which the
Democratic Party of Japan has been calling for extensions, such as
the provisionally lowered registration license tax rates for the
transfer of land ownership and an offshore market tax exemption for
financial institutions, the stopgap legislation includes
preferential tax treatment for acquisition of automobiles.

Asked about the expiration of the provisional tax rates on gasoline
and other items in an NHK program evening, Prime Minister Yasuo
Fukuda said: "We still have one more day left. I want (the ruling
and opposition parties) to discuss the matter so that (the bill can
be passed) in time." At the same time, the prime minister underlined
the need to reinstate the provisional tax rates quickly in order to
minimize revenue shortfalls, indicating that the abolition of the
provisional rates would throw the nation's finances into the red.

The government-presented bill amending the Special Taxation Measures
Law won the approval of the House of Representatives in late
February. Under the Constitution, the Lower House can readopt the
legislation by a two-thirds majority on April 29, 60 days after the
bill was sent to the House of Councillors. The government and ruling
bloc intend to aim for an early enactment of the legislation with
the aim of reinstating the provisional tax rates.

13) New Komeito to ask LDP for party decision on putting highway tax
revenues into general account starting in FY2009 as condition for
Lower House revote

TOKYO SHIMBUN (Top Play) (Excerpts)
March 30, 2008

It is now highly likely that the ruling coalition will fail to put
to a vote a bill amending the Special Taxation Measures Law to
maintain the current provisional gasoline and other tax rates by the
end of this fiscal year. The New Komeito decided yesterday that in
such a case, it would call on the Liberal Democratic Party to set
the shift of the tax revenues to the general account starting in
FY2009 as a condition for using the ruling coalition's two-thirds

TOKYO 00000868 010 OF 015


majority in the lower chamber for an override. Prime Minister Yasuo
Fukuda announced in a news conference on March 27 that the
government would open the tax revenues for general use in an effort
to bring the Democratic Party of Japan to the negotiating table.

If the gasoline prices are lowered on April 1 and prices raised
again by a revote, the public will inevitably react strongly.

In a bid to obtain public understanding, the New Komeito wants to
show its determination to reduce wasteful spending as much as
possible by shifting tax revenues into the general account.
Specifically, the party will call on the LDP to adopt the prime
minister's proposal as the party's decision.

Within the LDP, though, many are still opposed to the plan. Given
this, it seems difficult to unify views in the party by the time the
bill is brought back into the Lower House for a revote on April 29
or after. Meanwhile, if the New Komeito refuses to offer
cooperation, the LDP will be unable to secure the two-thirds needed
for an override. In such a case, the prime minister and the LDP will
be driven into a more difficult situation.

LDP Policy Research Council Chairman Sadakazu Tanigaki and his New
Komeito counterpart Tetsuo Saito met at a Tokyo hotel to discuss
this matter yesterday. Both agreed (1) to call on the opposition
bloc to hold talks on revising the bill amending the Special
Taxation Measures Law, based on the prime minister's proposal, by
both camps' policy affairs chiefs and to reach an agreement by the
31st; and (2) to continue to ask the opposition side to agree to
hold talks if the bill is not passed within this fiscal year. The
ruling coalition also hopes to discuss measures to avoid confusion
after gasoline prices are reduced.

14) Provisional gas tax rate expires today: Government to provide
interest subsidy to gas stations, following reduction in gasoline
prices

NIKKEI (Page 1) (Excerpts)
March 31, 2008

Following an expiration of the provisional rate on the gasoline tax
today, the tax portion of the gasoline price will drop by about 25
yen per liter for portions to be shipped from April 1. The
government yesterday started coordination with the possibility of
assisting gas stations suffering a loss of profits due to
price-reduction competition. It plans to prevent an escalation of a
confused situation stemming from a drop in gasoline prices by such
means as providing an interest subsidy to gas stations when they
borrow money from a bank and expanding their debt guarantee
frameworks.

The government intends to finance those measures from the special
energy measures account, whose funds are drawn from revenues from
the Oil and Coal Tax imposed on crude oil, natural gas and others.

Coordination is now under way with the possibility of offering a
subsidy worth several billion yen to the National Petroleum Dealers
Association (NPA) as fiscal resources for the envisaged measures.

An interest subsidy will most likely be provided through the NPA.
Under the existing system, subsidies are provided to gas stations in
order for them to cover part of their interest payment when they

TOKYO 00000868 011 OF 015


borrow funds to diversify their business or they change or close
down their business. Under the new system, gas stations suffering a
deteriorated profit as a result of a decline in gasoline prices
would also be eligible for subsidies. Gas stations would be able to
borrow operating funds needed for the immediate future almost
interest-free.

15) Who is appropriate for BOJ governor in terms of notion of
separation of fiscal and monetary administration?: Government having
difficulty choosing third candidate

NIKKEI (Page 2) (Excerpts)
March 31, 2008

The government is trying to choose a third candidate for Bank of
Japan (BOJ) governorship, which has been left vacant. Its option is
narrowing with Democratic Party of Japan (DPJ) Secretary General
Yukio Hatoyama expressing his party's stance that the appointment of
a person hailing from the Finance Ministry would be unacceptable.
The government has yet to determine the aftereffect of the
confrontation between the ruling and opposition camps over the
special-purpose road construction funds issue. It is poised to
cautiously reach a decision, including a decision on when to present
a third nominee for a new BOJ governor.

Prime Minister Yasuo Fukuda on an NHK television program yesterday
rebutted the DPJ's assertion that fiscal administration must be
separated from monetary administration: "I do not understand the
meaning of separating fiscal administration from monetary
administration. I rather believe that it is not until fiscal
administration goes hand in hand with monetary administration that
the Japanese economy can be managed properly." Asked about his image
of a candidate, he simply replied, "It should be a person who meets
the condition of placing the right person in the right job. The
character of a candidate is also important, because a BOJ governor
is responsible for managing a huge organization."

Hatoyama during talks with his Liberal Democratic Party (LDP)
counterpart Bunmei Ibuki on the selection of a BOJ governor on the
28th categorically said, "There is an atmosphere in the party that
the fact that former Finance-Ministry-official candidates have been
rejected twice must be taken seriously."

Hatoyama once indicated his view that Hiroshi Watanabe, an advisor
to the Japan Center for International Finance, or Haruhiko Kuroda,
governor of the Asian Development Bank, would be acceptable, though
QQui*/Lthey are former Finance Ministry officials. However, with the
government presenting Toshiro Muto and then Koji Tanami -- both are
former Finance Ministry officials -- in succession, opposition to
the idea of picking a former Finance Ministry official is mounting
in the DPJ with one saying, "BOJ governorship is not a post for a
retired Finance Ministry official."

The dominant view among government officials is that since there are
almost no personnel who meet the condition that a BOJ governor must
be versed in international financing, an eligible candidate would be
limited to those who hail from the Finance Ministry or the BOJ."

However, if it nominates a former Finance Ministry official for the
third time and the DPJ rejects it, the administration would
unavoidably lose its power base.


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16) Fukuda reveals on TV program a plan to present economic stimulus
measures in early April

YOMIURI (Page 2) (Full)
March 31, 2008

Appearing on an NHK TV program yesterday evening, Prime Minister
Fukuda commented on the Japanese economy, over which uncertainty is
looming due to such factors as the slowdown of the U.S. economy, the
strong yen, and rising oil prices. He said:

"It is impossible to resort to increasing government spending in the
conventional way. There is also a limit to lowering interest rates.
. . . We must work out policy measures to strengthen the nation's
economic growth potential. I would like to buoy up the somewhat
slowing economy by presenting a growth strategy in early April,
moving up the initial schedule."

He thus indicated his determination to energize the economy by
setting forth measures to strengthen the nation's economic growth
potential, focusing on improving small businesses' strengths and
resuscitating local economies.

Asked about last autumn's negotiations over an aborted grand
coalition between the Liberal Democratic Party and the Democratic
Party of Japan (DPJ), Fukuda said that thu negotiations were
initiated by DPJ leader Ichiro Ozawa. In reference to the
difficulties his administration has faced in implementing key
policies given the opposition camp's control of the Upper House,
Fukuda said:

"I think that since Mr. Ozawa was fully aware that such a situation
could arise sooner or later, he proposed considering a coalition. I
felt the same way."

17) Prime Minister Fukuda unable to arrange tour of Europe during
Golden Week, as Diet to reach crucial stage

SANKEI (Page 5) (Slightly abridged)
March 29, 2008

In the wake of the standstill in the divided Diet, Prime Minister
Yasuo Fukuda is now unable to arrange a tour of Europe originally
slated for the Golden Week holiday period in early May. The reason
is that depending on how deliberations on a bill to maintain the
provisional gasoline tax rate and other road-related taxes will turn
out, a fierce battle may take place in the Diet during that period.

It has been the practice for Diet business to go into recess during
the holiday period recess. Taking advantage of the holidays, former
prime ministers have traveled overseas. In 2000 when Japan hosted
the Kyushu-Okinawa Group of Eight (G8), then Prime Minister Yoshiro
Mori visited seven European countries in nine days.

As the G8 host nation, Fukuda was eager to play up his political
acumen by visiting European countries prior to the opening of the
July G8 summit in Hokkaido. In order to get high marks in diplomacy,
it is indispensable for the prime minister to visit other countries
ahead of the international conference.

Fukuda has visited only one G-8 member country -- the United States
-- since he assumed office. He initially planed to visit Russia,

TOKYO 00000868 013 OF 015


whose President Putin will step down on May 7, as well as major G8
members in Europe to exchange views on global warming and other main
topics of discussion in the G8 summit.

However, deliberations on the revenue-connected bill have not moved
ahead smoothly in the House of Councillors. In the case the bill is
delayed as long as possible under Article 59 of the Constitution,
passage of the bill will be April 29 or later, when the Upper House
ends its deliberation. Although the government and ruling parties
intend to readopt the legislation in the House of Representatives,
the main opposition Democratic Party of Japan (DPJ or Minshuto) and
other opposition parties appear likely to submit to the Upper House
a censure motion against the prime minister.

If that occurs, the ongoing Diet session may reach a climax from
April 30 through and May 2 -- weekdays during the Golden Week
holiday period from late April to early May. In addition, Chinese
President Hu Jintao is expected to visit Japan after the Golden Week
holiday period.

18) Second Chance Office to be dissolved

ASAHI (Page 4) (Full)
March 31 2008

The office in charges of measures to support a second chance, which
was a feature policy of former Prime Minister Shinzo Abe, will today
be dissolved. The Abe administration suffered a crushing defeat in
the House of Councillors election last summer, in part because it
failed to assuage public dissatisfaction with the social disparities
that were seen as widening under the government of Prime Minister
Junichiro Koizumi. The incumbent administration of Prime Minister
Yasuo Fukuda has been trying to narrow the gap by placing priority
on policies that deal with the daily lives of the people, while
removing the policy imprint from the Abe government,

According to the Cabinet Secretariat, all fulltime office staff will
be transferred to other offices as of April 1 and the office itself
will be dissolved. The office chief and a planning officer will
remain for the time being in their present posts to confirm the
state of achievements of support measures, but they will
concurrently have other duties. Award ceremonies by the prime
minister for persons of merit will be discontinued.

In 2006 a total of 94 Diet members attended in the inaugural meeting
of the Parliamentary League to Support a Second Chance. The
parliamentary group set the trend for the Abe government. However, a
government source said: "Since the current prime minister has been
having difficulty showing his own political identity, he probably
wants to distance himself from his predecessor's policies."

19) Poll: 58 PERCENT favor Fukuda's general-purpose initiative over
road tax revenues

ASAHI (Top play) (Abridged)
March 31, 2008

A total of 58 PERCENT favor Prime Minister Fukuda's overtures of
incorporating gasoline and other road-related tax revenues into the
state's general account budget from fiscal 2009, the Asahi Shimbun
found from its telephone-based nationwide spot public opinion survey
conducted Mar. 29-30. Those opposed to that idea accounted for 24

TOKYO 00000868 014 OF 015


PERCENT . Meanwhile, Fukuda has also proposed maintaining the rate
of provisional taxation on gasoline in fiscal 2008 for road and
other road-related infrastructure projects. Asked about this idea,
"yes" accounted for only 31 PERCENT , with "no" totaling 55 PERCENT
.

Asked whether to support the leading opposition Democratic Party of
Japan's (Minshuto) rejection of Fukuda's overtures, public opinion
was split, with 40 PERCENT saying "yes" and 44 PERCENT saying
"no."

The Diet has been in turmoil over the gasoline tax. Asked about
responsibility for that, 22 PERCENT answered the government and the
ruling parties are more to blame, with 13 PERCENT saying the
opposition parties are more to blame and 59 PERCENT saying both are
equally to blame. As seen from these figures, many of the
respondents regard both the governing parties and the opposition
parties as responsible. The proportion of those who think "both are
responsible" was 59 PERCENT among those who support the ruling
Liberal Democratic Party, 50 PERCENT among DPJ supporters, and 64
PERCENT among those with no particular party affiliation.

The approval rating for the Fukuda cabinet was 31 PERCENT (32
PERCENT in the last survey taken Mar. 1-2). The disapproval rating
was 53 PERCENT (50 PERCENT in the last survey). In the breakdown
of public support for political parties, the LDP stood at 31 PERCENT
(29 PERCENT in the last survey), with the DPJ at 20 PERCENT (21
PERCENT in the last survey).

20) Poll: 70 PERCENT concerned about crime

YOMIURI (Page 2) (Abridged)
March 31, 2008

A total of 70 PERCENT are "very much" or "somewhat" concerned that
they or their families may be involved in a crime and may become a
victim, the Yomiuri Shimbun found from its yearly survey of the
public. The figure rose 13 percentage points from the last survey
taken in December 1998. Reflecting a growing sense of anxiety, a
total of 79 PERCENT think they need to do something for security
even if they have to pay for it to some extent. People once thought
security was free, but that attitude now seems to be a thing of the
past.

The survey was conducted Mar. 15-16 on a face-to-face interview
basis.

In the survey, those who answered "yes" to a question asking if they
fear that they or their families may become a crime victim were
asked to pick one or more specific crimes that concern them. In
response to this question, "fraud and scams" accounted for 58
PERCENT , followed by "home burglary" at 57 PERCENT , and "purse
snatching and pick pocketing" at 45 PERCENT .

The survey also asked people if they thought public security in
Japan has improved or worsened over the past several years. To this
question, those who think it has "improved" and those who think it
has "improved to a certain degree" totaled only 12 PERCENT , and
those who think it has "worsened" totaled 86 PERCENT . "Worsened"
topped 80 PERCENT in all seven surveys taken in May 1995 and
afterward.


TOKYO 00000868 015 OF 015


Among those who gave negative answers, "weakening morals" accounted
for 67 PERCENT , followed by "school or home education" at 47
PERCENT and "weakening community ties."

SCHIEFFER

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