Cablegate: Daily Summary of Japanese Press 07/08/08

DE RUEHKO #1878/01 1900758
P 080758Z JUL 08




E.O. 12958: N/A



(1) Prime Minister Fukuda makes his summit debut as chair; Can he
turn the tables and improve his support ratings (Yomiuri)

(2) Nuclear and Abductions: Fukuda administration to seek "straight
gate," while eyeing public opinion (Nikkei)

(3) Shadow of globalization: G-8 countries groping for new economic
order (Mainichi)

(4) Mayor Iha off to U.S. on July 27 to seek elimination of
dangerous aspects of Futenma Air Station (Ryukyu Shimpo)

(5) Ruling parties to set up council in mid-July to work out
specific measures to shift road-tax revenues into general budget

(6) LDP's Koga approves reallocation of road funds for such
expenditures as social security (Asahi)

(7) 90 PERCENT of DPJ's local execs back Ozawa in party race


(1) Prime Minister Fukuda makes his summit debut as chair; Can he
turn the tables and improve his support ratings

YOMIURI (Page 4) (Abridged slightly)
July 8, 2008

Prime Minister Yasuo Fukuda made his "summit debut" yesterday with
an expanded dialogue between the Group of Eight nations and African
leaders, the first conference in the G-8 Lake Toya Summit. As the
chair of this year's summit, the prime minister aims to buoy up his
administration by making the international conference a success. At
the same time, if the results turn out to be insufficient, he would
not be able to put an end to his low support ratings. The prime
minister is facing a crucial test.

Prime Minister Fukuda shook hands with each one of the 20 leaders of
the expanded luncheon meeting on their way to the venue, Windsor
Hotel Toya, even exchanging words with them in English. Fukuda, who
is well known for his dislike of grandstanding, even tapped the
glass with a spoon at the luncheon table to signal the opening of
the event in a Western style.

"Once the discussion started, the prime minister expedited the
proceeding calmly as usual," a senior Foreign Ministry official

There is every reason for Prime Minister Fukuda to become excited
during the G-8 summit, the diplomatic highlight in his premiership.

Thorough preparations were made for the big event. In May, the
government hosted the fourth Tokyo International Conference on
African Development (TICAD) to play up Japan's eagerness to extend
aid to Africa. In June, the prime minister announced the Fukuda
vision to combat global warming.

A Fukuda aide commented: "I think Prime Minister Fukuda has special

TOKYO 00001878 002 OF 007

feelings about chairing the summit, something his father was not
able to achieve." Fukuda's father, the late Prime Minister Takeo
Fukuda was forced to step down after failing to win the LDP
leadership race in December 1978, the year before Japan was to host
the 1979 G-7 summit.

With no prospects in sight for the G-8 nations to reach an agreement
on a long-term greenhouse gas emission reduction target, the
environment surrounding Fukuda remains severe.

Katsuya Okada, vice president of the major opposition Democratic
Party of Japan, predicted: "Prime Minister Fukuda will not be able
to demonstrate the leadership in the upcoming summit. Japan has not
fulfilled its promise (under the Kyoto Protocol). It is hardly
possible for such a country to tell other countries to get things
done." Poor results of the Lake Toya summit would end up providing
the opposition camp with additional ammunition. Chairing the G-8
summit is a double-edged sword for Prime Minister Fukuda.

(2) Nuclear and Abductions: Fukuda administration to seek "straight
gate," while eyeing public opinion

NIKKEI (Page 2) (Full)
July 3, 2008

With the United States starting the process of lifting North Korea
as a state sponsor of terrorism, there was growing concern in Japan
on June 26 that the issue of abductions of Japanese nationals would
be left behind. Asked by reporters about how Japan would respond the
situation, Prime Minister Yasuo Fukuda stressed on June 27:
"Denuclearization is important. Along with that, we will have to
resolve the abduction issue, as well." According to a government
source, "The Prime Minister's remark was a result of careful
arrangements in his government." The Fukuda administration has come
up with a strategy of resolving the issues of abductions of Japanese
nationals and North Korean nuclear programs at the same time.
Appearing on NHK talks show on June 29, Foreign Minister Masahiko
Koumura said: "Progress on the nuclear issue is better than no
progress on both issues."

Need to avoid isolation

While the Six-Party Talks are entering a new phase, if Japan places
priority on making progress on the abduction issue alone, it would
be isolated. Japan has no other choice but to urge Pyongyang to
resolve the abduction issue, while carefully scrutinizing the North
Korea's nuclear declaration along with other countries.

On June 19, a meeting of bureau director-general class officials
from Japan, the United States, and South Korea was held in the
Ministry of Foreign Affairs. In the session, U.S. Assistant
Secretary of State Christopher Hill said: "I've heard that the
present situation reminds North Korea of the Hussein government
before the Iraqi war." When Hill said that North Korea was refusing
the International Atomic Energy Agency's (IAEA) participation in the
verification of the nuclear declaration, Asian and Oceanian Affairs
Bureau Director General Akitaka Saiki gave Hill a warning: "The IAEA
should be involved to the end."

The worst scenario for Japan is that Pyongyang will not fulfill its
obligation after Washington delists it and that the Six-Party Talks
will move forward without resolving the nuclear issue. With no

TOKYO 00001878 003 OF 007

improvement made on the abduction issue, Japan will have to face a
nuclear-armed North Korea. In an attempt to prevent such a risk, the
government will ask other six-party talks members to let it join the
verification of Pyongyang's nuclear declaration, besides the United
States, China and Russia, all of which are nuclear powers.

What Japan should do to resolve both nuclear and abduction issues is
to join effort to provide energy assistance, as agreed at the
six-party talks in return for North Korea's pledge to disable its
nuclear facilities and nuclear declaration. Japan has maintained a
principle of not taking part in the framework of providing energy
assistance to Pyongyang before progress is made on the abduction

Other members of the Six-Party Talks are expected to provide energy
to North Korea for the time being in place of Japan. Therefore, it
is uncertain how much Japan's pressure on Pyongyang will be
effective, according to a source connected to the talks. The source
also said that Russia was calling on Japan to join them.

Japan's other diplomatic leverage is its own economic sanctions
against North Korea. The government intends to gradually lift
sanctions when Pyongyang begins the reinvestigation into the
abduction issue.

However, political circles and the public have erected heavy
barriers. Ruling Liberal Democratic Party (LDP) lawmakers, including
former Prime Minister Shinzo Abe and Shoichi Nakagawa, who take a
hard-line stance toward North Korea, are cautious about easing
sanctions. In a poll Nikkei conducted recently, a majority of the
public are against relaxing sanctions.

The Fukuda administration will have to find a way that the public
accepts, while facing off against North Korea.

(3) Shadow of globalization: G-8 countries groping for new economic

MAINICHI (Page 2) (Full)
July 8, 2008

In the Lake Toya Summit in Hokkaido, economic issues are taking
center stage again, although political issues such as antiterrorism
measures were high on the agenda at the summits held over the past
several years. But the economic issues caused by globalism are too
complicated to be easily resolved under the lead of major
industrialized countries.

The current economic issues include soaring food and energy prices,
global warming, international financial crisis triggered by the
credit woes stemming from the U.S. subprime mortgage crisis, as well
as inflation.

These critical factors are closely connected with each other as a
result of the rapid integration of the global economy. The
U.S.-induced financial crisis has generated an enormous amount of
investment money that has nowhere to go and also has pushed up food
and oil prices. The countries that are emerging owing to the
advancement of globalization are gulping huge amounts of grains and
energy, causing global supply shortages. The industrialized
countries are now being pressed to resolve these problems.

TOKYO 00001878 004 OF 007

After the collapse of the Soviet Union, the U.S. dominated the world
as a huge power, and U.S.-dispatched money and information
technology flew around global markets. As a result, information
instantly reaches the other side of the world through the Internet
now. Former socialist countries, China, and India, after
incorporated in the market mechanism, became rich incredibly

Set off by the subprime loan problem last summer, however, changes
are going on in the U.S., which should have used state-of-the-art
financial technologies, resulting in disrupting international
financial markets. Large amounts of U.S. stocks and dollars were
sold, and the funds that flowed out of stock and real estate markets
drove up oil and food prices. President Bush, who used to lead the
political summits, has seen the U.S.' international leadership
decline in the last days of his presidency. The President can hardly
be expected to play a leading role in the summit.

The combined population of China and India is approximately 2.5
billion, about 40 PERCENT of the world population. China used to be
an oil exporting nation but turned to be an oil importing nation in
the mid-1990s owing to its rapid economic growth. As seen from also
the fact that China has become nation importing soybeans since the
start of this century, that nation is now a highly-developed
consumer society. The recent steep rise in resource and grain prices
is attributed to growing consumption of China.

The Group of Eight (G-8) leaders will discuss how to control the
surge in grain and oil prices. But now that the U.S. economy has
slowed, it might be difficult for the G-8 alone, without China and
India, to find an answer. That might be the reason the Lake Toya
Summit is bringing together the leaders of 22 countries, the largest
ever number, including the leaders of such emerging countries as
China and India, as well as African nations.

(4) Mayor Iha off to U.S. on July 27 to seek elimination of
dangerous aspects of Futenma Air Station

RYUKYU TIMES (Page 2) (Full)
July 8, 2008


Ginowan Mayor Yoichi Iha will make a six-day four-night visit to the
United States starting on July 27 to ask for the removal of
dangerous aspects of Futenma Air Station. His itinerary, including a
visit to U.S. Pacific Command (PACOM) headquarters in Hawaii, was
set yesterday. Funds to visit the United States were eliminated from
a supplementary budget bill that was presented to the city assembly
in June. Given that situation, the mayor will visit the United
States at his own expense. It will be his third visit to the United
States as major. Iha said: "I intend to make the U.S. military
realize that it is violating its own safety standards and to urge
them to remove the dangerous aspects and make efforts toward

Mayor Iha will call for the elimination of dangerous aspects of
Futenma and an early return of the base. He will say that the
absence of a clear zone (area where land use is prohibited) from
Futenma Air Station constitutes a violation of U.S. military safety
standards. His itinerary includes visits to PACOM headquarters,
PACOM Marine Corps headquarters, and Senator Daniel Akaka, D-HI, a

TOKYO 00001878 005 OF 007

member of the Senate Committee on Armed Services.

Mayor Iha will be accompanied by an interpreter, a city official,
and Okinawa assembly members Kiyoko Tokashiki and Seiryo Arakaki,
both representing Ginowan.

As mayor, Iha first visited the United States in July 2004. In
fiscal 2005 and 2006, the city assembly voted down expenses for U.S.
visits. In 2005, he was able to visit the United States owing to
donations from citizens. In March this year, the municipal assembly
voted down a peaceful communities fund ordinance envisaging expenses
for a U.S. visit. In June, the assembly passed the supplementary
budget bill that did not include U.S. travel expenses.

(5) Ruling parties to set up council in mid-July to work out
specific measures to shift road-tax revenues into general budget

YOMIURI (Page 4) (Full)
July 8, 2008

The Liberal Democratic Party (LDP) and the New Komeito started
preparations to launch possibly in mid-July a council to discuss the
issue of moving the tax revenues now dedicated to highway
construction and maintenance projects into the general budget
starting in FY2009. Since negotiations between the ruling and
opposition blocs on this issue remain at a standstill, the ruling
coalition judged it necessary to start drafting concrete measures

Immediately after the ruling parties began discussion on fundamental
tax system reform for FY2009, LDP Policy Research Council Chairman
Tanigaki sounded out his counterpart of the New Komeito on the idea
of setting up a panel. As panel members, the ruling parties intend
to pick the Policy Research Council chairman, the party's Tax System
Research Commission chairman, and policy chiefs responsible for road
construction and other local administrative affairs.

The ruling camp initially gave priority to discussions with the
opposition bloc, but no negotiations have been held since May 28 due
to conflict between the two camps over the issue of the provision
gasoline tax rate. Some members suggested that the ruling camp
prepare a package of proposals first in order to set the stage for
both sides to hold discussion.

The new panel is expected to discuss the propriety of a plan to
convert the gasoline tax into an environmental tax, the setting of
tax rates, and the total amount of money needed for highway
construction and maintenance projects. The government's annual
economic and fiscal policy guidelines for 2008 released in June
specified a plan to study the introduction of an environmental tax.
The New Komeito is agreeable to the plan.

LDP lawmakers with ties to the road construction industry are ready
to actively participate in discussions in an attempt to secure a
sufficient budget for highway construction and maintenance.

Election Committee Chairman Koga in a speech in Fukuoka yesterday
expressed his intention to allow the gasoline tax revenues for other
purposes than their initial one up until the consumption tax is
hiked. He said:

"We would like to consider the possibility of using (the gasoline

TOKYO 00001878 006 OF 007

tax revenues) for social security, education, and other purposes
even by freezing highway construction projects that are necessary
over the next several years."

Koga, however, said: "We cannot make concessions on budgetary
allocations for local highway construction projects," stressing that
the targets for the freeze should be only those in Tokyo, Osaka, and
Nagoya. Executive Council Chairman Nikai stressed: "It is imperative
to have the people understand that (the gasoline tax rate) cannot be
easily lowered." As it stands, difficult negotiations are expected
in the ruling camp.

(6) LDP's Koga approves reallocation of road funds for such
expenditures as social security

ASAHI (Page 4) (Full)
July 8, 2008

Makoto Koga, chairman of the Election Committee of the Liberal
Democratic Party (LDP) on July 7 gave a speech in Fukuoka City.
Referring to the reallocation of special-purpose road construction
revenues for other uses, he indicated his stance of approving of
such funds being used for social security, etc., noting: "We will
abide by fiscal discipline. However, we could perhaps make up for a
shortage even at the cost of placing a freeze on the construction of
necessary roads." He pointed out: "When it comes to the question of
whether we can win a mandate even if we reform the tax code
immediately and make arrangements this year for a consumption tax
hike, it is impossible." He thus indicated his view that it would be
unavoidable to reallocate road funds for such expenses as social
security, instead of raising the consumption tax. However, he
insisted that a ban should be first placed on the construction of
new roads in urban areas, noting: "We will secure the construction
of roads in rural areas. However, there are surely some road
construction plans whose implementation can wait for three years in
urban areas, where a public transportation system is

Koga warned that there must not be a dissolution of the Lower House
-- the term of office of members of the Lower House expires in
September next year -- and a general election within this year,
because the ruling camp is bound to be defeated. Concerning the
right timing for an election Prime Minister Fukuda should choose, he
said, "He could decide at the outset of the regular Diet session to
be convened in January next year. The end of March or April could
also be an option" He then called on the prime minister to make up
his mind whenever he thinks best timing after the passage of the
budget bill for the next fiscal year..

(7) 90 PERCENT of DPJ's local execs back Ozawa in party race

NIKKEI (Page 2) (Abridged)
July 4, 2008

The leading opposition Democratic Party of Japan (Minshuto) is
slated to hold a presidential election in September. Ahead of the
race, the Nihon Keizai Shimbun conducted a questionnaire survey of
the party's local executives from June 30 through July 3. In
response, 43 of the DPJ's local chapters or 90 PERCENT of the
party's local chapters answered that it would be desirable for the
DPJ to reelect its incumbent president, Ichiro Ozawa. The survey
showed that a majority of the DPJ's local leaders want Ozawa to stay

TOKYO 00001878 007 OF 007

on, envisaging a change of government in the next election for the
House of Representatives. Meanwhile, 35 local chapters or more than
70 PERCENT said the DPJ should hold an election with multiple
candidates running for its presidency.

The survey was carried out by sending a questionnaire form to the
DPJ's 47 local chapters across the nation or by calling their
executives, including secretaries general. Answers were obtained
from all of the party's local chapters.

The DPJ is to elect its head with votes from its Dietmembers and
local assembly members. In addition, its members and supporters
across the nation, totaling about 270,000, have the right to vote.
The DPJ has held no presidential election involving its members and
supporters since 2002. Among those calling for a presidential
election, the DPJ's local chapter in Aomori Prefecture suggested the
need for the party to give a voting opportunity. Some of the DPJ's
local chapters answered that they want the DPJ to display its
presence through policy debate, with its local chapter in Nagano
Prefecture saying it would be better to heighten police debate.

However, there were no negative answers at all from the DPJ's local
executives to a question asking if they thought it was desirable for
the DPJ to reelect Ozawa to its presidency. The local chapters in
the prefectures of Kyoto, Nara, Hiroshima, and Tokushima did not
answer this question. However, all other local chapters supported
the idea of retaining Ozawa in his current post, with a DPJ local
executive in Shizuoka Prefecture saying Ozawa is the best choice for
the party's stability. Many of the DPJ's local leaders want to ride
out the next election for the House of Representatives under Ozawa's
continued leadership following the party's victory under his helm in
last year's election for the House of Councillors and in this
April's by-election in Yamaguchi Prefecture's District 2.


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