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Cablegate: Daily Summary of Japanese Press 08//08

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PP RUEHFK RUEHKSO RUEHNAG RUEHNH
DE RUEHKO #2129/01 2170755
ZNR UUUUU ZZH
P 040755Z AUG 08
FM AMEMBASSY TOKYO
TO RUEHC/SECSTATE WASHDC PRIORITY 6306
INFO RUEKJCS/SECDEF WASHDC PRIORITY
RHEHAAA/THE WHITE HOUSE WASHINGTON DC PRIORITY
RUEAWJA/USDOJ WASHDC PRIORITY
RULSDMK/USDOT WASHDC PRIORITY
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RUEKJCS/JOINT STAFF WASHDC//J5//
RHHMUNA/HQ USPACOM HONOLULU HI
RHHMHBA/COMPACFLT PEARL HARBOR HI
RHMFIUU/HQ PACAF HICKAM AFB HI//CC/PA//
RHMFIUU/USFJ //J5/JO21//
RUYNAAC/COMNAVFORJAPAN YOKOSUKA JA
RUAYJAA/CTF 72
RUEHNH/AMCONSUL NAHA 1578
RUEHFK/AMCONSUL FUKUOKA 9204
RUEHOK/AMCONSUL OSAKA KOBE 2942
RUEHNAG/AMCONSUL NAGOYA 7397
RUEHKSO/AMCONSUL SAPPORO 9787
RUEHBJ/AMEMBASSY BEIJING 4713
RUEHUL/AMEMBASSY SEOUL 0702
RUCNDT/USMISSION USUN NEW YORK 1077

UNCLAS SECTION 01 OF 08 TOKYO 002129

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: DAILY SUMMARY OF JAPANESE PRESS 08//08

INDEX:

(1) Prime minister orders package of economic stimulus measures that
employs "all policy measures": Outline to be created possibly in
first half of August (Nikkei)

(2) Government to produce economic package possibly in September to
cope with soaring oil prices, assist small businesses (Nikkei)

(3) Finance minister: Discussion will start this fall on scenario
about consumption tax hike (Nikkei)

(4) Response of business circles: Call for structural reforms to
find breakthrough in economic gridlock (Nikkei)

(5) Defense Ministry to establish crisis management center to
exclusively handle information to speedily respond to terrorist
attacks and disasters (Nikkei)

(6) Defense Minister Hayashi: Continuation of refueling operations
in Indian Ocean necessary (Nikkei)

(7) Poll: 36 PERCENT in Japan, 67 PERCENT in China see bilateral
ties as good (Yomiuri)

(8) Fukuda or Ozawa for prime minister? (Mainichi)

(9) Fissure between LDP and New Komeito over Lower House dissolution
and term of next extraordinary Diet session (Yomiuri)

(10) TOP HEADLINES

(11) EDITORIALS

ARTICLES:

(1) Prime minister orders package of economic stimulus measures that
employs "all policy measures": Outline to be created possibly in
first half of August

NIKKEI ONLINE (Full)
12:40, August 4, 2008

The shuffled Fukuda cabinet got underway on the morning of August 4.
Prime Minister Yasuo Fukuda in the morning called State Minister for
Economic and Fiscal Policy Kaoru Yosano to his office and ordered
him to complete, possibly by the end of early August, an outline of
a package of economic stimulus measures that employ all policy
measures to address price rises caused by soaring crude oil and food
prices and a slowing economy. Now that the transfer of business from
outgoing to incoming ministers has been completed, efforts to
dissolve people's anxieties, which the reshuffled cabinet aims at,
will get into full swing.

The prime minister moved from the official residence to the Kantei
(Prime Minister's Office) shortly after 10:00 a.m. and held talks
with Yosano. He during the meeting noted that as the Japanese
economy is facing challenges, it is imperative for the government to
do whatever it can, by fully mobilizing every policy measure
available. He then ordered him to immediately compile economic
stimulus measures by putting together views of various government
agencies and the ruling parties.

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SUBJECT: DAILY SUMMARY OF JAPANESE PRESS 08//08


Yosano told reporters, "The prime minister is concerned about the
daily life of the public and small- and medium-size businesses." He
revealed the government policy of considering reducing the burden of
fuel expenses borne by people who live in remote areas and helping
small- and medium-size businesses that are experiencing funding
difficulties, as they are unable to pass higher costs along to
consumers.

(2) Government to produce economic package possibly in September to
cope with soaring oil prices, assist small businesses

NIKKEI (Page 1) (Full)
August 3, 2008

The government yesterday started work to compile a comprehensive
economic package to cope with soaring commodity prices following the
recent steep rise in oil prices and to buoy up the economy. The
package is likely to include energy measures and assistant measures
for small businesses and industries related to agriculture,
forestry, and fisheries, which have been directly affected by
skyrocketing oil prices. The government will also study the
possibility of compiling an extra budget to finance these measures.
A group under the lead of Minister for Economic and Fiscal Policy
Kaoru Yosano will launch full-scale coordination early next week and
finalize a package as early as September.

In a press conference after a cabinet meeting yesterday, Yosano
said: "It is inconceivable that we will come up with a package of
pork-barrel measures. Instead, we will conduct discussions with
government agencies concerned to hammer out effective measures.
Budgetary and tax policy means will need to be employed." Reflecting
Prime Minister Yasuo Fukuda's intention, Yosano plans to hurriedly
have specific measures drafted.

Finance Minister Bunmei Ibuki indicated his willingness to secure
fiscal resources by compiling a supplementary budget or utilizing
reserve funds. Minister of Economy, Trade and Industry Toshihiro
Nikai and Minister of State for Financial Services Toshimitsu Motegi
also expressed their views that measures for troubled small
companies are necessary.

Even so, Japan is facing a tight fiscal condition. The new cabinet
will be put to the test over whether it is capable of working out
effective measures without remarkably boosting expenditures.

(3) Finance minister: Discussion will start this fall on scenario
about consumption tax hike

NIKKEI (Page 1) (Slightly abridged)
August 3, 2008

The second Fukuda cabinet was formally launched yesterday. Cabinet
ministers gave press conferences after their first meeting and spoke
of what policies they planned to take. Finance Minister Bunmei Ibuki
indicated his willingness to determine such details as the timing
for raising the consumption tax and the level of increase in
discussing fundamental tax reform starting in the fall through the
end of the year. Ibuki said: "To carry out (a certain policy plan)
over a long period, securing permanent stable fiscal resources are
imperative. This issue must be discussed in the process of
discussion on fundamental system reform later this year."

TOKYO 00002129 003 OF 008

SUBJECT: DAILY SUMMARY OF JAPANESE PRESS 08//08


Prime Minister Yasuo Fukuda stated in a press conference in June:
"We want to consider the issue of increasing the consumption tax
over a long period, for instance, taking two or three years." Ibuki
said he has interpreted this remark as meaning that it will take two
or three years until the entire work is completed. Asked when he
plans to increase the tax, Ibuki replied: "There are a variety of
political judgments."

The terms of the Lower House members will expire about a year from
now. In this connection, Ibuki stated: "When both ruling and
opposition camps submit their policy manifestos, they should show
what measures they plan to take and how much money is needed to fund
the measures.

The government plans to raise by 50 PERCENT the national government
subsidy rate for basic pension benefits starting in FY2009.
Regarding this plan, Ibuki stressed that he would give priority to
maintaining the policy of keeping fiscal soundness, remarking: "I
have no intention of floating government bonds." He also indicated
that he would look into utilizing the so-called "buried money"
(untapped funds) at government agencies, such as reserve funds in
special accounts, saying: "If we may hold out even without raising
the consumption tax in the first year, that would be fine."

Taking up Economy and Fiscal Policy Minister Kaoru Yosano's
revelation of his plan to work out economy-spurring measures, Ibuki
praised the plan as stemming from an accurate judgment.

Former Finance Minister Fukushiro Nukaga had also stressed the need
to discuss the possibility of increasing the consumption tax in
discussions on tax system reform this fall.

(4) Response of business circles: Call for structural reforms to
find breakthrough in economic gridlock

NIKKEI (Page 5) (Full)
August 2, 2008

Many in business circles have called on the shuffled cabinet to
implement structural reforms. Fujio Mitarai, chairman of the Japan
Business Federation (Nippon Keidanren), commented, "It is necessary
to drastically reform tax and fiscal administration in order to find
a breakthrough in the economic impasse." Masamitsu Sakurai,
representative director of the Japan Association of Corporate
Executives (Keizai Doyukai), released a statement that went:
"Continuing and accelerating reform is the only recourse."

Fujio Mitarai, chairman of Nippon Keidanren

"The global economy is stalled. The Japanese economy also has paused
temporarily. Companies feel their situations are worsening. The
cabinet shuffle this time is the reflection of a consensus that the
government is determined to tackle a difficult situation with one
heart by forming a strong cabinet. Bringing about a reform of the
social security system and drastically reforming the tax code are
indispensable. I would like the government to discuss the timing of
a consumption tax hike and the scope of the increase"

Masamitsu Sakurai, Keizai Doyukai Representative Director: "The
shuffling shows that the prime minister aims to run his
administration through his own leadership. The only way to

TOKYO 00002129 004 OF 008

SUBJECT: DAILY SUMMARY OF JAPANESE PRESS 08//08

revitalize the economy is by continuing and accelerating structural
reforms, based on fiscal reconstruction and administrative reform,
and by realizing an open market economy. I would like the government
to immediately show the nation specific policy measures and their
order of priority."

Tadashi Okamura, Japan Chamber of Commerce and Industry President:
"Assisting small to medium-sized businesses, which are suffering
from soaring crude oil and raw material prices, is a matter of
urgent necessity. It is important to put the economy, which has
begun showing signs of decline, back on the recovery track through
reform of the tax code and budget compilation. I hope the government
will revitalize industries, in particular, by coming up with
assistance measures that will be effective in boosting small to
medium-sized businesses."

(5) Defense Ministry to establish crisis management center to
exclusively handle information to speedily respond to terrorist
attacks and disasters

NIKKEI (Page 2) (Abridged)
Evening, August 2, 2008

The Ministry of Defense (MOD) has begun discussions on establishing
what is called the crisis management center tasked with collecting
information in an integrated fashion in the wake of the occurrence
of an emergency situation, such as a large-scale terrorist attack, a
major disaster and an accident. The ministry's response to emergency
situations and its public relations activities have been hindered by
poor communications between MOD bureaucrats and SDF officers that
have become clear in past events, such as a collision between an
Aegis vessel and a fishing boat. The ministry eyes a system in which
the internal bureaus and SDF staff offices properly respond to
situations as a team at the order of the defense minister.

The step is part of the government's efforts to reform the MOD,
which was hit by a series of misconducts by MOD officials, such as
the underreport of the fuel the Maritime Self-Defense Force supplied
to a U.S. supply ship and a bribery case involving former
Vice-Defense Minister Takemasa Moriya.

The MOD envisages a body similar to the Cabinet Intelligence and
Crisis Management Center that collects information and responds to
emergency situations around the clock. A plan to establish the
crisis management center will be incorporated in a MOD reform road
map due out later this month.

In past news conferences, discrepancies were often evident in what
was announced by MOD senior officers and by SDF officers. The
envisaged system is designed to allow the non-uniformed MOD public
relations officer to exclusively grasp information and to establish
a set of rules that applies to all public relations activities and
media responses.

The emergency response manual for senior officers will also be
reexamined. The results of unannounced drills will be reflected in
the response manual.

New Defense Minister Yoshimasa Hayashi, appearing on a Yomiuri
televising program on the morning of August 2, emphatically said
about MOD reform: "It is important to realize policies one by one
that are included in a report (produced by the government's Council

TOKYO 00002129 005 OF 008

SUBJECT: DAILY SUMMARY OF JAPANESE PRESS 08//08

on Reform of the Defense Ministry)."

(6) Defense Minister Hayashi: Continuation of refueling operations
in Indian Ocean necessary

NIKKEI (Page 2) (Full)
Evening, August 2, 2008

Defense Minister Yoshimasa Hayashi, appearing on a Yomiuri
television program on the morning of August 2, underlined the
importance of extending the Maritime Self-Defense Force's refueling
operations in the Indian Ocean. He said: "The Ministry of Defense
will make preparations to obtain public understanding by explaining
why the operations are necessary."

(7) Poll: 36 PERCENT in Japan, 67 PERCENT in China see bilateral
ties as good

YOMIURI (Page 1) (Abridged)
August 4, 2008

The Yomiuri Shimbun and Outlook Weekly, a weekly journal published
by China's Xinhua News Agency, conducted a joint public opinion
survey in Japan and China. In Japan, 36 PERCENT answered that
Japan-China relations are in good shape, with 57 PERCENT saying
Japan-China relations are in bad shape. In China, "good" accounted
for 67 PERCENT , with "bad" at 29 PERCENT . As seen from these
figures, the Japanese and Chinese public differed widely in their
views of bilateral ties. In Japan, there is a deep seated sense of
distrust in China over its military buildup and pesticide-tainted
frozen 'gyoza' dumplings made in China. Meanwhile, China has now
shifted to future-oriented diplomacy toward Japan. The survey showed
a clear difference between the Japanese public's awareness and the
Chinese public's.

The survey was conducted July 12-13 in Japan and July 11-16 in China
on a face-to-face basis.

In Japan, the question about the state of Japan-China relations was
asked in the three surveys from 2006 through the one this time. In
the three surveys, "good" was up and down-27 PERCENT in 2006, 42
PERCENT in 2007, and 36 PERCENT this time. In May, Chinese
President Hu Jintao visited Japan and signed a bilateral joint
statement with Prime Minister Fukuda to push forward "strategic and
reciprocal" relations. As seen from this, Japan and China has made
headway to a certain extent in their diplomacy toward each other.
However, the survey shows that the Japanese public's view of China
has deteriorated.

In the survey this time, respondents were also asked if they could
trust each other's country. To this question, "yes" accounted for 19
PERCENT in Japan and 56 PERCENT in China, with "no" at 78 PERCENT
in Japan and 42 PERCENT in China. Asked what would become of
Japan-China relations, 38 PERCENT in Japan and 75 PERCENT in China
answered that bilateral ties would change for the better, with 51
PERCENT in Japan and 21 PERCENT in China saying there would be "no
change" and 8 PERCENT in Japan and 3 PERCENT in China saying
bilateral ties would worsen. As seen from these figures, the
Japanese public takes a harsh view of China, while the Chinese
public is optimistic about bilateral ties with Japan.

(8) Fukuda or Ozawa for prime minister?

TOKYO 00002129 006 OF 008

SUBJECT: DAILY SUMMARY OF JAPANESE PRESS 08//08


MAINICHI (Page 3) (Full)
August 4, 2008

The Asahi Shimbun conducted a telephone-based nationwide public
opinion survey on Aug. 1-2, in which respondents were asked to
choose between Prime Minister Yasuo Fukuda and Ichiro Ozawa,
president of the leading opposition Democratic Party of Japan
(Minshuto), as to who would be more appropriate to be prime
minister. To this question, 19 PERCENT picked Fukuda, with 18
PERCENT preferring Ozawa. This question was asked for the third
time following the April and May surveys. Fukuda was up 5 percentage
points from May, and Ozawa has leveled off. Fukuda has edged out
Ozawa again. The proportion of those who think "neither is
appropriate" decreased 7 points but still remains high at 56 PERCENT
.

Among those who support the ruling Liberal Democratic Party, Fukuda
was at 52 PERCENT and Ozawa at 4 PERCENT , with 40 PERCENT saying
"neither is appropriate." Among DPJ supporters, Fukuda was at 4
PERCENT and Ozawa at 42 PERCENT , with 51 PERCENT saying "neither
is appropriate." The figures show that both Fukuda and Ozawa are
precarious among their parties' respective supporters. Ozawa is more
precarious among his party's supporters.

"Neither" accounted for 70 PERCENT among those with no particular
party affiliation, 66 PERCENT among those who support New Komeito,
the LDP's coalition partner, and 62 PERCENT among those who support
the Japanese Communist Party. Among those unaffiliated, Fukuda was
at 9 PERCENT as appropriate for prime minister and Ozawa at 14
PERCENT .

(9) Fissure between LDP and New Komeito over Lower House dissolution
and term of next extraordinary Diet session

YOMIURI (Page 1) (Abridged slightly)
August 4, 2008

"What do you think of the idea of giving two cabinet posts to the
New Komeito?" Prime Minister Yasuo Fukuda asked former Prime
Minister Yoshiro Mori on the night before shuffling his cabinet. In
the eight years of the LDP-New Komeito administration, the number of
cabinet posts granted to the New Komeito has always been kept at
one. Aware of Fukuda's consideration for the New Komeito, Mori said:
"I think it's good. When the coalition government was first launched
with the Liberal Party and New Komeito, we limited the number of
portfolios to the New Komeito to one simply to prevent the Liberal
Party from demanding two."

The idea of giving two cabinet posts to the New Komeito with the aim
of strengthening ties with that party did not materialize because
the coalition partner ended up declining the offer.

A New Komeito executive explained: "Cabinet ministers are hostages
for keeping the coalition arrangement intact. We don't need two
posts." This comment clearly reflects the New Komeito's lack of
trust in the Fukuda administration.

New Komeito Representative Akihiro Ota, after LDP-New Komeito party
head talks on August 1, told reporters: "The prime minister said he
wanted solidarity and cooperation. We share the view that reform is
necessary for the sake of the people's livelihood." The need to call

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SUBJECT: DAILY SUMMARY OF JAPANESE PRESS 08//08

for solidarity tells much about the seriousness of the rift growing
between the LDP and New Komeito.

The gulf has resulted from two sticking points. One is the timing of
the dissolution of the Lower House and the other is over how to
proceed with the next extraordinary Diet session.

The New Komeito and its support base, Soka Gakkai, have kept sending
the same message to the LDP, namely, that the Lower House should be
dissolved before next summer's Tokyo Metropolitan Assembly election,
if possible, by late December or early January.

The New Komeito also wants the term of the extraordinary Diet
session to be as short as possible. Former Komeito Chairman Junya
Yano has filed a damage suit against Soka Gakkai. "The New Komeito
and Soka Gakkai desperately want to avoid the opposition bloc
demanding Yano's Diet testimony and making a big issue out of it,"
an LDP executive said.

The New Komeito's request for an early general election and a short
Diet session fetters the prime minister's right to dissolve the
Lower House. It also makes it difficult for Fukuda to realize his
plan to extend the new Antiterrorism Special Measures Law in the
extra Diet session.

Resolving the issues of the timing of the next Lower House election
and the course of the extraordinary Diet session depend on the
outcome of maneuvering between Prime Minister Fukuda and the New
Komeito. A source connected with Soka Gakkai noted: "The effects of
the shuffled cabinet will gradually fade away. Unless the Lower
House is dissolved early, calls for handing the helm to Mr. Aso will
grow louder. Chances are that Mr. Fukuda will dissolve the Lower
House for a snap general election before the end of the year. So we
will begin making reparations for the next election once the O-bon
mid-August holidays are over."

How will the prime minister deal with the New Komeito, which is
undermining him by fanning the winds of dissolution and spreading
talk about a power transfer to Aso?

(10) TOP HEADLINES

Asahi:
In run-up to Olympics, 1.4 million police officers on guard in
Beijing

Mainichi:
Fukuda persuades Aso to be LDP secretary general by taking advantage
of Aso's ambition to succeed him

Yomiuri:
Sharaku original found in Greek museum

Nikkei:
Itochu, Chinese trading giant tie up in food purchasing and
distribution

Sankei:
Soaring oil prices significantly reducing overseas tourists

Tokyo Shimbun:
Prosecutors to start investigation of ex-PCI heads today on

TOKYO 00002129 008 OF 008

SUBJECT: DAILY SUMMARY OF JAPANESE PRESS 08//08

suspicion of bribery in ODA project in Vietnam

Akahata:
Town in Nagano collects signatures from majority of residents to
protect Article 9

(11) EDITORIALS

Asahi:
(1) Heat-island phenomenon: Winds and greenery prevent heat
pollution

Mainichi:
(1) Toyosu should review plan to move central wholesale market in
response to final report on soil contamination

Yomiuri:
(1) Think of mergers and realignment to cope with fewer new students
at private universities
(2) Aim at unifying emerging markets

Nikkei:
(1) Problem of dispatched workers cannot be resolved with
shortsighted regulations
(2) Meaning of Karadzic trial questioned

Sankei:
(1) Economic and Fiscal Policy Minister Yosano expected to lead tax
and fiscal reforms
(2) Government must take some measures in reaction to Chinese
antimonopoly law

Tokyo Shimbun:
(1) What standard should be used in judging whether the Beijing
Olympics is a success or not?

Akahata:
(1) U.S. submarine radiation leak: We must continue fight against
deployment of nuclear-powered carrier to Yokosuka.

SCHIEFFER

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