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Cablegate: Japanese Morning Press Highlights 11//08

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UNCLAS SECTION 01 OF 11 TOKYO 003065

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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 11//08

Index:

1) Aso Cabinet's non-support rate, at 41.9 PERCENT , now greater
than support rate of 40.5 PERCENT in latest Yomiuri poll (Yomiuri)


Politics and defense:
2) ASDF top brass Tamogami fired for writing published essay
justifying Japan's wartime aggression, glorifying former Imperial
Japanese Army (Mainichi)
3) Tamogami's essay opposing government's official positions on past
wartime acts raises question of civilian control (Mainichi)
4) Ex-ASDF chief's essay drawing fire even from SDF members
(Yomiuri)
5) Democratic Party of Japan to call for former ASDF chief to appear
as witness before the Diet (Yomiuri)
6) Tamogami incident likely to adversely affect the passage of the
bill extending the MSDF's refueling mission in the Indian Ocean
(Mainichi)
7) Former ASDF chief Tamogami retires from the Self-Defense Forces
two years earlier than ordinarily scheduled (Yomiuri)
8) Until the end, Tamogami was unapologetic, showed no regret for
his controversial historical essay (Yomiuri)

9) Another blow to Aso government ahead of trilateral summit
(Mainichi)

10) Democratic Party of Japan (DPJ) to call on Japan to designate on
its own North Korea as a "terrorist state" (Sankei)

11) Prime Minister Aso has tightly packed diplomatic schedule
(Nikkei)

12) Japanese government intent on establishing contacts with the
camp of Obama, assuming that he will win the U.S. president race
(Mainichi)

13) Prime Minister Aso to express intention to hold a second
financial summit hosted this time by Japan (Tokyo Shimbun)

14) State Minister for Economic and Fiscal Policy Yosano expects
step-by-step increase of consumption tax to 10 PERCENT around 2010
if economy recovers (Mainichi)

Election:
15) LDP's Hidenao Nakagawa blasts Prime Minister Aso for delaying
the dissolution of the Diet and a snap election (Asahi)
16) DPJ head Ozawa expects Diet dissolution after fall (Asahi)

Articles:

1) Poll: Cabinet support rate sags to 40.5 PERCENT

YOMIURI (Page 1) (Full)
November 4, 2008

The rate of public support for Prime Minister Aso's cabinet dropped
5.4 percentage points from last month to 40.5 PERCENT , the Yomiuri
Shimbun found from its telephone-based nationwide public opinion
survey conducted Nov. 1-3. The nonsupport rate rose 3.3 points to
41.9 PERCENT . The Aso cabinet's nonsupport rate topped its support
rate about a month after its inauguration.

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Aso has indicated he would not dissolve the House of Representatives
and forgo a general election for the time being in order to
fast-track measures to deal with the impact on Japan's economy of
the current financial crisis from the United States. In the survey,
respondents were asked if they appreciated this. In response to this
question, 56 PERCENT answered "yes," with 33 PERCENT saying "no."
However, when asked about the Aso cabinet's response to the
financial crisis, affirmative answers accounted for no more than 42
PERCENT , with negative answers at 46 PERCENT .

Aso has also announced an additional package of economic stimulus
measures, including a plan to pay across-the-board flat benefits
adding up to 2 trillion yen. Asked about this flat-rate payment,
"yes" came from only 38 PERCENT , with "no" at 56 PERCENT .
Meanwhile, 56 PERCENT appreciated a plan to lower expressway tolls,
with 37 PERCENT negative.

Aso has further indicated that he would raise the consumption tax in
three years, making it a precondition to carry out administrative
reform and turn the nation's economy around. Asked about this, "yes"
came from 42 PERCENT and "no" from 51 PERCENT .

In the breakdown of public support for political parties, the ruling
Liberal Democratic Party stood at 32.4 PERCENT , down 6.3 points
from last month. The leading opposition Democratic Party of Japan
(Minshuto) was at 23.4 PERCENT , down 0.9 points from last month. In
the public's proportional representation choice of a political party
in the next election for the House of Representatives, the LDP
scored 32 PERCENT , with the DPJ at 31 PERCENT . The LDP sustained a
substantial drop of 7 points, and the DPJ down 1 point.

2) Government dismisses ASDF chief of staff over essay denying
government view of Japan waging war of aggression

MAINICHI (Top Play) (Excerpts)
November 1, 2008

It was learned yesterday that Gen. Toshio Tamogami, the Air
Self-Defense Force (ASDF) chief of staff, had written an essay in
which he stated: "It is certainly a false accusation to say that our
country was an aggressor nation." This view deviates from the
successive governments' position on Japan's wartime history, as
represented by a 1995 statement by then Prime Minister Tomichi
Murayama apologizing for Japan having inflicted damage on Asian and
other countries through its colonial rule and aggression. The
government has interpreted that the Constitution of Japan bans the
use of the right to collective self-defense. The essay also
criticizes this interpretation as mind-controlled by the judgments
in the Tokyo Trial. In reaction, the government dismissed Tamogami
last night.

In a contest of essays, the essay Tamogami had submitted won a first
prize. The original essay and its English translation were posted on
the Internet yesterday.

In a press conference held at the Defense Ministry last night,
Defense Minister Yasukazu Hamada stated: "He publicized his view
significantly different from the government's current position on
Japan's wartime history. It is not appropriate for an ASDF chief of
staff to do so." ASDF Deputy Chief of Staff Shigeru Iwasaki will
serve as acting chief of staff.

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In reference to the Sino-Japanese War, he notes in the essay: "Our
nation, which was drawn into the war by Chiang Kai-shek, was a
victim." He then justifies Japan's colonial rule, saying that people
in Manchuria and on the Korean Peninsula were "released from
tyrannical rule owing to the efforts made by the Japanese government
and Imperial Army. Their living standard was remarkably improved."
He concludes: "Many Asian countries have positively evaluated the
Greater East Asia War. It is certainly a false accusation to say
that our country was an aggressor nation."

Citing the restrictions placed under the government's interpretation
of the Constitution on the use of the right to collective
self-defense, as well as the use of weapons, Tamogami notes:
"Self-Defense Force troops have been hedged round with restrictions.
As long as they are released from the mind-control, our nation will
never be able to establish a system to protect itself on its own."

3) Commentary: Civilian control called into question

MAINICHI (Page 2) (Full)
November 1, 2008

Air Self-Defense Force Chief of Staff Toshio Tamogami, the ASDF's
top leader, has been sacked for his recent writing of an essay that
conflicts with the government's view. This could undermine civilian
control of the Self-Defense Forces. Meanwhile, the Diet has been
divided, with the ruling parties holding a majority in its lower
chamber and the opposition parties dominating its upper chamber.
Such a parliamentary situation has stagnated decision making. If
this has caused civilian control to deteriorate, the situation is
serious. The whole nation should seriously review relations between
politics and the SDF.

"If they sound as if to say politics is doing nothing, that's the
same as the February 26 incident, which was a coup pulled off by a
group of officers in the now-defunct Imperial Japanese Army." With
this, Agriculture Minister Shigeru Ishiba, who was previously
defense minister, voiced concern in the wake of Tamogami's sacking
about SDF officers unapologetically asserting their own standpoints
over matters that successive cabinets have handled carefully.

In the 21st century, however, the SDF is at a major turning point,
changing from an entity that exists only for deterrence to an entity
that actually functions. Some say the ASDF's top officer went out of
control because political governance has failed to catch up with
change.

Tamogami has aroused criticism resulting from his outspoken words.

Satoshi Morimoto, formerly with the ASDF and currently teaching at
Takushoku University, says: "One who is straightforward from his
younger days is much appreciated within the organization, and that
person climbed the ladder to the ASDF chief of staff post. That is
probably because his opinion was taken as correct." So saying,
Morimoto indicated that the essay was intended to speak for the
ASDF.

Indeed, the greater part of the SDF's uniformed officers have been
calling for "discussions in the political arena" over what is
incorporated in the essay, which focused in particular on collective
self-defense, which is prohibited according to the government's

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current constitutional interpretation, and guidelines for the use of
weapons or the so-called rules of engagement (ROE). The SDF has been
on overseas missions continuously in the Indian Ocean and Iraq.
Meanwhile, it is also true that SDF officers on overseas missions
have faced ambiguities about the government's constitutional
interpretation, and they are strongly calling for changing the
government's constitutional interpretation.

Politics, in order for it to display governance, should keep an eye
on the SDF, of course, and should sincerely face security debate.
Otherwise, the SDF brass will likely continue to raise questions
about politics.

4) Ex-ASDF chief's essay drawing fire even from SDF members

YOMIURI (Page 38) (Excerpts)
November 1, 2008

Gen. Toshio Tamogami, the Air Self-Defense Force chief of staff, was
dismissed yesterday over his essay that included inappropriate views
on Japan's wartime history and future options for the Self-Defense
Force (SDF). Tamogami was known for speaking frankly. Even SDF
members have voiced criticism of the contents of the essay for
significantly deviating from the views of successive Japanese
governments and the SDF's principle of civilian control.

Defense Minister Nakasone, who decided to dismiss Tamogami, gave a
press conference at the Defense Ministry starting at 10:00 and said,
looking grim: "I think he expressed his own view, but I wanted him
to take his position into consideration."

Tamogami is known for his cheerfulness and unique words and deeds.
He was popular among his subordinates, as one commented: "He
brightened the atmosphere in the ASDF Staff Office." In executive
meetings, he offered his candid views, favorably received even by
uniformed personnel. But his remarks sometimes gave rise to
controversy.

The essay includes such sensational expressions as: "Japan, which
fought the Greater East Asia War, won a high reputation"; and
"Compared with other countries' troops, SDF troops have been bound
firmly hand and foot." On this essay, one SDF member commented:
"They are what (he) has said from before"; and another said: "That's
how he is." An ASDF unit chief appeared shocked by the dismissal of
Tamogami, remarking: "He always spoke for SDF members without
currying favor with those around him." But another senior SDF member
lamented: "China and South Korea will unavoidably react fiercely.
When considering his position, I cannot understand what he did."

5) DPJ to take offensive in dealing with ex-ASDF chief problem by
demanding his Diet testimony as unsworn testimony

YOMIURI (Page 4) (Abridged slightly)
November 2, 2008

The Democratic Party of Japan (DPJ), the largest opposition party,
on Nov. 1 strengthened its criticism of the government over its
dismissal of Air Self-Defense Force (ASDF) Chief of Staff Toshio
Tamogami over a controversial essay denying Japan waged a war of
aggression against other Asian countries before and during World
War, which is against the government's position. There is a view
that the issue will unavoidably have an impact on deliberations in

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the House of Councillors on a bill amending the new Antiterrorism
Special Measures Law, although the government has aimed at an early
enactment of the legislation.

In an outdoor speech the same day in Inzai City, Chiba Prefecture,
DPJ Secretary General Yukio Hatoyama stressed: "If Prime Minister
Taro Aso thinks that the issue has resolved with the dismissal, it
would be a big mistake. We will strongly pursue it in the Upper
House." Referring also to the fact that Tamogami stated he was not
concerned about the Nagoya District Court's ruling in April that
part of the ASDF's activities in Iraq was unconstitutional, Hatoyama
criticized the then government's response, saying: "(The government)
should have taken (the situation) more seriously."

Azuma Koshiishi, chairman of the DPJ caucus in the Upper House, also
underscored in a street corner speech in Fuji-Kawaguchiko Town,
Yamanashi Prefecture, on Nov. 1: "We would like to pursue the
responsibility of the prime minister."

The DPJ intends to pursue such points as Tamogami's personal view of
history, the Defense Ministry and the Self-Defense Forces (SDF), and
Tamogami's failure in reporting (to the government) on the release
of his essay in view of civilian control.

The Upper House Foreign Affairs and Security Committee, which is now
deliberating on the new antiterrorism bill, plans to summon persons
related to the Afghan situation to testify as unsworn witnesses.
Although the ruling coalition aims to take a vote on the bill on
Nov. 6, the DPJ intends to seek Tamogami's testimony as an unsworn
witness. Keiichiro Asao, defense minister of the shadow cabinet of
the DPJ, said: "It is necessary for our party to show how it deals
with the matter in order to prevent a recurrence." He indicated in
his remark that the DPJ would not respond to a vote-taking unless
the government present preventive measures.

6) DPJ demand for intensive deliberations on dismissal of ASDF chief
over controversial essay likely affect deliberations on refueling
bill

MAINICHI (Page 2) (Full)
November 2, 2008

Gen. Toshio Tamogami was dismissed yesterday as Air Self-Defense
Force (ASDF) chief of staff over his essay contradictory to the
government's current position on Japan's wartime history. In
reaction to the controversial essay, the Democratic Party of Japan
(DPJ) has launched an offensive, with Secretary General Yukio
Hatoyama claiming: "It is impermissible for the top ASDF chief to
release a statement denying Japan's responsibility for the war." The
main opposition party is poised to call in a meeting of the House of
Councillors' Foreign Affairs and Defense Committee for intensive
deliberations to ask about Prime Minister Taro Aso's historical
views and pursue Defense Minister Yasukazu Hamada's supervisory
responsibility. With this development, uncertainty is looming larger
over the fate of a bill amending the New Antiterrorism Special
Measures Law to extend the Maritime Self-Defense Force's refueling
mission in the Indian Ocean.

In a street-corner speech in Inzai City, Chiba Prefecture,
yesterday, Hatoyama emphasized: "(The essay) makes Asian countries
worried about Japan's future actions." Regarding the Nagoya High
Court's ruling that the Air Self-Defense Force's airlift operation

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SUBJECT: JAPANESE MORNING PRESS HIGHLIGHTS 11//08

in Iraq was unconstitutional, Tamogami had said: "I don't care."
Also taking up this controversial remark, Hatoyama commented: "The
government should have taken it more seriously." In an interview
with the Mainichi Shimbun, Azuma Koshiishi, chairman of the DPJ's
caucus in the Upper House, said: "The problem will not end just with
his dismissal." Party executives in their meeting on Nov. 4 are
expected to discuss how to deal with this issue.

7) Defense Ministry announces former ASDF Chief of Staff Tamogami's
mandatory retirement in rare move

YOMIURI (Page 4) (Full)
November 4, 2008

The Defense Ministry said on Nov. 3 that Toshio Tamogami, who had
been dismissed as Air Self-Defense Force chief of staff over a
controversial essay on World War II and other events, retired from
the ministry as of Nov. 3. The ministry made the rare move in the
judgment that a slow decision might have a negative impact on Diet
deliberations in the following week.

The ministry extended Tamogami's mandatory retirement until Nov. 30.
But because he did not submit his letter of resignation, the
ministry considered disciplinary action. The ministry seems to have
tried to bring the matter to a close in a hurry because the
procedures could drag on and also because the major opposition
Democratic Party of Japan was set to grill the government at the
Diet.

An SDF officer's mandatory retirement age differs depending on post
and rank. The ASDF chief of staff is required to retire at the age
of 62. With his dismissal as ASDF chief of staff, Tamogami became a
lieutenant general, whose mandatory retirement age is 60. At the
point of the dismissal, Tamogami was already 60, along with 14 other
lieutenant generals.

A person reaching mandatory retirement is entitled to receive tens
of million of yen in retirement allowance. A senior SDF officer
criticized Tamogami, saying: "He should have tendered his
resignation. What he did is not appropriate for a person who served
in the top post."

8) Tamogami offers no apology or reflection

YOMIURI (Page 4) (Full)
November 4, 2008

Former ASDF Chief of Staff Toshio Tamogami held a press conference
in Tokyo last night. In the session, Tamogami indicated that he
would not retract his argument, insisting: "(What I wrote in my
essay) was not wrong," and, "Japan was not an aggressor."

Clad in a suit instead of the uniform he has worn for the last 37
years, Tamogami started off the press conference by reading out
something titled "My view on my retirement." He did not offer an
apology or reflection for throwing the Defense Ministry and the
Self-Defense Forces into turbulence.

The former ASDF chief repeated his argument that the perception that
Japan was a bad country must be corrected. He said: "Japan has been
under the spell of it being an aggressor nation under the postwar
education system, and that has resulted in the loss of national

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confidence and the morale of the SDF personnel." Tamogami also said
with a serious expression to incumbent SDF personnel: "They should
take action by prioritizing the state and the people over their own
matters at all times."

Asked about the fact that his essay contradicts the government's
view, Tamogami said in a strong tone: "If one is not allowed to
rebut the government's view, that is same as North Korea." Tamogami
also indicated that he would accept his 3 million yen prize money.
The major opposition Democratic Party is set to demand Tamogami's
Diet testimony. The former ASDF chief indicated that he would
respond to such a call of the DPJ. The press conference ended in a
little over 20 minutes.

9) Another blow to Aso government ahead of trilateral summit

MAINICHI (Page 2) (Abridged)
November 1, 2008

The government has sacked Air Self-Defense Force Chief of Staff
Tamogami over his controversial essay. Prime Minister Aso and his
administration, now being driven to deal with the global financial
crisis's impact on Japan and the nation's ailing economy, will
likely get into a scrape. It will not only affect Diet deliberations
on a bill amending the new Antiterrorism Special Measures Law for
the Maritime Self-Defense Force's extended refueling mission in the
Indian Ocean but will also call the Aso administration's historical
perception into question. Japan, China, and South Korea are
scheduled to hold a summit meeting of their leaders in December, and
Aso will host the trilateral summit. But the event this time can be
taken as pouring cold water on him.

10) DPJ abduction panel proposes additional sanctions on North
Korea, including independently designating the North as
terror-sponsor and imposing embargo

SANKEI (Page 3) (Excerpts)
November 4, 2008

The Democratic Party of Japan's abduction issue taskforce, chaired
by former Justice Minister Hiroshi Nakai, unveiled on November 2 a
draft of additional sanctions on North Korea, produced in response
to a lack of progress on the abduction, nuclear and ballistic
missile issues. The sanctions include severe steps against North
Korea, such as Japan independently designating the North as a state
sponsor of terrorism, a ban on re-entry into Japan by North Korean
residents, a total ban on exports and cash transfers to the North,
and a freeze on assets held by North Korea-related organizations in
Japan. The DPJ is expected to formally adopt the additional
sanctions at its abduction taskforce officers meeting on Nov. 5.

The draft sanction measures were compiled by taskforce secretary
general Shu Watanabe and his deputy Jin Matsubara at the instruction
of Nakai. The set of sanction measures consists of 14 articles in
four areas: people, goods, money, and others. Most of them can be
implemented under existing legislation. What makes this set of
proposals unique is that it is designed to allow Japan to
independently designate North Korea as a terror-sponsor. In response
to Pyongyang's clear intent to ignore Japan following the U.S.
delisting of the North as a state sponsor of terrorism, the
additional sanctions are designed to demonstrate Japan's severe
stance. The measures also include a step to expand the scope of the

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ban on re-entry into Japan that is limited to North Koreans in Japan
with a status of North Korean authorities.

Currently, financial sanctions are imposed only in cases connected
with missile and weapons of mass destruction programs. The
additional sanctions are designed to implement: (1) a total ban on
money transfers to North Korea and DPRK-connected bank accounts and
financial institutions; (2) a ban on transactions between financial
institutions in Japan and North Korea and DPRK-related
organizations; and (3) a freeze on assets held by North Korea and
DPRK-connected organizations in Japan. The aim is to isolate North
Korea financially by banning transactions between foreign financial
institutions doing business with North Korea and Japanese financial
institutions.

11) Prime Minister Aso has tightly packed diplomatic schedule

NIKKEI (Page 2) (Full)
November 1, 2008

Prime Minister Taro Aso will focus on holding summits with the top
leaders of other countries, since he has decided to delay a
dissolution of the House of Representatives for a snap election. He
has a tightly packed diplomatic schedule, including the trilateral
summit of Japan, China and South Korea. He is also enthusiastic
about cooperating with other countries in dealing with the global
financial crisis. However, a rocky path lies ahead for internal
politics due to the divided Diet. Whether Aso will be able to score
big gains through his diplomacy is uncertain.

On Oct. 24 in Beijing where he was visiting to attend the summit of
the Asia-Europe Meeting (ASEM), Aso said in an interview with a
local TV station: "Friendship is a means, but the purpose is to
produce mutual benefits and build a reciprocal relationship. We must
not confuse the means with the end." His view is that the bilateral
relationship will be stabilized by actual benefits rather than by
friendship.

"Chinese leaders have welcomed" Aso's position, according to a
source connected with Japan-China foreign policy. In the summit of
the top leaders of Japan and China on Oct. 24, Chinese President Hu
Jintao broached a specific issue that the Japanese side had not
expected, saying: "I would like to hear the prime minister's view on
the international financial crisis."

The summit of the Group of Twenty (G-20) on the global financial
crisis, which will take place in Washington on Nov. 15, will be the
climax of Aso's diplomatic schedule. In his meetings with top Asian
leaders, the financial crisis will inevitably be a major issue, as
well.

A senor Foreign Ministry official predicted: "Compared with Europe
and the United States, the damage to Asian countries is smaller.
However, we will need to come up with measures in the future."

Aso intends to put forward actual results rather than the abstract
goal of "strengthening friendship" in his meetings with top Asian
leaders. A government official said: "The prime minister may
advocate the idea of improving the framework of emergency
coordination on monetary policy."

12) Japanese government makes contact with persons close to Obama

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MAINICHI (Page 3) (Full)
November 3, 2008

Taking the stand that Japan and the U.S. have a mature relationship,
the Japanese government views that regardless of whether Republican
Sen. McCain or Democratic Sen. Obama becomes the president of the
U.S., there will be no major changes in U.S. policy toward Japan,
according to a senior Foreign Ministry official. However, there are
slight differences between the two candidates when it comes to Asia
diplomacy.

McCain takes a clear stand of giving priority to U.S. allies. This
is similar to PM Aso's position of working with countries that share
the same values as those of Japan in terms of democracy and the
market economy.

Obama, who has on his team of advisors such Japan experts as the
Defense Department Japan Desk chief during the Clinton
administration, characterizes the Japan-U.S. alliance as the base of
his Asia diplomacy. However, he at the same time advocates the
building of a security system also involving China. Regarding North
Korea diplomacy, he has come up with a strong stance of attaching
importance to dialogue. In this regard, there is a clear difference
between Obama and PM Aso, who is leaning toward strengthening
pressure on North Korea over the abduction issue.

One government source said, "We can easily imagine Mr. McCain
walking shoulder to shoulder with the prime minister. However, since
the specific policy Mr. Obama will come up with is unclear, we
cannot envisage what relationship he will build with the prime
minister."

The Japanese government has started making contact with U.S.
presidential candidates' advisors from around January this year
during the Fukuda administration. As Obama became a strong
candidate, the Foreign Ministry invited Obama's advisors to a
seminar in Washington in October. Senior officials exchanged views
with them in an effort to create a personal network.

Aides to the prime minister are also considering holding a meeting
with the president-elect. Chief Cabinet Secretary Takeo Kawamura
told a press conference on October 27, "Whether it is possible to
hold such a meeting in terms of the political schedule is an issue
we must bear in mind." He thus indicated the government's intention
to look into the possibility of the prime minister meeting with the
president-elect in Washington at the financial summit on November
15.

13) Financial summit: Prime minister to sound out concerned
countries about holding second round in Japan as early as before
year's end

TOKYO SHIMBUN (Top Play) (Full)
November 4, 2008

The emergency summit (financial summit) is to be held in Washington
on the 15 in order to deal with the global financial crisis. The
government on November 3 decided to sound out concerned countries
about the idea of holding the second round in Japan as early as
before year's end. The decision is in response to Prime Minister
Aso's strong wishes. The government indents to enter into

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coordination of a specific schedule and specifics of topics, by
dispatching special envoys to related countries as early as next
week.

Participants during the Washington summit will examine progress in
efforts to tackle the financial crisis. The will aim to reach an
agreement on reform principles that are needed for the prevention of
a recurrence of the crisis and future prosperity. They will map out
specific measures, based on those principles after the second round
on. Mid- to long-term challenges, such as the way the International
Monetary Fund (IMF) should be, will also likely be on the agenda.

In the wake of the financial crisis, Prime Minister Aso on October
10 told reporters that he is ready to host the financial summit in
Japan. He also conveyed this intention to U.S. President Bush during
a telephone conversation with him. However, the president announced
in a join statement with President Sarkozy of France, the EU
presidency holder, after their talks, that the first meeting would
be held in the U.S.

The joint statement noted that the financial summit would be held
several times. As such, Japan as the chair of the Group of Eight
major nations summit meeting, has decided to hold the second round
in Japan.

However, the outlook is that even if Japan is to hold the financial
summit, it will be in mid- or late December at the earliest after
the ASEAN-plus-3 (Japan, China and South Korea) meeting to be held
in Thailand on December 16-17, or early next year.

14) Consumption tax to be raised to about 10 PERCENT by around the
mid-2010s, says State Minister for Economic and Fiscal Policy
Yosano

MAINICHI (Page 2) (Full)
November 3, 2008

In connection with Prime Minister Aso's statement on a hike in the
sales tax in three years' time, State Minister for Economic and
Fiscal Policy Hajime Yosano during an NHK TV talk show on November 2
said, "State finances will go bust unless the consumption tax is
raised in stages to 10 PERCENT by around the mid-2010s." He thus
indicated his perception that it is necessary to raise the
consumption tax rate by more than 5 PERCENT in stages in order to
stably finance the social security system, once economic conditions
improve.

Concerning the flat-sum benefit payment system, a policy included in
the package of additional economic pump-priming measures, Yosano
said, "The government will pay benefits to all households that are
entitled to livelihood support." He thus once again stressed his
stance of looking into the policy with the possibility of exempting
high income earners from the list of those who are eligible for such
benefits.

However, since Yosano's plan will make paperwork complicated, New
Komeito Secretary General Natsuo Yamaguchi took a cautious stance:
"The government's goal is to implement that policy within the
current fiscal year. There must not be a delay."

15) DPJ President Ozawa on Internet video site: "Lower House will be
dissolved in fall or later"

TOKYO 00003065 011 OF 011

SUBJECT: JAPANESE MORNING PRESS HIGHLIGHTS 11//08


ASAHI (Page 2) (Excerpts)
November 4, 2008

Appearing on an Internet video site yesterday, Democratic Party of
Japan (DPJ) President Ichiro Ozawa pointed out that Prime Minister
Taro Aso's biggest chance was to dissolve the House of
Representatives at the outset of the extraordinary Diet session in
late September. Ozawa then revealed his perception on a Lower House
dissolution, saying:

"Mr. Aso will have to accept calls from the people that he should
listen to them. There is a possibility that a general election will
be held in the fall or at the beginning of the next regular session
early next year."

He appeared on the Niko Niko video site, which is popular among
young people.

16) LDP's Hidenao Kanagawa criticizes postponement of Lower House
dissolution

ASAHI (Page 2) (Full)
November 4, 2008

In a speech delivered yesterday in Fukushima City, Hidenao Nakagawa,
former secretary general of the ruling Liberal Democratic Party
(LDP), criticized Prime Minister Taro Aso's decision to put off a
dissolution of the House of Representatives. Nakagawa stated: "The
Democratic Party of Japan (DPJ) may submit a no-confidence motion
(against the prime minister) by putting up do-or-die resistance. In
the worst-case scenario, the Aso administration might fall into the
same trap as the Abe and Fukuda governments." Regarding a
consumption tax hike in three years, which Aso announced, Nakagawa
said: "Before making a roadmap for a tax increase, he should come up
with a roadmap for the things he should do before increasing the
consumption tax."

SCHIEFFER

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