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Cablegate: Daily Summary of Japanese Press 09/19/06

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RUEHBJ/AMEMBASSY BEIJING 4220
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RUCNDT/USMISSION USUN NEW YORK 1984

UNCLAS SECTION 01 OF 06 TOKYO 005357

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: DAILY SUMMARY OF JAPANESE PRESS 09/19/06


INDEX:
(1) LDP presidential election tomorrow; Mounting bills carried over
from previous session await extra Diet session; Social Insurance
Agency bill may wait until next year

(2) Whether new administration continues Koizumi reform line depends
on lineup of economic ministers

(3) Abe eyes having five prime ministerial assistants

(4) Japan will come up with own proposal for developing countries'
CO2 reductions at upcoming UNCCC-Nairobi

(5) Underground storage of CO2: Master card for greenhouse gas
emission reduction

ARTICLES:
(1) LDP presidential election tomorrow; Mounting bills carried over
from previous session await extra Diet session; Social Insurance
Agency bill may wait until next year

NIHON KEIZAI (Page 2) (Abridged)
September 19, 2006

The Liberal Democratic lawmakers and local rank-and-file LDP members
will determine the 21st LDP president tomorrow to replace Junichiro
Koizumi, who is also prime minister. With Chief Cabinet Secretary
Shinzo Abe's commanding lead over Finance Minister Sadakazu Tanigaki
and Foreign Minister Taro Aso remaining unshakable, the focus is now
how far Abe will be able to outdistance the runner-up. Heated debate
with Minshuto (Democratic Party of Japan) is expected in the next
extraordinary Diet session, scheduled to open on Sept. 26, to handle
many important bills that have been carried over from the previous
Diet session.

A new lineup of the three top LDP executives is likely to be
determined by Sept. 25. Immediately after the extraordinary Diet
session opens on Sept. 26 to run for 81 days, chances are that the
new LDP president will be designated as new prime minister and that
he will launch a new cabinet later the same day. The ruling
coalition plans to conduct question-and-answer sessions in both
houses of the Diet for three days starting on Oct. 2 following a
policy speech by the new prime minister on Sept. 29.

Minshuto President Ichiro Ozawa is expected to take the Diet floor
to question the new prime minister's views of the state centering on
his Asia policy. This will be the first time for Ozawa since
February 2003, when he was serving as head of the now-defunct
Liberal Party. Ozawa also intends to propose a party-head debate for
Oct. 18, days before the Oct. 22 Lower House by-elections, to lock
horns with Abe.

Extending the Antiterrorism Law a top priority

Extending the term of the Antiterrorism Special Measures Law, which
is to expire on Nov. 1, for one year is a top priority for the
ruling coalition. The Minshuto is expected to question the
appropriateness of the Maritime Self-Defense Force's refueling
activities in the Indian Ocean, which have been underway regardless
of declining demand and high oil prices.

In tandem with the antiterrorism legislation, the ruling camp plans
to begin deliberations on other important bills, including a bill to

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amend the Basic Education Law, Abe's top priority. The Minshuto
thinks an education reform bill requires deliberations lasting a
year or two.

Conspiracy legislation another priority

The ruling camp will also aim for the speedy enactment of a bill
amending the Organized Crime Punishment Law to create a new charge
of conspiracy so as not to allow it to have any adverse effects on
the unified local elections and the Upper House election next year.

Abe also intends to craft a set of new bills to reform the Social
Insurance Agency, which has drawn fire from the general public due
to its lenient punishment of its employees over the pension due
exemption scandal. But the government and the ruling coalition may
not be able to map out bills until next year's regular Diet session
because such work is time consuming.

(2) Whether new administration continues Koizumi reform line depends
on lineup of economic ministers

NIHON KEIZAI (Page 2) (Full)
September 18, 2006

Now that Chief Cabinet Secretary Shinzo Abe is viewed as a shoo-in
in the Liberal Democratic Party presidential election, attention is
being focused on who will be appointed for such key posts as Policy
Research Council chairman and economic ministers. The Koizumi
administration paved the way for economic revival by pursuing
structural reforms over five years and a half. Will the new
administration continue the Koizumi reform line? The new economic
team also could affect the life span of the new administration.

Weight to be added to LDP Policy Research Council chairmanship

"Should Policy Research Council Chairman Hidenao Nakagawa be
appointed to be secretary general, who will assume his current
post?" This question has been raised not only in government and
ruling party circles but also among market players. The government's
Council on Economic Fiscal Policy once had the lead in mapping out
guidelines for economic management, including the budget for next
fiscal year. But Nakagawa took back that leadership from the Koizumi
government and demonstrated his own influence as the party's Policy
Research Council chairman. The possibility is now surfacing that
Nakagawa might be appointed secretary general, but the post of
Policy Research Council chairman is likely to retain its importance
in the new administration.

Both the political administration and the ruling parties are
responsible for managing economic affairs in Japan, so some have
suggested that the one who holds the post of Policy Research Council
chairman should also assume an economic portfolio in the cabinet.
The aim is to avoid a struggle between the Kantei and the LDP over
policymaking. Abe proposed allowing vice ministers in each
government agency take the chairmanships of departments in the LDP
Policy Research Council.

Under such a situation, attention is being paid to who will become
the economic ministers in the new administration, such as finance
minister, state minister in charge of economic and fiscal policy,
and the economy, trade and industry minister.

Heizo Takenaka, minister of internal affairs, has supported Prime

TOKYO 00005357 003 OF 006


Minister Junichiro Koizumi as the control power for economic
management. But there is no such person around Abe. State Minister
in Charge of Economic, Fiscal and Financial Policy Kaoru Yosano, who
was at loggerheads with Takenaka, and LDP's Tax System Research
Commission Hakuo Yanagisawa have been named as candidates for such
economic posts.

Yosano is now in charge of the Council on Economic and Fiscal Policy
in place of Takenaka. He has often clashed head-on with Takenaka,
who has criticized Yosano's stance as tilting toward the Finance
Ministry. Yanagisawa, who heads the election campaign headquarters
for Abe, was also at loggerheads with Takenaka, who insisted on a
hard landing for the disposal of financial institutions'
non-performing loans. As a result, Yanagisawa, who was serving as
financial services minister, left the Koizumi cabinet in 2002.

Some persons attribute Takenaka's sudden resignation as a Diet
member to the emergence of the possibility that Yosano and
Yanagisawa were likely to become economic ministers in the next
administration.

Vice Foreign Minister Yasuhisa Shiozaki, who is close to Abe and
used to be a Bank of Japan official, is another candidate for an
economic portfolio. In the Diet session in 1998, in which the focus
of deliberations was on banking issues, he took part in the process
of drafting bills as one of the new breed of lawmakers specialized
in making financial policy. He is well versed in both banking
regulations and policies. Since he is also an expert on judicial
affairs, he will surely be helpful in effectively managing the
nation's economy, which has become more and more complicated.

Some observers anticipate that Minister of Economy, Trade and
Industry Toshihiro Nikai may stay on. He contributed to underscoring
the revival of METI, which had been dubbed as a declining government
ministry, and also took the lead in drawing up a new strategy to
push up the economy. Many ministry officials expect Nikai to retain
the current post.

LDP Research Commission on Highways Chairman Nobuteru Ishihara,
whose name has been cited as a candidate for the post of chief
cabinet secretary, and former foreign minister Nobutaka Machimura
are also among candidates for economic ministerships. Some observers
think that a person who is named as a candidate for the post of
chief cabinet secretary but fails to fill the post may be appointed
as an economic minister.

Besides, some persons recommend Deputy Policy Research Council
Chairman Toshiaki Amari, who has clearly expressed support for Abe
in the presidential race, for an economic portfolio. Coordination on
the lineup of economic ministers is likely to continue until the
last moment.

(3) Abe eyes having five prime ministerial assistants

MAINICHI (Page 5) (Abridged)
September 16, 2006

The National Congress on 21st Century Japan composed of experts
(chaired by former University of Tokyo President Takeshi Sasaki)
held a forum yesterday at a Tokyo hotel to promote a policy-oriented
LDP presidential race, with Chief Cabinet Secretary Shinzo Abe,
Finance Minister Sadakazu Tanigaki, and Foreign Minister Taro Aso
attending.

TOKYO 00005357 004 OF 006

In the session, Abe proposed having five prime ministerial
assistants, the maximum number allowed under the Cabinet Law, with
each one responsible for a separate area such as foreign and
security affairs, "second chance" programs, and education. He would
increase the number of deputy chief cabinet secretaries for
parliamentary affairs, which is now set at two. Abe also proposed
establishing a Japan-style National Security Council.

With strong local opposition in mind, Abe indicated that submitting
a decentralization promotion bill to the extraordinary Diet session,
scheduled to open on Sept. 26, would be difficult. Abe also
expressed eagerness to revise the Public Offices Election Law to
meet the needs of the times by allowing candidates running in local
elections to distribute policy manifestos and use the Internet as
part of their campaigning.

He also revealed a plan to let senior vice ministers double as heads
of party policy research council departments to realize decision
making at the initiative of politicians.

(4) Japan will come up with own proposal for developing countries'
CO2 reductions at upcoming UNCCC-Nairobi

MAINICHI (Page 3) (Full)
September 19, 2006

Takeshi Yamamoto

The second meeting of the Conference of the Parties (COP) to the
Kyoto Protocol (COP/MOP2) are due to take place in Kenya in
November. The meeting is likely to focus on future targets for
emission reductions in 2013 and later, an item not covered by the
Kyoto Protocol. Ahead of this meeting, the Japanese government
decided to propose that the upper limits of carbon dioxide emissions
be changed in proportion to the population of a country and the
gross domestic product (GDP). By setting a rule that is easy for
developing countries to accept, such as China, a country with a
growing economy, Japan aims to get as many countries as possible to
take part in the framework for greenhouse gas emissions control.

The proposal is likely to make a pitch for several countries that
are already willing to participate in the framework in 2013 or later
to become more positive about it. But negotiations are likely to run
into difficulties, given that the United States and many of the
developing countries are highly wary of the proposal, arguing, "It
will disturb economic growth."

There is a prediction that 62 percent of carbon dioxide emitted by
countries on the globe by 2050 will be countries other than
industrialized ones (or nonmembers of the Organization for Economic
Cooperation and Development (OECD). But most of the countries
obligated to reduce emissions at present are industrialized
countries.

Given this situation, the Japanese government pointed out in a
written statement submitted late last month to the secretariat of
the COP/MOP2: "It is necessary for developing countries to address
emission reductions." In the statement, Japan also asserted that in
addition to the current framework that sets the country-by-country
upper limit of the total carbon dioxide emissions, such steps as
controlling the efficiency of energy use as well as restricting the
per capita emission of carbon dioxide or emissions based on GDP

TOKYO 00005357 005 OF 006


should be taken in order to reduce emissions.

A senior official at the Environment Ministry said: "If those
measures were taken, even though the total emissions of carbon
dioxide may increase, making efforts to reduce emissions by
improving the energy efficiency would become possible. Countries
whose population or GDP tends to rise would find it easy to join the
protocol."

The statement also calls for extending the first commitment period
(2008-2012) requiring each member country to reduce their emissions
of carbon dioxide from the current five years to a longer period so
that measures should be implemented from a longer point of view. The
statement also pointed out the need for punishments if the
obligation for emission cuts was not observed.

(5) Underground storage of CO2: Master card for greenhouse gas
emission reduction

MAINICHI (Page 3) (Excerpts)
September 19, 2006

Two trillion tons of CO2 can be stored across the world; Hopes
pinned on arresting global warming

The Environment Ministry has begun looking into the possibility of
introducing a carbon dioxide capture and storage (CCS) system,
meaning containing carbon dioxide (CO2), a greenhouse gas,
underground, including the sub-seafloor structure. Hopes are being
pinned on this system as the master card for extensively reducing
CO2.

This technology is drawing attention, because locations used for
this purpose are abundant in the world. According to a special
report of the United Nations Intergovernmental Panel on Climate
Change (IPCC), submitted to the first meeting of the Parties to the
Kyoto Protocol late last year, it is possible to store at least 2
trillion tons of CO2 in the world under this system. This is the
amount of emissions equivalent 70 to 80 years worth of emissions in
terms of the current emission level (approximately 24 billion tons a
year). Some NGO-related sources even said, "It will not be possible
to prevent global warming without applying this method."

The Ministry of Economy, Trade and Industry (METI) projected that
Japan has the capability of storing 5.2 to 150 billion tons of CO2.
CO2 emissions in Japan in fiscal 2004 were about 1.355 billion
tons.

The Kyoto Protocol designed to prevent global warming mandates
parties to the pact to cut CO2 emissions, but it does not give much
consideration to how to store it. With calls for acknowledging the
CCS as a portion of CO2 emissions reduced by the international
community gaining grounds, authorizing the CCS is beginning to
become a trend.

Impact on environment unclear; concern about leakage

The concern about the CCS system is whether there is the possibility
of contained CO2 leaking.

The IPCC report does not assure that there is no possibility of
leakage, noting that the probability of the CO2 stored and
controlled underground at properly selected locations not leaking in

TOKYO 00005357 006 OF 006


100 years' time is 90-99 percent. Even if a leakage probability were
1 percent, if 2 trillion tons of CO2 are stored, leakage from there
would reach 20 billion tons. Atsushi Ishii, an associate professor
of science, technology and sociology, noted, "Nobody knows how much
contained CO2 will leak."

Environment Minister Yuriko Koike inquired the Central Environment
Council of the propriety of dumping CO2 in the sub-seafloor
structure. Ishii pointed out the difficulty of assessing such a
risk: "We do not know the eco-system of the deep sea-floor itself.
There is concern that if CO2 contained there should leak, acidified
seawater containing melted CO2, acid substance, or an increased
level of CO2 in seawater might have a grave impact on the
environment."

There is also concern about possible earthquakes in Japan. The
authentication test being carried out in Niigata Prefecture showed
no problem about leakage even after the Chuetsu Earthquake in
October 2004. However, the full-fledged introduction of the system
will require caution.

Enormous costs: Energy conservation is royal road to reduce CO2.

Another issue is the cost. Realizing the CCS requires the costs of
constructing related facilities and transporting the material. METI
has estimated that such a cost would be 5,000 to more than 10,000
yen per ton, if those costs are taken into account. It could be
nearly seven times higher than the cost needed by foreign countries.
METI said that in order to disseminate the CCS system, it is
necessary to lower the cost to around 3,000 yen per ton.

There is also concern that if a large amount of funds is injected in
the CCS, funds to cover energy-conserving measures might be
slashed.

The advantage of the CCS is that in oil fields, where oil and
natural gas reserves are decreasing, more oil could be obtained, by
injecting CO2. The development of this technology is now under way.

The US is one of the countries that are most enthusiastic about
developing this technology. It has vast stretches of strata that can
store CO2, such as oil fields, gas fields and coal seams. It also
has networks of pipelines to transport CO2, allowing the realization
of the CCS system at low costs. Some sources involved in the process
of mapping out measures to arrest global warming said: "If the Kyoto
Protocol acknowledges the portion of CO2 stored underground as
amounts reduced and grants the carbon emissions trading right to the
countries that have contained CO2 in such a way so that they can buy
and gain or trade emission rights to offset reduction costs, the US
might join the pact."

SCHIEFFER

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