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Cablegate: Japanese Morning Press Highlights 06/25/07-2

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PP RUEHFK RUEHKSO RUEHNAG RUEHNH
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ZNR UUUUU ZZH
P 250133Z JUN 07
FM AMEMBASSY TOKYO
TO RUEHC/SECSTATE WASHDC PRIORITY 4824
INFO RUEKJCS/SECDEF WASHDC PRIORITY
RHEHAAA/THE WHITE HOUSE WASHINGTON DC PRIORITY
RUEAWJA/USDOJ WASHDC PRIORITY
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RHHMUNA/HQ USPACOM HONOLULU HI
RHHMHBA/COMPACFLT PEARL HARBOR HI
RHMFIUU/HQ PACAF HICKAM AFB HI//CC/PA//
RUALSFJ/COMUSJAPAN YOKOTA AB JA//J5/JO21//
RUYNAAC/COMNAVFORJAPAN YOKOSUKA JA
RUAYJAA/CTF 72
RUEHNH/AMCONSUL NAHA 4134
RUEHFK/AMCONSUL FUKUOKA 1719
RUEHOK/AMCONSUL OSAKA KOBE 5292
RUEHNAG/AMCONSUL NAGOYA 0845
RUEHKSO/AMCONSUL SAPPORO 2539
RUEHBJ/AMEMBASSY BEIJING 7582
RUEHUL/AMEMBASSY SEOUL 3635
RUCNDT/USMISSION USUN NEW YORK 4743

UNCLAS SECTION 01 OF 08 TOKYO 002848

SIPDIS

SIPDIS

DEPT FOR E, P, EB, EAP/J, EAP/P, EAP/PD, PA;
WHITE HOUSE/NSC/NEC; JUSTICE FOR STU CHEMTOB IN ANTI-TRUST DIVISION;
TREASURY/OASIA/IMI/JAPAN; DEPT PASS USTR/PUBLIC AFFAIRS OFFICE;
SECDEF FOR JCS-J-5/JAPAN,
DASD/ISA/EAPR/JAPAN; DEPT PASS ELECTRONICALLY TO USDA
FAS/ITP FOR SCHROETER; PACOM HONOLULU FOR PUBLIC DIPLOMACY ADVISOR;
CINCPAC FLT/PA/ COMNAVFORJAPAN/PA.

E.O. 12958: N/A
TAGS: OIIP KMDR KPAO PGOV PINR ECON ELAB JA

SUBJECT: JAPANESE MORNING PRESS HIGHLIGHTS 06/25/07-2


Opinion polls:
15) Kyodo trend poll on Upper House election finds Minshuto now
ahead of LDP; Cabinet non-support rate up 9 points to 57.7 %
16) Yomiuri net-monitor poll: Minshuto with 31 % outpacing LDP,
with 26 % , as party of choice for winning Upper House race

Political agenda:
17) Prime Minister Abe on TV says the buck stops with him on
accepting responsibility for the pension issue
18) Abe sees constitutional amendment in three years time
19) LDP Secretary General Hidenao Nakagawa does not expect Abe to
step down if LDP defeated in Upper House election
20) Lawmaker Kamei in TV discussion predicts a major political
realignment after the Upper House election

21) LDP panel plans assistance program to Asia that would help
countries establish economic legislation

22) As WTO agricultural negotiations stumble, Japan's lawmakers
representing farmers breathe sigh of relief

23) Survey of 100 top companies finds over half see economy
expanding next year

OPINION

15) Poll: DPJ tops all parties; Cabinet support rate lowest at 33 %


TOKYO (Page 1) (Abridged)
June 25, 2007

The rate of public support for Prime Minister Shinzo Abe and his
cabinet was 33.5 % in a telephone-based nationwide public opinion
survey conducted by Kyodo News Service on June 23-24 to probe public
trends toward next month's election for the House of Councillors.
The Abe cabinet's support rate showed a further drop of 2.3
percentage points from a telephone-based spot nationwide public
opinion survey conducted June 1-2, renewing its all-time low since
the Abe cabinet came into office in September last year. Its
nonsupport rate rose 9.0 points to 57.7 % , breaking 50 % for the
first time. The results were extremely severe for Abe.

In the survey, respondents were also asked to pick up to two issues
they view as important. In response to this question, "pensions"
accounted for 63.4 % , sticking out of all other answers, such as
"education" at 23.4 % . As is evident from these figures, the
general public is strongly dissatisfied with the government's
pension record-keeping flaws. "Constitution revision" and "social
divide" were both at 18.0 % , with "money and politics" at 16.9 %
.

Respondents were further asked which political party or which
political party's candidate they would vote for in the forthcoming
House of Councillors election. In response, the leading opposition
Democratic Party of Japan (Minshuto) marked 22.0 % for electoral
districts. The figure was higher than those for all other political
parties. The DPJ also topped all other political parties in
proportional representation blocs as well, scoring 22.1 % . The
ruling Liberal Democratic Party was at 21.4 % for electoral
districts and 19.8 % for proportional representation.


TOKYO 00002848 002 OF 008


Among other political parties for proportional representation, New
Komeito stood at 4.9 % , with the Japanese Communist Party 3.1 % ,
the Social Democratic Party (Shaminto) at 1.2 % , and the People's
New Party (Kokumin Shinto) at 0.6 % . "Undecided" voters accounted
for 42.0 % .

The biggest focus of the upcoming election is on whether the ruling
coalition will maintain its current majority of the seats in the
House of Councillors, including those not up for reelection. In the
survey, respondents were asked if they would like the ruling
coalition to maintain its majority. To this question, 48.3 %
answered they would like the LDP-led coalition to lose its majority,
with 36.5 % saying they would like it to sustain its majority.

16) Poll: Minshuto most popular at 31 % , LDP 26 %

YOMIURI (Page 2) (Abridged)
June 23, 2007

The Yomiuri Shimbun conducted an Internet-based nationwide opinion
poll covering 1,000 individuals ahead of the July House of
Councillors election.

The results compiled yesterday found that the major opposition
Minshuto (Democratic Party of Japan) was most popular among
respondents with 31 % , surpassing the Liberal Democratic Party's
26 % . In comparison to a survey conducted in 2005 before then
Prime Minister Junichiro Koizumi dissolved the House of
Representatives for a snap election over postal reform, the LDP's
figure dropped 24 points, while Minshuto's increased 11 points. In
the latest survey, 4 % of respondents picked the New Komeito as
their favorite party, 1 % each for the People's New Party and the
New Party Nippon, and 32 % said they do have any favorite parties.
The survey clearly showed a headwind against the LDP over the
pension fiasco and other matters.

Asked who gives a better impression -- Prime Minister Shinzo Abe or
Minshuto President Ichiro Ozawa -- Abe found favor with 35 %
against Ozawa's 23 % .

A total of 50 % of respondents gave positive assessments to the
government and ruling bloc's response to the pension-record
mismanagement issue, while 40 % gave negative assessments.

Those who gave positive assessments to the government and the ruling
bloc's response were asked what party they would vote for in the
proportional representation segment in the upcoming election. The
results showed that 38 % would vote for the LDP, 27 % for
Minshuto, and 24 % said undecided. In response to the same
question to those who gave negative assessments, 43 % picked
Minshuto, 32 % said undecided, and 12 % for the LDP.

17) Prime Minister Abe: I also have responsibility for pension
fiasco

ASAHI (Page 2) (Full)
June 25, 2007

Appearing on an NHK talk show yesterday, Prime Minister Shinzo Abe
stated: "I bear greatest political responsibility" for the pension
premium payment records fiasco. He showed a positive stance toward
the idea of introducing a social-security numbering system that

TOKYO 00002848 003 OF 008


would cover personal information on pension and medical insurances,
saying "I think a one numbering system would be convenient. Such a
system would prevent this kind of "pension problem" from occurring.
I would like to promote debate."

Abe also stated that he needed to make effort to explain the pension
issue, saying, "It is necessary to reach a national consensus on
protection of personal information, which is a very important
issue."

18) Prime minister cites "constitutional revision three years later"
as campaign issue for Upper House election

TOKYO SHIMBUN (Page 1) (Full)
June 25, 2007

Appearing on an NHK news show yesterday, Prime Minister Shinzo Abe,
asked about points of contention for the upcoming House of
Councillors election, said: "It is necessary to declare to the
public that the government will aim at revising the Constitution
three years later. That is the government's honest stance."

Since assuming office, the prime minister has expressed his
determination to revise the Constitution during his term in office.
With the passage of the National Referendum Law in the current Diet
session, it will become possible to propose constitutional revision
starting three years from now. Keeping this in mind, he made a
specific remark about this issue.

While reiterating the need for cooperation with the Democratic Party
of Japan (Minshuto) and other opposition parties in revising the
Constitution, the prime minister expressed his desire to conduct
discussions, focusing on the draft constitution the LDP drew up in
2005. He said, "The LDP draft is a well-executed work, matching the
new values and global circumstances."

On the sloppy pension record-keeping issue, the prime minister
clearly said: "The major political responsibility rests with me."

19) LDP secretary general: Prime Minister Abe's resignation unlikely
even if LDP falls short of a majority in Upper House

ASAHI (Page 2) (Full)
June 25, 2007

Appearing on a TV Asahi program yesterday, ruling Liberal Democratic
Party (LDP) Secretary General Hidenao Nakagawa took a view that
there will be need for Prime Minister Shinzo Abe to step down from
his post even if the ruling coalition falls short of a majority in
the July 29 House of Councillors election. He stated: "Since the
upcoming Upper House election is an internal appraisal of the
government by voters, Prime Minister Abe's resignation will be
unlikely." He, however, indicated that he might step down from his
post if the ruling camp falls short of a majority, saying, "I will
risk my political life to win the Upper House race."

In the meantime, asked about his responsibility if the ruling camp
fails to win majority seats in the Upper House race in July on an
NHK program yesterday, Abe responded:

"If I speak on the assumption that the ruling coalition might fall
short of a majority, such an assumption may lead to a situation we

TOKYO 00002848 004 OF 008


will not win the race. We will win in all elections at any cost."

Asked about the fact that some in the ruling camp say that the prime
minister's responsibility has grown since he decided to extend by 12
days the current Diet session, delaying the Upper House election for
a week, Abe responded: "There is no change in my responsibility
regardless of whether the Diet session is extended or not. Even if
the session is not extended, my responsibility will never lesson."

Appearing on the NHK program along with Abe, Minshuto (Democratic
Party of Japan) President Ichiro Ozawa, refrained from responding to
a question that how he would take responsibility if his party fails
short of a majority in the Upper House, only saying, "I will make a
clear answer sometime before the election." He, however, stated: If
the ruling coalition fails to win majority Upper House seats, "Some
in the LDP will talk about what to do and such an argument will be
raised in our party, as well." He indicated in his remarks that
effort to collect as many supporters as possible will be activated
with an eye on future political realignment.

20) Kamei predicts grand coalition after election on Fuji TV's
program Hodo 2001, June 24

SANKEI (Page 5) (Abridged)
June 25, 2007

Policy chiefs of ruling and opposition parties exchanged views on
the Diet extension and campaign issues for the upcoming House of
Councillors election.

Diet extension

What was the reason to extend the Diet session by 12 days?

LDP policy chief Shoichi Nakagawa: "There still remain bills that
must be deliberated on for the people and the state."

New Komeito policy chief Tetsuo Saito: "Passing essential bills is
the ruling bloc's responsibility."

Minshuto (Democratic Party of Japan) policy chief Takeaki Matsumoto:
"The ruling bloc railroaded 14 bills in the current Diet session,
exposing its highhanded approach."

Japanese Communist Party policy chief Akira Koike: "The ruling bloc
has intentionally extended the Diet session in a bid to defuse the
public outcry over the pension fiasco."

Abolition of fixed-rate tax cut

-- Is Minshuto going to make a greater public burden a campaign
issue?

Matsumoto: "Both the abolition of the fixed-rate tax cut and the
transfer of tax revenue sources from the central to local
governments are important. The government is hiding a heavier
national burden from the public by just telling them about the
transfer of tax revenue sources."

Social Democratic Party policy chief Tomoko Abe: "Although the
nation's economy is said to have recovered, pensioners and salaried
workers would suffer more with the elimination of the fixed-rate tax

TOKYO 00002848 005 OF 008


cut."

Upper House election victory-or-defeat line

-- Some are mentioning the responsibility of Prime Minister Shinzo
Abe.

Nakagawa: "There is no need to discuss that."

Saito: "Although the New Komeito is said to win 13 seats for
certain, that would be extremely difficult. For now, the ruling
parties should make every effort rather than to discuss who should
take responsibility.

-- Minshuto has increased its target.

Matsumoto: "Is the public going to give a majority to the ruling
bloc or the opposition bloc? We take the upcoming election as an
occasion for the public to make that decision."

People's New Party Deputy Representative Shizuka Kamei: "Through the
election, the Liberal Democratic Party and the New Komeito will be
forced into a minority, and a policy-based grand coalition will
occur as a result. The PNP will take the leadership in the
process."

21) LDP proposes assisting establishment of economic legal systems
in Asia

NIHON KEIZAI (Page 1) (Excerpt)
June 24, 2007

The Liberal Democratic Party (LDP) yesterday finalized a package of
measures to help upgrade legal systems in the Asian region. The LDP
will set up in the Prime Minister's Official Residence within this
fiscal year a strategic council that will be placed under the prime
minister but also joined by private-sector experts. The panel will
work out cross-sectional assistance measures. It will also study the
possibility of recommending the establishment of Asian law schools
to study Asian unified legal systems in existing law graduate
schools. In addition to the purpose of making Asian countries aware
of the need for legal preparation, the LDP also aims to help
Japanese firms make inroads into Asia and assist their activities
there afterward by spreading Japanese legal systems across the
region.

A subcommittee on future options for laws and legal work to cope
with internationalization under the LDP Research Council on Legal
Systems will compile a strategic vision on support for legal system
arrangement by the end of this month. The government intends to
incorporate necessary expenditures in the fiscal 2008 budget bill.

22) Agreement at WTO talks this year difficult: Bilateral talks will
likely gather momentum; Agriculture policy clique members feeling
relieved

TOKYO SHIMBUN (Page 9) (Full)
June 23, 2005

The Group of 4 -- the US, the EU, Brazil and India -- meeting held
in Germany under the Doha Round (new multilateral trade talks) at
the WTO ended in rupture. A Group of 6 meeting, including Japan and

TOKYO 00002848 006 OF 008


Australia, planned for June 23, was also canceled. It now appears
difficult for the talks to reach an agreement due to the breakdown.
Concerned countries are expected to shift their focus to bilateral
talks. In the meantime, members of the agricultural policy clique in
the Diet appeared relieved now that difficult issues in the
agricultural area, the focus of attention, have been shelved for the
time being.

Sharp standoff

Commenting on the outlook for the WTO talks, Minister of Economy,
Trade and Industry Akira Amari during a press conference on June 22
noted, "I must admit that the situation is extremely severe." He
made this remark because although it is in principle necessary to
reach an agreement by the end of July in order for the WTO talks to
reach an agreement before the end of the year, it is difficult to
consolidate various opinions.

The reason for the breakdown of the G-4 meeting is that Brazil and
India did not make concessions on cuts in tariffs on mined and
manufactured products and that the US did not on a cut in
agricultural subsidies. The objective of the G-4 meeting was to
coordinate the interests of leading countries as a preliminary step
for wrapping up the stalemated multilateral talks. However, the
talks have highlighted differences in the stances of emerging
economies and industrialized countries.

Amari has indicated his desire to play a role in the WTO talks at a
trade ministers meeting of the Asia-Pacific Economic Cooperation
Conference to be held in Australia in early July: "Only contenders
are in the arena. There is no umpire." However, it is not an easy
job to coordinate views of various countries within a limited time.

If that is the case, Japan will have to promote bilateral talks,
such as economic partnership agreement (EPA) talks centered on the
East Asia region and free trade agreement (FTA) talks, while
pursuing the WTO talks. If it does so, it would be urged to revise
its trade strategy, because it has yet to shift its policy to that
direction from the present approach shown in the economic guidelines
for fiscal 2007 released on June 19 by the government,
characterizing talks with the US and the EU as future agenda items.

Sticking point averted

An atmosphere of relief, instead of a shock from the breakdown of
the G-4 talks, permeated among agricultural sources regarding two
respects. One is that Japan has avoided being unilaterally forced to
follow the agreement reached at the G-4, in which it did not take
part. One senior official of the Ministry of Agriculture, Forestry
and Fisheries (MAFF) said, "It was good that conditions
disadvantageous to Japan were not adopted."

The other point is that the WTO talks have lost weight as a campaign
issue for the Upper House election at the end of July. One senior
member of the LDP Agriculture and Forestry Division predicted that
the talks would be protracted, saying, "The crisis has been staved
off for the time being. It will take two more years for the talks to
reach an agreement."

The Democratic Party of Japan (DPJ or Minshuto) printed flyers for
the upcoming Upper House election criticizing the agricultural
policy of the government and the ruling camp. They are strengthening

TOKYO 00002848 007 OF 008


their campaign in single-seat constituencies, where farmers tend to
determine the fate of the election, as many such constituencies
consist of farm villages. The ruling camp had been concerned that if
conditions disadvantageous to Japan, such as cuts in tariffs on
agricultural products, are adopted, it might lose
agriculture-related votes.

The G-4 talks have for the time being put off reaching an agreement.
However, the basic policy of calling on industrialized countries to
cut tariffs on agricultural products will remain at multilateral
talks, which will become a key venue for future WTO talks.
Agricultural organizations intend to closely monitor the future
situation with one official noting, "The situation is far from
optimistic."

23) In poll, 55 of 100 firms expect continued economic growth next
year

ASAHI (Page 1) (Excerpts)
June 24, 2007

A survey of 100 Japanese firms by the Asahi Shimbun showed that
executives at Japanese firms are optimistic about the future of the
Japanese economy, with 55 predicting that the longest economic
expansion of the postwar era will continue into next year. Although
those who said that the current economic situation was "standing
still" slightly increased, many anticipate that the economy will
grow at a moderate pace in the near future.

The survey is conducted twice a year. The latest one was carried out
June 1-15 targeting 50 manufacturing and 50 nonmanufacturing firms
by interviewing their chief executive officers.

Asked about the present state of the economy, 84 companies said that
the economy is "expanding" or "moderately recovering." This figure
is 4 points less than in the previous survey. Meanwhile, 16 firms,
up 4, said that the economy has stalled. Mitsubishi Heavy Industries
President Kazuo Tsukuda made this analysis: "In some industries,
capital investment, which has played a role in driving the economy,
is now at a standstill. Exports to the United States in some sectors
are also slowing down."

A number of executives were upbeat about the economy. In the
previous survey conducted last November, only 18 firms said that the
economy will continue to expand in 2008 and beyond, but this number
tripled about six months later, probably encouraged by the
restructuring of excessive investment, debts, and employment.

Regarding the speed of economic expansion, however, Taiheiyo Cement
Corp. President Samejima commented: "The economy is growing not
conspicuously but steadily. So the economy will not suddenly lose
momentum." Tokio Marine & Nichido Fire Insurance Co. Managing
Director Takaaki Tamai also said, "Although it is a low peak, there
is no valley." Only two executives predicted that the economy would
grow at more than 2.5 % , and most respondents estimated the growth
rate at 1.5 % to just over 2 % .

Asked about a cause for concern, 75 firms cited the future of the US
economy. This figure is 5 points less than in the previous survey,
but the survey showed that many executives still harbor a sense of
alarm about the US economy.


TOKYO 00002848 008 OF 008


The number of companies that listed a further rise in oil and raw
material prices significantly increased to 20. A decreasing number
of firms cited stagnant personal consumption.

SCHIEFFER

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