Cablegate: Daily Summary of Japanese Press 08/06/07

DE RUEHKO #3598/01 2180852
P 060852Z AUG 07





E.O. 12958: N/A


(1) Poll on Abe cabinet, political parties

(2) Blue-ribbon panel's report on right to collective self-defense
to be put on back burner in wake of LDP's crushing defeat in Upper
House election; Cautious view exists against legislation for
allowing the use of the right to collective self-defense

(3) Government concerned about effect of LDP's defeat in election on
Abe diplomacy; China, North Korea already taking tough stance

(4) Reversed positions of ruling and opposition parties as a result
of Upper House election: LDP's stinging defeat may be the "beginning
of the end"?

(5) Primary balance: Impossible to move it into the black by FY2011,
according to Cabinet Office estimate, as increase in tax revenues
cannot be hoped for

(6) Foreign Ministry to set up ODA regular consultative council,
aiming to improve efficiency of aid

(7) Government bullish to compile austere budget: Discussions on
general-account budget requests to start today; Aftereffect of Upper
House election felt by ruling parties; Calls for revision of reform

(1) Poll on Abe cabinet, political parties

MAINICHI (Page 3) (Full)
August 6, 2007

Questions & Answers
(T = total; P = previous; M = male; F = female)

Q: Do you support the Abe cabinet?

Yes 22 (31) 20 24
No 65 (53) 68 62
Not interested 12 (14) 12 13

Q: (Only for those who answered "yes" to the above question) Why?

Because the prime minister is from the Liberal Democratic Party
21 (25) 25 18
Because something can be expected of the prime minister's leadership

13 (12) 8 17
Because there's a young, fresh image about the prime minister
32 (33) 34 31
Because something can be expected of the prime minister's policy
30 (25) 30 30

Q: (Only for those who answered "no" to the above question) Why?

Because the prime minister is from the Liberal Democratic Party
7 (7) 8 6

TOKYO 00003598 002 OF 009

Because nothing can be expected of the prime minister's leadership
57 (46) 56 59
Because the prime minister is inexperienced, weak
16 (18) 14 17
Because I'm opposed to the prime minister's policies
18 (27) 19 17

Q: Which political party do you support?

Liberal Democratic Party (LDP) 17 (22) 18 16
Democratic Party of Japan (DPJ or Minshuto)
33 (24) 35 31
New Komeito (NK) 6 (6) 4 7
Japanese Communist Party (JCP) 4 (4) 4 3
Social Democratic Party (SDP or Shaminto)
2 (3) 1 2
People's New Party (PNP or Kokumin Shinto)
1 (1) 1 0
New Party Nippon (NPN or Shinto Nippon)
1 (1) 1 1
Other political parties
1 (3) 1 2
None 35 (34) 33 37

Q: What do you think about the outcome of the recent election for
the House of Councillors?

Very satisfied 12 15 10
Satisfied 56 59 54
Dissatisfied 22 19 25
Very dissatisfied 5 5 6

Q: The LDP was swamped in the House of Councillors election with
only 37 seats. What do you think is the reason for the LDP's
crushing defeat?

Pension problem 26 22 29
Social divide 10 13 6
Politics and money 29 27 31
Prime Minister Abe's competence
15 18 12
Cabinet ministers' gaffes 20 19 20

Q: The DPJ won an overwhelming victory in the House of Councillors
election, garnering 60 seats. What do you think is the reason for
the DPJ's victory?

The public wanted to see the DPJ take office
10 10 10
The DPJ was good at campaigning
9 8 9
The DPJ gathered votes critical of the LDP
79 80 78

Q: After the House of Councillors election, Prime Minister Abe
clarified that he will stay on. Do you think he should resign, or do
you otherwise think there is no need for him to resign?

TOKYO 00003598 003 OF 009

Resign 56 62 52
No need to resign 41 37 44

Q: Having seen the outcome of the House of Councillors election,
there is an opinion saying Prime Minister Abe should dissolve the
House of Representatives for a general election at an early date.
What do you think about this opinion?

Dissolve the lower house 58 62 56
No need to do so 39 37 41

Q: Prime Minister Abe has now replaced Agriculture Minister Norihiko
Akagi over his alleged murky political funds. What do you think
about Prime Minister Abe's decision?

Support 8 8 8
It was too late to do so 87 88 86
There's no need to do so 3 3 3

(Note) Figures shown in percentage, rounded off. "0" indicates that
the figure was below 0.5 percent. "No answer" omitted. Figures in
parentheses denote the results of the last survey conducted July

Polling methodology: The survey was conducted Aug. 4-5 over the
telephone with the aim of calling a total of 1,000 voters across the
nation on a computer-aided random digit sampling (RDS) basis.
Answers were obtained from 1,165 persons.

(2) Blue-ribbon panel's report on right to collective self-defense
to be put on back burner in wake of LDP's crushing defeat in Upper
House election; Cautious view exists against legislation for
allowing the use of the right to collective self-defense

MAINICHI (Top play) (Full)

Yoso Furumoto

The "Council to Reconstruct the Legal Base for National Security"
(chaired by former Ambassador to the United States Shunji Yanai), an
advisory panel to Prime Minister Shinzo Abe, is to resume on Aug. 10
discussions, which have been suspended owing to the Upper House
election. The council is expected to propose reviewing the current
interpretation of Article 9 of the Constitution so as to allow Japan
to exercise the right to collective self-defense in a report to be
out this fall. But with the crushing defeat in the recent Upper
House election, the Abe administration is rapidly losing its
cohesiveness and has come under pressure to delay legislative action
on the right to collective self-defense by shelving the report. Abe
is being forced to switch away from his policy line of "getting rid
of the postwar regime."

A senior lawmaker from the New Komeito said: "The council's report
will be put on hold. For us to allow the exercise of the right to
collective defense would be the same as asking the Abe
administration to commit suicide." The party from the beginning has
been strongly opposed to allowing the use of the right to collective

TOKYO 00003598 004 OF 009

The council has had three rounds of discussions between May 18 and
the Upper House election. Abe has asked the council to study four
specific cases regarding national security. Of the four, the council
has almost finished discussions on two cases aimed at strengthening
the Japan-US alliance: escort US vessels cruising on high seas; and
intercept ballistic missiles targeting the US. The council has
agreed that it is necessary to allow Japan to exercise the right to
collective self-defense. In resumed discussions, the council will
discuss the remaining two specific cases regarding the expansion of
the Self-Defense Forces' (SDF) participation in international
peacekeeping operations: whether to rush to the spot of emergency
and escort other countries' vessels; and whether to allow the SDF to
provide logistic support in battle zones. The council is likely to
endorse also these two cases, with one council member asserting:
"The contents of the report will not change regardless of the
outcome of the Upper House election because discussions are
continuing in line with a foregone conclusion."

A senior Cabinet Secretariat official said that in order for Japan
to use the right of collective self-defense, "the prime minister's
declaration for the use of that right is not sufficient; legal steps
such as amending the SDF Law are required." The SDF Law does not
provide for any activities for the SDF to engage in for the sake of
Japan's ally. So, it is necessary to revise that law so as to add
such items as "mobilization for collective self-defense." One idea
under study is to establish a collective self-defense law that would
require Diet approval in order to thoroughly implement civilian

The New Komeito, however, has stiffened its attitude. A senior
member argued: "Any hawkish bills are out of the question. Should
such bills emerge, we would put them into the shredder." Given this,
it is hopeless to submit relevant bills to the Diet for the time

Even in the LDP, it has become tough-going for the prime minister to
unify views, given that even former Defense Agency Director-General
Shigeru Ishiba, who had until recently led debates favoring the
exercise of the right to collective self-defense, has began openly
calling on the prime minister to step down.

(3) Government concerned about effect of LDP's defeat in election on
Abe diplomacy; China, North Korea already taking tough stance

NIHON KEIZAI (Page 2) (Full)
August 5, 2007/08/06

The Japanese government has been worried about what impact the
Liberal Democratic Party's crushing defeat in the July House of
Councillors election will have on Prime Minister Abe's diplomacy. In
a cabinet ministerial meeting of the Association of Southeast Asian
Nations (ASEAN) Regional Forum (ARF) held in Manila just after the
Upper House election, North Korea sharply criticized Japan. China
has not eased its tough stance over the issue of gas-field
development in the East China Sea. The Foreign Ministry is
increasingly concerned that if the Abe administration's footing
becomes weaker, Japan might lose its negotiating power and
capability to send messages.

In the ARF ministerial on Aug. 2, North Korean Foreign Minister Pak
Ui Chun asserted: "If Japan brings forward Pyongyang's abductions of

TOKYO 00003598 005 OF 009

Japanese nationals, North Korea will request that the wartime
comfort women issue be brought up." In reaction, Foreign Minister
Aso emphasized: "Abductions are an important issue not only for
Japan but also for the international community." He asked the chair
country to incorporate the abduction issue in the chairman's
statement, but the statement used this common expression: "We
stressed the importance of humanitarian issues."

Initially, there was a strong possibility that the chairman's
statement would specify the abduction issue. But in an unofficial
meeting held prior to the ministerial, as well, no other countries
but Japan had referred to the abduction issue.

An accompanying source grumbled after the meeting: "Other countries
might have taken mean advantage of the ruling coalition's failure in
maintaining its majority in the Upper House election."

In a Japan-China foreign ministerial meeting held in Manila on the
previous day, Aso "traded verbal jabs," according to the
accompanying source, with his Chinese counterpart Yang Jiechi over
the issue of oil field development in the East China Sea.

The governments of Japan and China, when Premier Wen Jiabao came to
Japan in April, agreed to work out by this fall a specific
joint-development plan for oil fields in the East China Sea. The
Japanese side insisted that China should present a specific plan to
move negotiations forward, but China has made no response. When Aso
applied pressure by indicating the possibility of developing the gas
fields independently, Yang only replied: "It is important to create
a favorable environment for the negotiations."

Relations between Japan and China have improved since the Abe
administration was inaugurated. Given this, the Chinese government
has mapped out a policy toward Japan on the assumption that the Abe
administration will stay in power for a long period of time. Some
Foreign Ministry officials take the view that China's tough stance
might reflect its speculation that since the current Japanese
government is losing political ground, it might not be able to
sustain a tough approach.

The government relies strongly on the United States, but the issue
of Japan being able to extend the Antiterrorism Special Measures Law
has come up. Prime Minister Abe will soon attend the summit of the
Asia-Pacific Economic Cooperation (APEC) forum and visit China. But
the unstable political situation may have a negative effect on
Japan's bargaining capability in summit diplomacy, as well.

(4) Reversed positions of ruling and opposition parties as a result
of Upper House election: LDP's stinging defeat may be the "beginning
of the end"?

TOKYO SHIMBUN (Page 1) (Abridged)
August 2, 2007

Takaharu Watanabe

"We saw a number of able politicians defeated in the election. As
the top leader of the party, I am really sorry for that," Prime
Minister Shinzo Abe (concurrently president of the governing Liberal
Democratic Party (LDP)) told an LDP board meeting on Aug. 1 and
apologized for the ruling bloc's big setback in the recent Upper

TOKYO 00003598 006 OF 009

House election.

Many in the LDP are arguing that the prime minister and his aides
are responsible for this crushing defeat. They insist that because
the government was too late to deal with a series of
money-and-politics scandals involving cabinet members and the
pension problem, the voters "punished" the prime minister.

The LDP won only 37 seats from both the proportional representation
segment and electoral districts, and particularly in single-seat
constituencies, where the party had a showdown with the major
opposition Democratic Party of Japan (DPJ or Minshuto), the LDP was
overwhelmingly beaten by the DPJ, 23 seats to 6. Is the LDP's defeat
simply attributable to distrust of Abe? Fundamental reasons seem to
underlie the LDP's defeat.

The LDP was founded in 1955, and it has been in power since then
except for the period of 1993 to 1994. But it is undeniable that the
LDP lacks dynamism as an organization partly because of the
increased number of second-generation Diet members.

Under the so-called 1955 political setup, the Japan Socialist Party
(JSP, predecessor of the current Social Democratic Party) played a
part, but it fragmented, and analysts said the JSP completed its
historical mission. That was a long time ago. But the LDP even now
remains in power. One veteran LDP lawmaker explained: "The LDP has
survived because Junichiro Koizumi took office as president."

In the days of his serving as prime minister, Koizumi discarded the
previous supporting organizations for the LDP, such as special post
offices and the construction industry, through structural reform,
and widened support for him among unaffiliated voters in cities and
was able to stay in power for more than five years.

But it was impossible for Abe to pick up after Koizumi, who had a
strong personality and unique political techniques.

The LDP would be certain to be removed from power if it failed to
rebuild its posture upon fully analyzing the causes of its defeat in
the Upper House election this time before the next Lower House
election, which is likely to be a big showdown with the DPJ over the
reins of government.

On Aug. 1, the LDP leadership established a committee to examine the
results of the Upper House election in order to examine the causes
of its defeat.

But in the LDP, heavyweight lawmakers declared their support for Abe
to stay on one after the other, giving the impression that the party
members have not taken the defeat seriously.

Behind this is presumably their calculation that with no apparent
successor to Abe at present, it would be wise not to offend Abe by
opposing his decision to stay on if they want to secure either a
cabinet portfolio or a party executive post.

Even mid-level and junior lawmakers, who have until recently led the
move for revitalizing the party, are unlikely to criticize the party

Will the defeat this time become an opportunity for the LDP to make
a "revolutionary, fresh start," as former party Vice President Taku

TOKYO 00003598 007 OF 009

Yamasaki put it? Or will it become the beginning of the end of the
LDP-led administration? The answer will come out in the next Lower
House election.

(5) Primary balance: Impossible to move it into the black by FY2011,
according to Cabinet Office estimate, as increase in tax revenues
cannot be hoped for

YOMIURI (Page 2) (Full)
August 4, 2007

The government aims at moving the primary balance into the black by
fiscal 2011. However, the Cabinet Office's estimate on Aug. 3 found
that it would be impossible for the government to achieve that goal.
Since the government and the ruling parties have considered
achieving that goal as essential for fiscal reconstruction, the
estimate will likely spread repercussions to future budget
compilation and discussion on drastic reform of the tax system.

The primary balance is an index indicating whether it is possible to
finance policy expenses without relying on borrowing. In working out
the estimate, the Cabinet Office has modified the government's
reference estimate for the mid-term economic guidelines, by
incorporating the latest economic trends.

The result will be submitted to a meeting of the Council on Economic
and Fiscal Policy on August 6 as basic data to be used for the
compilation of the fiscal 2008 budget.

The estimate made as of January was that under an ideal scenario of
promoting tough spending cuts with a nominal grow rate of 4 percent,
the primary balance would mark a 1.6 trillion yen surplus.

However, the estimate this time is that the income and expenditure
balance would come out even, narrowly enabling the nation to climb
out of the red. The poor showing is due to the fact that the
nation's effort to emerge from deflation is slow. As a result, the
nominal growth rate has taken a downward turn, making an anticipated
revenue increase impossible. If a growth rate and the level of
spending cuts fall short of the level envisioned in the ideal
scenario, deficits in the primary balance would further increase.

In the meantime, the economic growth rate for fiscal 2008 projected
by the Cabinet Office has also been revealed. The Cabinet Office
estimated 2.2 percent real growth and about 2.6 percent nominal
growth. It also estimated the rate of increase in consumer prices to
be about 0.5 points, the level that will enable the nation to
completely break with deflation within fiscal 2008.

(6) Foreign Ministry to set up ODA regular consultative council,
aiming to improve efficiency of aid

YOMIURI (Page 2) (Full)
Evening, August 4, 2007/08/06

The Foreign Ministry has decided to set up a body tasked with
discussing future options for the nation's official development
assistance (ODA) policy on a regular basis, in cooperation with
Nippon Keidanren (the Japan Business Federation), the Japan
International Cooperation Agency (JICA), and the Japan Bank for
International Cooperation (JBIC). The ministry intends to hold its
first meeting by the end of this year, with the aim of pursuing the

TOKYO 00003598 008 OF 009

efficient management of the ODA program.

The panel will discuss the specific measures included in a package
of proposals on ODA policy released by Nippon Keidanren this May,
including: (1) shortening the period between planning and
implementation; (2) expanding projects eligible for the Special
Terms for Economic Partnership (STEP) designed to make use of
advanced technologies of Japanese firms; and (3) increasing the
number of projects. These measures are aimed to increase
opportunities for Japanese firms to participate in ODA projects and
make ODA more effective through the best use of private-sector

The Foreign Ministry, JICA, and JBIC are now involved in projects
related to yen loans, grant aid, and technology transfer, but
starting in October of next year, the government plans to place
these services uniformly under the control of JICA. In the new body,
members will discuss measures to strengthen the nation's ODA
strategy, focusing on this unification plan.

(7) Government bullish to compile austere budget: Discussions on
general-account budget requests to start today; Aftereffect of Upper
House election felt by ruling parties; Calls for revision of reform

NIKKEI (Page 2) (Full)
August 6, 2007

The government and the ruling parties will start discussing
guidelines for general-account budget requests today. The government
is ready to stick to an austere budget, continuing its effort to
recapitalize the nation's fiscal base, including a 3 percent cut in
public works-related expenses. However, an atmosphere of seeking a
revision of the existing structural reform line is growing in the
LDP, following the defeat in the recent Upper House election. The
situation appears that the aftereffect of the Upper House election
could cast a pall over the management of the economy.

Kantei remains bullish

The government held meetings of the Council on Economic and Fiscal
Policy for three days starting on Aug. 6, though one scheduled for
Aug. 1 was put off. The arrangement it envisages is drafting
ceilings of budget estimates for the next fiscal year's budget in
one burst. The plan is to obtain cabinet approval on Aug. 10 and
close estimated budget requests from all ministries at the end of
the month.

The Prime Minister's Official Residence (Kantei) is bullish with one
official noting, "We must not stop the reform drive, letting it be
affected by the result of the election." The Kantei has been playing
up the need to carry out structural reforms after the ruling
parties' defeat in the Upper House election as well, maintaining the
predetermined process of squeezing 220 billion yen by cutting public
works and containing a natural increase in social security spending.
It is concerned that slackening the drive to tighten spending at
this juncture could affect the progress of making the fiscal
situation sound, such as through a drastic reform of the tax system,
which is to start in the fall.

The Kantei is also showing a stance of counterattacking the
Democratic Party of Japan (DPJ or Minshuto), which during the Upper

TOKYO 00003598 009 OF 009

House election campaign criticized the government as having
abandoned the local regions. Those close to the prime minister are
criticizing the DPJ's policy with one noting that a political party
that compiles a pork-barrel budget is not responsible enough to run
the country. They are openly counterattacking the DPJ. The ruling
camp has a strong sense of crisis that if it aims exclusively at a
structural reform policy, such as a substantive cut in public works,
the parties could be defeated in the next Lower House election, as
well. The LDP will start discussing budget request caps, holding a
plenary meeting of the Policy Research Council on Aug. 7. The
situation is, however, a gap with the government could surface.

One senior LDP official noted: "The Finance Ministry has taken
advantage of the Koizumi reform line. If the DPJ wins the reins of
government in the next Lower House election, the Finance Ministry
will unavoidably be affected." There is a deep-seated resistance in
the LDP toward a 3 percent cut in public works, which the Finance
Ministry is insisting on. Disgruntlement with the Finance Ministry
for allegedly banking on the taking over of government reins by the
DPJ is smoldering in the LDP.

The LDP won six seats and lost 23 seats in the single-seat
constituencies, which used to be the LDP's impregnable stronghold.
How to set budgetary caps is drawing attention in the sense how the
LDP will make the most of lessons it learned from the defeat. If
public finance is managed led by the Finance Ministry, criticism is
bound to arise from within the LDP. There is a strong possibility of
a backlash against Prime Minister Shinzo Abe for remaining in office
becoming even stronger.

Voices of regional districts

On the other hand, if urban voters have judged that the ruling
parties have completely abandoned the structural reform policy, they
might turn their backs on them.

Whether to continue the spending reform or shifting from it is a
difficult decision to make, as it could dictate the political
equation in the future. Abe told the chief cabinet secretary and
deputy chief cabinet secretaries over dinner on the evening of Aug.
2, "I want to listen to local voices."


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