Cablegate: Daily Summary of Japanese Press 12/28/07

DE RUEHKO #5682/01 3620824
P 280824Z DEC 07





E.O. 12958: N/A



(1) Fukuda administration in third month (Nikkei)

(2) Interview with State Minister for Administrative Reform Minister
Yoshimi Watanabe: "Bureaucrats had secret scenario" (Sankei)

(3) Revised Political Fund Control Law requires politicians to
attach receipts for every item costing one yen or more; Lawmakers
too stingy (Tokyo Shimbun)

(4) Number of labor union members increases for first time in 13
years (Yomiuri)

(5) Editorial: Aware of need for prompt reforms to revitalize
economy (Nikkei)

(6) Editorial: Highest priority must be given to North Korea's "full
declaration" of nuclear programs (Asahi)


(1) Fukuda administration in third month

NIKKEI (Page 2) (Full)
December 28, 2007

On the evening of Dec. 20, when negotiations on reforming
independent administrative corporations entered the home stretch,
Prime Minister Yasuo Fukuda summoned Administrative Reform Minister
Yoshimi Watanabe to the Prime Minister's Office (Kantei) and asked
him to accept a compromise proposal to put off the review of the
status of the Urban Renaissance Agency and the Japan Housing Finance
Agency for another three years.

Watanabe, however, declined the proposal. Upset by this unexpected
reply, Fukuda instructed officials to rewrite the proposal. The
officials compiled a final proposal the next day through
coordination of views again by the Cabinet Secretariat and the Land,
Infrastructure and Transport Ministry. The final version called for
moving up the reform of the Japan Housing Finance Agency by only one

This was the first and last instruction on the reform of independent
administrative corporations by the prime minister. Fukuda was eager
to reform the negotiated contract system and the assessment system
but did not show any interest in abolishing or privatizing public
corporations that would lead to a drastic cut in fiscal outlays.
Discussion was not conducted on the meaning of such corporations'
existence, either, with priority given to only making the numbers
balance in streamlining plans.

The former Abe administration tried to maintain buoyancy by
underscoring that Kasumigaseki government officials are the forces
of resistance to reforms. Under the Fukuda administration, however,
the bureaucracy came back to life, slowing down administrative
reform efforts.

A member of an expert council on reforming the public servant system
grumbled: "Our reform plans have been watered down one after

TOKYO 00005682 002 OF 008

A bill to reform the public servant system that the council plans to
submit to the next ordinary Diet session initially called for
abolishing the career system. But the latest draft report inserted
the phrase calling for "replacing the first-class national
examination with an examination for the managerial track,"
indicating bureaucrats' desire to essentially retain the current
system. Irritated by this development, conference members decided to
set up a drafting committee and draft a report without depending on
government officials.

The prime minister has repeatedly said: "I am determined to
thoroughly eliminate waste and establish a streamlined and effective
government." But his eagerness to tackle administrative reform
cannot be detected at all.

(2) Interview with State Minister for Administrative Reform Minister
Yoshimi Watanabe: "Bureaucrats had secret scenario"

SANKEI (Page 3) (Full)
December 28, 2007

The independent administrative agency streamlining plan, which the
government adopted at a cabinet meeting on Dec. 24, turned out to be
a mere juggling of numbers with various decisions being put off.
Responding to an interview by the Sankei Shimbun, State Minister in
charge of Administrative Reform Yoshimi Watanabe, who has been out
in the forefront as a coordinator of the reform drive, revealed that
there was a so-called Kasumigaseki scenario, apart from the original
reform plan. He also said that bureaucrats were resisting the reform
drive behind the scenes. The following are the main portions of the

-- Some say that the plan has stepped back from the initial
scenario. How do you rate it yourself?

"The streamlining plan has on the whole put the scalpel into
symbolic entities among independent administrative agencies, such
the Urban Renaissance Agency. Regarding the Employment and Human
Resources Development Organization of Japan, a decision was made to
reach a conclusion in a year, including the possibility of scrapping
it. Though a decision on what should be done about the Urban
Renaissance Agency has been postponed until three years later, it
does not mean that it was decided to be kept in place. The package
has also cut the cords of the discretionary contract system and the
golden parachute system (amakudari practice). In that sense, we
succeeded in thwarting the Kasumigaseki (bureaucratic center of
Japan) scenario from being realized, contrary to public assessment.
I would give it a passing mark, though it was insufficient."

-- What do you mean by the Kasumigaseki scenario?

"I am making the move at the order of the prime minister. However,
there was also a Kasumigaseki scenario. Some were concerned that if
I do it my way, their scenario would collapse. As such, various
government agency officials adopted a bid-rigging policy in an
effort to prevent their ministers from going ahead with the reform

-- Please be more specific.

"Health, Labor and Welfare Minister Yoichi Masuzoe during
negotiations told me that working-level officials had said to him

TOKYO 00005682 003 OF 008

that they did not want the MHLW alone to stand out. Since Mr.
Masuzoe made an in-depth statement in the very first negotiations,
working-level officials probably got upset. His story made me
realize that there is a lock-step formula arrangement or the
so-called Kasumigaseki scenario among various government agencies.

"I also saw notes on Kasumigaseki's estimation regarding reform of
independent administrative agencies. To name a few, reforming the
Commemorative Organization for the Japan World Exposition 70 is a
mid- to long-term theme. The Big Three -- Nippon Export and
Investment Insurance, the Urban Renaissance Agency and the Japan
Housing Finance Agency -- should be maintained as they are. I have
been hit with a flood of opposition and requests from the ruling
parties as well. I felt that they were warning that they would not
allow me to cut into the Big Three."

-- You were criticized as excessively showcasing your motivation.
You have drawn fire for that.

"Somebody perhaps tried to find fault with me. Making a negative
campaign saying that the reform drive has failed due to my
performance is like spitting up into the sky. Those people are
putting their heads into the noose."

-- Has there been any change in the government stance of reforming
independent administrative agencies since the Fukuda administration
came into existence?

"(Unlike the Abe administration), the Fukuda administration uses
different rhetoric. The Fukuda cabinet's policy is "be cautious" and
"be gentle." The rhetoric it uses toward bureaucrats is gentle.
However, there is no difference between the Abe cabinet and the
Fukuda cabinet in the sense that their policy is to correct outdated
aspects of the present bureaucratic system so that public servants
can take pride in their work, instead of bashing them."

-- Did you feel the difficulty of administrative reform?

"It is self-contradictory to use bureaucrats for administrative
reform. This will not do, because it is like having bureaucrats work
out their own affairs. To look at the process I have undergone until
the streamlining plan was mapped out, I found myself in a clutch
situation from the beginning to the end. However, I have in the end
managed to go beyond bureaucrats' estimation. All that is left is to
how to implement the package. The reform drive would step back, if
the proposals were not implemented."

(3) Revised Political Fund Control Law requires politicians to
attach receipts for every item costing one yen or more; Lawmakers
too stingy

TOKYO SHIMBUN (Page 24) (Full)
December 28, 2007

The revised Political Fund Control Law will come into effect on Jan.
1, 2008. The centerpiece of the revised law is a requirement to
attach receipts to political fund reports for every item costing one
yen or more in view of public anger. Diet members have already
grumbled about such a requirement, with one member saying, "What
should we do when we have bought a bottle or can of juice from the
vending machine?" How stingy Japanese lawmakers are! The newspaper
looked into the foolishness of politicians' complaints, as well as

TOKYO 00005682 004 OF 008

their ignorance of popular opinion.

Condolence money for funeral

It is said that Diet members have complained about what they should
do about condolence payments. One politician said: "I don't want to
ask bereaved families for receipts." A 44-year-old salesman said in
a strong tone: "Of course, you should not." He continued:

"Supporters for a politician are tantamount to a salesman's best
customers, aren't they? Objectively speaking, attending a best
customer's funeral is a business in a way. So, you should pay a
funeral offering out of your pocket. I can't understand your
impudence that you want a receipt for condolence payment."

Fried Chinese noodle

Participating in events held by neighborhood community associations
is a kind of a job for politicians. It is said they, therefore, buy
fried Chinese noodles at these events since the Public Offices
Election Law prohibits them from giving gifts (to those associations
and supporters). They grumble because they can't ask a receipt (for
fried Chinese noodles). A 67-year-old man in Kanagawa Prefecture had
a good laugh at this story, saying:

"The lawmaker ate the noodles, didn't he? Who makes a decision on
eating something is a political activity or one's personal meal?
Does he want to say that all the meals of politicians are political

Bottle of juice from vending machine

Politicians like attending meetings. They give bottles of juice or
water to participants in their meetings. Some of them have said that
when they buy bottles of juice, they can't get receipts." A
36-year-old organization official in Tokyo was disgusted with this
story and said: "I don't understand why they offer beverages at all
meetings. If they really want receipts, they should buy them at
liquor shops or supermarkets."

Politicians concerned that names of persons with whom they meet will
be revealed

Many politicians have said that once they submit receipts, the names
of persons with whom they met will be unveiled. A 46-year-old
organization official in Tokyo laughed: "Why? Do they have to hold
meetings at restaurants from which they can get receipts? They are
probably unable to hold meetings without food and drink."

Clerical work to expand

There seems to be politicians who have pointed that once they are
required to submit receipts, their clerical work will be enormous;
and as a result, such will lead to wasting tax money. However,
citizens do such work when filing income tax returns. A 50-year-old
management at a company listed on the First Section said with
suppressed anger: "Private companies are required to submit specific
receipts. Why don't they do their clerical work on weekends or twice
a month? Why should I say what I tell new employees?"

Tsutomu Shimizu, a lawyer, who is well versed in political fund

affairs and information disclosure said:

TOKYO 00005682 005 OF 008

"It is true that voters ask politicians for bottles of juice and
condolence payments. Politicians are concerned about being seen as
stingy. The public should not ask them for rewards. With receipts
alone, we cannot find the names of those with whom they have held
meetings. It is unacceptable that they think meeting with people
costs a lot of money."

(4) Number of labor union members increases for first time in 13

YOMIURI (Page 2) (Full)
December 28, 2008

A survey carried out by the Ministry of Health, Labor and Welfare
(MHLW) found that the number of labor union members as of the end of
June this year increased for the first time in 13 years. A
significant increase in part-timers has apparently halted the
downward trend in the number of labor union members.

According to the findings of the survey, the number of labor union
members reached 10,079,614 as of the end of June this year, an
increase of 39,034 from last year. Approximately 588,000 union
members are part-timers, up by about 73,000 from last year. The
number of trade unions was 27,226, down by 281 from the previous
year. The ratio of companies that have labor unions was 18.1 PERCENT
, down 0.1 point from the previous year, a downward trend that
started in 1975.

(5) Editorial: Aware of need for prompt reforms to revitalize

NIKKEI (Page 2) (Full)
December 28, 2007

We should probably say we told you so, but Japan's share of the
global economy finally dropped below 10 PERCENT in 2006. The
implicit meaning is that the effect does not stop with the economic
front: we cannot help but fear Japan's diplomacy and national
security will be affected.

Japan's share of the world's nominal gross domestic product (GDP)
last year fell to 9.1 PERCENT , below the 10 PERCENT level for the
first time in 24 years. In terms of per-capita nominal GDP, Japan
slipped into 18th place among the 30 member countries of the
Organization for Economic Cooperation and Development (OECD).
Luxembourg took first place, with its per capita GDP 2.6 times
larger than Japan's.

The drop in GDP in dollar terms is attributed in part to the recent
rise in the exchange rates of other countries' currencies such as
the Euro to the dollar and the yen. However, Japan's share has
continued to fall for more than 10 years. Japan's delay in reforming
its economic, administrative, and financial systems, as well as its
corporate management system, also must be considered as lying behind
Japan's GDP problem. Many other countries have more swiftly taken
measures in response to the advance of economic globalization and

For instance, the five Scandinavian countries, all of which are
included among the top 10 in terms of per-capita GNP, have
energetically pushed ahead with policies since the 1990s that place

TOKYO 00005682 006 OF 008

emphasis on market mechanisms and being responsive to the
globalizing economy. Specifically, they have eased regulations,
reduced taxes, supported high-tech industries, as well as given
priority to creativity in education programs. As a result, Nokia,
which now enjoys the world's largest share in the cellular phone
market, made its start in Finland.

Japan was overtaken by England in terms of per-capita GDP three
years ago. The sweeping economic reform by then Prime Minister
Thatcher in the 1980s worked so effectively that the British economy
has continued to expand for 15 years, starting in 1992.

Some persons might question why it is necessary for the fairly
affluent Japan to further boost its GDP. To narrow income
discrepancy, it is necessary to expand the scale of economy, but it
is not enough only to change the wealth-distribution method.
Additionally, since tax revenues and insurance premiums are linked
to the size of economy, if the nation's GDP remains flat, its social
security programs, including pension and medical insurance, will be
at risk, given the aging of the society. Japan's fiscal deficit and
accumulated debt - the worst among those of the major industrialized
countries - will also never be liquidated without economic

Japan is losing its influence in the international community. Japan
was always in first place in net official development assistance
(ODA) rankings until a decade ago, but it slipped below the United
States and Britain in 2006. Three years from now, Japan is expected
to drop to sixth place. In recent years, such "soft power" as
economic aid, in the place of military power, has served countries
as a primary foreign-policy tool. The shrinkage of Japan's soft
power may lead to its losing its international say and to the
bringing about of uncertainty on the national security front.

The policies and system reforms initiated by the Koizumi
administration have made no significant progress since the
inauguration of the Abe cabinet. Excluding some cases, the path of
management reform of companies and financial institutions has slowed
to a crawl since the financial crisis passed. The government must
realize that it must quickly carry out the reforms that are

(6) Editorial: Highest priority must be given to North Korea's "full
declaration" of nuclear programs

ASAHI (Page 3) (Slightly abridged)
December 28, 2007

North Korea is unlikely to honor its commitments to disabling its
nuclear facilities and declaring all its nuclear programs, both of
which the North has said it would carry out by the end of the year.

A senior North Korean diplomat said: "Adjusting the speed of
disablement is unavoidable." The reason is because deliveries of
energy aid to that country, as agreed on at the six-party talks, is
behind schedule.

Reportedly, heavy fuel oil that is supposed to be supplied by Russia
for energy aid for November has not arrived in North Korea. Until
recently South Korea, China, and the United States have taken turns
in providing monthly deliveries of 50,000 tons of heavy oil to the
North. If it is true that Russia is behind the schedule in supplying

TOKYO 00005682 007 OF 008

heavy oil, we urge Moscow to live up to its promise properly.

But that does not appear to be the real reason why the North is
dragging its feet in carrying out disablement. The true reason is
apparently related to the question of whether the U.S. delists North
Korea from the list of states sponsoring terrorism. The U.S. and
North Korea in their negotiations agreed to link as a set the
North's disablement of its nuclear facilities and the declaration of
all its nuclear programs and America's delisting of the North from
its terror list.

The dominant explanation is that North Korea is now irritated that
although it thought that specific steps for delisting would be taken
by the end of the year, there has been no progress in that
direction. As a result, North Korea is now wavering back and forth.

From the beginning, it was said that it would be difficult for the
North to complete by the end of the year the disablement of the
three major nuclear facilities used to develop nuclear weapons.
Parts of those facilities are contaminated with radiation, so it has
taken time to remove that danger.

According to U.S. intelligence, the disablement process is by and
large moving forward. Even though the process cannot be completed
within the year, it may not be so serious. Now that the nuclear
facilities have been put out of operation, no materials needed for
making nuclear weapons can be produced.

More serious is the North's delay in declaring nuclear programs in a
complete and accurate manner.

In addition to the three major facilities, what other facilities are
there in North Korea? The North has promised to reveal all its
nuclear programs. Included in the promise is revealing the amount of
reprocessed nuclear fuel, the amount of extracted plutonium, the
amount of such plutonium that was used for making nuclear weapons,
the amount of plutonium used for nuclear testing, and the amount of
remaining plutonium. Also, the North has been promised to reveal
where the remaining plutonium is stored.

Once North Korea declares all its nuclear programs, negotiations
will start, based on the declaration, on specific steps for
denuclearization. The declaration will be a crucially important
basis for promoting six-party talks.

The declaration must not be treated lightly. The U.S. remains
cautious about delisting the North as a state sponsoring terrorism.
Perhaps based on the results of overtures from the North, the U.S.
must have become cautious about delisting.

It is outrageous that the North is unlikely to make a declaration of
all its nuclear programs by the end of the year as promised, but the
important thing is the contents of the declaration. The question of
uranium enrichment also should be made clear. Furthermore, there is
the suspicion that the North is proliferating nuclear technology.

The U.S. should not easily give away its card of delisting the
North. Instead, it should continue to work hard on the North. Even
if the declaration is not issued within the year, there is no need
to become impatient, and the five countries, including Japan and the
U.S., should work to maintain their unity.

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One can say that the most difficult stage - just prior to the
North's abandonment of its nuclear programs - has been reached.
Unless the North carries out its promise, it can never open the way
to normalizing diplomatic ties with the U.S. and Japan. North Korea
should think hard about that point.


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