Cablegate: Daily Summary of Japanese Press 07/31/08

DE RUEHKO #2107/01 2130756
P 310756Z JUL 08




E.O. 12958: N/A



(1) Drifting Doha Round: Japan finds itself further isolated (Asahi)

(2) Limits to proceedings of WTO under lead of U.S., Europe, with
strong reactions from developing countries; Japan remains low
profile (Yomiuri)

(3) Rupture of WTO talks to accelerate bilateral talks; Japan's
disadvantage to continue, fettered by agricultural interests

(4) Cabinet shuffle in August; no prospects yet on timing of extra
Diet session, Lower House dissolution (Yomiuri)

(5) Frustration growing among lawmakers and bureaucrats (Nikkei)

(6) Government to assist consolidation of Trans-Siberian Railway to
cut distribution costs (Nikkei)

(7) U.S. consul general's art of reasoning against reason: 'Racial
discrimination' against Okinawans; Outspoken to justify base
presence forced on Okinawa (Ryukyu Shimpo)

(8) DPJ's Okada says, "I do not have strong desire" to run in the
party's presidential election (Nikkei)

(9) BOJ economic outlook for 1998: Economic planning agency director
general intervenes at policy-setting meeting, claiming "The outlook
will work as a drag on the economy" (Tokyo Shimbun)


(1) Drifting Doha Round: Japan finds itself further isolated

ASAHI (Page 6) (Full)
July 31, 2008

The collapse of the new round of global trade talks (Doha Round)
under the World Trade Organization (WTO) has disappointed Japanese
business leaders. They had anticipated that tariffs imposed by the
U.S. and Europe could be sharply reduced. In an effort to protect
domestic farmers, Japan has been on the defensive about tariff
rates. Japan will inevitably be pressed to reform its agricultural
structure in the rapid shift toward bilateral free trade talks
expected in the future.

Concern about progress in FTA talks between EU, South Korea

Business leaders are disappointed at the breakdown of the WTO talks,
because they had expected to see drops in tariffs on industrial

Keizai Doyukai (Japanese Association of Corporate Executives)
President Masamitsu Sakurai (Ricoh chairman) issued this comment

"It was very regrettable. I am deeply concerned that the WTO talks
may be delayed by two or three years. I also fear that the
antagonism among participating countries might lead to a trend of
protectionism or anti-globalization setting in"

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High tariffs levied by the European Union (EU) and the U.S. stand in
the way of Japanese automakers' business. An executive of an
automobile manufacturer grumbled with disappointment: "The talks
were moving in a favorable direction. We are greatly disappointed."

The U.S. imposes a 25 PERCENT tariff on large-sized foreign
vehicles. This area in the automobile sector has long been a major
income source for the so-called U.S. Big Three automakers, including
General Motors. The EU, too, levies a 10 PERCENT tariff on imported
passenger cars, undermining Japanese compact cars' price
competitiveness. Given this situation, Japanese automakers had
highly anticipated that tariff rates would be sharply lowered.

Business leaders are becoming nervous about the future development
of the talks on concluding a free trade agreement (FTA) that started
last year between the EU and South Korea.

Once the EU agrees on a plan to reduce the tariffs on South Korean
vehicles, Japanese automakers will be driven into a tighter spot.
Electrical appliance manufacturers have also been in competition
with South Korean rivals in the market of such digital products as
slim TV sets. An executive of a leading home appliance manufacturer
emphasized: "WTO talks involve many countries' national interests,
so it naturally takes considerable time until an agreement is
reached. Japan should also pour its energies into bilateral FTA

Business leaders had also anticipated that if tariffs on farm
products had been reduced, agricultural reform in the nation would
be accelerated.

Vice President Yoji Sato of the leading trading company Sojitz Corp
said in a press conference yesterday: "(When grain prices are
steeply rising,) agriculture is becoming a sort of resource for
countries. Such 'resource' nationalism might have contributed to
breaking off the talks." Sato expressed concern that the trend of
protectionism might grow and that economic blocs might be formed.

Limit to protecting agriculture

"I had not thought that the world had such harsh views, so we must
move ahead with reform," said Ministry of Agriculture, Forestry and
Fisheries (MAFF) Minister Wakabayashi in a press conference on the
night of July 29, just after the talks ended in rupture.

Japan had insisted that 10 PERCENT of all farm products should be
designated as sensitive farm products to be exempted from sharp
tariff cuts. But based on the judgment that "the target might not be
seriously discussed," as Wakabayashi noted, the government lowered
the target to 8 PERCENT . Japan, however, remained defensive of its
stand on the agricultural sector.

With the collapse of the talks, tariffs will not be steeply cut for
the time being. But a senior MAFF officer said: "Since negotiations
will continue, the same scene will repeat itself several years from
now." When the Uruguay Round was concluded in 1993, the mandated
average tariff-cut rate was 36 PERCENT , 1.5 times less than the 54
PERCENT called for in the talks this time. Almost everybody
connected with agriculture is aware of the need to lower tariffs
from a medium to long-term point of view.

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Cited as a problem in Japan's agriculture is that farm products
cultivated in a land-intense way, like rice and wheat, are less
competitive. That's why Japan imposes considerably higher tariffs on
rice and wheat.

The major reason for this problem is that a cultivated acreage per
farm household is small. The average acreage under cultivation is
1.7 hectares in Japan, about 380 hectares in Australia, 84 hectares
in the U.S., and 34 hectares in France. MAFF intends to submit a
bill amending the Agricultural Land Law designed to promote farmland
concentration to the next extraordinary Diet session this fall. But
because the opposition camp has control of the House of Councillors,
it is uncertain whether legal preparations will be able to move
forward. Many farmers, in anticipation of a rise in land prices,
have kept held on to their farmland, so little progress has been
made in promoting large-scale farming.

Many experts see that expanding "the system of direct payments" from
the government to farmers is effective to maintain both the
free-trade system and certain amounts of food production in the
nation. The system is designed to maintain the production system
with subsidies in return for liberalization. This system has been
widely adopted among industrialized countries. Even so, there are
many hurdles to clear before Japan can introduce such a system, such
as a lack of public understanding and fiscal problems.

(2) Limits to proceedings of WTO under lead of U.S., Europe, with
strong reactions from developing countries; Japan remains low

YOMIURI (Page 9) (Excerpts)
July 30, 2008

A key ministerial meeting to determine the fate of the new round of
World Trade Organization (WTO) global trade talks (Doha Round) has
broken off. Although seven years have passed since the Doha Round
was established, no agreement has been reached. This result shows
that there are limits to the WTO's formation of rules as a result of
national interests of advanced and developing countries clashing

The situation this time is similar to that developed in the
ministerial meeting in Cancun, Mexico (in September 2003). WTO
Director General Pascal Lamy was attending in that meeting as a
trade and commerce officer of the European Union (EU).

At that time, Lamy was criticizing the WTO's policymaking based on
the unanimity rule. He fully knows about the WTO's weak points.

Despite such full knowledge, Lamy had confidently said before the
unofficial ministerial meeting: "There is a 50-50 chance" for a free
trade accord.

The U.S. submitted a proposal to cut subsidies for domestic farmers
just before the ministerial meeting, in an attempt to take the
initiative in discussions.

But India reacted fiercely, irritating the U.S. The U.S. repeatedly
criticized India, resulting in enraging India further. In past
negotiations, everything was decided under the lead of the U.S. and
Europe. This experience was no longer useful this time, as
represented by a clash between the U.S. and India/China over

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conditions for developing countries to invoke the so-called
safeguard mechanism in the agricultural sector.

The U.S. wants to sell its farm products to such huge markets as
India and China, but India and China want to protect their domestic
farmers. As it stands, both sides' circumstances are totally

A proposal for agreement - presented by Lamy on July 25 - noted that
if one nation boosts the volume of imports by 40 PERCENT over the
previous year, the nation will be allowed to resort to the safeguard

Even so, there are few cases of a 40 PERCENT increase in imports of
the same farm product. In India, there are many petty farmers, so it
wants to protect domestic wheat farmers. India claimed the Lamy
proposal as offering excessively strict conditions for safeguards.

Countries naturally make remarks to boost their national interests.
As emerging countries or developing countries become more
influential, it will become more difficult for the WTO to establish

Japan is the world's second largest economic power, but its
international status is waning in the shadow of India and China.

Japan attended a meeting by seven major trading parties, but there,
the U.S., Europe, India, and China played key roles. Minister of
Economy, Trade and Industry Amari said: "I would like to play a
mediating role between industrialized and developing countries," but
he just played a subordinate part.

Japan initially wanted 10 PERCENT of all farm products to be
designated as sensitive products to be exempted from sharp tariff
cuts. Just before the start of negotiations, Japan lowered the
target to 8 PERCENT , but the proposed rate was lower than 8 PERCENT
, exposing Japan's lack of bargaining capability and its overly
optimistic outlook.

(3) Rupture of WTO talks to accelerate bilateral talks; Japan's
disadvantage to continue, fettered by agricultural interests

MAINICHI (Page 8) (Full)
July 31, 2008

The breakdown of the multilateral trade liberalization talks (Doha
Round) sponsored by the World Trade Organization (WTO) will likely
accelerate moves to sign bilateral trade agreements, such as a free
trade agreement (FTA) or an economic partnership agreement (EPA).
However, Japan will likely be at a disadvantage in such bilateral
negotiations, just as it was in the Doha Round negotiations, since
the issue of opening its agricultural market will continue to act as
a fetter.

As of October 2007, the number of FTAs and other bilateral economic
agreements signed throughout the world grew seven-fold to 194,
compared to 1990.

An FTA focuses on trade liberalization, based on a scrapping of
tariffs. Japan attaches importance instead on signing EPAs, which
aim at revitalizing the economy by adding investment, intellectual
property rights and personnel exchanges to free-trade rules. It has

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so far signed EPAs with nine countries. Talks with six other
countries are going on.

However, since Japan has characterized bilateral talks as
supplemental to multilateral talks, it is lagging behind other
countries. Now that WTO talks have ruptured, those who are
advocating moving swiftly toward bilateral agreements are increasing
in number.

Japan found itself at a disadvantage during the WTO's ministerial
meeting. It also has been having difficulty in EPA talks with
Australia, since that country is pressing for a total abolition of
tariffs on rice, beef and dairy products. EPA talks with South Korea
have been suspended since that country is seeking the liberalization
of 90 PERCENT of agricultural products. Political and historical
issues are complicating talks with South Korea, with the issue of
Takeshima isles, which both countries claim, casting a pall.

South Korea this April reached agreement with the U.S. to sign an
FTA. It is also moving ahead with talks with the European Union
(EU). In Japan, however, government agencies are out of step with
the Ministry of Economy, Trade and Industry (METI), which is
exploring opportunities to start talks with the EU and the U.S. The
Ministry of Agriculture, Forestry and Fisheries, however, has been
taking a cautious stance. Now that the WTO talks have broken down,
it is time for Japan to take a second look at its trade policy.

(4) Cabinet shuffle in August; no prospects yet on timing of extra
Diet session, Lower House dissolution

YOMIURI (Page 4) (Full)
July 30, 2008

Following the endorsement of the spending cap for fiscal 2009, Prime
Minister Yasuo Fukuda began yesterday to coordinate a cabinet
shuffle in August, hoping by that to boost his administration's
popularity. However, following the cabinet shuffle, the timing of
the next extraordinary Diet session and whether there will be
dissolution of the House of Representatives remain opaque. On these
issues, the gaps in views in the ruling coalition seem difficult to

For the Fukuda administration, July 29 was a day of policy
decisions. That morning, the government announced an action plan to
create a low-carbon society in order to cut greenhouse gas
emissions, as well as an emergency social welfare program, called
the "five step relief plan."

Having completed his policy agenda, the Prime Minister then turned
to preparing an environment for shuffling his cabinet. A senior
Liberal Democratic Party (LDP) official said last night: "It will
probably be all over by August 10. I presume that a major shuffle
will be carried out."

With the likelihood of a pending cabinet shuffle in mind, Foreign
Minister Masahiko Koumura called off his eight-day trip to India and
other countries that would have started August 1.

However, Fukuda does not yet seem to have completely made up his
mind on all three matters. He told his aide: "I cannot ignore any of

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A divergence of views in the ruling camp on the timing for convening
an extraordinary Diet session, as well as for Lower House
dissolution has become stronger.

In order to enact a bill revising the New Antiterrorism Special
Measures Law and bills related to establishing a Consumer Affairs
Agency, LDP Secretary General Bunmei Ibuki hopes to convene the
extra session in late August. He also envisages that the Lower House
would likely be dissolved next spring, once the fiscal 2009 budget
is passed in the next regular session. The budget incorporates a
plan to convert tax revenues currently earmarked for road
maintenance and construction into general spending funds.

Meanwhile, the New Komeito has been seized with the notion of
convening the extra Diet session in late September, and the party is
pushing for foregoing a bill extending the New Antiterrorism Special
Measures Law.

For the New Komeito, it is desirable to call for a Lower House
election at the beginning of the regular Diet session next January
in order to have a long interval in between that election and the
Tokyo Metropolitan assembly election next summer, on which the party
has placed a priority. LDP Election Strategy Council Chairman Makoto
Koga has fallen in line with the New Komeito's position.

Ibuki wants Fukuda first gain public support by shuffling the
cabinet before considering a general election. Although the New
Komeito ostensibly says that shuffling a cabinet is the prime
minister's sole prerogative, it has been reluctant toward a cabinet
shuffle, one official citing: "It would delay the timing of Lower
House dissolution." Some in the LDP doubt that the New Komeito is
planning to try to dump Fukuda before the Lower House election.

(5) Frustration growing among lawmakers and bureaucrats

NIKKEI (Page 2) (Abridged)
July 31, 2008

Prime Minister Yasuo Fukuda did not announce a cabinet shuffle
yesterday, July 30, disappointing government and ruling party
executives. A delay in the prime minister's decision has elicited
voices of bewilderment and frustration from the Kasumigaseki
bureaucratic district and the capitol district of Nagatacho, with
one saying, "It's hard to proceed with new projects."

A meeting yesterday of the secretaries general and Diet affairs
chiefs of the LDP and New Komeito confirmed the policy course of
handing such outstanding issues as the time of convening the next
extraordinary Diet session over to the new regime on the assumption
that the prime minister will shuffle his cabinet in August. But no
one was certain about the cabinet shuffle.

Representing the LDP officers, Secretary General Bunmei Ibuki later
in the day called on the prime minister at his office with the aim
of nailing down the much-talked-about cabinet shuffle. But the prime
minister simply said, "I will consult with you later." Ibuki could
not press the prime minister harder.

The LDP leadership is likely to remain paralyzed until the prime
minister announces a cabinet shuffle and forms a new cabinet. An LDP
Upper House officer described the series of developments over a
cabinet shuffle as "much ado about nothing."

TOKYO 00002107 007 OF 013

Frustrated with Fukuda's excessive caution, an LDP executive also
complained, saying, "The prime minister has kept us hanging, and we
cannot make plans. I want to return to my home constituency, but I
cannot make a decision."

The prime minister's lack of decision has begun taking a toll on
policy councils as well. For example, the government's National
Commission on Social Security planned to meet in the week of August
4, but it might now have to delay that substantially depending on
when the prime minister shuffles his cabinet. The Council on
Economic and Fiscal Policy will also effectively remain stalled
until after the O-bon midsummer holidays.

The impact is not limited to domestic affairs alone. Foreign
Minister Masahiko Koumura has cancelled his trip to India, Sri
Lanka, and Uzbekistan from August 1. Although a Foreign Ministry
official denied any adverse effects, some fear that Japan might have
lost a golden opportunity to strengthen ties with India, which
played a major role in the just-ended World Trade Organization trade
talks. A meeting of the foreign ministers of Japan and five Central
Asian countries, the first in two years, will also have to be
rearranged for a later date.

Economic and Fiscal Policy Minister Hiroko Ota is unable to decide
on her attendance at the First APEC Ministerial Meeting on
Structural Reform, to be held in Melbourne on August 3-5.

The prime minister has been concealing his true intention from
private-sector individuals as well. Fukuda attended journalist
Soichiro Tahara's study meeting yesterday in which the premier was
advised by the journalist: "If you have to shuffle your cabinet, you
must take chances. Otherwise the cabinet will lose steam." In
response, Fukuda nonchalantly said, "What do you mean by 'take

DPJ cold toward indecisive premier

Opposition parties are also reacting coldly to the turmoil in the
government and ruling bloc. Democratic Party of Japan Deputy
President Naoto Kan, attending a workshop held yesterday in Fukuoka,
criticized Fukuda, saying, "I have never seen such an indecisive
person. He has yet to make up his mind." President Ichiro Ozawa, in
a press conference in Sapporo, categorically said: "The LDP
administration cannot handle the current major issues; the country
needs a change of government."

(6) Government to assist consolidation of Trans-Siberian Railway to
cut distribution costs

NIKKEI (Page 1) (Full)
July 30, 2008

The government in cooperation with the Russian government will
launch a project to build a distribution network that would
modernize the Trans-Siberian Railway. Loans by a Japanese
government-affiliated financial institution and trade insurance will
be used to modernize the railway, which stretches approximately
9,300 kilometers across Russia, to help boost train speed, and to
introduce new trains and a goods-transport system. The assistance
will aim at speeding up customs clearance with the aim of helping
companies reduce the time and cost of the distribution of goods.

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Since along the railway there are many special economic zones and
areas where resources are being developed, the government will
indirectly be assisting a broad range of Japanese companies, such as
resource-related, automobiles, high-tech, and distribution, to make
inroads into these areas.

The initiative to be promoted by the governments of Japan and Russia
will be called the "Eurasia Industrial Investment Bridge." Under the
initiative, Tokyo and Moscow will cooperate to develop energy and
natural resources, as well as to nurture new industries centered on
the modernization of the railway connecting the Russian Far East and
Moscow. The Russian government last year proposed a plan to
modernize the Trans-Siberian Railway by 2030. The total project cost
will be approximately 69 trillion yen. Private investments from
foreign countries will also be solicited.

The upgrading of the Trans-Siberian Railway will shorten the length
of cargo transportation between Moscow and Vladivostok from the
current two weeks to one week. The main transportation route is now
an ocean route via Europe. The use of the improved Trans-Siberian
Railway would shorten the length of cargo transportation by 40
PERCENT -70 PERCENT . At present the freight rate charged to ship
via the Trans-Siberian Railway is higher than the freight charge of
ocean transportation. However, the gap is beginning to narrow due to
a rise in the cost of ocean transportation due to soaring fuel

Japan will offer full support for the initiative. As a first step to
implementing the plan, both countries in early September will hold a
bilateral investment forum at the cabinet level in St. Petersburg.
More than 100 companies from such industrial fields as distribution,
financial services and automobile manufacturing, not to mention
resource-related areas, will take part in the conference and discuss
ways to cooperate in the project.

In modernizing the railway system, bilateral cooperation will focus
on improving the train operation system, building infrastructure to
improve train speed and upgrading freight cars and rail beds.
Chances are that the project could lead to the introduction of train
cars made in Japan. Japan also will promote investments in the
numerous economic zones and resource development areas located along
the railway. The government will help companies advance into Russia
through financing by the Japan Bank for International Cooperation
(JBIC) and the use of Japan's trade insurance system.

Japan's trade with Russia in 2007 jumped 55 PERCENT from the
previous year's level. Japan mainly imports natural resources, such
as crude oil and nonferrous metals. As Russia's per-capita income
increases, its markets are becoming increasingly attractive.
However, many Japanese companies take the view that transportation
infrastructure connecting major cities with the Far East remains
insufficient. The government, therefore, has decided it needs to
make more efforts in order to deepen Japan's economic relations with
that nation.

Once the distribution network becomes more efficient, Russia would
also find it easier to export such resources as rare metals and

(7) U.S. consul general's art of reasoning against reason: 'Racial
discrimination' against Okinawans; Outspoken to justify base
presence forced on Okinawa

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RYUKYU SHIMPO (Page 17) (Full)
July 30, 2008

Koya Nomura, professor at Hiroshima Shudo University

According to the Ryukyu Shimpo's article in its July 12 morning
edition's local news page and its July 13 editorial titled "We don't
need an American consul general like this," the U.S. consul general
in Okinawa, Kevin Maher, seems to have hurt the hearts of many
people in Okinawa again. This is evident from the article that
reported on the anger and humiliation of people in Okinawa.
Moreover, I also guess that some of those who read the article
probably felt discomfort, depressed or helpless, or felt sad. This
kind of feeling is probably the one that we would have when we are
discriminated against.

"I wonder," the consul general reportedly said, "why Ginowan City
allows (housing) construction in the off-base area near the runway"
of the Futenma base. This remark, as explained in the editorial, is
tantamount to a logic that goes: "The local residents, who later had
their houses built near the base on their own, are to blame, and so
is Ginowan City that allows it. Accordingly, the U.S. military is
not to blame." This logic is similar to the so-called logic of
approaching danger, which can be likened to the art of reasoning
against reason to compel the population of Okinawa to shoulder the
burden of hosting U.S. military bases.

Reasoning against reason-this is a debating skill of unduly using
unreasonable logic and holding down someone to forcefully push
through something unreasonable. Also, the key to the art of
reasoning against reason is not to listen to what the other person
is saying. The consul general can say such a thing. That is because
he ignores serious facts as premises in Okinawa. And his ignorance
of the facts or his intentional disregarding thereof hurts the
dignity of Okinawa's people.

In the meantime, many of Okinawa's people were deprived of their
farmland for U.S. military bases and they were also deprived of even
their right to live on their landed properties. I'm sure that the
consul general knows this fact.

In Okinawa, people's property rights have been violated. In
addition, even their free choice of where to live has been extremely
restricted. In other words, their fundamental human rights have been
violated. As a result, many people in Okinawa have had no choice but
to live in the vicinity of U.S. military bases. Moreover, the U.S.
military-and none other-has left the Futenma base's danger as is
against its own safety standards. In short, many of those who live
around the Futenma base have had no choice but to live "in the
off-base area near the runway" because of the U.S. military
presence. Meanwhile, U.S. military personnel and civilian employees
are almost free to live on or off their bases.

By ignoring the abovementioned serious facts as premises, it is
possible to set up fictitious premises that are convenient to the
U.S. military-as if its bases had been built on uninhabited
wasteland. The conclusion reached by doing so is the consul
general's remark this time. However, it is nothing but a conclusion
reached by what is called a "false premise" in logic. A wrong
premise cannot arrive at a correct conclusion. Accordingly, claiming
such a conclusion to be correct is also reasoning against reason.

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However, any conclusion-if its premise is wrong-is logically not a
lie. In addition, the consul general says that one of the basics for
diplomats is not to tell a lie. If that is the case, we might well
think that he must have knowingly used the art of reasoning against
reason. In point of fact, the consul general's argument corresponds
to the logic of "countervailing"-or a specific tactic employed in
the art of reasoning against reason. In this sense, the consul
general's remark, which sounded as if he was shifting the blame onto
Ginowan Mayor Yoichi Iha, can be taken as being intended to offset
the illegality of U.S. military bases on Okinawa by countervailing
the mayor's justifiability.

However, the reason why one tries to countervail another person's
justifiability is because that person acknowledges that
justifiability. That is a weak point of the logic of countervailing.
If we logically verify it, contradictions and faults will come out
of it. That is to say, the consul general, in point of fact,
acknowledges the justifiability of Mayor Iha, who criticizes the
U.S. military's violation of its own safety standards for Futenma
airfield, and the consul general owns up to the U.S. military's
illegality. Accordingly, it is reasonable to close down the airfield
as demanded by the mayor.

However, the consul general reemploys his countervailing logic in
trying to shirk responsibilities by stressing that the U.S.
government is not authorized to restrict off-base building. But no
matter how much the consul general underscores that, he cannot
offset the fact that it is possible enough for the United States to
close down Futenma airfield within the scope of its on-base

In the United States, any base that violates the U.S. military's
safety standards can never be maintained and can never be allowed to
exist. In Okinawa, however, the U.S. government forcibly continues
maintaining a base that must not exist. In other words, the U.S.
government unconcernedly violates the human rights of Okinawans
while it can never violate those of Americans.

Such an act is called racial discrimination, isn't it? Forcing U.S.
military bases on Okinawans is racial discrimination, isn't it? Base
construction, which is symbolized by "bayonets and bulldozers," is
racial discrimination, isn't it? In that sense, Mayor Yoichi Iha's
demand to close down Futenma airfield is also an act of seeking to
do away with racial discrimination.

Meanwhile, it is probably possible to say that the reason why Consul
General Kevin Maher hurt the hearts of people in Okinawa is because
he outspokenly justifies racial discrimination-which is in the form
of forcing the presence of U.S. military bases on Okinawans-by
developing his logic of reasoning against reason. The consul general
also remarked that the Futenma base is not dangerous. This
reasoning-against-reason logic is also one of his doings that hurts
the dignity of Okinawans. Anyone reasoning against reason is apt to
fall into self-contradictions. The consul general says that the
Futenma base is not dangerous. But he also says that the U.S.
government will move it. If so, there's no reason, from the
beginning, to insist on Henoko. It is also possible enough to
relocate the base elsewhere outside Okinawa Prefecture.

By the way, in 1948, when the construction of U.S. military bases on
Okinawa was beginning in full swing, Hendrick Verwoerd, who was

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called the farther of apartheid and served as South African prime
minister, said: "The apartheid policy is a good neighbor policy."
This is a remark regarding the most notorious racial discrimination
policy in the world, and it helps shed light on the "good neighbor
policy" in Okinawa.

(8) DPJ's Okada says, "I do not have strong desire" to run in the
party's presidential election

NIKKEI (Page 2) (Full)
July 31, 2008

Democratic Party of Japan (DPJ) Vice President Katsuya Okada said at
the Japan National Press Club yesterday: "At this time, I do not
have a strong desire" to run in the presidential election in
September. It was the first time for Okada to reveal his true
intention. There has been a strong view in the party calling on him
to run in the leadership race. Even though the likelihood that
incumbent President Ichiro Ozawa would be reelected for a third term
has increasingly become stronger, the focus will likely now be on
moves by Public Relations Committee Chairman Yoshihiko Noda and
lawmaker Yukio Edano.

Pointing out that he had resigned from the DPJ presidency in 2005 to
take responsibility for the party's setback in the House of
Representatives election that year, Okada said: "I think I should
restrain myself until the next Lower House election." He added: "I'm
not sure whether the environment has drastically changed since 2005.
I think the election will be the same as that in 2005, even if it is
carried out under my initiative."

Okada commented about Ozawa:

"There is no question that he was the biggest contributor to the
party's victory in the House of Councillors election. He has been
doing well since then. However, since the presidential race is an
opportunity to debate policies, it can be considered as a step
forward toward the Lower House election."

He indicated that it would be desirable that the election be
contested by more than one candidate.

Okada answered with "no comment" whenever he has been asked whether
he would run in the presidential race. With his expression of
reluctance to run in the election finally made for the first time,
the possibility is high that moves to field rival candidates against
Ozawa will likely enter a new phase.

Noda, who has been asked by junior and mid-level lawmakers to run,
has so far remained silent. However, a group of lawmakers, who wish
to field rival candidates against Ozawa, will likely ask Noda to
run. Another group of junior and mid-level lawmakers, who have close
ties to Vice President Seiji Maehara, is expected to accelerate a
plan to file him as a candidate. Edano has told persons close to him
his intention to run in the election if Okada does not.

However, still another group of lawmakers, including the executive
members, who favor Ozawa's reelection for a third term, is gaining
momentum. Diet Affairs Committee Chairman Kenji Yamaoka at a press
briefing yesterday in the city of Oyama, Tochigi Prefecture,
commented on Okada's remarks: "He is a person with a lot of
commonsense and thinks of the party."

TOKYO 00002107 012 OF 013

Deputy President Naoto Kan in a study session he hosted stated
yesterday: "The party head's post should be assumed by a person who
is feared by other parties. The LDP is most afraid of Mr. Ozawa." In
the study session, many participants voiced their views supporting
Ozawa. Support for Ozawa has grown in a group of lawmakers failing
from the former Democratic Socialist Party, as well as in a group of
lawmakers coming from the former Japan Socialist Party. A senior
party official said: "More than a half of the DPJ Diet members
support (Ozawa)."

However, Ozawa has yet to announce his candidacy. So, if Ozawa does
not run, there remains a possibility that Okada might stay in the
presidential race. When asked by reporters about his comment on
Okada's remarks, Ozawa just said yesterday in Sapporo: "I'm not in a
position to make any comment." Asked about when he would announce
his candidacy, he responded: "I will consider it after the
mid-August O-Bon holiday break."

(08073103kn) Back to Top

(9) BOJ economic outlook for 1998: Economic planning agency director
general intervenes at policy-setting meeting, claiming "The outlook
will work as a drag on the economy"

TOKYO SHIMBUN (Top Play) (Excerpts)
July 31, 2008

The Bank of Japan (BOJ) on July 31 for the first time released the
minutes of its policy-setting meetings. As a result, it was found
that then Economic Planning Agency Director General Koji Omi
demanded a revision to its economic outlook at a meeting on April 9,
1998, in which he took part as the representative of the government.
It was also learned that the government later demanded the deletion
of Omi's demand from the summary of the minutes, released on May 22
the same year, claiming that such a description could be taken as
the government having lodged an objection.

That was the first time for the BOJ to hold a meeting under the
amended Bank of Japan Law, which was put into effect in April 1998
with the aim of securing the independence of the central bank. The
revelation indicates that since a tense relationship between the BOJ
and the government had been continuing, the government could have
infringed on the independence of the BOJ as it had not yet
familiarized itself with the spirit of the amended law.

The BOJ economic outlook in question noted that the present state of
the economy was in the negative territory. Omi repeatedly demanded
that the BOJ steered clear of issuing a report that could obstruct
economic-stimulus measures taken by the government.

Then BOJ Deputy Governor Sakuya Fujiwara made a rebuttal, saying,
"Announcements that the BOJ issues are not intended to be a drag on
the economy." In the end, the BOJ outlook was not revised.

A person who attended a BOJ meeting on May 19 the same year from the
Economic Planning Agency demanded that Omi's statement be deleted
from the minutes, claiming that the minutes described as if the
director general had trampled on the spirit of transparency,
including the accountability of the BOJ. Omi's demand was then
deleted, based on the decision made by then BOJ Governor Masaru

TOKYO 00002107 013 OF 013


The BOJ is expected to continue releasing minutes covering a
six-month period every six months.


© Scoop Media

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