Cablegate: Japanese Morning Press Highlights 10/08/08

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1) Top headlines
2) Editorials

3) War on terror: U.S. expects Japan to pick up a portion of Afghan
war costs to the tune of an estimated $20 billion over five years

North Korea problem:
4) Special envoy Sung Kim to brief Japanese officials today on
recent U.S.-DRPK talks (Yomiuri)
5) U.S. may have compromised with North Korea during Assistant
Secretary Hill's Pyongyang visit to get agreement on inspections

6) Japan to seek at G-7 meeting U.S. commitment to inject public
money by end of month in order to free up capital (Yomiuri)

Diet affairs:
7) Prime Minister Aso eager to pass new anti-terrorist bill allowing
MSDF refueling mission to continue (Yomiuri)
8) Prime Minister in Diet replies skirts the issue of Yasukuni
Shrine (Yomiuri)
9) Supplementary budget to pass the Lower House (Asahi)

10) Democratic Party of Japan to approve passage of the
supplementary budget (Tokyo Shimbun)
11) Aso orders drafting of an additional economic package by the end
of the month that will include tax cut for capital investment
12) Diet dissolution schedule is up in the air (Tokyo Shimbun)
13) Anxiety over the financial crisis has changed the political
equation in the Diet (Tokyo Shimbun)
14) Aso tells Shizuka Kamei of the People's New Party that he has
been "reading to many gossipy weeklies" when talking about
Komeito-Soka Gakkai relations (Yomiuri)
15) DPJ President Ozawa's in question; He is hospitalized with
sore-throat symptoms (Sankei)



Asahi, Mainichi, Yomiuri, Nikkei, Sankei, and Tokyo Shimbun:
3 Japanese scientists win Nobel Prizes in Physics

Chairman Shii calls for amendments to Worker Dispatch Law in Lower
House Budget Committee session


(1) Three Japanese scientists win Nobel Prizes in physics
(2) Prime Minister Aso must answer questions earnestly

(1) Nobel Prizes encourage basic research
(2) Worldwide stock plunge: U.S., European nations urged to employ
every possible means

TOKYO 00002802 002 OF 010

(1) Enough economic talk, it's time for tough action
(2) Nobel Prize: Effort and reform necessary for fostering

(1) Universal stock plunge: U.S. and European countries must
eliminate root cause of financial crisis
(2) Latent power of particle research demonstrated by Nobel Prize

(1) Nobel Prize winners prove latent strength of theoretical
research in Japan
(2) Japanese, U.S. stock markets tumble: G7 must come up with solid

Tokyo Shimbun:
(1) Three scientists win Nobel Prizes
(2) Nikkei dips below 10,000 mark

(1) Large companies must improve work environment

3) Afghanistan war costs: U.S. expects Japan to share up to 20
billion dollars over five years

NIKKEI (Page 2) (Full)
October 8, 2008

Nihon Keizai Shimbun learned on October 7 that the Washington has
conveyed to Tokyo its expectations for Japan to share up to 20
billion dollars (approximately 2 trillion yen) of part of military
assistance costs to Afghanistan, where public security is worsening.
Japan was sounded out because it was deemed difficult for it to make
personnel contributions in mainland Afghanistan for the time being.
The U.S. government therefore has approached Japan about the
possibility of it expanding its contribution in terms of providing
funds as an alternative measure. The issue of shouldering funds used
for the stabilization of Afghanistan and the continuation of
refueling mission in the Indian Ocean will likely surface as
challenges to Japan.

Deputy Assistant Secretary of Defense for Central Asia Wilkes
conveyed this request by the U.S. to Japan, when he visited Japan in
late July. Prior to this, then Prime Minister Yasuo Fukuda during
his talks with President Bush in early July had explained Japan's
position of finding it difficult to dispatch Self-Defense Forces
personnel to mainland Afghanistan. Wilkes was sent to Japan in such
a context. Twenty billion dollars is equivalent to approximately 150
PERCENT of what Japan contributed in funds to the Gulf war effort
in 1991.

Wilkes during talks with the Japanese government asked for the
continuation of the refueling mission by the SDF. As aid activities
sought from Japan in Afghanistan he cited logistical support for the
International Security Assistance Force (ISAF), participation in the
Provincial Reconstruction Team (PRT) and transporting goods by
transport planes and helicopters. He expressed U.S. expectations for
increased funding in the event of Japan finding it difficult to make
personnel contributions in those areas.

TOKYO 00002802 003 OF 010

Military assistance expenses, which Wilkes had referred to, appear
to include the reinforcement of Afghanistan's own military forces.
However, it is not necessarily clear whether the U.S. is hoping that
Japan will shoulder the full amount. That is because there is the
possibility that it has asked other countries that are not
dispatching troops to Afghanistan to share the expenses.

Wilkes' request to Japan was reportedly endorsed by President Bush.
Japan has kept the request pending in part due to the recent cabinet
replacement. It is likely that the U.S. will once again make a
similar request, now that the Aso cabinet is now in full swing.

4) Sung Kim to visit to Tokyo today to report on U.S.-DPRK talks

YOMIURI (Page 4) (Full)
October 8, 2008

U.S. special envoy for the six-party talks Sung Kim will visit Japan
today to brief the Foreign Ministry's Asian and Oceanian Affairs
Bureau Director General Akitaka Saiki on the details of the talks
between the United States and North Korea on the verification
procedure of the North's nuclear report, according to government
sources yesterday. The U.S.-DPRK talks were held in Pyongyang on
Oct. 1-3 between U.S Assistant Secretary of State Christopher Hill
and North Korean Vice Foreign Minister Kim Kye Gwan.

5) N. Korea's agreement needed for inspections; U.S. gives way, soon
to delist N. Korea as terror backer

SANKEI (Page 1) (Full)
October 8, 2008

U.S. Assistant Secretary of State Hill, chief U.S. delegate to the
six-party talks over North Korea's nuclear weapons program, visited
North Korea on Oct. 1 and reached a basic agreement with his North
Korean counterpart on procedures to verify North Korea's nuclear
facilities. One of the agreed procedures is that the United States
and other six-party members need North Korea's concurrence when
inspecting its nuclear facilities. The United States made the
concession since North Korea threatened to resume its nuclear
facilities' operation. The United States has so far demanded spot
inspections over North Korea's declaration of its nuclear programs.

"It's very regrettable, but the United States will shortly delist
North Korea as a state sponsor of terrorism," a government source
said yesterday in connection with the basic agreement reached
between the United States and North Korea with the U.S. having made
such a concession.

The United States has now given way to North Korea. What lies behind
this is that President Bush's term of office is to end in January.
"The Bush administration wants to give some kind of shape to the
situation within its term," a senior official of the Foreign
Ministry said.

Hill reported the basic agreement in detail to Secretary of State
Rice yesterday. With Rice's approval, Sung Kim, the special envoy to
the six-party talks who is now staying in Seoul, was to have visited
Japan yesterday to convey details about the agreement to Japan as
well. However, his visit to Japan has been postponed "probably
because the U.S. government was taking time to go through procedures
or otherwise the agreement was still being discussed within the U.S.

TOKYO 00002802 004 OF 010

administration," according to a Foreign Ministry source.

6) Japan at G-7 to call on U.S. to inject public money

YOMIURI (Page 2) (Full)
October 8, 2008

A meeting of finance ministers and central bank governors from the
Group of Seven Nations (G-7) is to be held in Washington starting on
October 10. The likelihood is now Japan will urge the U.S. to inject
public money into ailing financial institutions. Its judgment is
that in order to calm the financial crisis, which has spread across
the world, it is inevitable to inject as quickly as possible public
money into those financial institutions that have triggered the
havoc. The global economy is clearly slowing down, compared with the
time when the previous G-7 meeting was held in April. G-7 members
will likely share a sense of crisis toward the present state of the
world economy, for the financial crisis is beginning to have an
adverse effect on the real economy.

The G-7 will focus on talks on measures to stabilize the
international financial market, where tension is increasingly
mounting, triggered by the collapse of Lehman Brothers, a leading
U.S. investment bank. Member nations are expected to reach an
agreement to strengthen cooperation over the continuation of a
measure to supply dollars to assist leading financial institutions'
cash management. The EU is pressing ahead with the nationalization
of financial institutions with public money. Japan along with
European members will insist on the need for the U.S. to inject
public funds into financial institutions at an early date in order
to help them reinforce their capital.

Proposals for strengthening cooperation among G-7 member nations
will include: 1) determining a system of monitoring the financial
soundness of leading financial institutions in the world and their
cash management; 2) verifying the effects of the supply of a total
of 620 billion dollars carried out by leading central banks of
member nations and looking into additional measures; and 3)
verifying financial system stabilization measures taken by various
countries, including the Emergency Economic Stabilization Act of the
U.S. and European countries' public money injection measures.

In this connection, Prime Minister Aso on the evening of the 7th met
at the Kantei with Finance Minister and State Minister for Financial
Policy Nakagawa and Central Bank Governor Masaaki Shirakawa, who
will take part in the G-7. He ordered them to explain Japan's
experience of having tided over the crisis with capital
reinforcement using public money in the 1990s, saying, "I would like
you to send a message to the world, based on Japan's experience."
Aso apparently intends to call on the U.S. to take a similar

The U.S. during the meeting asked Shirakawa: "The present situation
could affect the real economy. I want you to exert all-out efforts
to stabilize the financial market." State Minister for Economic and
Fiscal Policy Yosano was also present at the meeting. Emerging from
the meeting, the prime minister told reporters, "The G-7 is drawing
attention for the first time in a long while. It means that the
world is experiencing a high crisis awareness regarding the current
financial crisis."

7) Premier eyes passing antiterror bill

TOKYO 00002802 005 OF 010

YOMIURI (Page 4) (Full)
October 8, 2008

The fiscal 2008 supplementary budget, one of Prime Minister Aso's
top priorities, is expected to clear the Diet on Oct. 16. As it
stands, the focus of the political situation will now be on when to
dissolve the House of Representatives for a general election. The
government has now introduced a legislative measure amending the new
Antiterrorism Special Measures Law in order for Japan to extend the
Maritime Self-Defense Force's refueling activities in the Indian
Ocean, and the prime minister wants the legislation passed. However,
it is still unclear whether the Diet will enter into deliberations
on the bill. In addition, the economic situation is also showing
even more difficult aspects. The prime minister will carefully
explore timing for a snap election, with an eye to Nov. 16 or a
later date, while keeping tabs on the leading opposition Democratic
Party of Japan (Minshuto).

The prime minister attended a House of Representatives Budget
Committee meeting yesterday, during which he indicated that he would
like to focus on Japan's international contributions toward the
general election for the House of Representatives through Diet

DPJ President Ozawa is opposed to continuing the MSDF's refueling
mission in the Indian Ocean as "unconstitutional." The prime
minister apparently wants to make it a campaign issue in the general
election by clearly differentiating his policy stance from Ozawa's
over the war on terror and Japan-U.S. relations.

If the DPJ votes against the antiterror bill in the House of
Councillors at an early date, the bill will likely be passed in
October with the House of Representatives' second vote overriding
the upper chamber's decision. In that case, the prime minister can
dissolve the House of Representatives for a general election in
mid-November or in late November.

Meanwhile, the prime minister stated before the House of
Representatives Budget Committee yesterday that Japan's economy is
even more difficult than it was when the supplementary budget was
compiled. With this, the prime minister underscored his intention to
tackle additional economic stimulus measures.

"I cannot say that I have fulfilled my role until we win the battle
with the DPJ in the general election for the House of
Representatives." With this, in his ruling Liberal Democratic
Party's presidential election last month the prime minister had
implied his intention to dissolve the House of Representatives for a
snap election at an early date. In the aftermath of the recent
international financial crisis, however, the prime minister has
prioritized economic pump-priming measures over an early snap
election for the House of Representatives.

The prime minister eyes dissolving the House of Representatives for
a general election within the year. One possible scenario in that
case-according to an LDP lawmaker-is that the prime minister will
dissolve the House of Representatives with a campaign pledge to
implement large-scale economic stimulus measures.

The LDP recently probed the nation's electorate for the House of
Representatives. But the LDP is said to have found that it was

TOKYO 00002802 006 OF 010

delicate whether the ruling coalition can secure a majority of the
seats. One LDP executive has voiced concern: "It's a minus to
dissolve the House of Representatives under such economic
circumstances. The economy is in a slump, so we will get scolding."
Some LDP lawmakers are beginning to say it is desirable to put off
the general election until early next year.

Meanwhile, the New Komeito, the LDP's coalition partner, is now
gearing up for the general election, with an eye on a date in early
November for voting and vote-counting. "It's desirable to dissolve
the House of Representatives for a general election within the year
at the latest," one New Komeito executive said.

Concerning the antiterror bill as well, the New Komeito has
concurred on taking a second vote in the House of Representatives to
enact the bill in case the DPJ votes against it in the House of
Councillors in a short time. The prime minister's aides will
carefully coordinate with the New Komeito and its backer, Soka

8) Prime minister speaking in Lower House Budget Committee is
elusive about visiting Yasukuni Shrine

YOMIURI (Page 2) (Excerpts)
October 8, 2008

Asked in yesterday's Lower House Budget Committee session about the
possibility of his paying homage at Yasukuni Shrine during his
tenure of office, Prime Minister Taro Aso said: "Right now, I will
not answer whether I will go or not." When he was serving as foreign
minister, he did not go to the shrine on the August 15
end-of-the-war anniversary.

The prime minister made this comment about the situation surrounding
Yasukuni Shrine: "The current situation is such that the state is
prohibited from respecting those who sacrificed themselves for the
country with the highest honor. Such a situation is wrong. The root
cause lies in the decision to leave honoring the war dead to one
religious corporation." Since from before becoming prime minister,
Aso has called Yasukuni Shrine to voluntarily dissolve itself as a
religious corporation and shift its functions to a special
corporation involving the state. Regarding this fact, Aso said:
"There is no other option but for Yasukuni Shrine and the Japan
War-Bereaved Association to make a final decision."

9) Supplementary budget to clear the Lower House today

ASAHI (Page 4) (Excerpt)
October 8, 2008

The fiscal 2008 supplementary budget bill will be adopted by the
full session of the House of Representatives today and then be sent
on to the House of Councilors. This is because the Democratic Party
of Japan (DPJ, in the directors' meeting of the Lower House Budget
Committee yesterday, yesterday agreed to the approval of the budget
bill on the 8th in committee and adoption by the Lower House full
session later on the same day. The DPJ plans to vote for adoption of
the supplementary budget in the Lower House. The ruling parties aim
to have the Upper House approve and pass the budget bill by the
middle of next week. The DPJ in the Upper House has taken the
position of agreeing to passage of the budget from the standpoint
that this will spur on an early dissolution of the Diet.

TOKYO 00002802 007 OF 010

10) DPJ to approve extra budget bill, aiming to press Aso for early
Lower House dissolution

TOKYO SHIMBUN (Page 2) (Full)
October 8, 2008

The Democratic Party of Japan (DPJ) has decided to approve a fiscal
2008 supplementary budget bill, turning around its confrontational
stance. The decision stems from the judgment that if the party
opposes the bill, it may be subject to public criticism, against the
backdrop of the U.S.-triggered financial crisis. The approval is
also aimed at urging Prime Minister Aso to act quickly to dissolve
the House of Representatives.

The main opposition confirmed in its executive meeting yesterday its
agreement to take a vote in a meeting of the Lower House Budget
Committee and a plenary session today in response to a request by
the ruling camp. The DPJ left the decision on the bill entirely to
its leader Ichiro Ozawa.

Although the DPJ cites the need to deal with the emergency financial
situation as the reason for its approval, its ultimate aim is to
bring about an early Lower House election.

Aso has said that he will give priority to the economic measures
over Lower House dissolution. Keeping this in mind, the DPJ judges
that once the extra budget bill clears the Diet, the obstacle to the
prime minister's decision to dissolve the Lower House will be
removed, as a senior DPJ member saying: "We are aiming to make
arrangements first and then urge the government to dissolve the
Lower House."

Aso, however, has also expressed his desire to hold deliberations on
a bill amending the New Antiterrorism Special Measures Law to enable
the Maritime Self-Defense Force to continue its refueling mission in
the Indian Ocean. It therefore is uncertain whether things will go
as the DPJ plans. Given this, some members are suggesting that the
party should revert to a confrontational stance in the House of

11) Government plans to draw up additional economic stimulus
measures later this month, including tax breaks on capital

YOMIURI (Page 2) (Full)
October 8, 2008

In the wake of the Nikkei Stock Average's huge plunge, Prime
Minister Taro Aso decided yesterday to draw up an additional
economic stimulus package later this month, following passage of a
fiscal 2008 supplementary budget. Given growing economic uncertainty
amid the international financial turmoil, the prime minister has
recognized the need to expand domestic demand. The package is
specifically expected to include tax cuts to encourage corporate
capital investment, the extension and expansion of mortgage tax
breaks, and flat-sum income tax cuts. The prime minister will order
later this week the relevant cabinet ministers to earnestly consider
additional measures.

Before the Lower House Budget Committee yesterday, the prime
minister announced his intention to come up with measures to prop up

TOKYO 00002802 008 OF 010

the economy in connection with the U.S.-triggered international
financial crisis. He said: "It is as grave as (the Great Depression)
of 1929. This time around, European nations are also involved, and
it is certain to have a negative impact on Japan. Priority must be
given to near-term economic and financial measures." Ahead of the
Budget Committee meeting, the prime minister attended an informal
cabinet meeting in which he said, "It is going to be necessary to
take steps to expand domestic demand, as well."

To fund the flat-amount tax cuts, the government will consider using
the so-called "buried treasure," such as the reserve fund in the
Fiscal Investment and Loan Program special account.

Possible additional measures include the expansion of dept guarantee
for small and mid-sized companies experiencing difficulty raising
funds and expanding the tax breaks for securities.

12) LDP Koga: Timetable for Lower House dissolution is wrapped in

TOKYO SHIMBUN (Page 2) (Full)
October 8, 2008

09:00: Prime Minister Aso was engaged in debate with Democratic
Party of Japan (DPJ) Deputy President Naoto Kan, the first
questioner in a meeting of the House of Representatives Budget

11:30: Liberal Democratic Party Executive Council Chairman Takashi
Sasagawa said: "Some in the ruling and opposition camps are calling
on the government to dissolve the Lower House for a snap election at
an early date before we lose momentum, but it is essential to first
deal with the issues that are causing anxiety among the people
before dealing with the loss of our momentum.

11:40: LDP Election Committee Chairman Makoto Koga delivered a
speech in a party held by Koga faction members. He said: "I feel
that the timetable for Lower House dissolution for a snap election
is still wrapped in fog."

17:20: DPJ Vice President Katsuya Okada told reporters regarding the
party's response to the fiscal 2008 supplementary budget bill: "The
bill contains some deficiencies, but we will not take it upon
ourselves to oppose the bill."

13) Lower House dissolution still not on the horizon due to
financial fears, with some LDP members calling for a prolonged

TOKYO SHIMBUN (Page 2) (Excerpts)
October 8, 2008

With the key Nikkei index dropping to below the 10,000 mark at one
point yesterday, the impact of the U.S.-triggered financial crisis
is becoming serious in Japan. Under this situation, the view that
the dissolution of the House of Representatives for a snap election
should be significantly delayed from the expected date is gaining
influence in the government and the ruling coalition.

Liberal Democratic Party's Election Committee Chairman Makoto Koga
emphasized yesterday: "Drastic second and third economic packages
are needed. We should devote ourselves to mapping out economic

TOKYO 00002802 009 OF 010

stimulus measures, rather than discussing the timing for Lower House
dissolution for a general election." Koga was calling for an early
Lower House dissolution, but even he has begun to say that the
government has no choice but to defer Diet dissolution.

Prime Minister Aso has decided to come up with additional economic
measures after the supplementary budget bill clears the Diet. If the
government decides to compile and enact a second extra budget bill,
the timing for the general election will be delayed still further.

In addition, Aso expressed his desire yesterday to push ahead with
deliberations on a bill amending the New Antiterrorism Special
Measures Law. The Prime Minister's Office is apparently wishing to
delay Lower House dissolution.

Some in the ruling camp who have started preparations for election
campaigning, eyeing an election in November, were initially
irritated at the idea of putting off Diet dissolution. But an
increasing number of the lawmakers have begun to accept the prime
minister's proposal for prioritizing economic measures over Lower
House dissolution, seeing the impact of the financial crisis on the
Japanese economy becoming serious.

If the Aso government dissolves the Lower House, setting aside the
task of working out measures to deal with the financial crisis, and
then sees the economic situation worsening, the government will
inevitably come under heavy fire. In such a case, that will work as
a negative factor for the ruling camp in the Lower House election.

Sluggish growth in public support for the Aso administration is also
behind the growing calls for postponing the election. The judgment
that the government needs a certain amount of time to accumulate
positive results by postponing Lower House dissolution is
contributing to making more lawmakers believe there is need to put
off the election.

14) Prime Minister Aso tells Shizuka Kamei: You spend too much time
reading tabloid weeklies

YOMIURI (Page 4) (Full)
October 8, 2008

Shizuka Kamei, deputy chief of the People's New Party, took up the
lawsuit filed by former New Komeito chairman Junya Yano against the
religious sect Soka Gakkai, the main backer of the New Komeito, at a
Lower House Budget Committee session yesterday: He asked Prime
Minister Taro Aso: "Is the Soka Gakkai the largest supporter of the
Liberal Democratic Party?"

Kamei, quoting Yano's remarks, pointed out that the Soka Gakkai
carried out election campaigns by using its religious facilities."
Aso said: "You may be reading too many weekly magazines."

Environment Minister Tetsuo Saito, a New Komeito member, criticized
the opposition party for planning to summon Yano to testify as a
Diet witness. He said: "The opposition is trying to use the Diet for

15) Anxiety about DPJ President Ozawa being hospitalized with a sore

SANKEI (Page 5) (Abridged slightly)

TOKYO 00002802 010 OF 010

October 8, 2008

It was learned yesterday that Ichiro Ozawa, president of the
opposition Democratic Party of Japan (DPJ), has been hospitalized
since late Monday in a Tokyo hospital suffering a sore throat after
developing complications from a cold. With the hospitalization of a
prime ministerial candidate ahead of a dissolution of the House of
Representatives and a general election, all eyes are now again being
focused on Ozawa's health condition and physical strength. Senior
DPJ members were desperate to put a cap on the rumor that Ozawa's
health condition was serious. Secretary General Yukio Hatoyama made
this comment:

"He has had a sore throat with a touch of a cold for a couple of
days, but there is no concern about his condition. Whenever the
Lower House is dissolved, we will take over the reins of government
under the leadership of President Ozawa."

Ozawa's aide last night sent an email to DPJ lawmakers. The email
wrote: "Since the president has swollen tonsils, he is being put on
an IV drip for a rest. He, however, is attending a meeting at 5:00
p.m. He is sorry for making you worry." The aide stressed on the
email that Ozawa's health condition was not serious.

Soon after 5:00 p.m. yesterday, Ozawa wearing a mask showed up at
the entrance door of the hospital and drove off in a car. He was
temporarily discharged to attend the meeting. Almost the same time,
Ozawa, on the phone, received a report on the party's manifesto (set
of campaign pledges) for the next Lower House election from Policy
Research Committee Chairman Masayuki Naoshima. Ozawa told him: "I

Ozawa has weak tonsils. Hiroshi Nakai, former justice minister,
said: "Ozawa has a sore throat twice a year. He always says that he
can rest himself at the hospital most, since when he is at home or
office, he has to meet visitors and reply to phones."

Ozawa complained of a soar throat on Sept. 16, when he held talks
with People's New Party head Tamisuke Watanuki. After that, he has
been busy with his stumping nationwide to pick candidates for the
Lower House election, as well with representative interpellations at
the Diet. Reportedly he has been in pain more than 20 days.

There are no comments on Ozawa's health condition from the ruling
parties. However, a senior ruling coalition member said ironically:
"Since election campaigning is tough, he should stop for a while for
the sake of his health." Meanwhile, a veteran DPJ lawmaker said: "It
might be the president's trap to draw about an early Lower House
dissolution, making the ruling camp think this is a good chance for

It is a practice in the political world that even a minor illness is
rumored as being serious. A senior DPJ Diet Affairs Committee member
telephoned to Ozawa's aide, saying: "The LDP side seems to have
circulated a rumor that he is in a serious condition. I want him to
attend a Lower House plenary session tomorrow."

Ozawa was hospitalized on Sept. 25, 2006, feeling symptoms of angina
and discharged on Oct. 5.


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