Cablegate: Japanese Morning Press Highlights 10/15/08

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UNCLAS SECTION 01 OF 09 TOKYO 002869

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

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

SUBJECT: JAPANESE MORNING PRESS HIGHLIGHTS 10/15/08

1) Asahi poll: Aso Cabinet support rate rises a point to 42 PERCENT
, with non-support rate at 38 PERCENT (Asahi)

North Korea problem:
2) Prime Minister Aso in Upper House Budget Committee exchange
expresses dissatisfaction with U.S. removing North Korea from terror
blacklist (Yomiuri)
3) Main exchanges on North Korea issues in the Upper House Budget
Committee (Tokyo Shimbun)
4) Senior Foreign Ministry official in Washington to explain Japan's
position of not providing energy aid to North Korea (Mainichi)

5) Japan-South Korea summit meeting to take place on the sidelines
of ASEM in Beijing (Tokyo Shimbun)

Diet in session:
6) Amended anti-terror bill allowing continued MSDF refueling
service in Indian Ocean to pass the Diet at the end of the month
(Mainichi)
7) LDP secretary general hints at late November general election
(Asahi)
8) Name of candidate for deputy governor of Bank of Japan to finally
be presented to the Diet today (Nikkei)
9) Democratic Party of Japan (DPJ) continues to take a flexible
policy line in the Diet (Nikkei)

10) DPJ strengthening argument for early dissolution of the Diet,
now that the stock market is recovering (Tokyo Shimbun)
11) DPJ head Ozawa returns to the Diet from hospital ready to start
pushing for Diet dissolution again (Asahi)
12) Ozawa calls DPJ lawmaker Maeda's acceptance of large
contributions from pyramid scheme outfit "inappropriate" (Tokyo
Shimbun)

Economic measures:
13) Aso hints at issuing deficit bonds in order to fund part of
proposed second supplementary budget to stimulate economy (Yomiuri)

14) Bill that would strengthen the financial system expected to pass
the Diet this month (Nikkei)

Articles:

1) Poll: 42 PERCENT support rate for Aso cabinet, with 38 PERCENT
non-support; 56 PERCENT oppose issuing deficit-covering government
bonds

ASAHI (Page 4) (Full)
October 15, 2008

The Asahi Shimbun conducted a telephone-based opinion survey on Oct.
11-12, following the latest one on Oct. 4-5. The Asahi poll found
that 42 PERCENT of respondents support the cabinet of Prime
Minister Taro Aso, about the same level as the 41 PERCENT in the
previous poll. The disapproval rate for the Aso cabinet slightly
dropped to 38 PERCENT from the previous 42 PERCENT .

People were asked their opinion about the issuance of
deficit-covering government bonds to fund a large-scale
supplementary budget containing an economic stimulus package. Only
24 PERCENT supported such an issuance, while 56 PERCENT opposed
it.

TOKYO 00002869 002 OF 009

When the Asahi asked in an August poll, before the global financial
crisis became serious, about the issuance of deficit government
bonds to stimulate the economy, 15 PERCENT approved, while 67
PERCENT disapproved.

Asked about whether to continue the Maritime Self-Defense Force's
(MSDF) mission to refuel ships of the United States and other
countries, 42 PERCENT said that it was necessary and another 42
PERCENT called it unnecessary.

Regarding which party to vote for if an election were held now, 32
PERCENT of respondents (33 PERCENT in the previous poll) said they
would vote for the ruling Liberal Democratic Party (LDP) and 32
PERCENT (34 PERCENT in the previous poll) answered they would vote
for the Democratic Party of Japan (DPJ).

Asked about what was the priority issue when choosing the party to
vote for, 90 PERCENT said measures to stimulate the economy, 76
PERCENT picked the health insurance system for people aged 75 and
older, and 75 PERCENT pointed to the pension-record mess. The
percentages of the respondents who would vote for the LDP and DPJ
were even.

2) Prime minister expresses dissatisfaction about U.S. removing
North Korea from terrorism blacklist

YOMIURI (Page 2) (Full)
October 15, 2008

Prime Minister Taro Aso in yesterday's Upper House Budget Committee
session made this comment regarding the delisting by the United
States of North Korea as a state sponsor of terrorism: "The U.S.
assertion to move the nuclear issue forward is understandable to
some extent. But we have three problems: (abduction), nuclear
programs, and missiles. We have clearly told (the United States)
that we are dissatisfied with the delisting of North Korea as a
state sponsor of terrorism."

Touching on Japan's policy toward the six-party talks that are
expected to resume later this month, the prime minister also said:
"We will naturally continue to strongly ask for the resolution of
the abduction issue." Regarding energy aid to North Korea, he
declared: "We will not respond to calls unless there is (progress)
on the abduction issue."

3) Main questions and answers on North Korea in Upper House Budget
Committee session on Oct. 14

TOKYO SHIMBUN (Page 6) (Excerpts)
October 15, 2008

Gotaro Yoshimura of the Liberal Democratic Party: I am not convinced
by the U.S. decision to delist North Korea as a state sponsor of
terrorism.

Chief Cabinet Secretary Takeo Kawamura: We will strongly call for
the establishment of a research committee with authority (a
committee on reinvestigation into the victims of kidnapped by North
Korea).

Prime Minister Taro Aso: We will call for the launching of a

TOKYO 00002869 003 OF 009

comprehensive investigation at an early date that would deliver
results leading to the return of all existing abducted Japanese. I
want to continue upholding the basic policy of normalizing
diplomatic ties (between Japan and North Korea) after
comprehensively resolving the abduction, nuclear, and missile issues
and settling issues of the unfortunate past.

Seiichi Eto of the Liberal Democratic Party: What is your view of
energy aid (to North Korea)?

Prime Minister: There will be no change in the government's policy
of not taking part in economic and energy assistance programs under
the six-party talks unless progress is made in Japan-DPRK relations,
including the abduction issue.

Masayuki Naoshima of the Democratic Party of Japan: Does Japan
simply have to accept the United States' decision to delist North
Korea as a state sponsor of terrorism?

Prime Minister: The U.S. decision is understandable to some extent
as a means to move the nuclear issue forward. We have told them
clearly that we are dissatisfied with the delisting. It is Japan
that will be most affected by (the North's) nuclear programs.
Whether (the North's nuclear facilities) can be verified properly is
a big question.

Naoshima: We will no longer be able to seek progress on the
abduction issue by using the delisting as a bargaining chip.

Prime Minister: The six countries are expected to conduct a variety
of talks. We will naturally continue strongly proposing talks on the
abduction issue on those occasions.

Naoshima: I believe the verification of undeclared facilities is not
possible without the North's consent.

Prime Minister: There seems to be a gap in views between the United
States and North Korea on (how verification should be conducted).
Obtaining assurance is essential. For the documentation of the
process, it is important to carry out six-party talks.

Naoshima: What if (economic assistance by other countries) moves
forward while leaving the question of undeclared facilities
unresolved?

Prime Minister: I do not rule out the possibility of such a
development. Even if Japan is asked (by other countries to expend
money) and extend assistance, we will not go along with them.

4) In sub-cabinet-level meeting with U.S. and South Korea, Sasae
explains that it is difficult for Japan to extend assistance to
North Korea

MAINICHI (Page 2) (Full)
October 15, 2008

Kazuhiko Kusano, Washington

A Japan-U.S.-South Korea sub-cabinet-level meeting was held on Oct.
14 at the U.S. State Department to discuss a framework to verify the
nuclear facilities declared by North Korea. Touching on Japan's
energy assistance to North Korea, Deputy Foreign Minister Kenichiro

TOKYO 00002869 004 OF 009

Sasae explained Japan's position, saying: "Since there has been no
progress on the issue of Japanese nationals abducted (by North
Korea), (extending assistance) is difficult." The United States and
South Korea showed understanding toward Japan's thinking, according
to Sasae.

5) Japan-South Korea summit in Beijing envisioned

TOKYO SHIMBUN (Page 2) (Full)
October 15, 2008
The government started arrangements yesterday for the first meeting
between Prime Minister Aso and South Korean President Lee Myung-bak
on the sidelines of the Asia-Europe Meeting (ASEM) in Beijing on
Oct. 24-25. This will be the first Japan-South Korean summit since
President Lee visited Japan in April. The two leaders, having
repaired bilateral ties strained by such issues as territorial
claims to the Takeshima / Dokdo islets, are expected to confirm the
need for the two countries' cooperation in dealing with the
U.S.-triggered financial crisis.

Under the Fukuda administration, Japan and South Korea introduced a
program of reciprocal visits by Fukuda and Lee on a regular basis,
but the program has been suspended since South Korea reacted
fiercely to the inclusion of a passage stating that Takeshima was
Japan's territory in a teaching manual for school curriculum
guidelines for middle schools in July.

Japan has been seeking a chance to swiftly improve the bilateral
relationship, based on the judgment that "it is indispensable for
Japan, South Korea, and China to send joint messages" over how to
deal with North Korea's nuclear problem or the ongoing financial
crisis, according to a senior Foreign Ministry official.

In the envisioned Japan-South Korea summit, the two leaders are
expected to discuss the possibility of resuming talks on concluding
a bilateral economic partnership agreement (EPA) to realize the
Fukuda-proposed initiative of building a new era in Japan-South
Korea relations. No EPA talks have been held since June.

6) Passage of new anti-terror bill expected at end of month

MAINICHI (Page 2) (Excerpts)
October 15, 2008

The possibility has become strong that the bill amending the new
anti-terrorism special measures law that would continue refueling
operations in the Indian Ocean will pass the Diet at the end of this
month. The reason lies with the opposition camp's coming up with the
view of seeking thorough debate of the bill in the Upper House. As a
result, the view in the government and ruling camp has spread that
it would be difficult from a timing standpoint to dissolve the Diet
and call for a snap election in mid-November.

The Democratic Party of Japan (DPJ) at first had taken a stance of
going along with an early passage of the amended new anti-terror
special measures law. On the 14th, as well, party leaders and senior
members confirmed that they would agree to the bill passing a
plenary session of the Lower House of the Diet on Oct. 21. At that
point, the ruling camp initially assumed that the Upper House would
reject the bill on Oct. 24 and the bill would then be passed by a
Lower House override vote.

TOKYO 00002869 005 OF 009

However, the DPJ was criticized by the other opposition parties that
wanted thorough debate of the bill, so it switched its position to
one of not making a definite promise in the Upper House of passage
of the legislation. As a result, the Diet affairs departments in the
ruling parties judged that although the bill would be adopted by the
Lower House, the outlook for the Upper House was not good. The
ruling camp officials saw passage of the bill late in the month, at
the earliest.

If a general election is called, this would make the possibility of
it occurring in mid-November slim. The growing outlook in the ruling
camp is that the election will be held either on Nov. 23, with Diet
dissolution at the end of October, or on Nov. 30, with dissolution
in early November. However, Prime Minister Taro Aso on Nov. 22-23
will likely be attending the APEC meeting in Peru. It is hardly
conceivable that an election would be held on day that the Prime
Minister is absent from the country.

7) LDP Secretary General Hosoda hints at general election in late
November

ASAHI (Page 1) (Full)
October 15, 2008

Liberal Democratic Party (LDP) Secretary General Hiroyuki Hosoda
held a news conference at the Foreign Correspondents' Club of Japan,
in which he hinted at the possibility of a general election taking
place in late November. The government and ruling parties plan to
present a nominee for Bank of Japan deputy governor to the meetings
today of party representatives in the two chambers of the Diet,
taking preparatory steps for dealing with the financial crisis, as
well as for an early dissolution of the House of Representatives.

In the government, Eiji Hirano, a director of Toyota Financial
Services Group and former BOJ Policy Board member, has been floated
a possible candidate for BOJ deputy governor. Prime Minister Taro
Aso will make a decision late this month on when to dissolve the
Lower House after closely watching the situation.

Hosoda said at the FCCJ:

"I have heard from Prime Minister Aso that the dissolution of the
Lower House for a snap election at an early date is the best way to
break the political deadlock (created by the divided Diet)."

Hosoda clearly stated that there was no change in Aso's intention to
dissolve the Lower House as early as possible. Asked whether the
snap election would be held the last week of November, he said: "I
think there are many similarities between media speculation and my
thinking." He hinted that there could be a general election in late
November.

8) Government to present nominee for deputy BOJ governor today:
Urges DPJ to cooperate

NIKKEI (Page 2) (Excerpts)
October 15, 2008

In order to help address the global financial crisis, the government
will present to the Diet today the name of a candidate to fill one
of the two deputy governor positions at the Bank of Japan, a post
that has long been vacant and requires Diet approval. It will also

TOKYO 00002869 006 OF 009

aim at securing Diet approval before the end of the month for a bill
amending the Financial Function Early Strengthening Law designed to
reinstate the injection of public money into regional financial
institutions. With an eye on an early dissolution of the Lower House
and a snap election, the government and the ruling camp want to take
the initiative in addressing the financial crisis that started in
the U.S. by urging the DPJ to cooperate in passing several important
pieces of legislation.

Chief Cabinet Secretary Takeo Kawamura will present the proposal for
deputy BOJ governor at a joint meeting of representatives of the
Diet Steering Committees of the Upper and Lower Houses to be held at
noon on the 15th. LDP Diet Affairs Committee Chairman Tadamori
Oshima on the evening of the 14th met with his DPJ counterpart Kenji
Yamaoka and asked him to consider the proposal immediately and give
a nod to it.

Prime Minister Taro Aso on the evening of the 14th met with BOJ
Governor Masaaki Shirakawa alone at the Katei. Emerging from the
meeting, Aso told reporters, "The timing is good. I do not think
that the DPJ will oppose the government's proposal, because they are
well aware of the current financial situation." More than one
government source said, "The Prime Minister wants the BOJ to
nominate one of its officials."

Oshima during a meeting of chairmen of the Diet Affairs Committee of
the ruling parties on the 14th gave this outlook, "The DPJ has never
opposed the selection of a deputy BOJ governor. The government
proposal will be approved without problems." One government source
took this view: "A person other than a former Finance Ministry
official will be picked. The government cannot possibly present a
controversial personnel proposal."

9) DPJ likely to continue its flexible policy

NIKKEI (Page 2) (Excerpts)
October 15, 2008

DPJ President Ichiro Ozawa on October 14 held a meeting at the party
headquarters with senior officials, such as Secretary General Yukio
Hatoyama, Azuma Koshiishi, head of the DPJ caucus in the Upper
House, and others. Participants confirmed a policy of once gain
discussing how to respond to government proposals for the selection
of deputy Bank of Japan governor and measures to address the
financial crisis. There is a strong possibility of the party
continuing its flexible approach without taking a resistance
tactics, including prolonging Diet deliberations, with the
determination that dissolution of the Lower House for a snap
election must not be delayed.

Hatoyama at a meeting of DPJ members held in Tokyo on the evening of
the 14th said, "We would like to deal with issues which the public
wants to see handled urgently in an adult-like manner."

10) With stock market recovering, calls growing in DPJ for
confrontational stance to force early Lower House dissolution

TOKYO SHIMBUN (Page 2) (Excerpts)
October 15, 2008

A growing view in the Democratic Party of Japan (DPJ) is for the
party to switch policy gears and take a confrontational stance

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against the ruling coalition after Oct. 21, when a bill amending the
New Antiterrorism Special Measures Law is expected to clear the
House of Representatives. Behind such calls is the desire to force
Prime Minister Aso to dissolve the Lower House for a snap election
at an early date. Seeing that Tokyo stock market rebounded sharply
yesterday, party members now judge there would be no major obstacle
to such, even if additional economic stimulus measures being planned
by the prime minister are worked out as emergency measures to ease
financial unrest.

President Ichiro Ozawa, Deputy President Naoto Kan, Secretary
General Yukio Hatoyama, and other executive members met last evening
and decided to reach a conclusion quickly on what approach they
should take in the Diet once the amended anti-terror law passes the
Lower House.

11) No change in Ozawa's strategy of forcing early Lower House
election in Upper House

ASAHI (Page 4) (Full)
October 15, 2008

Despite deep concerns about the impact of the global financial
crisis on Japan's real economy, Democratic Party of Japan (DPJ)
President Ichiro Ozawa intends to seek an early dissolution of the
House of Representatives, arguing that political change is the best
way to stimulate the economy. The DPJ plans to strengthen
"dissolution pressure" at the House of Councillors Budget Committee,
which started deliberations yesterday, so as not to be affected by
the prevailing view in the Liberal Democratic Party (LDP) for
pushing back Lower House dissolution.

At a press conference yesterday, Ozawa revealed his prediction that
the Lower House would be dissolved soon, saying:

"I think the public probably would not accept the LDP holding a
general election for its own convenience. The election is just
around the corner. I want our party members to do their best with
that in mind."

Ozawa criticized Prime Minister Taro Aso's article that hinted at
Lower House dissolution at the outset of the extraordinary Diet
session. He stated: "For a person who sits in the seat of power, his
words are too casual."

After checking out of the hospital yesterday afternoon, Ozawa went
to party headquarters to coordinate candidates in electoral
districts, meeting with candidates-to-be. Even while he was in
hospital (for a bad cold), he analyzed the results of the
pre-election poll by the DPJ and he also urged by phone secretaries
being sent all over the country to do their best.

12) Ozawa calls DPJ member Maeda's receipt of donations from pyramid
scheme operators "inappropriate"

TOKYO SHIMBUN (Page 2) (Full)
October 15, 2008

It has been revealed that two political organizations that support
Yukichi Maeda, a lawmaker of the Democratic Party of Japan (DPJ),
received a huge amount of money as Maeda's lecture fees and
political donations from pyramid scheme operators and another group.

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President Ichiro Ozawa commented on this problem in a press
conference yesterday: "It is quite inappropriate that he received
money (lecture fees) from a company that was ordered to suspend
business." Maeda is a House of Representatives member elected in the
Tokai region proportional representation block.

Ozawa will ask Maeda today about the details of the case. In the
press conference, Ozawa said: "Upon hearing Mr. Maeda's explanation,
we would like to determine as soon as possible what our party should
take to secure (public) trust."

13) Prime Minister Aso hints at increasing issuance of deficit bonds
in second supplementary budget; Reduction in corporate tax revenues
expected

YOMIURI (Page 2) (Excerpt)
October 15, 2008

Prime Minister Aso in the Upper House Budget Committee yesterday
hinted at the possibility of increasing the issuance of deficit
bonds in the second supplementary budget to supplement an expected
reduction in corporate tax revenues. He gave this outlook regarding
the impact of the financial crisis that started in the United
States: "Revenues from the corporate tax will drop severely."
However, he stressed "I basically do not want to issue deficit
bonds" to fund the additional economic stimulus package that will
form the pillar of the second supplementary budget.

14) Government expects DPJ to cooperate on passage of amendment to
Financial Function Early Strengthening Law

NIKKEI (Page 2) (Almost full)
October 15, 2008

The government and the ruling parties will likely adopt an amendment
to the Financial Function Early Strengthening Law after the summit
of the Asia-Europe Meeting (ASEM) to be held in Beijing on October
24-25. They intend to ask for cooperation from the DPJ in the hope
that Diet deliberations will start right after the summit and the
bill will be enacted before the end of the month.

With the acceleration of efforts to put on a package of additional
economic stimulus measures to address the global financial turmoil,
the focus is now shifting to tax-cut measures.

LDP Policy Research Council Chairman Kosuke Hori and Hakuo
Yanagisawa, president of the Financial Crisis Addressing Project
Team, on the afternoon of the 14th met with Tax System Research
Commission Chairman Yuji Tsushima. They agreed to incorporate into
the package a policy of looking into the following measures during
an annual tax code revision at the end of the year: (1) Extending
the current preferential tax system for securities; (2) expanding
the housing loan tax cut; and (3) expanding items eligible for the
capital investment tax cuts.

The bill on a supplementary budget, which will finance the
comprehensive economic stimulus package, was enacted on the 16th. A
bill aimed at extending Japan's refueling operations in the India
Ocean will likely clear the Lower House on the 21st. What approach
the DPJ will make during Upper House deliberations is unclear.
However, there is the possibility that the bill will be enacted as
early as the 29th. Prospect now look brighter for the top priority

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issue in the extraordinary Diet session.

The view is strong that once specifics of additional economic
stimulus measures are fixed, the environment for the prime minister
to reach a final decision on when to dissolve the Lower House for a
snap election will be readied.

One senior official of the LDP Policy Research Council took this
view: "The prime minister told me that the compilation of the
package of additional economic stimulus measures can wait until the
final week of October. If the Lower House is dissolved in late
October, the additional stimulus measures will serve as a manifesto
for the Lower House election."

SCHIEFFER

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