Cablegate: Daily Summary of Japanese Press 12/09/08

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UNCLAS SECTION 01 OF 07 TOKYO 003341

SIPDIS

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: DAILY SUMMARY OF JAPANESE PRESS 12/09/08

INDEX:

(1) Editorial: How should Prime Minister Aso respond to public
criticism? (Nikkei)

(2) Some LDP members considering speeding up party presidential
election as Aso cabinet's support rates entering 'danger zone'
(Tokyo Shimbun)

(3) WTO talks: Japan may be pressed to largely reduce tariffs on
farm products, to expand low-tariff imports quotas (Nikkei)

(4) New glitch found in next-generation transport aircraft; Defense
Ministry to delay CX mass-production (Tokyo Shimbun) 4
(5) TOP HEADLINES

(6) EDITORIALS

(7) Prime Minister's schedule, December 8 (Nikkei)

ARTICLES:

(1) Editorial: How should Prime Minister Aso respond to public
criticism?

NIKKEI (Page 2) (Full)
December 9, 2008

The support rates for the cabinet of Prime Minister Aso are
plummeting in the opinion polls. The reason is that even though the
economy and job situation are rapidly deteriorating, the Aso
administration has delayed submission of a second supplementary
budget to the Diet and seems be putting off economic stimulus
measures until later. With the administration's centripetal force
slowing down, the lead over compiling the national budget and
reforming the tax system has returned to the bureaucracy and cliques
of lawmakers representing special interests. A move to reverse the
reform course has become noticeable. We are very concerned about the
current muddled state of politics.

In an opinion survey released by the Nikkei on Dec. 1, the support
rate of the Aso Cabinet plummeted to 31 PERCENT . In the question
about who would be more suitable to be the next prime minister,
political circles were shocked by the result of Prime Minister Aso,
who used to have a more than double advantage over Democratic Party
of Japan President Ichiro Ozawa, now on par with Ozawa.

In the opinion polls of the Yomiuri Shimbun and Asahi Shimbun that
came out on Dec. 8, the support rate dropped even further into the
21-22 percent range. And in the question of who would be more
appropriate as prime minister, Prime Minister Aso and DPJ head Ozawa
traded places. At this point, the signboard, "Aso for the economy,"
that the prime minister hung out has grown faded, and the
expectation that he would be the party's face going into the
election has flown away.

Although the prime minister's series of controversial statements
that raised doubts about his qualifications account in part for his
administration's going into a stall, the main reason seems to be his
delay in submitting to the Diet the promised second supplementary
budget that would contain economic stimulus measures, even though he
has been claiming to prioritize policy over politics and to give

TOKYO 00003341 002 OF 007

highest priority to the economy. Since November 15, when the prime
minister decided to delay the supplementary budget, there have been
continuous reductions of temporary labor and a rapidly worsening job
situation. Countermeasures put off to later have not helped.

Prime Minister Aso has stated: "The figures are extremely severe. I
take them as an evaluation of my performance. I think it is
criticism for insufficient responses to expectations about economic
and job measures. I can only respond by moving ahead with proper
measures to deal with them." Although the Democratic Party of Japan
has been shaking the Aso administration by pursuing an early
dissolution of the Diet, if there results a delay in deliberating
the budget until the regular Diet session next year, the target for
public criticism will turn toward the DPJ. The party should be
resolved to face such a situation.

A noticeable movement in the ruling camp to topple Aso has emerged.
In addition to there not being a successor candidate around, the
situation is that the game of musical chairs of ruling party
administrations has already reached its limit. With the current low
support rates, if the prime minister is unable to decide to dissolve
the Diet, he will fall into a state of being under siege from all
sides.

In the previous opinion poll, many respondents took the view that
with the financial crisis expanding, the timing for dissolving the
Lower House would be better after next spring or next September at
the end of its tenure. In the new poll, many replied that the
election should be as soon as possible or at the start of the
regular Diet session early next year.

How will the prime minister now deal with those who are saying, "If
you are going to delay the economic stimulus package, then quickly
dissolve the Diet and make a fresh political start."

(2) Some LDP members considering speeding up party presidential
election as Aso cabinet's support rates entering 'danger zone'

TOKYO SHIMBUN (Page 3) (Abridged slightly)
December 9, 2008

The Liberal Democratic Party (LDP) has been greatly shocked by Prime
Minister Taro Aso's support ratings plummeting to 25 PERCENT . With
an eye on the next Lower House election, the trend of LDP lawmakers
seeking chances to leave the party and opt for political realignment
is likely to accelerate. Since Prime Minister Aso's term of the LDP
president will end next September, some party members are now
talking about speeding up the date for next presidential race as the
party did in the last days of the administration of the Prime
Minister Yoshiro Mori in 2001.

LDP executives, meeting last evening, were in a gloomy mood. When
Senior Deputy Secretary General Mikio Hayashi was about to refer to
the results of opinion polls by various news companies, Diet Affairs
Committee Chairman Tadamori Oshima interrupted him, saying, "Don't
talk about support rates."

However, Aso mentioned them, noting, "I bear full responsibility for
them." He was so disappointed that he had no choice but to refer to
them. Senior LDP officials reiterated that they would not react
nervously to the public's support rates for the cabinet, but Aso
admitted that the responsibility was his.

TOKYO 00003341 003 OF 007

If the approval rate for a cabinet drops to below 30 PERCENT , it is
said that the cabinet has entered the danger zone, meaning it is
approaching its final days in office. However, the Aso cabinet
entered the danger zone only two months after its inauguration. The
public support rates for the Abe and Fukuda administrations in the
polls conducted immediately before the two prime ministers resigned
were 40.5 PERCENT and 31.5 PERCENT (according to Kyodo News).

What shocked the LDP further was the result of the question as to
which person, Aso or Democratic Party of Japan President Ichiro
Ozawa, would be more suitable for prime minister. The result was
34.5 PERCENT stated they preferred Ozawa as prime minister, while
33.5 PERCENT picked Aso. Support rates for the LDP and DPJ are now
almost equal.

However, Aso has now lost confidence in managing his
administration.

In a meeting held last evening in Tokyo, former Administrative
Reform Minister Yoshimi Watanabe explained that there would be three
cases for the formation of a new party: 1) forming small parties
under the LDP; 2) splitting the LDP through consultations; and 3)
forming a new party by leaving the LDP.

Apart from whether Watanabe will actually bolt the LDP, there is a
group of junior and mid-level lawmakers, including former Chief
Cabinet Secretary Yasuhisa Shiozaki, who are raising strong
objections to Aso's policy line. The membership of the group is
gradually increasing.

Former Secretary General Hidenao Nakagawa hinted at the possibility
of political realignment depending on the outcomes of the next Lower
House election, saying: "It is the matter to be decided after the
election is over." Moves are gradually growing stronger toward
resignation from the LDP and political realignment.

The Aso administration, whose public support ratings have plummeted
due to Aso's making of gaffes and flip-flops, resembles the final
days of the Mori administration in the spring of 2001.

With the July Upper House election moving closer, calls for the
resignation of Prime Minister Mori became stronger in the LDP. Mori
was then forced to announce his resignation in the form of carrying
out the party leadership race in March earlier than due in
September. If moves become strong for resignation from the party and
political realignment this time around, there will be no future for
the Aso administration.

Aso's aide, who had taken the offensive, quipped yesterday: "It is
really serious." Taku Yamasaki, former LDP vice president, clearly
stated in a speech last night: "The Aso administration no longer has
the power to dissolve the Lower House." Aso no longer can lead the
LDP in the next Lower House election.

(3) WTO talks: Japan may be pressed to largely reduce tariffs on
farm products, to expand low-tariff imports quotas

NIKKEI (Page 3) (Full)
December 8, 2008

Japan, on the defensive, is facing difficult negotiations on farm

TOKYO 00003341 004 OF 007

products. The focus of attention is on how many items will be
designated as sensitive products, which are exempted from steep
tariff cuts. Japan, which has imposed an over 200 PERCENT tariff on
101 items, had asserted that 8 PERCENT of all farm products should
be regarded as sensitive products. The chairman's proposal in the
agricultural sector, however, sets this percentage at 4 PERCENT in
principle and 2 PERCENT conditionally. Accordingly, some of the
current high-tariff items including rice and dairy products will no
longer be regarded as mainstay items, and Japan will be pressed to
significantly lower the tariffs on such items.

Even if certain products are designated as sensitive items, Japan
might be pressed to expand low-tariff import quotas, like rice under
a minimum access formula. Japan is now obligated to import about
770,000 tons of rice under this formula annually, but if rice is
designated as a sensitive item, Japan may be required to increase
the volume to over 1.1 million tons.

It has been said that sugar and starch, for which any low-tariff
import quota is not set, cannot be designated as sensitive items,
but under the new system, it will become possible for up to 1
PERCENT of all products to be designated as sensitive products if a
larger low-tariff import quota than those on other items is
introduced.

As a result of steep rises in food prices across the world,
countries began to restrict exports of farm products. Given this,
the Japanese government has insisted on the need for new rules to be
introduced to prevent export restrictions from being rampant. The
chairman's proposal includes a new regulation requiring a country
planning to restrict exports to confer with countries concerned.
Focusing on this, a member of the Agriculture, Forestry and
Fisheries Ministry said that the chairman's proposal merits
appreciation.

(4) New glitch found in next-generation transport aircraft; Defense
Ministry to delay CX mass-production

TOKYO SHIMBUN (Page 1) (Full)
December 9, 2008

A new defect has been found in a prototype of next-generation
transport aircraft (CX), now being developed by Kawasaki Heavy
Industries (KHI) as the follow-on mode of the Air Self-Defense
Force's C-1 transport plane. The Defense Ministry as a result has
begun final coordination for postponing the acquisition of a second
prototype, planned for fiscal 2009, until fiscal 2010 or later. The
mass-production of the CX is likely to slip to fiscal 2010 or
later.

The maintenance of the CX is noted in the current National Defense
Program Guidelines (NDPG) that specify the basic policy for defense
buildup. A reexamination of the CX development program is certain to
take center stage when the NDPG is reviewed at the end of fiscal
2009.

The CX is being developed at the KHI Gifu plant (Kakamigahara, Gifu
Prefecture).

The new glitch occurred in a test in late September to apply
pressure on the prototype. A breakage was found in the fuselage rear
part to load and unload cargos. The Defense Ministry Technical

TOKYO 00003341 005 OF 007

Research and Development Institute and KHI are racing to determine
the cause, suspecting that it could be a serious defect concerning
the structure of the fuselage.

A series of glitches have been found regarding the CX, including the
discovery in February last year of the rivets in the prototype that
did not meet the strength criteria, as well as of a lack of strength
of the fuselage supporting the main landing gear. The first flight,
planned for September last year, has yet to take place. The
development of the aircraft has been significantly behind schedule.

The ministry was scheduled to purchase the second prototype for some
50 billion yen from its fiscal 2009 budget. In the wake of the
discovery of the new glitch, the ministry has concluded that it
would be difficult to procure the second prototype in fiscal 2009.

(5) TOP HEADLINES

Asahi, Mainichi & Yomiuri:
Decentralization panel recommends cutting 35,000 workers in central
government's local branches

Nikkei:
FY2009 general account expenditures to top 50 trillion yen for first
time

Sankei:
More than 15,000 companies may go bankrupt, highest figure in five
years

Tokyo Shimbun:
Panel recommends abolishing only one central government's local
branch

Akahata:
Government must refuse to accept WTO chairman's plan: Import
expansion would destroy our agriculture

(6) EDITORIALS

Asahi:
(1) Plummeting Aso cabinet's support rates: The public is calling
for political change
(2) Six-party talks: How to pass the torch to the Obama
administration

Mainichi:
(1) Prime Minister Aso's responsibility to put on track panel's
recommendation to cut 35,000 jobs in central government's local
branches
(2) North Korea talks: Codify sampling of nuclear materials

Yomiuri:
(1) Plummeting popularity bodes ill for Aso, LDP
(2) Government must drastically cut jobs in central government's
local branches

Nikkei:
(1) How will Prime Minister Aso respond to the public's criticism?
(2) Merger of central government's local branches is not the final
goal

TOKYO 00003341 006 OF 007

Sankei:
(1) Communities as whole should protect children
(2) Panel's recommendation on decentralization insufficient

Tokyo Shimbun:
(1) Prime Minister Aso can't see the big picture
(2) Falsification of court ruling outrageous

Akahata:
(1) Can U.S build relationship of equality with Latin American
countries?

(7) Prime Minister's schedule, December 8

NIKKEI (Page 2) (Full)
December 9, 2008

10:30
Met with Mexican Foreign Minister Espinosa. Ambassador Amano to the
Delegation to International Organization in Vienna was present.

11:11
Science and Technology Council meeting.

12:08
Government-ruling party liaison council meeting. Finance Minister
Nakagawa and State Minister for Economic and Fiscal Policy Yosano
remained.

12:48
Government-ruling camp joint meeting and related ministers' joint
meeting to discuss tax revenues for road construction.

13:07
Met with LDP Tax System Research Commission Chairman Tsushima,
followed by Ambassador to Tanzania Nakagawa and Ambassador to
Slovakia Nomoto, followed by Amano.

14:04
Met with Yotaro Konaka, chairman of the New 21st Century Japan-China
Friendship Committee and supreme advisor to Fuji Xerox, Reform and
Liberalization Forum Executive Director Zheng Bijian, the Chinese
side's chairman and others. Chinese Ambassador to Japan Cui Tiankai
was present. Then met with Foreign Ministry Economic Affairs Bureau
Director General Otabe, METI Trade Policy Bureau Director General
Okada and Agriculture Director General for Policy Coordination
Yoshimura.

15:03
Met with National Economy Minister al-Makki, followed by Land,
Infrastructure and Transport Minister Kaneko.

16:03
Met with Chief Cabinet Secretary Kawamura. Then, experts council
"Rising Agricultural, Mountain, and Fishing Villages."

17:03
LDP executive meeting

17:45
Met with Decentralization Reform Promotion Committee Chairman Niwa

TOKYO 00003341 007 OF 007

at the Kantei. Internal Affairs Minister Hatoyama was present. Then
met with Yosano and Assistant Deputy Chief Cabinet Secretary
Fukuda.

19:09
Dined with his friend from collage days in the U.S. at a Japanese
restaurant in Yurakucho.

19:37
Met with Kawamura at a bar in Imperial Hotel.

20:45
Met with his secretary

23:31
Returned to the private residence in Kamiyaya-cho.

SCHIEFFER

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