Cablegate: Daily Summary of Japanese Press 02/04/08

VZCZCXRO9257

PP RUEHFK RUEHKSO RUEHNAG RUEHNH

DE RUEHKO #0287/01 0352250

ZNR UUUUU ZZH

P 042250Z FEB 08

FM AMEMBASSY TOKYO

TO RUEHC/SECSTATE WASHDC PRIORITY 1483

INFO RUEKJCS/SECDEF WASHDC PRIORITY

RHEHAAA/THE WHITE HOUSE WASHINGTON DC PRIORITY

RUEAWJA/USDOJ WASHDC PRIORITY

RULSDMK/USDOT WASHDC PRIORITY

RUCPDOC/USDOC WASHDC PRIORITY

RUEAIIA/CIA WASHDC PRIORITY

RUEKJCS/JOINT STAFF WASHDC//J5//

RHHMUNA/HQ USPACOM HONOLULU HI

RHHMHBA/COMPACFLT PEARL HARBOR HI

RHMFIUU/HQ PACAF HICKAM AFB HI//CC/PA//

RHMFIUU/USFJ //J5/JO21//

RUYNAAC/COMNAVFORJAPAN YOKOSUKA JA

RUAYJAA/CTF 72

RUEHNH/AMCONSUL NAHA 8288

RUEHFK/AMCONSUL FUKUOKA 5892

RUEHOK/AMCONSUL OSAKA KOBE 9559

RUEHNAG/AMCONSUL NAGOYA 4516

RUEHKSO/AMCONSUL SAPPORO 6500

RUEHBJ/AMEMBASSY BEIJING 1485

RUEHUL/AMEMBASSY SEOUL 7548

RUCNDT/USMISSION USUN NEW YORK 8182

UNCLAS SECTION 01 OF 11 TOKYO 000287

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 02/04/08

INDEX:

(1) Growing opposition among government officials to restriction on

foreign investment in airports: Idea goes against government policy

of expanding inward foreign direct investment in Japan (Nikkei)

(2) Government underscoring stance of giving priority to Africa with

financial aid plans (Tokyo Shimbun)

(3) Views on strategy for Diet dissolution split in DPJ (Nikkei)

(4) Fierce battle over provisional tax rates: Sudden agreement

between ruling and opposition camps creating commotion in LDP and

DPJ (Mainichi)

(5) Rivalry between "guardians" and "advisers" to Prime Minister

Fukuda (Sankei)

(6) Maher's remarks will wreck Okinawa-U.S. ties: Nakaima (Ryukyu

Shimpo)

(7) Poll on the public view of Japan (Yomiuri)

ARTICLES:

(1) Growing opposition among government officials to restriction on

foreign investment in airports: Idea goes against government policy

of expanding inward foreign direct investment in Japan

NIKKEI (Page 5) (Full)

February 2, 2008

Gaps in opinions on placing restrictions on foreign investment in

airport corporations - a notion the Ministry of Land, Infrastructure

and Transport (MLIT) is now mulling -- have surfaced among

government officials, reflecting a growing concern that the move

could work at cross purposes to the government's policy of boosting

inward foreign direct investment in Japan which is a major pillar of

its growth strategy. MLIT is now undergoing coordination with the

possibility of adopting at a cabinet meeting next week a bill

amending the Airport Consolidation Law that would include the new

restriction. However, an increasing number of officials have begun

to call for putting the idea on the back burner.

The government's Regulatory Reform Council, chaired by Takao

Kusakari, chairman of NKK Line, on Feb. 1 hastily released a stance

of opposing MLIT's plan, noting, "Restricting foreign investment

will dampen foreign companies' desire to invest in Japan, working

negatively for the development of the Japanese economy and the

boosting of the efficiency of airports."

State Minister for Financial Policy Yoshimi Watanabe also told a

news conference the same day, "The idea is diametrically opposed to

the government strategy of boosting inward foreign direct investment

in Japan." MLIT Minister Tetsuzo Fuyushiba is insisting, "A specific

foreign company controlling airport corporations is against the

national interest," revealing that cabinet ministers are not in

agreement on the issue.

MLIT is trying to introduce the regulation in response to Narita

International Airport Corporation preparing to list its stocks on

the stock exchange as early as fiscal 2009. It is considering

TOKYO 00000287 002 OF 011

amending the relevant law with the possibility of constraining

foreign companies' ratio of capital contribution to Narita

International Airport Corporation and an already-listed Japan

Airport Terminal Company, which operates Haneda Airport, to

one-third in terms of the right to vote.

As a reason for restricting foreign investment, MLIT explained that

since international hub airports are irreplaceable key facilities

from the perspective of maintaining security and securing national

interests, such as keeping international competitiveness, it is

necessary to avoid such facilities from coming under the control of

a foreign company in the same way investment in NTT and broadcasters

are regulated.

In foreign countries, public corporations usually operate main

airports or governments hold a majority of stocks of such airports.

In Britain, which has no foreign investment restriction, a Spanish

company purchased a British company operating Heathrow Airport. MLIT

underscored that chances are if the company operating Narita Airport

is privatized without a foreign investment restriction, a foreign

company would buy it.

An argument opposing the introduction of such a restriction is based

on the government's strategy of boosting inward foreign direct

investment in Japan. There has appeared concern that if MLIT's plan

to regulate foreign companies' investment in Japanese airports goes

the rounds abroad, a trend of investment money bypassing Japan could

accelerate.

Former Chief Cabinet Secretary Yasuhisa Shiozaki and Upper House

member Hiroshige Seko during a meeting of the Liberal Democratic

Party's Land and Transportation Division criticized the move,

noting, "Such a proposal would send a wrong message about the

Japanese market." The bill failed to secure approval at the panel

meeting twice.

Commenting on these arguments, Prime Minister Yasuo Fukuda told

reporters on the evening of Feb.1, "I think that it would not be a

good idea for Japan to close itself to the outside." He called for

consideration be given so that investment in Japan will not be

hampered.

MLIT aims at having its bill approved at a cabinet meeting next

week, with one official saying, "Many ruling party members are in

favor of our proposal, noting that a regulation restricting foreign

investment is necessary." However, some among government officials

took a view that the introduction of such a regulation would be put

on the back burner for the time being.

(2) Government underscoring stance of giving priority to Africa with

financial aid plans

TOKYO SHIMBUN (Page 3) (Full)

February 3, 2008

The government has begun to underscore the stance of attaching

importance to Africa, stemming from a desire to demonstrate its

leadership at the 4th Tokyo International Conference for African

Development (TICAD) in Yokohama in May and the G-8 Summit (Lake Toya

Summit) in Hokkaido in July. The government has proposed setting up

a fund mechanism intended to help developing countries take measures

to contain global warming. It has chosen four African countries as

TOKYO 00000287 003 OF 011

the first countries to receive aid based on this mechanism. The

government is eagerly working out support measures for African

countries.

In his speech in the annual meeting of the World Economic Forum

(Davos Conference) in Switzerland, Prime Minister Yasuo Fukuda

ranked aid for Africa and the challenge of fighting global warming

as its top priority tasks. In offering aid for Africa, the prime

minister presented such conditions as (1) setting self-help efforts

as the basis; and (2) having African countries accelerate their

economic growth to bring about sustainable development. In a small

meeting, Fukuda exchanged views on Africa problems with U.S.

Microsoft Chairman Bill Gates and other prominent figures.

Besides such appeals to the international community, Foreign

Minister Masahiko Koumura visited Tanzania last month. It was the

first Tanzania visit by a Japanese incumbent foreign minister in 29

years. He promised there that the Japanese government will disburse

260 million dollars, or approximately 28 billion yen, in aid for

reconstruction from natural disasters and refugees in African

countries, as well as for construction of training facilities for

peacekeeping operations (PKO).

Former Prime Minister Yoshiro Mori also announced at a general

meeting of the Africa Association in Ethiopia late last month

Japan's plan to offer 4.1 million dollars, or approximately 440

million yen, through the United Nations World Food Program as

measures for about 250,000 refugees in the fallout of the Kenya

presidential election.

The government is beefing up efforts to demonstrate its priority to

Africa by coming up with support measures to fight global warming

and development assistance measures.

The government aims to attract attention to Japan from many African

countries so that Japan will be able to display leadership at the

TICAD and the G-8 Summit.

Recently, China is stepping up "resource diplomacy" to African

countries. Japan cannot see itself lag behind China in maneuvering

to win over a majority of votes, particularly, focusing on its bid

for UN Security Council permanent status.

Even so, the government financial situation remains very difficult.

The nation's official development assistance (ODA) budget has

decreased to about 60 PERCENT of its highest record in fiscal 1997.

Financial sources for the aid announced by Foreign Minister Koumura

will be squeezed out in the supplementary budget. The government

finds it difficult to increase aid funds, so it is racking its

brains over how to hammer out effective, strategic, and high-quality

aid measures.

(3) Views on strategy for Diet dissolution split in DPJ

NIKKEI (Page 2) (Full)

February 2, 2008

The strategy of the Democratic Party of Japan (DPJ) on forcing a

dissolution of the House of Representatives is now wavering. The

main opposition party initially had "a decisive battle in March" in

mind, but this possibility has disappeared with a compromise

agreement reached between the ruling and opposition camps on how to

TOKYO 00000287 004 OF 011

treat the gasoline and other road-related tax rates. Some DPJ

lawmakers, concerned about a reignition of the concept of forming a

"grand coalition" with the Liberal Democratic Party (LDP), have

begun to call for a more combative approach to selecting a successor

to the incumbent Bank of Japan (BOJ) governor, whose term of office

expires in March. Growing dissatisfaction in the party is also

leading to questions about President Ichiro Ozawa's grip on the

reins of the DPJ.

Deep-seated war advocate

"House of Representatives Speaker Yohei Kono said he did not mean to

imply that a vote would be taken by the end of March," noted

Secretary General Yukio Hatoyama in a press conference yesterday in

SIPDIS

referring to the mediation offer presented by the heads of both Diet

chambers. The offer called for a certain conclusion to be reached by

the end of this fiscal year. Hatoyama's aggressive remark reflects a

growing mood for doing battle in the party.

Deputy President Naoto Kan, who has been firmly behind Ozawa,

emphasized in a meeting of his own group on the night of Jan. 31:

"We will see real battle over the next two months." In another

meeting the same day, Ozawa said: "The Japanese and U.S. election

campaigns may coincide with a period when China is expected to face

serious economic difficulties." Ozawa thus hinted that he is aiming

to put off the dissolution of the Lower House until this fall.

The conflict between those calling for political battle and others

who want talks is affecting the process of selecting a successor to

BOJ Governor Toshihiko Fukui. The government plans to promote Vice

Governor Toshiro Muto to the BOJ governorship. Within the DPJ, too,

some members are now in favor of making a compromise.

Call for combative approach on appointment of new BOJ governor

Hatoyama, however, told the press corps he plans to hold a meeting

of the subcommittee on personnel appointments, chaired by Yoshito

Sengoku, on Feb. 5, stressing: "At the committee, a view for

separating fiscal policy from monetary policy was proposed." House

of Councillors Diet Affairs Committee Chairman Susumu Yanase also

stated in a press conference: "Separating fiscal policy from

monetary policy is our party's policy. We are in the process of

selecting proper personnel."

Hatoyama and Yanase both used to belong to the now defunct New Party

Sakigake. Diet Affairs Committee Deputy Chairman Jun Azumi, with

whom Hatoyama made arrangements prior to his press conference, was

also a member of the New Party Sakigake.

Internal moves with an eye to the presidential election in September

are expected to gather momentum from now.

The idea of separating fiscal and monetary policies, in connection

with the selection of a next BOJ governor, is the stock argument of

Vice President Katsuya Okada, who has been regarded as one of the

likely candidates for the next DPJ presidency. Okada assumed the

chairmanship in January both of the global warming countermeasures

headquarters and the parliamentary league to promote a campaign to

provide foreign residents with local suffrage. One member speculated

that Ozawa might have succeeded in winning over Okada to contain

moves by resistance forces.

TOKYO 00000287 005 OF 011

(4) Fierce battle over provisional tax rates: Sudden agreement

between ruling and opposition camps creating commotion in LDP and

DPJ

MAINICHI (Page 4) (Full)

February 2, 2008

The unexpected agreement between the ruling and opposition parties

on the provisional tax for gasoline and other road-related taxes is

now rattling the main opposition Democratic Party of Japan (DPJ or

Minshuto), which had pledged to reduce gasoline prices by 25 yen a

liter. The reason is that the largest opposition party may be unable

to keep its pledge to cut the gasoline prices in April after the

terms of the provisional tax rates expires on March 31 since the

agreement incorporates the phrase that they will reach a certain

conclusion by the end of this fiscal year.

Some DPJ lawmakers have received questions by phone from the party's

regional chapters and municipal assembly members about how they

should explain the gasoline issue to the electorate. The DPJ planned

to hold a moral-boosting rally for cutting the gasoline prices in a

national meeting Feb. 2 of officials in charge of policy, but there

is growing concern in the party that the move may come under a

barrage of questions. The Shizuoka prefectural chapter has suddenly

decided to hold an explanatory meeting on Feb. 9 regarding the

gasoline issue, inviting DPJ Policy Research Committee Chairman

Masayuki Naoshima to the session.

The DPJ's regional organizations and assembly members at first were

confused about party headquarters' policy of abolishing the

provisional tax rates.

According to the result of a Yomiuri Shimbun poll, of the 47

prefectural assemblies, a total of 39 have adopted since last

September a resolution calling for securing resources for road

construction in rural areas. Of the 39 assemblies, 30 clearly

demanded that the current provisional tax rates be retained. A total

of 18 assemblies expressed their opposition to the DPJ's policy of

completely integrating the special account of road-related taxes

into the general account. Many DPJ-affiliated assembly members

supported the adoption of a written statement opposing the plan to

allocate the revenues for road projects to the general revenues.

Such moves in the prefectural assemblies have now spread to DPJ Diet

members. A total of nine Upper House members, including Yoshiro

Kawakami, who belong to a DPJ-led group, met on Feb. 1 in the Diet

with Policy Research Committee Chairman Masayuki Naoshima and handed

a statement which says: "Should the provisional tax rates be

abolished, persuasive replacement resources should be shown. A

revenue shortfall of as much as 2.6 trillion yen will undermine

services for local residents."

A total of 39 legislators from the two Diet chambers supported a

signature-collecting drive conducted by Upper House member Yasuhiro

Oe. The number of potential advocates may increase even more.

Meanwhile, the ruling Liberal Democratic Party (LDP) has called for

the need for retain the current special revenue for road

construction and other road-related taxes in solidarity with local

governments and assemblies, which have sought for securing resources

for road construction.

TOKYO 00000287 006 OF 011

The aim of the LDP was to shake up the largest opposition party's

rural area support. In a meeting of the national secretaries general

in January, Deputy Secretary General Hiroyuki Sonoda asked the

participants to make friends in the Diet.

However, the LDP is not necessarily unified. With the agreement by

the ruling and opposition camps including the phrase that revisions

will be made only on items agreed by each party, different views are

now coming to the fore.

Recently one junior lawmaker was strongly urged by several

supporters to support the idea of abolishing the provisional tax

rates. The junior LDP member quipped:

"In rural areas where many people drive a car, they are suffering

from the hike in gasoline prices. I wonder if retaining the revenues

for road construction and other road-related taxes is a true view of

the desire of rural areas."

LDP Secretary General Bunmei Ibuki threw a wet blanket on the issue

in a board meeting on Feb. 1 when he said: "I want you to follow the

party's policy." However, there is a mood in the party that a

conflict will flare up again over the plan to shift the tax revenue

for road construction to the general budget.

In a study session on Feb. 1 of the LDP caucus in the Upper House,

Kazuya Maruyama requested a study of promoting the plan to integrate

the road-related tax special account with the general account.

The sudden agreement between the ruling and opposition blocs is now

gradually widening the divisions within the LDP and within the DPJ.

(5) Rivalry between "guardians" and "advisers" to Prime Minister

Fukuda

SANKEI (Page 2) (Abridged slightly)

February 3, 2008

A new trend is emerging in the political dynamics surrounding Prime

Minister Yasuo Fukuda. For instance, there is a growing presence of

former Chief Cabinet Secretary Kaoru Yosano, who played an active

role late last year in drafting lawmaker-sponsored legislation with

the aim of settling the issue of people who had contracted hepatitis

C after being administered contaminated blood products. Former Prime

Minister Yoshiro Mori and former Secretary General Hidenao Nakagawa

of the Machimura faction have also enhanced their influence as main

players in buttressing the administration of Prime Minister Fukuda,

who used to belong to the Machimura faction. The mutual relations of

Yosano and Mori and Nakagawa are delicate. Escalation of their

rivalries might further rock the already shaky foundation of the

Fukuda administration.

Yosano visited the Prime Minister's Office (Kantei) around noon Jan.

29, the day before a House of Representatives plenary session was

expected to adopt a stopgap bill designed to extend the expiration

of the provisional gasoline tax rate from March 31 to the end of

May. "I'm here to discuss follow-up measures for the hepatitis

issue," Yosano told the reporters. But once in the prime minister's

office, Yosano advised Fukuda that the Lower House should not take a

vote on the legislation. He warned:

"Although Lower House Speaker Yohei Kono will probably allow the

TOKYO 00000287 007 OF 011

chamber to take a vote, the step would undermine the authority of

the House of Councillors, and in the long run, it would create

confusion in the administration."

Patiently listening to Yosano's advice, Fukuda in the end said, "I

see your point."

According to a person close to the prime minister, Fukuda, too,

wanted to avoid steamrolling the stopgap legislation, giving

priority to talks with the major opposition Democratic Party of

Japan. Fukuda reportedly called Secretary General Bunmei Ibuki to

his official residence on the following day, Jan. 30, and told him

to handle the matter, while keeping in mind Yosano's advice.

Following the government's response to the hepatitis C issue, which

had lowered the cabinet's support rating, aides close to the prime

minister have begun calling for Yosano's return to the Kantei. "The

prime minister and Mr. Yosano seem to be on the same wavelength," a

Kantei source said.

Yosano has taken some other steps as well. For instance, he has

become the vice-president of the board of directors of the Center

for International Exchange which is chaired by DPJ President Ichiro

Ozawa. They are scheduled to attend a board of directors meeting on

Feb. 4. It will bring Yosano and Ozawa together for the first time

since their go game on Oct. 28, two days before Fukuda-Ozawa talks,

in which the idea of a grand coalition cropped up. Ozawa has asked

Yosano to sit through the board of directors meeting, although he

had to leave it early.

What makes the prime minister so eager to pursue a policy line of

dialogue with the DPJ? A senior DPJ member explained it this way:

"In order to maintain the political calm, the prime minister wants

to delay Lower House dissolution and a general election as long as

possible and to keep the grand-coalition option alive."

The term of office of the Bank of Japan governor is scheduled to

expire on March 19. Given the divided Diet in which the opposition

bloc controls the Upper House, the prime minister, who desperately

wants to avoid a showdown with the DPJ and confusion, cannot afford

to forsake his ties to Ozawa, which have resulted from two rounds of

party-head talks last year. Yosano is obviously trying to serve as a

bridge between Fukuda and Ozawa.

Mori, on the other hand, takes pride in regarding himself as

Fukuda's "guardian." Mori served as an arbitrator between Fukuda and

Ozawa for the grand-coalition concept. Mori has also recently called

Fukuda to let him know his willingness to negotiate with Ozawa on

the appointment of the new BOJ governor.

Nevertheless, the stage is not set for Yosano and Mori to join hands

for Fukuda and Ozawa. Former Prime Minister Shinzo Abe appointed

Yosano his chief cabinet secretary when he shuffled his cabinet last

August. Mori reportedly opposed Yosano's appointment because he was

not a member of the Machimura faction.

Nakagawa, who is close to Mori, has also visited the Kantei often to

offer advice to the prime minister on the question of a special

secret slush fund known as the "buried treasure" and other matters.

SIPDIS

Nakagawa, too, has bad chemistry with Yosano. When it comes to

economic and fiscal management, Nakagawa and Yosano are like oil and

water, with the former attaching importance to economic growth and

TOKYO 00000287 008 OF 011

the latter focused on fiscal soundness. The prime minister, who has

only a few dependable aides and policy advisers, is expected to run

his administration while struggling to keep a balance between

Yosano, the resourceful adviser, and Mori and Nakagawa, the

"guardians."

(6) Maher's remarks will wreck Okinawa-U.S. ties: Nakaima

RYUKYU SHIMPO (Page 1) (Abridged)

Eve., February 1, 2008

Okinawa Prefecture's Governor Hirokazu Nakaima, meeting the press

this morning, voiced dissatisfaction with Kevin Maher, U.S. consul

general in Okinawa, for his recent remarks over the issue of

building an alternative facility for the U.S. Marine Corps' Futenma

Air Station. Maher has indicated a negative view of Okinawa

Prefecture's request to move the construction site out to the sea.

"I wonder if the consul general is authorized to say such a thing

when we are asking the government to respect local views," Nakaima

said. "I fear that the remarks could mess up the relationship

between Okinawa and the United States," he added. He also voiced a

critical comment, saying: "He sounded as if to totally ignore the

environment law and environmental ordinances. It's really

regrettable."

(7) Poll on the public view of Japan

YOMIURI (Page 13) (Full)

January 25, 2008

Questions & Answers

(Figures shown in percentage)

Q: Are you proud of being Japanese?

Very proud 54.8

Somewhat proud 37.9

Not proud 5.6

No answer (N/A) 1.7

Q: What is it that you are proud about in Japan and its people? Pick

as many as you like from those listed below.

History, tradition, culture 71.6

Country, nature 43.4

Constitution 16.8

Emperor system 12.0

Economic prosperity 18.9

Education, science and technology 19.3

Nationality 28.0

Social stability, public security 28.4