Cablegate: Daily Summary of Japanese Press 03/20/08

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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: DAILY SUMMARY OF JAPANESE PRESS 03/20/08

INDEX:

(1) Vacancy in BOJ governorship (Part 1): Japan may be unable to

send governor to G-7 in April; Concern that international confidence

in Japan will decline (Tokyo Shimbun)

(2) Editorial: Mr. Fukuda, the situation is more serious than you

think (Asahi)

(3) Dispatch Box: I want to believe that politics is now before dawn

(Mainichi)

(4) Fukuda stresses need to create consumer agency with strong

authority (Yomiuri)

(5) Poll in Iraq: Support for Prime Minister Maliki doubles to 40

PERCENT (Asahi)

(6) Thinking of whales while enjoying whale dishes (Mainichi)

ARTICLES:

(1) Vacancy in BOJ governorship (Part 1): Japan may be unable to

send governor to G-7 in April; Concern that international confidence

in Japan will decline

TOKYO SHIMBUN (Page 1) (Full)

May 20, 2008

An atmosphere of tension swept across the main office of the Bank of

Japan (BOJ) in Nihonbashi, Tokyo, yesterday, when Governor Toshihiko

Fukui's term of office expired.

The House of Councillors, which the opposition bloc controls,

rejected the government's nomination of Koji Tanami, a former vice

foreign minister, for the BOJ governorship in its plenary session

held yesterday afternoon. As related persons had worried since the

opposition voted down the government's first nomination of Deputy

BOJ Governor Toshiro Muto for the post, the top BOJ post has been

vacant since yesterday.

The BOJ sent to the U.S. Federal Reserve Bank (FRB) and other major

central banks on the phone or in writing the message that "Mr.

Shirakawa now serves as acting governor" after the expiration of

Fukui's term.

This is first time in 85 years, since September 1923, for the post

of BOJ governor to be left vacant. At that time, the vacated seat

was filled only two days later. This time, however, the leadership

vacuum at the central bank was caused as a result of political

strife in the politically divided Diet situation, prospects for the

situation to return to normal are nowhere in sight.

The central banks of other industrialized countries have set a

mechanism under which the incumbent will stay on if a new governor

is not selected even after the incumbent's term ends, from the

viewpoint of crisis management. That is because the central banks

deal with the global market that is in operation on a

round-the-clock basis. The current situation in the BOJ is quite

unusual internationally.

If the current situation continues for a while, the BOJ will face a

TOKYO 00000760 002 OF 010

major trial at a meeting of Group of Seven (G-7) finance ministers

and central bank governors to be held in Washington in early April.

Since there is no precedent in which an acting governor's

participation was approved as the central bank representative, Japan

may have to give up sending anyone from the BOJ.

A senior Finance Ministry official said with a serious look: "If the

governor of one nation is absent, its finance minister will explain

the nation's monetary policy. In such a case, though, there will

inevitably be a limit. There is the possibility that no probing

discussion will be conducted, with the finance minister just reading

a prepared paper."

The focus of attention at the upcoming G-7 will be on how to ready a

coordinated action plan under the lead of the U.S. to deal with the

U.S. subprime mortgage crisis. Great expectations are placed on the

roles to be played by the central banks at the meeting. Former FRB

Chairman Greenspan contributed an article to the British newspaper

Financial Times last month, in which he labeled the monetary market

turmoil set off by the subprime loan problem as "the largest single

crisis since the end of World War II."

The BOJ has started work to coordinate views with countries

concerned to enable the acting governor to attend the G-7. But the

possibility is growing that the BOJ will be left out of discussion

at an unprecedented crucial time.

Hugh Patrick, a professor at Columbia Business School and a

specialist on the Japanese economy, said that the BOJ leadership

vacuum will "result in sending to the world the message that the

Japanese government has become so weakened that it remains unable to

make an important judgment on economic policy." He added: "Japanese

politics is like a Kabuki performance. One cannot understand what is

going on behind the scenes and what negotiations are being carried

out." Professor Patrick then gave this advice: "I would be advisable

that Japan appoint a new governor prior to such an important

international conference as the G-7."

Deputy Governor Masaaki Shirakawa, who serves as acting governor, is

the best theorist in the BOJ and is also well known internationally.

A senior BOJ officer said: "He has to demonstrate that he can do

things without a hitch under this situation." But he angrily said

that the vacancy in the BOJ top post will deal a serious blow to

Japan, because its state governance will be questioned."

The international confidence of the Japanese central bank will be

significantly undermined. The situation will be worsening every

moment.

(2) Editorial: Mr. Fukuda, the situation is more serious than you

think

ASAHI (Page 3) (Full)

March 20, 2008

The top seat of the Bank of Japan is now vacant, which is an

unprecedented emergency, especially at a time when the global

economy is being shaken.

A direct cause of the leadership vacuum at the central bank is the

rejection of the government's nominations for the new BOJ governor

by the main opposition Democratic Party of Japan (DPJ) and other

TOKYO 00000760 003 OF 010

opposition parties. In the House of Councillors plenary session, the

opposition did not approve the nomination of Koji Tanami, a former

vice finance minister. However, the main cause lies in Prime

Minister Yasuo Fukuda's bungled handling of the nomination issue.

Although the DPJ's conduct was inappropriate, Fukuda is to blame for

failing to get approval of his nominees from the opposition. The two

nominations for the new BOJ governor were rejected due to his lax

approach to the problem.

The political situation has been in shambles for the entire six

months since the Fukuda government came into office.

For about three months after he took office, Fukuda spent most of

his energy on continuing and resuming the Self-Defense Maritime

Force's refueling operation in the Indian Ocean. He has been

striving hard to retain the current provisional tax for gasoline and

road-related taxes. But politics has not kept pace with his

efforts.

Although only ten days are left until the end of the current fiscal

year, when the issue of revenue sources for highway construction is

hoped to be resolved, consultations on a revision of the

government's drafted bill have yet to begin. Fukuda said that he

would not interrupt the daily lives of the people, but the

possibility is strong that gasoline prices will drop in April 1 when

the terms of the provisional tax rates will expire. Does the prime

minister plan to hike those tax rates again by using the ruling

coalition's majority in the House of Representatives? He will likely

make the same mistake as he did when he nominated candidates to

serve as the new BOJ chief, saying: "It is unacceptable for the BOJ

helm to be left vacant."

Fukuda may want to say that the opposition camp, which has tried to

stand in his way in the Upper House, should take the blame. However,

he should have had the desire to overcome such situations when he

took over the government helm.

It is only natural that Diet business is not proceeding as smoothly

as it did before since the ruling parties do not control the Upper

House. The Fukuda government cannot make decisions in a flexible

manner.

The largest opposition party also is in turmoil. DPJ President

Ichiro Ozawa tried to form a grand alliance with the ruling Liberal

Democratic Party, but he has now locked horns with the ruling

coalition over various issues. One of the reasons for getting the

appointment of the new BOJ governor complicated is that the DPJ did

not easily reach consensus on the issue of whether Muto should be

promoted to the governor's post.

Why did the Japanese politics become such a mess? Many people might

think that a Lower House dissolution and general election would be

the only way to break the present political stalemate.

On the day when the Fukuda cabinet was inaugurated, we wrote an

editorial titled "Proposal for Lower House dissolution in January."

The point of the editorial was that the prime minister would not be

able to manage politics with confidence unless he established the

legitimacy of his government by asking the people's vote of

confidence.

TOKYO 00000760 004 OF 010

We wrote the editorial because we felt a fear that politics would

come to a standstill. Our fear has turned into reality. The

international community may be disappointed at Japan more and more.

The prime minister should face squarely the seriousness of the

situation.

(3) Dispatch Box: I want to believe that politics is now before

dawn

MAINICHI (Page 2) (Full)

March 20, 2008

By Masao Yora, Mainichi Shimbun commentator

Public opinion on former Prime Minister Junichiro Koizumi is still

divided. I think, however, the reasons the Koizumi government had

remained in power such a long time were that its consistent public

support and that the ruling and opposition parties feared the

unpredictable and eccentric prime minister might dissolve the House

of Representatives.

Prime Minister Yasuo Fukuda, who has common sense, has been in

trouble, because he lacks two factors. The public support rates for

his cabinet have remained low. Both ruling and opposition camps are

confident that Fukuda will not be able to dissolve the Lower House

for the time being. For example, the main opposition Democratic

Party of Japan (DPJ or Minshuto) was able to reject the government's

candidates for the new governor of the Bank of Japan because the

largest opposition force believed that Fukuda would not dissolve the

Lower House.

DPJ President Ichiro Ozawa also lacks visibility in his party. He

had initially gone along with the government's nomination of Toshiro

Muto, a former administrative vice finance minister, for the BOJ

governorship, but he failed to convince party members, who have now

moved away from him.

Since the top leaders of the two parties have lost their grips on

their parties, the Diet has not decided anything, and the public's

anxieties about the economy will strengthen. I wrote in this column

last month that calls for a grand alliance from newspapers and

business circles would become stronger. However, it has now become

difficult to form a grand alliance (of political parties). I

strongly oppose the grand alliance notion. But political parties

have lost their energy to substantially move forward with politics.

Politics are now in a critical situation. Even though I want to

believe that politics will again move forward, what can I say about

what has happened to the Bank of Japan? There is no other way but to

rebuild politics by letting the voters have their say. Is this idea

overly optimistic?

(4) Fukuda stresses need to create consumer agency with strong

authority

YOMIURI (Page 2) (Excerpts)

March 20, 2008

Prime Minister Fukuda stressed his determination last night to make

efforts to establish a new government agency separated from existing

government offices and tasked with dealing exclusively with consumer

TOKYO 00000760 005 OF 010

affairs. His determination reflects a call in a final report

submitted the same day by the Liberal Democratic Party's Research

Committee on Consumer Issues, chaired by Seiko Noda. Replying to

questions by reporters at his official residence, Fukuda said: 'It

is necessary to establish a government office that considers things

from the consumer's viewpoint."

The government's Council for Promoting Consumer Policy, composed of

experts, has discussed a new organization since last month. The

panel plans to come up with a conclusion on specific functions of

the new agency and other details possibly in May, based on the final

report and a report with recommendations to be submitted later this

month by the Council for National Consumer Affairs, an advisory

panel to the prime minister.

The prime minister said: "The policy direction shown in the final

report is similar to my own thinking." He then indicated that

powerful authority should be given to the new body, saying: "It is

necessary to set up a body with such powers as collecting

information, making policy plans, and issuing an instruction to

other government agencies if necessary."

The final report of the Research Committee on Consumer Issues called

the new body an independent-type "consumer agency" and proposed

providing the agency with great authority, including powers to (1)

make an on-site inspections into entities whose products caused

accidents; (2) confiscating the profits improperly earned by vicious

entities; and (3) urging other government agencies to correct their

practices. Regarding consumer affairs centers in local areas, a

number of local governments have reduced the scale of the centers,

reflecting their austere financial conditions. Given this, the

report proposed reinforcing their functions, including budgetary

allocations and the number of personnel.

(5) Poll in Iraq: Support for Prime Minister Maliki doubles to 40

PERCENT

ASAHI (Page 1) (Full)

March 19, 2008

Yasunori Kawakami, Samawah, Iraq

More than 70 PERCENT in the southern Iraqi province of Muthanna

support Iraqi Prime Minister Maliki and his administration, the

Asahi Shimbun found from its public opinion survey conducted there.

In addition, the survey also found that the proportion of those who

think Prime Minister Maliki is appropriate as "government leader"

has doubled as compared with the last survey taken in August 2006.

The survey was conducted in Muthanna only. However, it shows that

the Maliki administration has now consolidated support and is

becoming stable in Iraq's central and southern parts, whose

population is mostly Islamic Shiite.

In the survey this time, respondents were asked about public

security in the province of Muthanna. In response to this question,

a total of 99 PERCENT answered that it was "good." In the summer of

2007, former Muthanna Gov. Hassani was assassinated. After that,

police and security forces controlled by the Supreme Islamic Iraqi

Council (SIIC), to which Hassani belonged, clashed with the Mahdi

militia led by Muqtada al-Sadr. The police currently set up

checkpoints all over the southern Iraqi city of Samawah to contain

Mahdi militants.

TOKYO 00000760 006 OF 010

Respondents were also asked who they thought was appropriate as

their nation's leader. In response, 40 PERCENT picked Maliki, who

was at 18 PERCENT in the last survey. In the survey this time,

former Iraqi Prime Minister Jafari was at 30 PERCENT . In the last

survey, Jafari was at 49 PERCENT , topping all others. In the latest

survey, however, Maliki topped Jafari. Meanwhile, Sadr was down from

14 PERCENT to 6 PERCENT . These figures can be taken as reflecting

a decline of the Mahdi militia's influence and a growing trend of

the public's stability-oriented mindset.

In the latest survey, respondents were asked to compare their daily

lives with the prewar situation. To this question, 29 PERCENT

answered that things have improved very much. In the last survey,

their proportion was 23 PERCENT . Asked how their daily lives will

change from now on, 44 PERCENT said their daily lives will improve

very much, up from 28 PERCENT in the last survey. As seen from

these figures, more people are now optimistic about their

present-day and future situations.

When asked about serious problems, "no job" accounted for 53 PERCENT

, followed by "radical terrorism" at 35 PERCENT and "electric power

shortage" at 32 PERCENT .

When considering stability in the Shiite region including Muthanna,

the influence of Abdul Aziz al-Hakeem, who leads the SIIC, is a key

factor. The SIIC controls province governors, police, and security

forces in the central and southern parts of Iraq. However, only 3

PERCENT answered that they thought of Hakeem as a government

leader. That is because he does not have a widespread base of public

support. Hakeem is close to Iran, and Shiite people are strongly

prone to react against him.

Hakeem's low popularity shows that the Shiites in Iraq would not

move close to Iran even if the United States pulls its troops out of

Iraq.

Muthanna is situated between Najaf and Basra, which are the center

of religion and the center of commerce in Iraq's central and

southern parts. The 1920 riot against Britain's rule and occupation

started in this province. Samawah is essential to observe the

political situation in the central and southern parts of Iraq.

Questions & Answers

(Figures shown in percentage)

Q: What do you think about the Self-Defense Forces'

two-and-a-half-year deployment? (One choice only)

Very good 37

Generally good 42

Not very good 6

Not good at all 7

Q: How were the SDF activities? (One choice only)

Very helpful 38

Somewhat helpful 39

Not very helpful 7

Not helpful at all 8

Q: What was helpful? (Only for those who answered "very helpful" and

TOKYO 00000760 007 OF 010

"somewhat helpful" to the foregoing question. Up to two choices.)

Medical support 59

Water supply 38

Road repair 26

School, facility repair 51

Electric power supply 18

Employment promotion 8

Q: Why was the SDF not helpful? (Only for those who answered "not

very helpful" and "not helpful at all" to the foregoing question.

Only one choice.)

Results short of expectations 41

Results in specific areas only 27

Results for specific people or individuals only 20

SDF activities didn't meet local needs 11

Q: Was the SDF loved by local residents? (One choice only)

Very much 56

Somewhat 32

Not very much 3

Not at all 2

Q: Did the SDF's deployment make you change your view of Japan? (One

choice only)

Improved very much 40

Improved somewhat 34

Unchanged 18

Worsened somewhat 2

Worsened very much 4

Q: How is public security in Muthanna? (One choice only)

Very good 81

Somewhat good 18

Somewhat bad 0

Very bad 0

Q: Do you support the current government? (One choice only)

Yes 72

No 28

Q: Who do you think is appropriate for government leadership? (One

choice only)

Nouri Maliki 40

Ibrahim Jafari 30

Abdul Aziz al-Hakeem 3

Muqtada al-Sadr 6

Iyad Allawi 16

Ahmad Chalabi 2