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

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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.

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TAGS: OIIP KMDR KPAO PGOV PINR ECON ELAB JA

SUBJECT: DAILY SUMMARY OF JAPANESE PRESS 04/08/08

INDEX:

(1) "Governor Shirakawa" to attend G-7 meeting (Yomiuri)

(2) Discord in DPJ over selection of BOJ deputy chief; Government,

ruling coalition frustrated with DPJ's response (Tokyo Shimbun)

(3) Fukuda administration beset with troubles both at home and

abroad: No breakthrough for environmental strategy (Asahi)

(4) DPJ President Ozawa, at the two year mark, going forward with

preparations for his "last fight" for the party, with next Lower

House election in mind (Nikkei)

(5) What is the Japan-U.S. Joint Committee? (Mainichi)

(6) Editorial: Change the policy line to one enhancing ODA (Nikkei)

(7) Sankei-FNN poll on Fukuda cabinet, political parties, gasoline

tax (Sankei)

ARTICLES:

(1) "Governor Shirakawa" to attend G-7 meeting

YOMIURI (Page 9) (Excerpts)

April 8, 2008

It became certain yesterday that Bank of Japan Deputy Governor

Masaaki Shirakawa will become the central bank's new governor,

paving the way for his attendance at the G-7 meeting of finance

ministers and central governors to be held on April 11. The

development that narrowly escaped the deputy governor's attendance

at the upcoming G-7 meeting has elicited sighs of relief from BOJ

officials. A Shirakawa-led central bank, which has been toyed with

by lawmakers, is likely to continue facing a rocky road.

Japan Business Federation Chairman Fujio Mitarai told a press

conference yesterday: "Amid global financial uncertainties, the BOJ

governorship must not be left vacant. Mr. Shirakawa, who has

abundant experience and international awareness, is fit for the

job."

Many market players are also supportive of Shirakawa's promotion,

with Shinko Research Institute economist Norio Miyagawa saying, "Mr.

Shirakawa is one of the members who have built the BOJ's logical

framework. He is fully qualified for the job."

Shirakawa and Hiroshi Watanabe, candidate for one of the two BOJ

deputy governor posts, will deliver policy speeches in the Diet on

April 8. If their nominations are approved in the plenary sessions

of both chambers of the Diet on April 9, Deputy Governor Shirakawa

will immediately become the new central bank governor and head for

the United States on April 10 to attend the G-7 meeting.

The governor's timetable is packed with vital events, such as the

BOJ regional managers meeting on April 18 to discuss local economic

situations. All eyes will be on Shirakawa's caliber to handle a

plethora of challenges, including the U.S. subprime loan issue.

The central bank is scheduled to hold a monetary policy meeting on

April 8-9, chaired for the first time by Shirakawa. The bank is

TOKYO 00000959 002 OF 011

expected to decide to keep its interest rate at 0.5 PERCENT .

(2) Discord in DPJ over selection of BOJ deputy chief; Government,

ruling coalition frustrated with DPJ's response

TOKYO SHIMBUN (Page 2) (Full)

April 8, 2008

Yesterday the Democratic Party of Japan (DPJ or Minshuto) executives

were in disarray over whether to accept the government nomination of

Hiroshi Watanabe, professor at Hitotsubashi University graduate

school, as one of the two deputy governors of the Bank of Japan

(BOJ). The government and ruling parties have strengthened criticism

of the DPJ for lacking coordination on internal views.

On April 4 Liberal Democratic Party Secretary General Bunmei Ibuki

told his DPJ counterpart Yukio Hatoyama that the government and

ruling coalition would like to promote incumbent Deputy Gov. Masaaki

Shirakawa to the top post and nominate Watanabe as Shirakawa's

successor. Senior DPJ members reached an agreement to endorse the

promotion of Shirakawa, but they remained at odds over the

nomination of Watanabe, a former vice finance minister for

international affairs, for the reason that if the party endorses

Watanabe's nomination, it will go against its assertion that the

amakudari practice of placing retired senior government officials

into top positions at private and public entities be terminated.

Appearing on an NHK talk show on April 6, DPJ President Ichiro Ozawa

indicated his opposition to Watanabe's nomination, saying: "The DPJ

has strongly called for discontinuing the amakudari (golden

parachute) practice." Diet Affairs Committee Chairman Kenji Yamaoka,

Ozawa's aide, took a position of opposing the nomination of

Watanabe.

Hatoyama, however, expressed his willingness to accept the Watanabe

nomination plan, telling the press yesterday: "I don't really think

that nominating Watanabe is necessarily included in the category of

the amakudari practice." He disapprovingly told a member of the

party's subcommittee on personnel shuffle: "Just two (Ozawa and

Yamaoka) are opposed to Watanabe's nomination." This reflects a move

in the DPJ to prevent the stalemate from turning into hopeless mess

regarding the selection of the BOJ executives.

Following the presentation of the nominations of Shirakawa and

Watanabe as the new chief and deputy chief of the central bank, the

DPJ held an executive meeting last night. In it, the executives just

confirmed that internal unity should be solidified. Some in the DPJ

have contended that the confrontation between Hatoyama and Yamaoka,

who are the contact points for the government and ruling coalition,

is the cause for confusion.

One of the mid-level members, who are critical of Ozawa, commented:

"It has now become clearer that party head Ozawa is losing his grip

on the party." This might impact adversely on Ozawa's management of

party affairs.

Meanwhile, the government and ruling camp are increasingly

frustrated with the DPJ's response.

Feeling that they will be able to secure approval from the largest

opposition party for the Watanabe nomination, the government and

ruling bloc decided on April 7 to present the nominations. When the

TOKYO 00000959 003 OF 011

situation took a dark turn, the government and ruling parties

desperately tried to look for the DPJ's real intention, but they

failed to do so. Therefore, their initial plan to present the

nominations at noon yesterday slipped to yesterday evening. A senior

LDP member said in disgust: "What's up with the DPJ? I give up!"

Prime Minister Yasuo Fukuda appeared to be reluctant to present the

nominations yesterday, telling a senior LDP member on the phone last

evening: "I wonder if I may be hurting Watanabe." After that, as

well, the government and ruling coalition failed to feel out the

DPJ's intention. But they decided to present the nominations, with

one government official saying: "If waiting, the situation will not

change."

In a press conference, Ibuki urged Hatoyama to get moving, saying:

"The DPJ needs more coordination. It is the practice in society that

the person who took the agreement to his party deals with the matter

in a responsible manner." A high government official, too, made this

comment: "The coordination this time around was carried out between

the secretaries general. So I want Mr. Hatoyama to do his best."

(3) Fukuda administration beset with troubles both at home and

abroad: No breakthrough for environmental strategy

ASAHI (Page 2) (Excerpts)

April 6, 2008

Prime Minister Fukuda on April 5 appealed his proposal for realizing

a low carbon society to the public from Lake Toya in Hokkaido, the

venue of the Group of Eight (G-8) summit. However, with his

administration's power base waning, following a decline in public

support rates for his cabinet, he now has found it difficult to

display powerful leadership as a champion of a campaign to combat

climate change.

G-8 close at hand, but showcase issues have yet to be found

The prime minister on April 5 hosted the government's round-table on

global warming at The Windsor Hotel Toya by Lake Toya situated on

the summit of a snow-clad mountain. He expressed his desire to see

Japan lead discussions on the environmental issue: "In July, there

will be much greenery here, which will make leaders from G-8 nations

feel that the environment is important."

A number of experts warned that a delay in a shift to a low carbon

society, which makes full use of energy conservation and natural

energy, such as sunlight, could significantly damage national

interests.

The prime minister after the two-hour meeting said, "I felt a sense

of urgency. I would like the panel to come up with substantive

proposals, obtaining a national consensus by the G-8."

Participants decided to set up a subcommittee to consider concrete

measures to cut global warming greenhouse gas emissions. The

challenge would be enhancing "visibility," meaning introducing a

domestic emissions trading system and an environment tax, and

indicating the amounts of carbon emissions regarding manufactured

goods and services.

The prime minister, who is having trouble dealing with the divided

Diet, wants to show his presence as the chairman of the G-8, where

TOKYO 00000959 004 OF 011

measures to deal with global warming greenhouse gases will become a

major item of the agenda, thereby buoying up his administration.

However, public support rates for the cabinet stood at just over 30

PERCENT in an opinion poll conducted by the Asahi Shimbun due to

his administration's declining power base and other issues, such as

the unfilled Bank of Japan governor position and the expiry of the

provisional gas tax rate. It is unclear whether Fukuda can obtain a

domestic consensus on the introduction of a carbon emissions rights

trading system and an environment tax, as the proposals are meeting

deep-rooted opposition from industrial circles.

The prime minister repeatedly pointed out that Japan's gas tax is

lower than those of Europe and the U.S. He was visibly impatient,

noting, "Other countries are raising taxes due to the environment

issues. However, Japan has lowered the gas tax. How can I explain

this to leaders of other countries?"

The Japanese government has yet to choose showcase issues to be

taken up at the G-8. One foreign ministry official noted, "Japan

should set a specific reduction goal to be achieved by 2050 in order

to clarify when its carbon emissions take a downward turn." An aide

to the prime minister took a cautious view, "We must not make the

G-8 a beauty contest for numbers."

Developing countries opposing Japanese proposal

Japan is struggling to have its proposal accepted in international

talks aimed at setting up a post-Kyoto Protocol framework. The first

taskforce meeting by signatories of the UN Framework Convention on

Climate Change has been held until early hours of the 5th. The April

5 edition of Bangkok Post, Thailand's English daily, front-paged the

meeting with the headline "Japanese proposal withdrawn."

Japan proposed a method of cutting greenhouse gas emissions called a

sector-specific approach. Under this method, the level of

energy-conserving technology would be set for each industrial

sector, such as the steel and power industries, and those sectors in

industrialized countries would reduce their carbon emissions by

transferring their technologies to developing countries. The total

goal of emissions cuts to be achieved by each country would be

calculated, by adding amounts of cuts each sector can achieve.

Developing countries are welcoming technology transfer, but they are

strongly opposing the Japanese proposal, citing that it could lead

to their accepting mandatory greenhouse gas emissions. With pros and

cons clashing over the Japanese proposal, the sector-specific

approach was removed from the list of main agenda items at the next

meeting in June. It was postponed until the third meeting. One

member of the delegation from Thailand, the host nation, noted, "We

were alert to the possibility of the Japanese proposal leading to

mandatory emissions cuts to be achieved by developing countries."

It is not only developing countries that are opposing the

sector-specific approach. Industrialized countries are also harsh

toward the Japanese proposal. One representative from the European

Union (EU) said, "There is a possibility of the Japanese proposal

becoming a key option for developing countries." However, this

source did not highly evaluate the Japanese proposal as a method of

setting a total carbon emissions reduction goal on each country,

citing that it is questionable whether the amount of target

emissions worked out for each sector will reach a level necessary

for preventing global warming.

TOKYO 00000959 005 OF 011

One member of the Climate Action Network, formed by NGOs tackling

the global warming issue throughout the world, said, "The

sector-specific approach contains edible mushrooms (technology

transfer) and poisonous mushrooms (compulsory emissions cut) for

developing countries. However, all mushrooms are viewed as

poisonous."

If the sector-specific approach comes under fire at the G-8, in

which China and India will also take part, the meeting might not

result in success. The Japanese government in early May will host in

Paris a dialogue among research organs of various countries. It is

increasingly heightening a sense of crisis with one senior

government official noting, "If Japan fails to promote the

sector-specific approach to a joint proposal, it would find itself

isolated."

(4) DPJ President Ozawa, at the two year mark, going forward with

preparations for his "last fight" for the party, with next Lower

House election in mind

NIKKEI (Page 2) (Slightly abridged)

April 7, 2008

Two years ago today Ichiro Ozawa assumed the post of president of

the major opposition Democratic Party of Japan (DPJ). Having

just-recently brought about a gasoline price cut in the country, he

will now push forward with preparations for the next Lower House

election, which he calls his "last battle" for his party. Ozawa,

however, appears caught in a dilemma that the more harshly he

attacks Prime Minister Yasuo Fukuda in the Diet, in a bid to force

dissolution of the Lower House, where the ruling bloc holds a

two-third majority at present, the less likely is the chance such

dissolution will take place. Ozawa's confrontational stance reveals

his dilemma: he has to continue to run at full speed with an eye on

the DPJ presidential election in September while removing the

effects of his failed scheme last year to form a grand coalition

with the ruling Liberal Democratic Party (LDP).

After a long hiatus, Ozawa recently appeared on TV in a succession

of programs. He had not been on TV for a long after the uproar

caused last year over his concept of forming a grand coalition with

the LDP. He condemned the government for its poor handling of the

unidentified pension premium accounts. Ozawa reiterated: "The only

way to deal with the situation is to seek the public's judgment

(through an election)."

Ozawa aims for dissolution of Lower House for snap election before

G-8 Toyako Summit

Ozawa said with conviction:

"My first goal is to bring about dissolution of the Lower House for

a snap election before the Group of Eight industrialized nation

summit (G-8 Toyako Summit in Hokkaido) in July. I aim to change the

current situation by the end of the year even if the Lower House is

not dissolved before the G-8 summit,"

Ozawa's scenario is that should the prime minister decide to

reinstate the higher gasoline price, the opposition bloc will submit

and adopt a censure motion against the prime minister to the Upper

House, where the opposition parties hold a majority. Then, backed by

TOKYO 00000959 006 OF 011

public opinion, the opposition camp will boycott Diet debate until

June or the end of the current session of the Diet and force the

government to dissolve the Lower House. If the prime minister keeps

the gasoline price as is, Ozawa then will look into the possibility

of submitting a censure motion against the prime minister at the

beginning of an extraordinary Diet session slated for this fall.

This past March, Ozawa resumed a nationwide stumping tour, which in

the Upper House election last year, led the DPJ to a landslide

victory. Ozawa has already stumped in eight prefectures and has

begun consolidating support for the DPJ among local organizations,

such as those labor unions under the wing of the Japanese Trade

Union Confederation (Rengo). The 300 single-seat constituencies for

the Lower House are more subdivided than the electoral districts for

the Upper House. So, the Lower House's 300 single-seat

constituencies are more affected by the difference in organizational

power between the DPJ and the LDP.

However, even if the prime minister is driven into a tight corner,

it is not necessary safe to say that he will decide to dissolve the

Lower House. If a snap election arises in a situation unfavorable

for the ruling bloc, it will be certain to lose some of the seats it

holds now. If, as a result of a snap election, the ruling bloc is

unable to re-approve bills rejected by the Upper House by a

two-third majority of votes or more in the Lower House since the

Upper House is under the opposition bloc's control, it is obvious

that the Diet will be even worse off than it is now.

Meanwhile, the DPJ is not necessarily perfectly ready for a snap

election, either. Ozawa stresses the need for the party to grab at

least 150 seats in the 300 single-seat constituencies for the Lower

House. But if with the DPJ becoming the first party (in the Lower

House), the opposition bloc holds a majority of seats in the Lower

House, a change of government will come true. The DPJ aims to grab a

total of 260 seats in a next Lower House election, but the number of

candidates ready to run at present is 237. In a meeting with members

of the Rengo Ibaraki chapter, Ozawa was asked by them for a DPJ

ticket, but he rejected the request by telling them: "If your

candidate becomes a hopeful, I will officially adopt that candidate.

This is the way I nominate a candidate."

Ozawa spurs junior lawmakers to do their best

The question is what to do if the tide of the battle is determined

by a slim margin or if the Lower House is not resolved until

September of next year, when the prime minister's term of office is

to expire. The divided Diet will remain until then, and political

realignment that will involve both the ruling and opposition parties

will become more likely. An anti-Ozawa group in the DPJ is alarmed

by this sort of political realignment. It is concerned by Ozawa's

stance of keeping a dialogue line with the prime minister for a

while, even after failing to realize the concept of forming a grand

coalition with the LDP, and also by rumors that a one-on-one between

the heads of the LDP and the DPJ will be held to discuss such issues

as the Bank of Japan head.

Meanwhile, if the DPJ continues to reject policy talks (with the

ruling bloc) on such issues as tax revenues for the construction of

road and the reform of the pension system on the pretext of

principles, the party will be then exposed to this criticism that

the DPJ lacks the capability to take the reins of government.

Ozawa's previous top-down management is no longer easily accepted in

TOKYO 00000959 007 OF 011

the party. Given this, it may be safe to say that he is not as

influential in the party as he was before.

"You should fully ready yourselves for election campaign. A next

general election will be the last battle for the DPJ." This remark

has come out from Ozawa since this past March at gatherings of the

party's junior lawmakers he had held every week. Whether Ozawa can

maintain this confrontational stance against the government depends

on the trends in public opinion. Once the view spreads that there

will be no snap election for a while, at a time when there is only

less than a half year before the DPJ presidential election, there is

a possibility that moves to find a successor to Ozawa will gain

momentum.

(5) What is the Japan-U.S. Joint Committee?

MAINICHI (Page 3) (Abridged slightly)

April 8, 2008

Question: When a U.S. deserter from Yokosuka Naval Base was arrested

on murder and robbery charges, newspapers reported that he was

handed over based on a concurrence of the Japan-U.S. Joint

Committee. What does the Japan-U.S. Joint Committee do?

Answer: It serves as a venue for the governments of Japan and the

United States to discuss such matters as the use of bases by U.S.

Forces Japan (USFJ) and the legal status of U.S. service members. It

is based on the Japan-U.S. Status of Forces Agreement, which was

concluded based on the U.S.-Japan Security Treaty. In the latest

case, the U.S. sailor was in the custody of the U.S. military, so

the Japanese side sought his handover through the Japan-U.S. Joint

Committee, and the U.S. side agreed to do so.

Q: Difficult. What is the Japan-U.S. Status of Forces Agreement

(SOFA)?

A: It is a treaty specifying arrangements requiring Japan to provide

USFJ with facilities and areas and criminal procedures against U.S.

service members suspected to have committed crimes. Under the SOFA,

the United States is not required to hand over service members

before indictment. But a schoolgirl rape incident in Okinawa in 1995

resulted in strong calls in Japan for revision of the SOFA. Given

the situation, the U.S. side has decided to hand over even before

indictment its service members who are suspected to have committed

heinous crimes, such as murder and rape. Since 1995, Japan has made

five pre-indictment handover requests through the Joint Committee.

Of them, the U.S. side agreed to do so in five cases.

Q: Who are the members of the Joint Committee?

A: The Japanese side is led by the North American Affairs Bureau

chief of the Ministry of Foreign Affairs (MOFA) and the U.S. side by

the USFJ deputy commander. Other Japanese members are mostly senior

officials from the Foreign Ministry and the Defense Ministry. But

when, for instance, livestock is affected by a U.S. military drill,

senior Agriculture, Forestry and Fisheries Ministry officials join

the committee, and when contamination of soil on a U.S. base becomes

a problem, senior Environment Ministry officials do the same. The

members meet about twice a month either at a MOFA conference room or

the New Sanno Hotel in Tokyo's Minami-azabu in turn.

Q: Is what is determined there made public?

TOKYO 00000959 008 OF 011

A: Agreements on return of land and other matters are posted in the

Defense Ministry's website, but sensitive military information, such

as the sites of U.S. military communications facilities, is not made

public. Because vital agreements connected to the Japan-U.S.

security setup are reached by this framework, some people call the

Japan-U.S. Joint Committee as the "security mafia."

(6) Editorial: Change the policy line to one enhancing ODA

NIKKEI (Page 2) (Full)

April 8, 2008

Japan has slipped to fifth place in the list of donors of official

development assistance (ODA). This is extremely regrettable. Aid

policy has a significant diplomatic tool for Japan. Foreign Minister

Masahiko Koumura has said he would aim at halting the downward trend

in ODA and reverse it. Given Japan's international status, it is

only natural for him to have made such a statement.

According to the ODA report issued by the Development Assistance

Committee (DAC) of the Organization for Economic Cooperation and

Development (OECD), the record of Japan's ODA performance in terms

of net disbursements was 7.7 billion dollars in 2007, but this was a

drop of 30 PERCENT from the preceding year. As a result, Japan has

slipped from third to fifth place in the ODA donor list.

The ratio of Japan's ODA to its gross national income (GNI) is 0.17

PERCENT , ranking 20th among the 22 DAC members.

One reason for the drop in Japan's ODA is that debt forgiveness

offered to Iraq and other countries from 2005 through 2006 ended

last year. The main reason for the decrease, however, is

attributable to fiscal constraints. The government aims at turning

the primary balance into black by fiscal 2011. To that end, it has

had to slash the aid budget.

The government should continue its fiscal reconstruction policy,

because until fiscal reform makes headway, aid policy will not be

implemented in a stable manner. Even so, the decline in Japan's ODA

to fifth place was shocking in a way, because Japan from 1990 to

2000 topped the ODA donor list

Japan will host the Tokyo International Conference on African

Development (TICAD) in May and the G-8 Summit in July. It is in a

position to take the lead in improving aid to developing countries.

It is unacceptable for it to let the downward trend in its ODA

continue.

Granted it will be difficult matter to increase ODA while continuing

fiscal reconstruction, but if Prime Minister Fukuda's proposal for

shifting special-purpose road construction revenues to the general

account would produce excess funds that can be diverted to ODA

loans.

Needless to say, aid policy must be implemented in a strategic

manner. Implementing an ODA policy from such viewpoints as securing

resources and energy and taking measures to combat climate change,

as well as to provide humanitarian aid as before, will remain

important.

According to the DAC, ODA extended last year by 22 member nations

TOKYO 00000959 009 OF 011

dropped 8.4 PERCENT , compared with the preceding year. The DAC

notes that if the situation is left unattended, it would be

impossible to meet the Millennium Development Goals agreed on at the

UN in 2000 or the African Aid Goals set at the G-8 in Gleneagles in

Britain in 2005. Japan should stop giving the impression that it is

dragging its heels.

(7) Sankei-FNN poll on Fukuda cabinet, political parties, gasoline

tax

SANKEI (Page 5) (Full)

April 5, 2008

Questions & Answers

(Note) Figures shown in percentage. Figures in parentheses denote

findings from the last survey conducted by Fuji News Network (FNN)

on Feb. 23-24.

Q: Do you support the Fukuda cabinet?

Yes 23.8 (28.7)

No 59.0 (52.2)

Don't know (D/K) + Can't say which (CSW) 17.2 (19.1)

Q: Which political party do you support?

Liberal Democratic Party (LDP) 27.4 (27.8)

Democratic Party of Japan (DPJ or Minshuto) 24.9 (25.3)

New Komeito (NK) 4.1 (5.2)

Japanese Communist Party (JCP) 3.2 (1.9)

Social Democratic Party (SDP or Shaminto) 1.6 (1.6)

People's New Party (PNP or Kokumin Shinto) 0.7 (0.5)

New Party Nippon (NPN or Shinto Nippon) 0.2 (0.2)