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RUCNDT/USMISSION USUN NEW YORK 2002
UNCLAS SECTION 01 OF 07 TOKYO 002810
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 10/08/08
INDEX:
(1) DPJ goes along with having new antiterrorism revision bill
adopted by Lower House this week (Mainichi)
(2) Ruling parties eye election in November (Asahi)
(3) DPJ, PNP set to grill New Komeito on separation of politics and
religion (Asahi)
(4) Japan to seek at G-7 U.S. commitment to inject public funds into
ailing banks (Sankei)
(5) Inpex to build offshore LNG terminal in Indonesia: Over 1
trillion yen to be invested; Exports likely to begin in 2015
(Nikkei)
(6) Prime Minister's schedule, October 7
ARTICLES:
(1) DPJ goes along with having new antiterrorism revision bill
adopted by Lower House this week
MAINICHI ONLINE (Full)
1:48 pm, October 8, 2008
In a directors meeting this morning of the Lower House Steering
Committee, the main opposition Democratic Party (DPJ) took a stance
of going along with having the House of Representatives approve
before the end of the week a bill amending the new Antiterrorism
Special Measures Law that allows the Maritime Self-Defense Force to
continue its refueling mission in the Indian Ocean. The DPJ demanded
that a Lower House plenary session tomorrow be skipped and that the
government explain the purpose of the legislation and a
question-and-answer session be held at the Lower House Special
Committee on Antiterrorism and Iraq Assistance. The DPJ's demand
seems to be aimed at an early Lower House dissolution.
The ruling camp, however, proposed launching deliberations on the
bill after government explains the purpose of the legislation.
Therefore, the ruling coalition and the DPJ in the end failed to
reach agreement on the procedures.
(2) Ruling parties eye election in November
ASAHI (Page 4) (Abridged slightly)
October 8, 2008
By Tsuyoshi Yamashita and Hiroshi Samejima
The ruling coalition is hoping to carry out the next general
election in November, despite the turbulence in financial markets
and low support rates for the Aso Cabinet. An election at the end of
the year might expose the growing rift between the Liberal
Democratic Party and the New Komeito over how to finance basic
pensions and the flat-sum tax cut expected to be implemented in
fiscal 2008, thereby taking a toll on campaign cooperation. Prime
Minister Taro Aso's grip on power is likely to weaken if he delays a
decision to carry out the election in November.
The flat-sum tax cut, which is supposed to be implemented in the
TOKYO 00002810 002 OF 007
current fiscal year in compliance with the New Komeito's request, is
the toughest challenge for the government as the end of the year
approaches. The government and the ruling coalition agreed in August
to decide on the scale of the tax cut and fiscal resources for it
when discussing tax reform in December.
The New Komeito defines the flat-sum tax cut as its greatest
achievement, and its powerful supporter, Soka Gakkai, also pins
hopes on it. New Komeito Representative Akihiro Ota indicated that
the tax must be reduced by a minimum of 65,000 yen (for a family of
four), as is the case with the special tax cuts 10 years ago. But a
former LDP cabinet minister predicted that the amount would be no
more than 10,000 yen per household under the tight fiscal
situation.
Aware of the large gap between the two ruling parties, Liberal
Democratic Party of Japan Deputy President Naoto Kan applied
pressure on Environment Minister Tetsuo Saito of the New Komeito in
yesterday's Lower House Budget Committee meeting.
Kan: "The scale of and fiscal resources for the flat-sum tax cut
will be unknown until late December. The New Komeito is calling for
the general election in November. Isn't your party going to include
(the tax cut) in the manifesto?"
Saito: "The timing of the election will be determined by the prime
minister. I cannot say for certain that we will incorporate (the tax
cut) in our manifesto."
Is the government going to increase the size of the tax cut in
deference to the New Komeito or curb it by placing high priority on
fiscal discipline? The prime minister will be pressed for a decision
toward the end of the year. The popular view in the LDP is that the
general election should be held before the contents of the tax cut
are nailed down, with one lawmaker saying: "Discussion of tax reform
is scheduled for year's end. If the election is postponed until
then, it would create too much trouble for us."
The handling of the bill extending the special measures law
authorizing the Maritime Self-Defense Force's refueling mission is
also a thorny issue. The New Komeito gave a nod to the Lower House's
re-adoption of the legislation in January, but this time around, the
party is cautious about using the same method. If the LDP attempts
to readopt it before the general election, the New Komeito might
exert heavy pressure on the administration, just as it did in the
closing days of the former Fukuda administration.
The prime minister wants to begin Diet deliberations on the
refueling legislation and make it a point at issue in the next
election, while the New Komeito wants to avoid readopting the
legislation before the election. To save the faces of the two sides,
the prevailing view in the LDP is that the Lower House should be
dissolved soon after the Diet begins deliberating on the
legislation.
In compiling the fiscal 2009 budget, the government must secure
funds for an increase in the government's contribution to the basic
pension scheme and take steps to free up road-related revenues for
general spending. About the prime minister's strong desire to
compile a second supplementary budget, an LDP executive said:
"Specifics in the budget might fall short of expectations. The Lower
House should be dissolved soon after an overall picture is
TOKYO 00002810 003 OF 007
presented."
There is concern in the ruling bloc that the more the election is
put off, the more the support ratings will drop. "I think the
election is near, very near," LDP Secretary General Hiroyuki Hosoda
said at a fund-raising party held yesterday by an LDP Lower House
member.
(3) DPJ, PNP set to grill New Komeito on separation of politics and
religion
ASAHI (Page 4) (Full)
October 8, 2008
Naoto Kan, deputy president of the Democratic Party of Japan (DPJ),
and Shizuka Kamei, deputy head of the People's New Party (PNP), took
up the issue of separation of politics and religion at a Budget
Committee session yesterday of the House of Representatives. The two
opposition parties have a plan that if Lower House dissolution is
pushed back, they will shake up the New Komeito by demanding that
Junya Yano, former chairman of the New Komeito, be called to testify
as a Diet witness. Yano has said that the facilities of the
religious sect Soka Gakkai, which is the support body of the New
Komeito, are the bases for the party's election activities.
At yesterday's committee session, Kan posed a question:
"The Aum Shinrikyo cult headed by Shoko Asahara (death-row inmate
whose real name is Chizuo Matsumoto) was formed in 1990. Twenty-five
Aum members ran for seats in a national election. The Aum cult tried
to spread its beliefs by taking advantage of political power. Does
this activity violate the principle of the separation of politics
and religion?"
Kan succeeded in eliciting an answer from the Cabinet Legislation
Bureau director general that such activity was "unconstitutional."
Prime Minister Taro Aso also said: "I think so, too."
Moreover, Kamei questioned: "The largest supporter of the Liberal
Democratic Party (LDP) is Soka Gakkai. Is it permissible for
religious facilities that receive tax benefits to be used in such a
way?" There was a tense atmosphere. Aso evaded the question, saying:
"You must have read too many tabloid weeklies." Environment Minister
Saito, former New Komeito policy chief, refuted him by saying: "You
are trying to make it a political issue."
The questions by Kan and Kamei appear to be strategic moves in an
effort to realize Diet testimony by Yano. When the House of
Councillors called then Soka Gakkai Chairman Einosuke Akiya to
testify in 1995, Kamei was one of the senior LDP members, who
demanded testimony.
After the end of the Lower House Budget Committee session, Kamei
told reporters: "It is not good to for Yano to testify alone. It is
necessary to do it fairly by hearing from Soka Gakkai, too." He
indicated that if Yano's testimony was realized, the opposition
would call Soka Gakkai representatives to testify as Diet
witnesses.
(4) Japan to seek at G-7 U.S. commitment to inject public funds into
ailing banks
TOKYO 00002810 004.2 OF 007
SANKEI (Page 7) (Full)
October 8, 2008
In a meeting of finance ministers and central bank governors from
the Group of Seven (G-7) countries in Washington on Oct. 10, Finance
Minister and State Minister in Charge of Financial Services Shoichi
Nakagawa will propose that the U.S. government decide to use public
funds to shore up the capital base of ailing financial institutions.
The U.S. enacted a bailout bill into law designed for the government
to purchase nonperforming loans with public funds on Oct. 3, but
since the legislation was regarded as just a stopgap measure, global
stock markets have continued to tumble. The focus of attention in
the coming G-7 meeting is on how the U.S., which triggered the
global financial crisis, will respond to Japan's request based on
its experience.
Good opportunity for Japan to play up presence
Prime Minister Taro Aso urgently called in Finance Minister
Nakagawa, Bank of Japan Governor Masaaki Shirakawa, and other
responsible officers last night to discuss what approach Japan
should take in the G-7 meeting. They agreed that Japan should
propose that the U.S. inject public funds into ailing banks.
Nakagawa told reporters: "It will provide a change for Japan to let
the other G-7 members know that Japan had suffered a bitter
experience for several years," indicating that he would explain
about the government's injection of approximately 13 trillion yen in
public funds into ailing financial institutions following a credit
crunch in 1997.
The U.S. bailout legislation has had no immediate effect, as
admitted by President Bush saying: "It will be some time before the
effect becomes apparent."
The round-the-world panic sell-offs that started in Tokyo on Oct. 6
returned to New York on the 7th. Market players will pay close
attention to the upcoming the G-7 meeting. Depending on the outcome
the meeting, the economy might fall into a global depression.
It is uncertain, however, whether the monetary authorities from
Japan, the U.S., and Europe would be able to jointly come up with
effective measures.
U.S. authorities also do not think the measures to purchase
nonperforming bank loans under the bailout legislation are
sufficient. A senior Federal Reserve Board member said: "The
Department of the Treasury recognizes that it is unavoidable to
increase funds to cover the losses accrued from the sales."
Some have begun to think injecting funds would be possible under the
framework of the bailout legislation. A provision notes that it is
possible to purchase any kind of financial instrument. It means that
"it is possible to buy shares issued by financial institutions to
increase capital," according to an international finance source.
But there are no moves to send a message to the markets regarding
capital injection at the present stage.
European financial authorities are divided over whether taxpayers'
money should be used. The European Central Bank (ECB) supervises
monetary policies in Europe, but there are administrative
TOKYO 00002810 005 OF 007
authorities in countries who oversee their individual financial
institutions. "The administrative office of the European Union (EU)
does not have enough funds to set up a joint fund for that purpose,"
according to an ECB official.
For Japan, which has been suffering only slightly from the ongoing
financial crisis, it is a good opportunity to demonstrate its
presence by explaining its experience in handling its own
post-economic bubble financial crisis. Japan's injection of public
funds came too late, and the people's burden eventually increased.
To what extent will Western countries listen to Japan's advice?
Seeing global stock markets reeling, World Bank President Zoellick
said: "(The G-7) is not working." The significance of the G-7 will
now be severely tested.
(5) Inpex to build offshore LNG terminal in Indonesia: Over 1
trillion yen to be invested; Exports likely to begin in 2015
NIKKEI (Top Play) (Full)
October 5, 2008
The Inpex Corp. will likely construct a liquefied natural gas
terminal off the coast of Indonesia -- the first such terminal in
the world. It will invest over 1 trillion yen in hopes of LNG
delivery to Japan as early as 2015. Amid growing economic
nationalism focusing on natural resources, it has been of urgent
concern for Japan to secure an LNG supplier, because Japan is the
largest importer of the product. The construction of a huge terminal
will secure up to 7 PERCENT of Japan's annual LNG imports.
The company will likely reach an agreement with the Indonesian
government before year's end. Inpex owns a 100 PERCENT stake in the
Marcela gas field, a major gas field in the Timor Sea. It is now
pressing ahead with a plan to produce 4.5 million tons starting in
2015 and exports the total amount to Japan. The gas field is now
being developed. A plan to build an LNG terminal to ship liquefied
gas has remained undecided.
The company had two construction options for the terminal. One
option was to build on solid ground in Australia, transporting the
gas from Indonesia through undersea pipelines. The other was to
build an offshore terminal inside Indonesian territorial waters, an
option which would be significantly more expensive, because it
requires measures against welters caused by waves. However,
President Kuroda told Nihon Keizai Shimbun, "We are now making our
final consideration with the possibility of opting for an offshore
terminal." He added, "We will reach a decision within a couple of
months.
Inpex will build the offshore terminal, meeting the Indonesian
government's request, giving priority to the launching of production
at an early date. The estimated construction cost will reach more
than 1 trillion yen. However, the company believes that the project
will be worthwhile, because of prospects for growing LNG demand and
high LNG prices.
Construction will be financed by bank loans and Inpex cash reserves.
The company will also consider selling part of its stake in the
Timor Sea gas field to foreign energy companies.
Inpex is also developing the Ixis gas field in Australia. The plan
TOKYO 00002810 006 OF 007
is to start producing 8 million tons from around 2014-2015 and
export the total amount to Japan.
The output of the "Hinomaru (Rising Sun)" gas fields in Indonesia
and Australia will total 12.5 million tons, approximately 20 PERCENT
of annual imports by Japan. The company has already decided to
construct a terminal on solid ground in Australia. It now has paved
the way for a system allowing the supply of large quantities of LNG
to Japan.
Demand for LNG is growing throughout the world, indicating signs of
a scrambling for the material occurring. Against a backdrop of
rising prices of natural resources, energy nationalism is rising.
Indonesia plans to cut the exports of LNG to Japan from the current
12 million tons a year to 2-3 million tons a year in 10 year's
time.
It is believed that the gas field will be exempt from Indonesia's
export reduction policy. It is expected that shipments from the two
gas fields will make up for portions of exports slashed by
Indonesia.
(6) Prime Minister's schedule, October 7
NIKKEI (Page 2) (Full)
October 8, 2008
07:09
Met at Kantei with Deputy Chief Cabinet Secretary Matsumoto.
08:31
Attended cabinet meeting in the Diet building.
09:00
Attended Lower House Budget Committee session.
12:08
Arrived at Kantei.
13:00
Attended Lower House Budget Committee session.
17:15
Signed in at the Imperial Palace to express appreciation for dinner
party.
17:55
Met Brazil-Japan immigration 100th anniversary association chairman
Uehara at Kantei and others
18:30
Met with Finance Minister Nakagawa, Economic and Fiscal Policy
Minister Yosano, BOJ Gov. Shirakawa, Financial Services Agency
Director General Sato, Vice Finance Minister Sugimoto, Budget Bureau
chief Tango, Vice Finance Minister for International Affairs
Shinohara, and Deputy Vice Minister Katsu. Nakagawa and Sugimoto
remained.
20:08
Telephoned Makoto Kobayashi and Toshihide Masukawa, awarded the 2008
Nobel Prize in Physics.
TOKYO 00002810 007 OF 007
20:39
Dined with LDP Diet Affairs Committee Chairman Oshima, New Komeito
Diet Affairs Committee Chairman Urushibara and ruling coalition Diet
affairs members, at Chinese restaurant in Kiyoi-cho, joined by Chief
Cabinet Secretary Kawamura and Deputy Chief Cabinet Secretary
Matsumoto.
21:00
Met with Matsumoto at a Japanese restaurant in New Otani Hotel. Met
afterwards with secretaries at Kato's Dinning and Bar at the hotel.
23:04
Returned to his private residence in Kamiyama-cho.
SCHIEFFER