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PP RUEHFK RUEHGH RUEHKSO RUEHNAG RUEHNH
DE RUEHKO #2246/01 2680645
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P 250645Z SEP 09
FM AMEMBASSY TOKYO
TO RUEHC/SECSTATE WASHDC PRIORITY 6434
INFO RUEHBJ/AMEMBASSY BEIJING PRIORITY 1149
RUEHFR/AMEMBASSY PARIS PRIORITY 6565
RUEHUL/AMEMBASSY SEOUL PRIORITY 7808
RUEHFK/AMCONSUL FUKUOKA PRIORITY 6649
RUEHHK/AMCONSUL HONG KONG PRIORITY 6843
RUEHNAG/AMCONSUL NAGOYA PRIORITY 3963
RUEHNH/AMCONSUL NAHA PRIORITY 8988
RUEHOK/AMCONSUL OSAKA KOBE PRIORITY 0464
RUEHKSO/AMCONSUL SAPPORO PRIORITY 7166
RUEHGH/AMCONSUL SHANGHAI PRIORITY 0610
RUEHIN/AIT TAIPEI PRIORITY 7486
RUEHBS/USEU BRUSSELS PRIORITY
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC PRIORITY
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UNCLAS SECTION 01 OF 03 TOKYO 002246
SENSITIVE
SIPDIS
USTR FOR AUSTR CUTLER, BEEMAN, LEE, AND HOLLOWAY
NSC FOR LOI, RUSSELL
E.O. 12958: N/A
TAGS: EFIN ECON PGOV JA
SUBJECT: INSURANCE: DPJ'S FIRST STEPS ON POSTAL REFORM
REF: A. TOKYO 2079
B. TOKYO 1329
C. TOKYO 1106
D. TOKYO 706
E. TOKYO 555
SENSITIVE BUT UNCLASSIFIED. CONTAINS BUSINESS SENSITIVE
INFORMATION.
1. (SBU) SUMMARY: The Democratic Party of Japan (DPJ)-led
government appears likely to take several steps to halt, and
in some cases reverse, the postal privatization process.
Although no official statement has been made, by all accounts
the government plans to pass a bill in the extraordinary
session of the Diet, which will most likely occur in mid to
late October, to stop the sale of stock for Japan Post
Holdings, Japan Post Bank, and Japan Post Insurance. The
coalition government also plans to submit a bill at an early
stage to conduct an overall review of postal services. The
Embassy continues to make clear in its discussions with GOJ
officials the USG does not take a position on postal
privatization, but that we remain concerned about how changes
in the privatization process could affect the competitive
environment for banking, insurance, and delivery services and
further delay GOJ commitments to create a level playing field
for U.S. and other private companies. END SUMMARY.
PNP PUSHES TO LEAD ON POSTAL ISSUES
-----------------------------------
2. (SBU) Just two days after Japan's new coalition
government, led by the DPJ, took power, conflict arose
between DPJ Minister of Internal Affairs and Communication
(MIC) Kazuhiro Haraguchi and People's New Party (PNP) leader
and Minister for Financial Affairs and Postal Reform Shizuka
Kamei. Haraguchi, whose ministry has the statutory authority
to regulate postal issues, in a live television broadcast on
the night of September 17, presented a plan for review of the
postal service privatization. Kamei retorted in an interview
following a Cabinet meeting the next day that he is the one
in the Cabinet responsible for postal matters. In response,
Haraguchi reportedly said that his plan was just one example
of what could be done. The early conflict between Kamei and
MIC Minister Haraguchi caught most observers by surprise,
since Haraguchi was rumored to be one of the DPJ members
closest to the PNP and to have similar views as the PNP on
postal reform. Both Haraguchi and Kamei are apparently in
agreement, however, with PM Hatoyama in calling for the
resignation of controversial Japan Post Holdings President
Yoshifumi Nishikawa (Refs B-C).
3. (SBU) PNP Secretary General and Upper House member
Shozaburo Jimi told the DCM September 22 the PNP planned to
lead within the coalition as an "equal partner" to shift the
course on postal privatization and to improve the lives of
rural citizens. Jimi claimed complete privatization of
postal services would cause 10 million rural inhabitants to
lose access to financial services and postal delivery.
Although the PNP would ideally like to re-nationalize all
parts of the postal business, Jimi said his party realizes
this would not be possible. Therefore, the PNP will work to
make certain that integrated postal delivery, banking, and
insurance are available nationwide.
4. (SBU) In a separate meeting with Emboffs, DPJ Upper House
Member and Director of the Committee on Financial Affairs
Tsutomu Okubo confirmed the DPJ's one-year economic and
financial policy is aimed at capturing the Upper House next
July. He said halting the stock sale for the various postal
corporations is a concession being made to the PNP to ensure
consumer welfare measures rapidly pass in the Diet. Okubo,
who has been in touch with U.S. insurance representatives in
Japan, explained the coalition government will focus on
TOKYO 00002246 002 OF 003
delaying the stock sale; restructuring Japan Post Holdings by
integrating Japan Post Network (post offices) and Japan Post
Service (mail and parcel collection and delivery) directly
into the holding company while keeping Japan Post Bank and
Japan Post Insurance as independent corporations under Japan
Post Holdings; and removing President Nishikawa. Although
the PNP objects to any privatization steps, Okubo said the
DPJ's plan is for 50 percent of the shares to remain with the
government (COMMENT: Press reports indicate the government
plans to hold more than two-thirds of Japan Post Holdings'
stock and for Japan Post Holdings to hold at least two-thirds
of the stock of Japan Post Bank and Japan Post Insurance.
END COMMENT.)
U.S. INDUSTRY LOOKING FOR A SILVER LINING
-----------------------------------------
5. (SBU) The DPJ made clear during the Lower House election
campaign that it would take steps to halt and review postal
privatization. U.S. insurance industry representatives were
therefore not surprised that the new government moved quickly
to introduce a bill to halt the Japan Post Holdings, Japan
Post Bank, and Japan Post Insurance stock sales. Some
believe, however, the complexity of legislation needed to
reorganize Japan Post Holdings may take more time to develop
and will not be ready until next year's regular Diet session.
Industry is looking for a silver lining in the changes. One
company's representative speculates the DPJ's stated
intention to move from bureaucrat-led to elected-leader
policy could be a positive development. Some also hope the
threat of new insurance products being approved for sale by
Japan Post Insurance would recede during the review period
while officials consider the various realignment options
(Refs D-E).
6. (SBU) While U.S. industry expected Kamei to get a cabinet
appointment, most thought it would be the MIC Minister
portfolio (Ref A). During the Koizumi Administration, Heizo
Takenaka served as both the MIC Minister and the State
Minister for Privatization of the Postal Services. It
therefore came as a surprise when Kamei was given the
Financial Affairs portfolio in addition to the more expected
State Minister for Postal Reform position. Industry expects
Kamei to push the PNP's single-issue agenda on postal reform
aggressively, since it is widely speculated the DPJ will drop
its coalition partners should it win an outright majority in
the 2010 Upper House elections.
BUREAUCRATS BIDING THEIR TIME
-----------------------------
7. (SBU) Recent inquiries to MIC and the Financial Services
Agency have been met with uncertainty and cautious replies
that it will take time to see how postal reform proceeds. A
contact at the Office for the Promotion of Privatization of
Postal Services (OPJP) was more forthcoming and said that
since there has been no official plan released, there have
been no instructions given to the various bureaucrats
traditionally tasked with working on this issue. They, like
everyone else, are simply following the stories in the press.
The contact added there appear to be many competing plans,
some advanced by parties, some advanced by individual
politicians, to address postal reform. He noted, however,
that the three coalition parties had established a Postal
Reform Consideration Team, but provided no further details
about its approach or timelines for decision-making.
COMMENT
-------
8. (SBU) We continue to make clear in our discussions with
GOJ officials that the USG does not take a position in favor
or in opposition to the postal privatization, but we remain
TOKYO 00002246 003 OF 003
concerned about how changes in the privatization process
could affect the competitive environment for banking,
insurance, and delivery services. We also continue to
emphasize the importance of equal regulatory requirements
between Japan Post Insurance and private sector companies,
especially before Japan Post Insurance offers any new or
altered products.
ROOS