VZCZCXRO6811
RR RUEHCHI RUEHFK RUEHHM RUEHKSO RUEHPB
DE RUEHKO #2879/01 1450214
ZNR UUUUU ZZH
R 250214Z MAY 06
FM AMEMBASSY TOKYO
TO RUEHC/SECSTATE WASHDC 2487
INFO RUEHZU/ASIAN PACIFIC ECONOMIC COOPERATION
RUEHFK/AMCONSUL FUKUOKA 6390
RUEHNAG/AMCONSUL NAGOYA 6339
RUEHNH/AMCONSUL NAHA 9015
RUEHOK/AMCONSUL OSAKA KOBE 9611
RUEHKSO/AMCONSUL SAPPORO 7550

UNCLAS SECTION 01 OF 02 TOKYO 002879 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
DEPT PLEASE PASS USTR WENDY CUTLER 
DEPT PLEASE PASS NSC CHRISTINA COLLINS 
 
E.O. 12958: N/A 
TAGS: ECON ETRD PREL CH KS JA
SUBJECT: JAPANESE BUSINESS WANTS STRONG US TIES; CONCERNED 
ABOUT CHINA/KOREA 
 
 
TOKYO 00002879  001.2 OF 002 
 
 
¶1. (SBU) Summary:  Incoming Japan Business Federation 
(Keidanren) Chairman Fujio Mitarai told the Ambassador May 23 
that Japan's most important foreign relationship was with the 
United States.  He agreed with Ambassador Schieffer that it 
was time to consider further integration of the U.S. and 
Japanese economies.  Outgoing Keidanren Chair Hiroshi Okuda 
told the Ambassador that Japanese business worried over 
Japan's deteriorating political relations with Korea and 
China.  He noted that he and Mitarai, after visiting the US 
embassy would visit the Korean and Chinese Ambassadors and 
ask them how the business community could improve relations. 
Turning to domestic politics, Okuda said that the LDP 
Presidential race was down to two candidates -- Abe and 
Fukuda.  Okuda thought that former Prime Minister Mori and 
Prime Minister Koizumi would manage the situation so that 
only Abe or Fukuda, would run virtually guaranteeing their 
faction's selection in the first round.  Okuda implied that 
he supported Fukuda when he said that Abe needed to gain 
experience by holding a minister portfolio in the next 
government.  End Summary. 
 
¶2.  (U) Incoming Japan Business Federation (Keidanren) 
Chairman (and Canon CEO) Fujio Mitarai and outgoing Keidanren 
Chairman (and Toyota CEO) Hiroshi Okuda called on Ambassador 
Schieffer on May 23, one day prior to Mitarai's replacing 
Okuda as the head of Japan's preeminent business 
organization.  Okuda noted that he had headed Keidanren for 
four years and it was time for a new leader.  Okuda also 
noted he would step down as CEO of Toyota in June.  Okuda 
said that Mitarai, who had lived and worked for 23 years in 
the United States, was a good friend of the U.S. 
relationship.  Mitarai noted that he had spent more of his 
professional career in the United States than in any country 
including Japan.  He had learned how to do business in 
America and had many American friends.  He also looked 
forward to developing new American friends in this new role. 
 
Promoting US-Japan Economic Integration 
--------------------------------------- 
 
¶3.  (SBU) Ambassador Schieffer said that the stage was set 
for the United States and Japan to further their economic 
integration.  As Japan's major business organization, 
Keidanren could further this goal.  Mitarai agreed noting 
that relations with the United States were more important to 
Japan than any other.  He looked forward to participating in 
the Business Roundtable and Japan-US Business Council. 
 
Concerns over Japanese relations with China and Korea 
--------------------------------------------- -------- 
 
¶4. (SBU) Okuda said Japanese companies were concerned over 
Japan's deteriorating political relations with China and 
Korea.  He noted that he and Mitarai, after visiting the U.S. 
embassy would call on the Korean and Chinese Ambassadors and 
ask them how the business community could improve relations. 
He complained that Prime Minister Koizumi "did not listen" to 
business views on relations with Asian neighbors.  Half 
jokingly he said he hoped that President Bush would ask the 
Prime Minister to improve Japan's relations with its 
neighbors in North East Asia.  Okuda said he was also worried 
that Chinese President Hu Jintao's visit to the United States 
had not gone well.  Ambassador Schieffer said that despite a 
few glitches, the two President's had engaged in a good 
conversation on the issues.  Ambassador Schieffer also said 
President Bush was eager to welcome Prime Minister Koizumi to 
Washington to thank him for his support and friendship over 
the past five years. 
 
Selecting a new LDP President 
----------------------------- 
 
¶5. (SBU) Turning to domestic politics, Okuda said that the 
LDP Presidential race was down to two candidates -- Chief 
Cabinet Secretary Abe and former Chief Cabinet Secretary 
Fukuda.  Okuda thought that former Prime Minister Mori and 
Prime Minister Koizumi would manage their factional politics 
so that only one of them would run for LDP President.  This 
development virtually guaranteed the selection of a Mori 
faction member in the first round.  Okuda said that other 
candidates -- including Foreign Minister Aso and Finance 
Minister Tanigaki -- had virtually no chance of election. 
 
TOKYO 00002879  002.2 OF 002 
 
 
They would both run, but they already knew they would lose. 
He discounted the chances of any other dark horse candidates, 
saying the selection was down to the two leading candidates. 
Okuda said that Fukuda was "gaining strongly" on Abe. Okuda 
also said that Defense Agency head Nukaga was the strongest 
contender from the Tsushima (former Hashimoto) faction, but 
he doubted that Nukaga or anyone else from that faction would 
run.  He also said that this election represented the last 
chance for LDP politicians such as Fukuda, Aso and Nukaga. 
In the next election, younger candidates like Abe would be 
the main contenders. 
 
¶6. (SBU) Okuda said that he had told Abe not to run this time 
for "health reasons."  He said that he sits across from Abe 
at Prime Minister Koizumi's Council on Economic and Fiscal 
Policy meetings, and expressed concern that Abe's color was 
"not good."  He had heard rumors that Abe had some sort of 
liver problems which were consistent with Abe's "dark" 
physical complexion.  Okuda then admitted that "health" was 
an excuse and he thought that Abe needed to gain experience 
by holding a minister portfolio in the next government. 
 
Comment 
------- 
 
¶7. (SBU) Okuda appeared genuinely anxious to step down and 
disappear for a time from Japan's political and business 
world.  He said that his ambition in the short term was to 
travel around the world using sea and road transportation. He 
said he wanted to drive across the United States to see 
places he had heard about like Route 66.  (Indeed after his 
visit with the Ambassador he went to the Consular Section to 
apply for a visitors visa which is only required for persons 
staying for over 90 days.)  It was not clear if Okuda's 
scenario of only one Mori faction candidate running was a 
prediction or more wishful thinking.  His decision to back 
Fukuda rather than Abe is undoubtedly a reflection of his 
concern about Japan-Korea and Japan-China relations.  For his 
part, Mitarai assumed the back-seat role to Okuda at this 
meeting.  We expect that after having formally assumed the 
reigns of Keidanren on May 24, he will become a much more 
active participant in US-Japan economic discussions.  Mitarai 
appeared anxious to develop close relations with U.S. 
counterparts and talked of visiting Washington DC next year. 
SCHIEFFER