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UNCLAS SECTION 01 OF 08 TOKYO 006465 
 
SIPDIS 
 
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 11/09/06 
 
 
INDEX: 
 
(1) Will Japan suffer from setback over autos, beef, following 
Democratic Party's victory in US midterm elections? 
 
(2) Pros and cons of nukes debate: It's up to Japan-US alliance, 
public opinion 
 
(3) Editorial: Abe's reply on nuclear debate absurd 
 
(4) Abe administration and Constitution: How Minshuto will respond 
is key to whether national referendum will be passed through the 
Diet 
 
(5) Tax revenues likely to exceed 50 trillion yen in FY2007 budget 
after seven years, enabling government to cap new bond issuance at 
26 trillion yen 
 
(6) Government submits proposal on review of members' contributions 
to UN, calling for increase in China's share 
 
ARTICLES: 
 
(1) Will Japan suffer from setback over autos, beef, following 
Democratic Party's victory in US midterm elections? 
 
Tokyo Shimbun (Page 9) (Full) 
November 9, 2006 
 
Fierce confrontation between the Bush administration and the 
Congress is now viewed as inevitable, following the Democratic Party 
victory in the US midterm elections. This new situation will likely 
affect in some way the Japan-US economic relationship. Though few 
economic officials and market players have pointed out the 
possibility of a sea change occurring, they admit the likelihood 
that pressure on Japan will mount in the aftermath of confrontation 
between the Republican and Democratic Parties over economic policy, 
with an eye on the presidential election in 2008. 
 
Economic pressure likely to be strengthened; Democratic Party to 
attach importance to domestic front, casting shadow on new WTO 
framework 
 
Iraq was the major campaign issue in the midterm elections, far 
overshadowing any economic issues involving Japan. The US is, 
however, saddled with serious economic issues, including revaluation 
of China's yuan, an expanding economic divide on the domestic front, 
a huge trade deficit with China, and the sluggish performance of 
General Motors and other leading auto maker. Regarding Japan, there 
is deep-rooted dissatisfaction with the procedures it requires for 
US beef imports. 
 
The increase in the number of seats won by the Democratic Party 
reflected the American public's discontent with their government's 
Iraq policy. The result has also prompted the Democratic Party to 
take an even stronger confrontational stance toward the Bush 
administration. 
 
Japanese government agencies at Kasumigaseki are calmly watching the 
results of the elections, with one official of the Trade Policy 
Bureau of the Ministry of Economy, Trade and Industry noting, "It is 
not possible to tell how US economic policy will change after the 
elections before the lineup of personnel in the Congress, such as 
 
TOKYO 00006465  002 OF 008 
 
 
who will assume the posts of president of the Senate and speaker of 
the House of Representatives, is settled. 
 
The financial market has, however, judged that now that President 
Bush has only two years left to serve, the Democratic Party would 
strengthen its anti-Bush stance, as one market player put it. That 
is because even the Republican Party, which advocates expanding the 
US economy, could come up with a bullish economic policy aimed at 
holding on to the reins of government. 
 
The outlook for the time being is that a Democratic Party-led 
Congress will call for correcting the imbalance in trade with China. 
The US auto industry may intensify activities to strengthen pressure 
on the Japanese automotive industry. The US auto industry is already 
lobbying for strengthening pressure for a higher yen, claiming that 
the weakening yen is one cause of their sluggish performance. 
 
Having Japan relax inspections of US beef could become a major issue 
again. 
 
The change in the power balance in the US Congress will also likely 
delicately affect the World Trade Organization's (WTO) effort to 
create a new framework. The major reason for the suspension of trade 
liberalization talks under the WTO was the Bush administration's 
opposition to cuts in agricultural subsidies for protecting domestic 
agriculture with an eye on the upcoming midterm elections. The Bush 
administration will find it even more difficult to make concessions 
in future talks because of its weakened power base. 
 
Japan's external trade policy is based on the WTO, but now it will 
likely find it necessary to sign economic partnership agreements 
with more countries. 
 
(2) Pros and cons of nukes debate: It's up to Japan-US alliance, 
public opinion 
 
SANKEI (Page 2) (Full) 
November 9, 2006 
 
Hisahiko Okazaki, former ambassador to Thailand 
 
Before we think about arming Japan with nuclear weapons, we must 
think about whether that is possible within the framework of Japan's 
alliance with the United States. 
 
In other words, we must consider how to ensure that option's 
consistency with the Japan-US alliance under a categorical 
imperative: how to ensure Japan's national security and prosperity. 
 
One may argue that Japan should go nuclear in order to show that 
Japan is a country that is going its own way and is independent of 
the United States. Such an emotional argument, which logically seems 
unlikely for Japan's long-term strategy, is harmless because it 
cannot come true. However, if Japan really chooses to do so, that 
would be a prelude to a catastrophe for Japan and its people. 
 
Britain and France can be noted as precedents in the realm of 
feasibility. Since the beginning of the current century, Britain has 
made it a national policy to act in concert with the United States. 
 
Of course, it is unlikely for two independent nations to have the 
completely same stake. In the past, the United States and Britain 
experienced crises. However, the United States and Britain overcame 
 
TOKYO 00006465  003 OF 008 
 
 
those crises under their fundamental principle of positioning their 
bilateral relationship as the axis of their foreign policies. Under 
such a special relationship of mutual trust, their respective 
nuclear strategies never ran counter to each other. 
 
Meanwhile, France went nuclear in defiance of the United States' 
strong opposition. De Gaulle went so far as to kick the headquarters 
of the North Atlantic Treaty Organization (NATO) out of Paris but 
upheld the NATO alliance. De Gaulle was the first to support 
Kennedy's naval blockade of Cuba though the United States and France 
were in the midst of friction. We need to note that the US-France 
alliance in those days was more reliable than the half-baked 
Japan-US alliance, under which Japan is still not allowed to 
participate in collective self-defense. 
 
In the United States, however, there were arguments in favor of 
France's nuclear arsenal. I remember that those arguments arose in 
the early 1990s when the Cold War was about to end. In those days, 
the Soviet threat was at its zenith and America was desperate for 
any help. They argued that France's nuclear weapons would work to 
complicate the Soviet Union's calculation. 
 
What about Japan? For example, suppose that China attacked the 
Senkaku islets. China would think the United States would not use a 
nuclear weapon just because China did so. However, what if Japan had 
nuclear weapons? In this case, China would wonder what to do if 
Japan really had nuclear weapons. This would complicate China's 
calculation. 
 
That can be a strategic reason for Japan to have nuclear weapons. 
Even in that case, however, Japan needs to depend on America's 
nuclear umbrella from a broader point of view. Japan's strategic 
merit in that case is just making the other side complicate its 
calculation. Accordingly, the question is how much political and 
diplomatic cost it is worth paying for to gain strategic interests 
to that extent. 
 
In that case, Japan's nuclear deterrence-should Japan lose its 
alliance with the United States-would be in vain. Today, Japan and 
the United States are closely related with each other in the 
political and economic areas. Considering this fact, the price De 
Gaulle paid for US-France relations in those days would be too high 
for Japan. 
 
In short, it (Japan's nuclear option) depends on the strength of 
Japan's bilateral alliance with the United States and Japan's public 
opinion-and their correlation. 
 
First of all, the question is whether Japan is as important and 
indispensable as Britain and France for the United States in NATO 
during the Cold War era. It is difficult to make a judgment of this 
kind. For one thing, such a judgment necessitates an objective 
judgment of the situation. For another, it will involve each 
country's future policy. In other words, it also depends on whether 
the countries concerned are willing to make their relations closer 
and whether they can do so. 
 
In the end, the important thing is whether Japan will decide to 
participate in collective self-defense and will endeavor to 
establish a relationship indispensable to each other by doing so. 
 
Another important factor is Japan's public opinion and its will. If 
it is clear that the Japanese public wants in unison to go nuclear, 
 
TOKYO 00006465  004 OF 008 
 
 
and if the United States is urged to choose to agree on Japan's 
option of arming itself with nuclear weapons or otherwise to lose 
its alliance with Japan, it would be possible for Japan to model 
after Britain or France to arm itself with nuclear weapons. However, 
I deem it unlikely for Japan to do so in the foreseeable future. 
 
Finally, when it comes to the pros and cons of debating on this 
nuclear matter in itself, which is given to me as the main theme for 
this column, I have already passed it over because I am actually 
talking here in this column about the advocacy of debating on the 
option of going nuclear. 
 
If and when politicians debate on this matter, however, I hope that 
they will consider talking about strategies at least to this level. 
 
(3) Editorial: Abe's reply on nuclear debate absurd 
 
TOKYO SHIMBUN (Page 5) (Full) 
November 9, 2006 
 
A Diet debate between Prime Minister Shinzo Abe and Minshuto 
(Democratic Party of Japan) President Ichiro Ozawa -- their second 
-- took place yesterday. Ozawa asked why Abe allows senior ruling 
party members to continue mentioning a nuclear option on the one 
hand, while vowing to uphold the three non-nuclear principles on the 
other hand. Abe's answer was absurd. 
 
Yesterday's debate was far easier to understand than the one last 
months. The debate centered on Article 9 of the Constitution, a 
nuclear option, and Basic Education Law revision. Ozawa asked 
questions calmly, while Abe answered them in haste. Abe's answers 
lacked persuasiveness and punch. The prime minister must polish his 
rhetoric. 
 
The highlight was their debate on possessing nuclear arms. Ozawa 
said to Abe: "You repeatedly indicated that cabinet members and 
party policy officers were allowed to talk about possession of 
nuclear arms, while declaring that the government would uphold the 
three non-nuclear principles. Given that, Japanese people and the 
international community may not take your words that the government 
would uphold the three non-nuclear rules at face value." 
 
In response, Abe said: "If (nuclear) debate is totally prohibited, 
then (the governments of Japan and the United States), too, would 
not be allowed to discuss that their alliance is firm as a 
deterrent." 
 
Abe's argument is absurd. Nuclear debate and the three non-nuclear 
principles simply do not go together. Ozawa warned Abe: "Going 
nuclear will do Japan no good, either politically or militarily. As 
the person representing Japan, the only country in the world that 
suffered atomic bombings, you must exercise caution in making 
statements." 
 
Liberal Democratic Party Policy Research Council Chairman Shoichi 
Nakagawa, a person at the center of the controversy, has indicated 
that he would not mention nuclear debate for the time being. His 
announcement is natural. The prime minister must follow suit. 
 
Reportedly Abe told foreign media, including a British newspaper: 
"Article 9 of the Constitution does not fit the times." Ozawa asked 
Abe's hidden intention behind that statement. But Abe did not say 
much, citing his duty to respect the Construction. The prime 
 
TOKYO 00006465  005 OF 008 
 
 
minister gave an evasive answer at the Diet, while saying that he 
would put constitutional revision on the political agenda. If he 
cannot give a clear answer, he should not have casually mentioned 
the subject to foreign media. 
 
Ozawa also urged the government to rewrite its Basic Education Law 
revision bill, arguing that such problems as bullying and high 
schools' failure to teach compulsory subjects would not be solved 
unless the system was reformed. Many people would subscribe to 
Ozawa's view despite his party's intention to prolong Diet 
deliberations. 
 
In response, Abe explained that visions and principles necessary to 
deal with those problems were incorporated in the government plan. 
We would like to see in-depth debate, as is the case with a bill to 
upgrade the Defense Agency to a ministry. 
 
In yesterday's session, Ozawa outperformed Abe. It may have an 
impact on ongoing gubernatorial races. In the next session, we would 
like to see the prime minister offer clear-cut answers. 
 
(4) Abe administration and Constitution: How Minshuto will respond 
is key to whether national referendum will be passed through the 
Diet 
 
YOMIURI (Page 4) (Full) 
November 8, 2006 
 
Whether a national referendum bill to set procedures for amending 
the Constitution will clear the Diet is one of the key issues of the 
ongoing Diet session. The government of Prime Minister Shinzo Abe 
aims at amending the Constitution, but since it has yet to come up 
with any concrete procedures for constitutional amendment, it is 
necessary for it to first pass a bill that sets the ground rules. 
 
At a session on Oct. 26 of the House of Representatives Special 
Committee on the Constitution, Hajime Funada, chairman of the 
Liberal Democratic Party (LDP) Research Commission on the 
Constitution, made this statement about two bills already submitted 
to the current Diet session: 
 
"There are few major differences between the bill drafted by the 
ruling coalition and the other presented by Minshuto (Democratic 
Party of Japan). I would like to say that the two bills are rather 
similar." 
 
Funada then stressed: "We will be able to fill the gaps." He has had 
now confidence in negotiating changes in the legislation. 
 
Major differences between the two bills are: 1) the minimum age for 
granting voting rights, 2) subject themes for the national 
referendum, and 3) a way to express pros and cons on a ballot. 
 
The ruling camp suggests the age eligible for voting should be at 
least 20, while Minshuto proposes the age should be in principle 18 
or over. 
 
Funada explained Secretary General Hidenao Nakagawa on Oct. 5 about 
"common ground" in negotiations with the main opposition party as 
follows: 
 
"We will change the minimum age for granting voting rights from 20 
to 18 in the main rules in the bill, but will set a period of three 
 
TOKYO 00006465  006 OF 008 
 
 
to five years as a provisional measures in a supplementary 
provision. During that period, the minimum voting age should be 20. 
We will see the work of revising the franchise and the ages 
regulated by the Civil Law and the Juvenile Law. In order to set the 
minimum voting age at 18, legal revision is necessary." 
 
Minshuto's Constitutional Research Commission Chairman Yukio Edano, 
Funada's negotiator, appears to be responding to negotiations, 
saying, "We cannot give in and set the minimum voting age at 18. But 
there is room to flexibly respond to the remaining part." 
 
Edano whispered to Funada on Oct. 31: "I was told by a senior party 
official that President Ozawa was telling him to make efforts a bit 
for the general plebiscite plan." Edano's remarks shook Funada's 
confidence. 
 
Funada had assumed through the past negotiations with Edano that 
Minshuto would withdraw the general plebiscite plan at the end. 
 
The genera plebiscite plan is Minshuto's suggestion that the 
subjects of a national referendum be expanded to important national 
political issues. The ruling coalition, however, has asserted that 
this proposal should be a theme up for consideration in the future. 
 
As if to echo Edano's remarks, Minshuto Secretary General Yukio 
Hatoyama took a cautious stance toward the enactment of the bill 
during the current Diet session. He stated at a press conference on 
Nov. 2: "It is not that easy to pass bills related to the 
Constitution through the Diet during the extra session." 
 
Hatoyama discussed the constitutional issues with Ozawa on Aug. 7. 
In the meeting, Hatoyama proposed: "Why don't we let the party's 
policy study panel start drafting a constitutional reform outline?" 
Hatoyama reportedly failed to get a favorable answer from Ozawa, 
however. 
 
A source familiar with Minshuto said: "Mr. Ozawa seems to be placing 
emphasis on cooperation with the Japanese Communist Party and the 
Social Democratic Party, both of which oppose revising the 
Constitution. 
 
It is evident that the LDP is dissatisfied with the fact that 
whether the referendum bill will clear the Diet has become 
uncertain. Secretary General Nakagawa told reporters on Nov. 2: "It 
is extremely regrettable that there is a party that is trying to 
delay deliberations for party politics." 
 
The ruling parties intend not to put the bill to a vote until after 
the negotiations with Minshuto are completed. This is because the 
ruling camp has determined that since more than two-thirds of 
members of both Diet chambers are needed to propose amending the 
Constitution, the referendum bill should be passed through the Diet 
under the same condition. 
 
Hajime Imai, the secretary general of a civic body calling for 
creating fair rules for the referendum bill, said: 
 
"A national referendum is an opportunity to exercise the most 
important right, but most people don't know that they have the right 
to make a final decision. I want the Diet to do its best to deepen 
the level of public understanding, as well as to work to create good 
legislation." 
 
 
TOKYO 00006465  007 OF 008 
 
 
(5) Tax revenues likely to exceed 50 trillion yen in FY2007 budget 
after seven years, enabling government to cap new bond issuance at 
26 trillion yen 
 
ASAHI (Page 1) (Full) 
November 9, 2006 
 
The Finance Ministry now expects tax revenues in FY2007 to exceed 50 
trillion yen for the first time since FY2000. Ministry officials 
attribute the jump to the nation's economic recovery that has 
contributed to an increase in corporate tax revenues. As a result, 
the total amount of the new bonds the government will issue in 
FY2007 is likely to be 26 trillion yen or less, far lower than the 
30-trillion-yen cap set by Prime Minister Abe. The ministry hopes to 
reduce government bond issuance as much as possible in order to 
reconstruct the nation's financial system. But some officials in the 
Abe administration are calling for larger corporate tax cuts as part 
of efforts to pursue further economic growth. Haggling is likely to 
increase now over how to use the increased portion of tax revenues. 
 
 
According to government sources, when the ministry compiled last 
December the initial general account budget for FY2006, it estimated 
tax revenues at 45.9 trillion yen. But the ministry now expects an 
increase of at least 3 trillion yen over the initial projection. 
Should tax revenues shoot up at a faster pace, the ministry might 
see tax revenues top 50 trillion yen within FY2006. 
 
In FY2007, the ministry estimates one trillion yen to be generated 
due to the planned abolishment of the fixed-rate tax reduction 
measure. In addition, if the economy grows 2% in FY2007, 1 trillion 
yen more in tax revenues will be accrued. If the nation attains a 3% 
economic growth as targeted by the government and the ruling 
parties, the ministry will see an increase of 1.5 trillion yen. 
 
Given these, the ministry now projects the total of tax revenues in 
FY2007 at about 51 trillion yen, an increase of 5 to 5.5 trillion 
yen over the FY2006 initial budget. 
 
The Finance Ministry in the FY2007 draft budget estimates general 
expenditures to increase about 400 billion yen. With about 500 
billion yen needed to finance corporate tax cuts and the increased 
principle and interest payment for government bonds added to the 40 
billion yen, factors for increasing government bond issuance is 
estimated to be worth 1 to 2 trillion yen. 
 
Accordingly, it will become possible to significantly reduce the 
amount of new government bond issuance in FY2007 from the 29.97 
trillion yen recorded in FY2006. 
 
Given this, some officials are calling for frontloading the targeted 
year now set for FY2011 for bringing the basic balance of payments 
to the plus column. Others are seeking an expanded size of corporate 
tax cuts. In ongoing debate on a revision of the tax system for 
FY2007, an idea of tax cuts by reviewing companies' depreciation 
costs is emerging. Further, Finance Minister Omi has come up with a 
plan to scrap the accumulated earning tax. 
 
(6) Government submits proposal on review of members' contributions 
to UN, calling for increase in China's share 
 
TOKYO SHIMBUN (Page 2) (Full) 
November 9, 2006 
 
TOKYO 00006465  008 OF 008 
 
 
 
The government yesterday submitted a package of proposals on 
reviewing each UN member's share of the UN regular budget to the 5th 
Committee (for administrative and fiscal policies) of the United 
Nations' Assembly. The focus in the review work is on dues for China 
and Russia. Although they are veto-wielding members, their shares of 
contributions remain low. The proposal calls for an increase in 
China's share but no change in Russia's burden. 
 
In March, Japan presented a report this March calling for the 
minimum level of contributions to be set at 3% or 5% for the five 
permanent UN Security Council members. Either amount would mean a 
significant increase in China's financial burden. However, Japan 
failed to obtain support for the proposal from many UN member 
countries, so it crafted a new plan. 
 
The new proposal suggests that the rate of discount for countries 
with a low level of per capita income should be lowered for 
countries whose economic scale is considerably large. Under this 
proposals, China, India, and Brazil would see their rate down. The 
proposal calls for the share of Russia to be raised from the current 
0.5% to 1% , but this country now pay 1.1% of the UN regular budget, 
so no change will take place in the case of Russia. 
 
A decision has been made for the UN to determine by the end of the 
year the financial share of the UN regular budget to be borne by 
each member country for the next three years. 
 
SCHIEFFER