VZCZCXRO6717
PP RUEHFK RUEHKSO RUEHNAG RUEHNH
DE RUEHKO #4436/01 2680805
ZNR UUUUU ZZH
P 250805Z SEP 07
FM AMEMBASSY TOKYO
TO RUEHC/SECSTATE WASHDC PRIORITY 7861
INFO RUEKJCS/SECDEF WASHDC PRIORITY
RHEHAAA/THE WHITE HOUSE WASHINGTON DC PRIORITY
RUEAWJA/USDOJ WASHDC PRIORITY
RULSDMK/USDOT WASHDC PRIORITY
RUCPDOC/USDOC WASHDC PRIORITY
RUEAIIA/CIA WASHDC PRIORITY
RUEKJCS/JOINT STAFF WASHDC//J5//
RHHMUNA/HQ USPACOM HONOLULU HI
RHHMHBA/COMPACFLT PEARL HARBOR HI
RHMFIUU/HQ PACAF HICKAM AFB HI//CC/PA//
RHMFIUU/USFJ //J5/JO21//
RUYNAAC/COMNAVFORJAPAN YOKOSUKA JA
RUAYJAA/CTF 72
RUEHNH/AMCONSUL NAHA 5730
RUEHFK/AMCONSUL FUKUOKA 3317
RUEHOK/AMCONSUL OSAKA KOBE 6971
RUEHNAG/AMCONSUL NAGOYA 2267
RUEHKSO/AMCONSUL SAPPORO 4044
RUEHBJ/AMEMBASSY BEIJING 9117
RUEHUL/AMEMBASSY SEOUL 5173
RUCNDT/USMISSION USUN NEW YORK 6064

UNCLAS SECTION 01 OF 10 TOKYO 004436 
 
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 09/25/07 
 
 
Index: 
 
(1) New LDP leadership launched; Structural reform course might be 
modified; Finance Ministry pins hopes on Tanigaki, Nukaga 
 
(2) Market response to election of Fukuda as LDP president: 
"Stabilize the government first"; No real substance in economic 
policy; Concern about structural reform backsliding 
 
(3) DPJ Secretary General Hatoyama hopes for quick response from US 
Embassy 
 
(4) Prime Minister Abe offers apology for announcing resignation at 
worst timing; He has not regained 5 kg he lost 
 
(5) Editorial: Ozawa's logic getting into a scrape with UNSC 
resolution 
 
(6) Editorial: Japan might be labeled as force of resistance to 
preventing global warming 
 
(7) TOP HEADLINES 
 
(8) EDITORIALS 
 
ARTICLES: 
 
(1) New LDP leadership launched; Structural reform course might be 
modified; Finance Ministry pins hopes on Tanigaki, Nukaga 
 
MAINICHI (Page 11) (Abridged) 
September 25, 2007 
 
New LDP President Yasuo Fukuda launched yesterday the new LDP 
leadership including Secretary General Bunmei Ibuki, Policy Research 
Council Chairman Sadakazu Tanigaki in the run-up to the prime 
ministerial election today, in which Fukuda is certain to be named 
the nation's 91st prime minister. Whether the new administration 
will continue the structural reforms laid down by former Prime 
Ministers Junichiro Koizumi and Shinzo Abe remains to be seen. In 
his campaign pledges, Fukuda promised to study such options as 
freezing the planned increase in elderly people's share of medical 
payments and a tax system allowing greater local autonomy in 
consideration of the socially weak and local districts, while 
declaring that he would continue some basic policies, such as fiscal 
reconstruction. Attention is focused on the extent to which Fukuda 
can break away from the Abe administration's economic policies once 
he becomes prime minister. 
 
Senior Finance Ministry officials welcomed Tanigaki's appointment as 
policy research council chairman and Fukushiro Nukaga's expected 
reappointment as finance minister because they are receptive to 
fiscal reconstruction. A Finance Ministry official also took this 
view: "They also seem to exhibit excellent abilities to coordinate 
views in dealing with opposition parties on tough issues, such as 
hiking taxes." 
 
In running the LDP presidential election last year, in which he was 
defeated by Abe, Tanigaki contended that the consumption tax must be 
raised to up to 10 PERCENT  by around 2015 to finance social 
security. 
 
 
TOKYO 00004436  002 OF 010 
 
 
Highly alarmed at the nation's long-term debt equivalent to 150 
PERCENT  of GNP, Tanigaki is eager to attain a black-ink primary 
balance by pursuing an approach combining the Koizumi- and Abe-style 
policy course that deeply cut public works projects and tax grants 
and tax hikes. Nukaga, on the other hand, shows an understanding of 
the need for public works projects in order to redress disparities 
between urban and rural areas. The appointments of Tanigaki and 
Nukaga are likely to put a stop to one-sided spending cuts. 
 
Fukuda's key policies also include freezing the government's plan to 
increase elderly people's share of medical payments and taking bold 
measures to eliminate the shortage of doctors. 
 
Staring in next April, the government plans to increase the portion 
of medical expenses borne by people between ages of 70 and 74 from 
the current 10 PERCENT  to 20 PERCENT . Fukuda's plan would 
necessitate the central and local governments to come up with 
additional financial resources totaling 120 billion yen. With his 
another pledge of eliminating the lack of doctors also remaining 
unclear, Fukuda's medical reform plan is likely to be pressed for a 
fundamental review. 
 
Following the ruling bloc's crushing defeat in the July House of 
Councillors election, the New Komeito is calling for tax reforms, 
such as reallocating the corporate enterprise tax and the corporate 
inhabitant tax among prefectures as a means of reducing disparities 
between urban and local areas. In the upcoming year-end tax reform, 
Fukuda is likely to be pressed for new responses to the New 
Komeito's call along with his campaign pledge of a tax system and 
tax grants allowing local independence. 
 
A working-level study is underway between the Finance Ministry and 
the Internal Affairs and Communications Ministry on disparities in 
tax revenues. Like the New Komeito, the Finance Ministry is studying 
the plan to distribute the two local corporate taxes in terms of 
prefectural population and the number of business establishments. 
The Internal Affairs Ministry is also advocating a plan to 
generously provide local areas with consumption tax revenues that 
are essentially unaffected by cyclical changes, as well as the 
so-called hometown tax scheme, under which taxpayers can allocate a 
certain amount of their residential tax payment to their hometown. 
Attention is focused on the future course of coordination between 
the two ministries. 
 
Markets players cool toward caretaker government 
 
With many market players having already factored in the inauguration 
of Prime Minister Fukuda, the establishment of a Fukuda 
administration is likely to have a limited impact on the stock 
markets. A leading securities firm source indicated, however, that 
the appointment of Tanigaki, who has been skeptical about the 
structural reform course since the Koizumi administration, as LDP 
policy chief might dampen foreign investors' desire to buy, thereby 
resulting in sluggish stock prices depending on the new 
administration's policy. At the same time, expectations are strong 
among market players, with Nomura Securities Co. market analyst 
Masahiko Sato saying, "Mr. Fukuda has a stronger sense of stability 
and balance than Mr. Abe." 
 
From mid- to long-term perspectives, a Fukuda administration is 
bound to face rough going in the opposition-controlled Upper House. 
Credit Suisse Chief Economist Hiromichi Shirakawa said: "The Fukuda 
 
TOKYO 00004436  003 OF 010 
 
 
cabinet will be a caretaker cabinet until the next general election. 
Reform will not advance under such a cabinet." Daiwa Securities SMBC 
Co. Equity Marketing Department chief Kazuhiro Takahashi's 
observation was equally chilly: "Chances are slim for the new 
administration to put vital economic policies boosting stock prices 
into action, such as a consumption tax hike." 
 
Japanese stocks have been in an adjustment phase due to America's 
subprime loan crisis. The predominant view is that Japanese stocks 
depend on reduced global credit uncertainty and the trends of the US 
economy. The trends of foreign investors, who account for 70 PERCENT 
 of trading in the domestic markets, are also vital. Norihiro Fujito 
of Mitsubishi UFJ Securities said: "If a Fukuda cabinet immensely 
increases government spending in the name of redressing 
socioeconomic disparities, it would turn off foreign investors, 
taking it as a setback from fiscal reconstruction." 
 
(2) Market response to election of Fukuda as LDP president: 
"Stabilize the government first"; No real substance in economic 
policy; Concern about structural reform backsliding 
 
ASAHI (Page 9) (Slightly abridged) 
September 25, 2007 
 
The prevalent view among market players is that the new president of 
the Liberal Democratic Party of Japan (LDP) should first manage his 
administration in a stable manner. That is because although the 
election of the LDP president has put a halt to the political vacuum 
for the time being, the opposition camp's dominance in the Upper 
House remains unchanged. Some are concerned that the LDP might step 
back to its former self, which attached importance to the interests 
of party factions. If the reform policy, including fiscal 
reconstruction, backslides, new disturbing factors might appear in 
the market, which is now being rocked by the subprime housing loan 
issue in the US. 
 
The Nikkei average on the Tokyo Stock Exchange has surged about 500 
yen over a week or so since Prime Minister Abe's announcement of his 
resignation. A view that a shift to a new administration as well as 
an interest rate cut in the US would stabilize the political 
situation appears to have contributed to the rise. 
 
The prevalent view is that since the market had already taken into 
consideration the assumption of power by Fukuda, there would be no 
major impact on the Tokyo market at the beginning of the week. Even 
so, voices placing expectations on the Fukuda administration are 
growing, because a stable administration inspires the market with 
confidence, as Hidehiko Fujii of the Japan Research Center put it. 
 
Among past administrations since around 1995, under the Hashimoto 
and Mori cabinets stock prices dropped when they resigned, compared 
with the level posted when they took office. In contrast, stock 
prices were higher when Obuchi, Koizumi and Abe stepped down, 
compared with the level marked when they took office. During the 
Koizumi cabinet, the Nikkei average temporarily dropped to the 7,600 
yen level, but it went up to the 15,500 yen level when he resigned. 
The trend indicates that the Koizumi reform drive, including 
deregulation, obtained a certain amount of praise from the market. 
 
The key is the movements of foreign investors, who hold a majority 
in terms of the amount of stock trading on the TSE. Koichiro Nishio 
of Nikko Cordial Securities has believes that foreigners tend to 
 
TOKYO 00004436  004 OF 010 
 
 
give high marks to an administration like the Koizumi cabinet, which 
send clear-cut messages. 
 
In this regard, some take a cool view, with Shinya Ueno of Mizuho 
Securities saying, "Whoever becomes the president of the LDP, he 
would not be able to display political leadership under the present 
market environment." 
 
Consumption tax a subject of high interest 
 
As a matter of fact, many economists are unhappy with Fukuda's 
economic policy, with one noting, "His economic policy is unclear." 
Fukuda's statement on economic policy made during the LDP 
presidential campaign lacked specifics out of consideration to 
various factions that supported him. 
 
How the new administration will deal with spending cuts and a 
consumption tax hike is a subject of high interest in the market. It 
is said that a consumption tax hike, which could take the steam out 
of the domestic economy, putting a dent in consumption, could 
trigger yen-selling. 
 
Taro Aso, another contender in the presidential election, fought 
well. Hiromichi Shirakawa of Credit Swiss, noted, "Mr. Aso brought 
to the forefront a policy of giving priority to local economies. He 
gained an unexpectedly large number of votes. The result shows that 
LDP members are concerned they cannot fight the next election unless 
they attach importance to regional areas." 
 
Fukuda's so-called balanced approach is the cause of barring market 
players from placing expectations of reform, with Kenichi Kawasaki 
of Lehman Brothers noting that that the LDP has returned to its 
former self, as can be seen in Mr. Fukuda's attaching importance to 
coordination with government offices, and Nishio saying, "Giving 
excessive consideration to income disparities and regional economies 
would backslide fiscal and political structural reforms." 
 
Impact on interest hike 
 
The inauguration of the new administration and the selection of a 
cabinet line-up will likely affect the future monetary policy of the 
Bank of Japan, which is searching for the best time for an interest 
rate hike. Shirakawa pointed out, "Chances are that if the Fukuda 
administration clarifies its vision for fiscal reconstruction, 
political checks will heighten against an interest rate hike by the 
BOJ, as it could lead to an increased fiscal burden." However, the 
general view is that whether to raise interest rates will be 
determined by the movements of the global monetary market triggered 
by the subprime loans, according to Hideo Kumano of Dai-Ichi Life 
Insurance Economic Research Center. 
 
Another focus of attention is the impact on the selection of a 
successor to BOJ Governor Toshihiko Fukui, who finishes his term 
next March. The cabinet appoints a BOJ governor with the consent of 
the Lower and Upper Houses.  However, if the Upper House, where the 
opposition holds a majority, opposes the selection of a person 
proposed by the cabinet, then the proposal will be scrapped. 
 
The BOJ is holding out hope that Vice Governor Toshiro Muto, a 
former Finance Ministry official, will be promoted. When the Koizumi 
administration picked Muto as vice governor in 2003, Fukuda was the 
chief cabinet secretary. Expectations of the selection of Muto will 
 
TOKYO 00004436  005 OF 010 
 
 
likely heighten. However, the DPJ opposed the selection of Muto as 
vice governor, because he is a former bureaucrat. 
 
Nishio views that since Mr. Fukuda must obtain cooperation from the 
DPJ in managing the government, he probably does not want a fight 
over the selection of a BOJ governor. On the other hand, there is 
also a strong view that since if the DPJ opposes anything proposed 
by the ruling camp it would not be able to gain support from the 
public, it would try to find a common settlement line with the new 
administration, as Fujii put it. 
 
(3) DPJ Secretary General Hatoyama hopes for quick response from US 
Embassy 
 
SANKEI (Page 5) (Full) 
September 22, 2007 
 
Yukio Hatoyama, secretary general of the main opposition Democratic 
Party of Japan (DPJ), stated in a press conference on Sept. 21 on 
his party's request for the US Embassy in Tokyo to provide 
information about the activities of US warships that have received 
fuel from the Maritime Self-Defense Force in the Indian Ocean: "The 
Embassy is trying to respond in a careful manner. We hope the 
Embassy will swiftly provide the information so that we will be able 
to use it at questioning sessions and Budget Committee sessions in 
the upcoming Diet." Hatoyama explained how his party made the 
request to the US Embassy: "The party's International Affairs Bureau 
chief Tetsundo Iwakuni verbally conveyed it." 
 
(4) Prime Minister Abe offers apology for announcing resignation at 
worst timing; He has not regained 5 kg he lost 
 
YOMIURI (Page 1) (Full) 
September 25, 2007 
 
Prime Minister Shinzo Abe, appearing publicly for the first time 
since his hospitalization, explained yesterday his health condition 
and the real reason for the sudden announcement on Sept. 12 of his 
intention to step down. He reiterated words of apology, saying, "I 
want to apologize to the public." He did not mention the major 
reason for his decision to resign, however. He held the press 
conference a day before his cabinet is to resign en masse. Although 
he expressed his eagerness for cooperating with the new LDP 
president as a Diet member, questions about Abe's accountability 
were raised from some experts. 
 
It was after 5:00 p.m. when Abe showed up at the press conference 
room in Keio University Hospital in Shinanomachi, Tokyo. He entered 
the room slowly and sat on a chair. He was looking down at notes 
while his doctors were being introduced. He apparently grew utterly 
emaciated. "I was unable to have a chance to explain since my 
condition did not make any recovery as I expected," rasped Abe, who 
has been hospitalized since Sept. 13. 
 
The prime minister said feebly: 
 
"I wanted to apologize to the people before stepping down as prime 
minister. I announced my resignation at the worst timing soon after 
delivering a policy speech. I was unable to respond adequately to 
the expectations of the public." 
 
At the press conference on Sept. 12 when he announced his intention 
 
TOKYO 00004436  006 OF 010 
 
 
to quit, he cited Democratic Party of Japan (DPJ) President Ichiro 
Ozawa's refusal of his request for a meeting as a reason for his 
intention to resign. Abe, however, essentially retracted it 
yesterday. He stated: "I apologize for not referring to the main 
cause of my decision and for failing to convey my real intention to 
the public." He added: "I should have mentioned it at that time." 
Abe, who had suffered from such factors as his party's setback in 
the July Upper House election, and the resignation of the 
agriculture minister even after he reshuffled his cabinet, said 
yesterday: "I felt like I'd reached the limit of my strength." One 
of his doctors also explained his condition: "The prime minister 
suffered from lack of appetite due to acute gastroenteritis during 
his overseas trip. He then grew weak." The doctor revealed that Abe 
has been unable to regain his weigh since he lost 5 kg. 
 
Watching Abe's press briefing, many in his hometown, Shimonoseki 
City in Yamaguchi Prefecture, expressed their hopes for Abe to 
recover as quickly as possible. Akio Ito, 71, chairman of Abe's 
support group, worried about Abe, saying: "I'm concerned about his 
lifeless voice. I want him to think first of recovering his health 
as early as possible." He expressed his determination to continue to 
his political career. Regarding this, Abe's support group secretary 
general Okamoto, 60, commented: "Since he said that he wanted to 
continue his political career, I'm determined to support him." 
 
Keio University Prof. Yasunori Sone made this comment: 
 
"I understand that he reached the limits of his strength physically 
and psychologically. He should have explained his health condition 
as the reason for his resignation when he announced his intention. 
He as prime minister of the country missed the right timing to 
fulfill his accountability. The fact that he did not appoint an 
acting prime minister during his hospitalization exposed a lack of 
the Prime Minister's Official Residence's crisis management. His 
responsibility for abandoning the prime minister's job in this way 
is grave. I think his political career will be difficult in the 
future." 
 
 Nobuko Hiwasa, external board member of Snow Brand Milk Products 
Co., who used to serve as chief of secretariat of the National 
Liaison Committee of Consumers' Organizations, commented: 
 
"It never should occur that the top leader of a company does not 
explain the real reason for trouble when the trouble affects 
consumers. He should have said at that time if he was really sick. 
Since he failed to do so, the public was confused and speculation 
was rampant. Honesty is required in any circle. I think that Abe 
made that decision because he did not look toward the public." 
 
(5) Editorial: Ozawa's logic getting into a scrape with UNSC 
resolution 
 
NIKKEI (Page 2) (Full) 
September 21, 2007 
 
The United Nations Security Council adopted Resolution 1776, which 
extends the International Security Assistance Force's mission in 
Afghanistan for one year and which expresses "appreciation" to 
multinational naval forces for their maritime interdiction 
operations conducted in the Indian Ocean with Japan's participation. 
The leading opposition Democratic Party of Japan (Minshuto) remains 
committed to standing against continuing the Maritime Self-Defense 
 
TOKYO 00004436  007 OF 010 
 
 
Force's refueling activities in the Indian Ocean. However, the UNSC 
resolution adopted this time works to the disadvantage of DPJ 
President Ichiro Ozawa, who has been asserting that the MSDF's 
refueling mission is not based on any UN resolution. 
 
The resolution was adopted with a concurring vote of 14 countries 
excluding Russia, which abstained from voting. It is not a unanimous 
resolution, so some people seem to take it that this would work to 
the DPJ's advantage. When the Gulf War broke out, Ozawa, basing his 
standpoint on UNSC Resolution 678, asserted that Japan should send 
the Self-Defense Forces to participate in the multinational forces. 
However, China abstained from voting on that resolution. Ozawa will 
lose consistency if he makes light of Resolution 1776 on the grounds 
that it is not a unanimous resolution. 
 
Yoshio Hachiro, foreign minister in the DPJ's shadow cabinet, 
stresses the DPJ's posture against continuing the MSDF's refueling 
mission, taking the position that the UNSC resolution this time does 
not directly provide for Japan's SDF activities at all. This kind of 
assertion is understandable from the context of domestic politics. 
The question is how far it will be convincing in the international 
community and in Japan now that the UNSC has adopted a new 
resolution. 
 
As noted by Hachiro, UNSC Resolution 1776 does not directly touch on 
the SDF's activities. However, the international community has no 
powerful law enforcers. International law is not the same as 
domestic laws. Unlike a treaty between one country and another, UNSC 
resolutions go no further than to politically bind UN members in 
many cases. If a UNSC resolution is vague in substance, it is 
important to interpret what it means on the whole. 
 
UNSC Resolution 1776 expressed appreciation for the multinational 
naval forces' maritime interdiction operations. What does this mean? 
The UNSC has approved their activities. In commonsense terms, that 
is why the UNSC expressed its appreciation. The UNSC, if it is 
against their activities, is unlikely to adopt a resolution that 
expresses its appreciation for such activities. 
 
Accordingly, the DPJ's logic, which takes the position that the 
SDF's refueling mission is groundless because it is not based on a 
UN resolution, cannot but fall into a jurist argument that makes no 
sense to the general public if the DPJ tries to carry it through, 
although it has yet to collapse completely. 
 
The Diet will elect Japan's new prime minister next week. The DPJ 
would find it even more difficult than ever to uphold its logic in 
parliamentary inter-party talks. 
 
The DPJ has stood against the SDF's refueling mission, so the DPJ 
should carry through its standpoint against it to the last. That is 
a sincere response to its supporters. One may think in this way. 
There can be such a way of thinking in Japan, indeed. At the same 
time, however, the DPJ should also listen in a sincere manner to the 
international community's expectations shown in the UNSC resolution. 
The DPJ should take it for granted as a political party responsible 
for state affairs in Japan living in the international community. To 
that end, the ruling and opposition parties should rack their 
brains. 
 
(6) Editorial: Japan might be labeled as force of resistance to 
preventing global warming 
 
TOKYO 00004436  008 OF 010 
 
 
 
NIKKEI (Page 2) (Full) 
September 25, 2007 
 
Soon after the Fukuda administration is launched today, it will find 
itself facing difficult international talks in which both national 
and global interests are complexly interrelated. These will be 
political negotiations aiming at the period after the Kyoto Protocol 
expires in 2012 by creating a new regime that would include the US, 
China and other major gas emitters. For Japan, the question is how 
it should combat global warming while keeping the economy growing. 
 
The United Nations kicked off its meeting on climate change in New 
York on Sept. 24. The Japanese prime minister did not attended the 
meeting this year, although the prime minister initially should 
express Japan's views on the international stage and discuss ways to 
prevent global crisis with other countries' leaders. 
 
From dialogue to negotiations 
 
The conference brings together leaders from 80 countries, including 
United States President Bush and French President Sarkozy. Former 
Prime Minister Yoshiro Mori represents the Japanese government. 
Prime Minister Shinzo Abe set forth the initiative, "Invitation to 
Cool Earth 50," in the Heiligendamm Summit in June calling for 
halving global greenhouse gas emissions by 2050 and earned a certain 
level of international praise for it. Set off by Abe's sudden 
resignation, Japan's presence on the international stage has begun 
to decline. 
 
The high-level UN conference is indisputably aimed to shift such 
tasks as halving global gas emissions by 2050 and of creating a 
post-Kyoto framework from "the current dialogue stage to the 
negotiating stage," in which rules and goals will be worked out. 
 
China still insists that industrialized countries alone should be 
required to cut greenhouse gas emissions. The US government also 
remains opposed to setting any goals for gas-emission cuts. In the 
declaration issued at the Asia-Pacific Economic Cooperation (APEC) 
forum and on other occasions, only goals to strive for were worked 
out, in a sense, as products of dialogue. 
 
United Nations Secretary General Ban Ki-moon aims to start 
full-scale negotiations at the 13th session of the Conference of the 
Parties (COP) to the UN Framework Convention on Climate Change 
(UNFCCC) in Bali, Indonesia, in December, reflecting countries' 
political stances clarified by their leaders in the high-level 
conference. Following the high-level meeting, a meeting of major 
greenhouse gas emitters will be held in Washington starting on Sept. 
¶27. This is a valuable occasion for industrialized countries and 
emerging countries such as China and India to sit at the same table, 
but many countries have decided not to send cabinet ministers, for 
the reason that the meeting is unlikely to produce specific results 
because it will be held under the lead of the Bush administration. 
 
Negotiations on global warming will held at various levels, 
including the COP13 and the Lake Toya Summit in Hokkaido next July. 
Besides the serious damage from Abe's resignation, Japan has another 
weak point that might cause questions about Japan's ability as the 
chair of the Lake Toya Summit. That is the fact that Japan remains 
unable to clearly speak of its own reduction goals. 
 
 
TOKYO 00004436  009 OF 010 
 
 
In Japan, the business world and the government agencies responsible 
for economic policies are absolutely opposed to the idea of adopting 
an emissions trading system based on a cap-and-trade program that 
would set limits on companies' gas emissions. They are also against 
an introduction of nation-specific reduction targets. Looking at 
Japan's negative stance, other countries might define Japan as a 
force of resistance. 
 
It was said that since the Japanese industry has achieved energy 
saving most conspicuously in the world, it will be impossible to 
hammer out more energy-conservation measures. But this myth might 
have already shattered. Japan has already been overtaken by Germany 
and Britain in terms of energy efficiency and emission consumption 
rate in many of its industries. 
 
Nippon Keidanren (Japan Business Federation) and the Ministry of 
Economy, Trade and Industry (METI) have yet to present any reasons 
for their opposition to emissions trading and total volume targets. 
In the US, a law that would set numerical targets for cutting its 
greenhouse gas emissions will surely be enacted under a post-Bush 
administration. Many of the bills now put on the agenda set 
numerical targets that are not significantly different from those of 
the European Union (EU). Naturally, they are numerical figures 
worked out on the premise of introducing the emissions trading 
system. Australia has also come up with similar figures. 
 
Flexible goals for emerging nations 
 
Among the industrialized countries, only Japan has still allowed 
companies to draw up their own voluntary action programs based on 
the conventional convoy system, without setting any total volume 
targets. Japan has yet to allow emissions trading, either. Even so, 
Japan will inevitably be requested to transfer technology and offer 
financial aid in the future. How can a nation that cannot speak of 
its future targets assume the initiative in cutting greenhouse gas 
emissions? 
 
Emerging nations will not be punished even if they fail to achieve 
their targets. Furthermore, study is underway to set a 
target-setting framework under which if they succeed in meeting 
their targets, they will be allowed to sell that portion under the 
emissions-trading system. By introducing sector-specific goals, 
instead of nation-specific ones, emerging countries will find it 
easier to join the framework. 
 
Views are split over whether to push ahead with negotiations on a 
regime for industrialized countries and those for emerging countries 
separately. But the major principle in a treaty is "common but a 
different level of responsibility." 
 
It is as clear as daylight that it is impossible for Japan to cut 
its emissions of greenhouse gases by 60 to 70 PERCENT  from current 
levels without emissions trading. It is believed that Nippon 
Keidanren and METI are now aware of the need for a policy switch. 
What is needed now in Japan is a political judgment. The government 
must try to prevent the force incomprehensive of the scientific 
evidence of global warming from undermining Japan's national 
interests. 
 
(7) TOP HEADLINES 
 
Asahi, Mainichi, Yomiuri, Nikkei, Sankei & Tokyo Shimbun: 
 
TOKYO 00004436  010 OF 010 
 
 
Fukuda names faction leaders Ibuki, Tanigaki, Nikai, and Koga to 
party executive posts, Machimura as chief cabinet secretary 
 
Akahata: 
All JCP members elected in Higashi Osaka assembly election 
 
(8) EDITORIALS 
 
Asahi: 
(1) End of Abe cabinet: Results and setbacks of right-wing 
government 
(2) Increasing poverty: More countermeasures needed 
 
Mainichi: 
(1) Appointments of LDP executives: How will party policies, 
management change? 
(2) Record high oil prices: Speculative funds pouring in 
 
Yomiuri: 
(1) Will LDP return to faction-led politics? 
(2) Sale of insurance policies at banks: Complete removal of ban 
serves to expedite reform in industry 
 
 
Nikkei: 
(1) Japan might be labeled a "force of resistance" preventing global 
warming 
 
Sankei: 
(1) New LDP executives expected to achieve results through 
coordination and resolution 
(2) Academic aptitude test: Fair competition leads to improving 
scholastic ability 
 
Tokyo Shimbun: 
(1) LDP returns to old regime, with appointments of faction leaders 
(2) Transparency required in selecting Chinese Communist Party 
leader 
 
Akahata: 
(1) Lawsuit on drug-induced hepatitis C: Give top priority to 
rescuing victims 
 
SCHIEFFER