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UNCLAS SECTION 01 OF 22 TOKYO 004557 
 
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 09/28/07 
 
 
Index: 
 
(1) Japan begins discussing sanctions against Burma (Myanmar); Prime 
minister indicates need to ascertain the situation 
 
(2) Premier Wen tells Prime Minister Fukuda, "China will make 
efforts" to deal with situation in Burma (Myanmar) 
 
(3) Burma's (Myanmar's) authorities take into custory Tokyo 
Shimbun's local correspondent 
 
(4) Editorial -- Burma (Myanmar) under oppression: China should join 
international pressure on Burma's military junta 
 
(5) Focus -- Summit between two Koreas: Interview with Hajime Izumi; 
"North" likely to make full use of results of dialogue with US 
 
(6) Mitsubishi Heavy Industries wins order for nuclear plant 
equipment in China 
 
(7) Poll on Fukuda cabinet, political parties (Mainichi) 
 
(8) Spot poll on Fukuda cabinet, political parties, MSDF refueling 
mission (Yomiuri) 
 
(9) Poll on Fukuda cabinet, political parties (Asahi) 
 
(10) Understanding Prime Minister Fukuda from his sayings 
 
(11) Fukuda office altered receipts for 2006 funds report 
 
(12) Fukuda-led branch office, political groups found to have 
rewritten addresses on receipts worth 5.8 million yen 
 
(13) Prime Minister Fukuda: "I feel really ashamed" of political 
funds problem 
 
(14) Ibuki-headed LDP branch office received illicit donations from 
money-losing company for over three years 
 
(15) Diet to reopen at long last for a showdown; LDP to present new 
bill before antiterror law loses its effect 
 
(16) Fate of correction of social disparities: Striking balance with 
fiscal reconstruction is challenge 
 
(17) Keizai Kyoshitsu (Economic Classroom): Post-Abe politics -- 
ideals and policy (part 1); Do not allow reactionary politics to 
become rampant; Continuation of reform drive at crucial state; 
Revitalization of local communities based on agriculture, 
decentralization 
 
ARTICLES: 
 
(1) Japan begins discussing sanctions against Burma (Myanmar); Prime 
minister indicates need to ascertain the situation 
 
YOMIURI ONLINE NEWS (Full) 
September 28, 2007, 13:54 p.m. 
 
The government this morning began discussing sanction measures 
against the military junta of Burma in response to its armed 
 
TOKYO 00004557  002 OF 022 
 
 
crackdown on antigovernment demonstrators, which caused scores of 
casualties, including the death of a Japanese journalist, Kenji 
Nagai. 
 
As a specific sanction measure, banning new investment in Burma is 
being proposed. 
 
At noon today, Prime Minister Fukuda told reporters: "We need to 
ascertain the situation before deciding to whether to impose 
sanctions immediately. Most aid projects Japan has previously 
implemented in Myanmar have humanitarian aspects. We must take that 
point into consideration" 
 
Meanwhile, Foreign Minister Komura, now visiting Washington, told 
reporters traveling with him, "Depending on Burma's military junta's 
response, we will take a strong measure," implying that if the 
regime continues an armed crackdown on citizens in the days ahead, 
Japan would have no choice but to impose its own sanctions. 
 
Tokyo intends to convey this policy to Burma via Deputy Foreign 
Minister Mitoji Yabunaka of the Foreign Ministry, who is to be sent 
to that country. As of this morning, however, the military junta has 
not accepted Yabunaka's visit yet. 
 
(2) Premier Wen tells Prime Minister Fukuda, "China will make 
efforts" to deal with situation in Burma (Myanmar) 
 
YOMIURI ONLINE NEWS (Full) 
September 28, 2007, 13:22 p.m. 
 
Prime Minister Fukuda this morning had a 25-minute conversation with 
Chinese Premier Wen Jiabao by phone. 
 
Referring to the situation in Burma, where the military junta has 
continued an armed crackdown on citizens, Wen said: "We are closely 
watching the situation. We think the international community should 
offer constructive assistance to that country. China will make 
efforts in this regard." 
 
Prime Minister Fukuda conveyed to Wen his intention to visit China 
as quickly as possible and told Wen: "We wish to invite President Hu 
Jintao to visit Japan around next spring." 
 
The two prime ministers agreed to work to build a "strategic, 
reciprocal relationship" between the two countries from now on, as 
well. 
 
(3) Burma's (Myanmar's) authorities take into custory Tokyo 
Shimbun's local correspondent 
 
ASAHI NET (Full) 
September 28, 2007 01:27 p.m. 
 
It was learned today that a local correspondent of the Tokyo Shimbun 
(Chunichi Shimbun) has been taken by police authorities of Burma 
(Myanmar) where a Japanese journalist covering antigovernment 
demonstrations was killed. Whether the correspondent was put under 
restraint or was only being questioned is unknown. 
 
According to the Tokyo Shimbun's Foreign News Department, the 
correspondent is a Burmese man. He reportedly was taken from his 
home in Rangoon (Yangon) before dawn on Sept. 28. His main job was 
 
TOKYO 00004557  003 OF 022 
 
 
to assist the coverage of the daily's Bangkok bureau chief, a 
Japanese correspondent. 
 
The Burmese correspondent was covering the mounting unrest in 
Rangoon along with the Japanese journalist, who arrived in the city 
on Sept. 24. The Burmese military government deported the Bangkok 
bureau chief on the 26th because he had covered antigovernment 
demonstrations. 
 
(4) Editorial -- Burma (Myanmar) under oppression: China should join 
international pressure on Burma's military junta 
 
MAINICHI (Page 5) (Full) 
September 28, 2007 
 
Burma's military junta used force to crack down on demonstrations of 
Buddhist monks protesting against gasoline price hikes, and the 
death toll rose when soldiers began indiscriminately firing on 
demonstrators. 
 
How outrageous! Solders turned their guns on unarmed monks. The 
Burmese people, who have a deep faith, take this act as morals 
deteriorating. Social unrest will widen even further. 
 
Demonstrations began in August and have now spread to major cities 
across the country. With gasoline and heating oil prices doubled, 
the masses have suffered a serious blow all the more because they 
have to rely on small generators and kerosene cooking stoves for 
their daily lives. The demonstrators are acting on behalf of the 
masses. What the junta should do is to consider a proper economic 
policy instead of using force to clamp down on demonstrators. 
 
Burma has one of the major natural gas resources in the world, but 
its people are suffering soaring energy prices. This is perhaps 
because the wealth earned from exports of natural resources is 
pocketed by the military leaders. Burma should shift to a civilian 
government as quickly as possible. 
 
We need no more bloodshed. The United Nations Security Council 
(UNSC) expressed concern over the situation in Burma. But the 
concern was voiced in the form of "an unofficial statement," which 
is seen as softer than a resolution or a president's statement. 
 
The reason was that China, which has been linked by 
"resource-oriented diplomacy" to the military junta, raised an 
objection against sanctions called for by the United States and 
European nations. This development could send the military junta a 
wrong message that "The UN is weak." The question is whether China 
has fulfilled its responsibility as a permanent UNSC member. China 
may be in part responsible for allowing the junta to run amok. 
 
The UN will send, as a special envoy, its secretary general's 
Special Advisor Gambari to Burma. A much stronger action will be 
necessary, depending on a response by the military junta in the days 
ahead. 
 
In January, a resolution condemning the military junta was put 
forward in the UN, but China rejected it by resorting to a veto. One 
reason China did so was reportedly because of the projects for 
exploring natural gas fields off Burma and for constructing a 
pipeline that would link Burma and China's Yunnan Province. China as 
well as the military junta would suffer a blow if the construction 
 
TOKYO 00004557  004 OF 022 
 
 
of the pipeline were suspended because of economic sanctions against 
Burma. 
 
Burma lies in between China and India and it is abundant in natural 
resources, beginning with natural gas and lumber. Those natural 
resources are attractive to India. India is approaching Burma. 
Russia is going along with China. It is therefore not an easy task 
for the international community to be aligned with criticism of the 
military junta. 
 
Japan's position, as well, is not simple, either. Japan had a good 
record in official development assistance (ODA) to Burma, but it has 
refrained from offering aid to Burma since the occurrence of its 
violation of human rights. As a result, China took the place of 
Japan and has become influential on Burma. 
 
International pressure is necessary to stem the military junta from 
running amok and have it open a dialogue with democratic forces. To 
that end, it is indispensable to get China, a patron of Burma in a 
good or bad sense, to join international pressure. We urge China to 
be aware of its responsibility as a permanent UNSC member. 
 
(5) Focus -- Summit between two Koreas: Interview with Hajime Izumi; 
"North" likely to make full use of results of dialogue with US 
 
YOMIURI (Page 7) (Full) 
September 27, 2007 
 
Hajime Izumi, professor at University of Shizuoka 
 
Interviewer: Takashi Nakagawa 
 
-- What do you think is North Korea aiming at in the upcoming summit 
between two Koreas? 
 
"North Korean General Secretary Kim Jong Il decided to meet with the 
South Korean top leader at a time when nuclear talks between the 
United States and the North were put in motion. I presume Kim's 
strategy is to 'take whatever it can from South Korea" on the 
strength of a deal cut with the United States. In addition, he will 
try to influence the presidential election in South Korea slated for 
December. The North wants to make full use of the North-South summit 
in order to get the ruling party-backed presidential candidate, who 
is conciliatory toward the North, to be elected. If the number of 
South Koreans supportive of the so-called sunshine policy or 
engagement policy toward the North increases as a result of the 
summit, no drastic policy shift could occur even though a 
conservative government is established." 
 
-- What is the aim of South Korea? 
 
"What is clear at present is that President Roh Moo Hyun, who will 
complete his term of office in five months, is trying to build a 
legacy for his administration. In relations between the two Koreas, 
talks on 'reconciliation,' including dialogue, exchange, and 
cooperation, have been generally finalized at the 2001 summit 
between then President Kim Dae Jung and Kim Jong Il. The next 
subjects for talks are 'peace' and 'economy.' Although it may be 
difficult to finalize talks on those subjects, if the president can 
produce something symbolic in the upcoming summit, he could use it 
as a legacy." 
 
 
TOKYO 00004557  005 OF 022 
 
 
-- Can he produce a result? 
 
"Roh should come up with a plan to offer considerably massive 
economic cooperation (to the North), but Kim wouldn't think the 
president, whose term of office is to expire shortly, can actually 
put the plan into action. What the North can expect from the 
upcoming bilateral summit would be (economic) assistance in exchange 
for progress on the issue of prisoners of war taken in the Korean 
War and the issue of South Koreans abducted to the North. The South 
Korean delegates to the upcoming bilateral summit will include 17 
business leaders. Also, expectations are building that transactions 
with South Korean firms will occur for the purpose of promoting 
direct investment (in the North) by the (South Korean) private 
sector." 
 
-- How about the nuclear issue? 
 
"In 2005, South Korea made mention of 2 million kilowatts of 
electricity supply. If in the upcoming summit, Roh promises to offer 
aid and provide a light-water reactor that can generate that amount 
of electricity to the North, this will be linked to the six-party 
talks. Pyongyang has called for a light-water reactor in the 
six-party talks. With South Korea responding to this call from the 
North, other six-party members may come to bear the expenses for the 
construction of electric transmission facility. Also, an idea may 
come out of jointly digging a uranium mine in the North." 
 
-- What impact there will be on Japan-North Korea relations? 
 
"US-North Korea talks are making progress now. If the summit between 
two Koreas moved their ties forward further, the North would become 
eager about tackling negotiations with Japan. If the North deemed it 
is possible to elicit something beneficial from Japan if it had 
talks with it, it would naturally become positive about such 
talks." 
 
(6) Mitsubishi Heavy Industries wins order for nuclear plant 
equipment in China 
 
NIKKEI (Top Play) (Excerpts) 
September 28, 2007 
 
Mitsubishi Heavy Industries Ltd. will tie up with the Harbin group, 
a major Chinese heavy machinery manufacture in Heilungkiang 
Province, to make a full-scale entry into the Chinese market for 
equipment used in nuclear power plants. The two companies will 
jointly receive orders for key power components from the Chinese 
government for two nuclear power plants the government plans to 
construct. They are also considering the possibility of producing 
large turbines and other equipment together. The orders the partners 
will receive are worth more than 100 billion yen. The Chinese market 
for equipment used in nuclear power plants is expected to be worth 
10 trillion yen over the next 20 years. Given this, leading nuclear 
facility makers across the world, such as Westinghouse Electric Co. 
of the US under the wings of Toshiba Corp. and Areva of France, are 
stepping up efforts to win orders from China. Mitsubishi Heavy will 
fully cooperate with the Chinese government for its effort to 
develop a local nuclear equipment industry and gain a foothold in 
the giant market, which is on a par with the United States. 
 
The Japanese and Chinese partners will sign a contract with the 
Chinese government in Beijing on Sept. 28 for building large-scale 
 
TOKYO 00004557  006 OF 022 
 
 
equipment to be used in the Sanmen nuclear power plant to be 
constructed in Zhejiang Province. They have now secured a contract 
worth 60-70 billion yen to supply large equipment, such as steam 
turbines. They are also expected to win a contract for equipment for 
the Haiyang nuclear power plant to be constructed in Shandong 
Province. The value of the order is estimated to be almost the same 
level as that for the Sanmen plant. 
 
Westinghouse Electric signed a contract with China this July to 
construct the reactors for the two plants. For key power components 
to these plants, Mitsubishi Heavy won a victory by joining hands 
with Harbin group after competing with Siemens AG of Germany and 
Alstom SA of France. 
 
In China, more than 70 PERCENT  of the power generation facilities 
are coal thermal power plants. Against the backdrop of such serious 
problems as air pollution, deterioration, and electric power 
shortage, however, the nation has no choice but to depend on nuclear 
power plants from now. The Chinese government pans to expand its 
nuclear power generation capacity by more than 30. 
 
(7) Poll on Fukuda cabinet, political parties (Mainichi) 
 
MAINICHI (Page 3) (Full) 
September 27, 2007 
 
Questions & Answers 
(T = total; P = previous; M = male; F = female) 
 
Q: Do you support the Fukuda cabinet? 
 
 T P M F 
Yes 57 (29) 52 59 
No 25 (58) 31 22 
Not interested 16 (13) 14 17 
 
Q: (Only for those who answered "yes" to the above question) Why? 
 
 T P M F 
Because the prime minister is from the Liberal Democratic Party 13 
17 11 
Because something can be expected of the prime minister's leadership 
12  8 13 
Because there's something stable about the prime minister 58  58 57 
Because something can be expected of the prime minister's policy 
measures 12  13 11 
 
Q: (Only for those who answered "no" to the above question) Why? 
 
 T P M F 
Because the prime minister is from the Liberal Democratic Party 20 
29 14 
Because nothing can be expected of the prime minister's leadership 
21  11 28 
Because there's no fresh image about the prime minister 20  24 17 
Because nothing can be expected of prime minister's policies 35  29 
39 
 
Q: Which political party do you support? 
 
 T P M F 
Liberal Democratic Party (LDP) 32 (27) 35 30 
 
TOKYO 00004557  007 OF 022 
 
 
Democratic Party of Japan (DPJ or Minshuto) 26 (29) 30 25 
New Komeito (NK) 4 (4) 3 4 
Japanese Communist Party (JCP) 2 (4) 2 2 
Social Democratic Party (SDP or Shaminto) 3 (1) 2 3 
People's New Party (PNP or Kokumin Shinto) 0 (1) 1 -- 
New Party Nippon (NPN or Shinto Nippon) 1 (1) 1 1 
Other political parties 1 (1) 1 1 
None 30 (32) 25 32 
 
Q: Do you appreciate Prime Minister Fukuda's appointments to his 
cabinet and party posts? 
 
 T P M F 
Yes 49  48 50 
No 39  46 36 
 
Q: Prime Minister Fukuda was elected LDP president with the leaders 
of many intra-LDP factions standing behind him. What do you think 
about this? Pick only one from among those listed below. 
 
 T P M F 
It's the revival of factional politics, so it's not good 36  42 33 
It's unavoidable to depend on factions for party unity 38  41 36 
Factions' cooperation is needed, so there's no problem 20  14 23 
 
Q: Prime Minister Fukuda's predecessor, former Prime Minister Abe, 
upheld constitutional revision and other challenges for reforms. Do 
you think Prime Minister Fukuda should take over the Abe cabinet's 
policy course? 
 
 T P M F 
Yes 35  33 36 
No 58  63 55 
 
Q: Do you support the previous Abe cabinet? 
 
 T P M F 
Yes 26  25 27 
No 53  61 49 
Not interested 15  11 17 
 
(Note) Figures shown in percentage, rounded off. "0" indicates that 
the figure was below 0.5 PERCENT . "--" denotes that no respondents 
answered. "No answer" omitted. Figures in parentheses denote the 
results of the last survey conducted Sept. 12-13. The last cabinet 
support rate is for the Abe cabinet. 
 
Polling methodology: The survey was conducted Sept. 25-26 over the 
telephone across the nation on a computer-aided random digit 
sampling (RDS) basis. Answers were obtained from 828 persons. 
 
(8) Spot poll on Fukuda cabinet, political parties, MSDF refueling 
mission (Yomiuri) 
 
YOMIURI (Page 2) (Full) 
September 27, 2007 
 
Questions & Answers 
(Figures shown in percentage.) 
 
Q: Do you support the Fukuda cabinet? 
 
 
TOKYO 00004557  008 OF 022 
 
 
Yes 57.5 
No 27.3 
Other answers (O/A) 2.1 
No answer (N/A) 13.2 
 
Q: (Only for those who answered "yes" to the foregoing question) 
Pick only one from among the following five reasons for your 
approval of the Fukuda cabinet. 
 
Something can be expected of its policy measures 13.2 
The prime minister has leadership 7.3 
There's something stable about the prime minister 50.4 
Its lineup is good 9.0 
Because it's a coalition of the Liberal Democratic Party and New 
Komeito 11.8 
O/A 1.5 
N/A 6.8 
 
Q: (Only for those who answered "no" to the foregoing question) Pick 
only one from among the following five reasons for your disapproval 
of the Fukuda cabinet. 
 
Nothing can be expected of its policy measures 24.9 
The prime minister lacks leadership 9.5 
There's nothing stable about the prime minister 4.7 
Its lineup is not good 19.4 
Because it's a coalition of the Liberal Democratic Party and New 
Komeito 32.0 
O/A 6.3 
N/A 3.2 
 
Q: What issues do you want the Fukuda cabinet to pursue on a 
priority basis? Pick as many as you like from among those listed 
below, if any. 
 
Economic, employment measures 40.1 
Consumption tax 36.6 
Pension 71.4 
Social divide 41.0 
Politics and money issues 48.7 
O/A 2.1 
Nothing in particular 2.1 
N/A 0.8 
 
Q: Prime Minister Fukuda has reappointed the greater part of the Abe 
cabinet. Do you think this was appropriate? 
 
Yes 66.7 
No 21.4 
N/A 11.9 
 
Q: The LDP's four top posts, such as the posts of secretary general 
and policy board chairman, are now filled by the leaders of its 
factions. Do you think it's desirable? 
 
Yes 30.2 
No 56.2 
N/A 13.6 
 
Q: The government has sent Maritime Self-Defense Force ships to the 
Indian Ocean under the Antiterrorism Special Measures Law. The MSDF 
ships there are currently engaged in refueling and other activities 
 
TOKYO 00004557  009 OF 022 
 
 
for foreign naval vessels participating in the antiterror campaign 
of multinational forces in Afghanistan. The antiterror law for MSDF 
activities there is to expire on Nov. 1. Do you support continuing 
the MSDF mission in the Indian Ocean beyond the law's Nov. 1 
expiry? 
 
Yes 46.9 
No 39.7 
N/A 13.4 
 
Q: The United Nations Security Council has now adopted a resolution 
thanking Japan for the MSDF's antiterror participation in the Indian 
Ocean. Do you think this UNSC resolution represents the 
international community's endorsement of the MSDF's refueling 
mission? 
 
Yes 42.9 
No 42.0 
N/A 15.1 
 
Q: The Democratic Party of Japan (Minshuto) is opposed to continuing 
the MSDF's refueling activities in the Indian Ocean, maintaining 
that the UNSC resolution cannot be a ground to justify the MSDF's 
refueling mission there. Is this DPJ standpoint convincing to you? 
 
Yes 37.6 
No 47.1 
N/A 15.3 
 
Q: Do you think it would be better to dissolve the House of 
Representatives for a general election as early as possible, or do 
you otherwise think there's no need to be in a hurry? 
 
Dissolve the Diet as early as possible 34.8 
No need to be in a hurry 58.1 
N/A 7.1 
 
Q: Which political party do you support now? Pick only one. 
 
Liberal Democratic Party (LDP) 37.6 
Democratic Party of Japan (DPJ or Minshuto) 24.4 
New Komeito (NK) 4.5 
Japanese Communist Party (JCP) 2.7 
Social Democratic Party (SDP or Shaminto) 1.2 
People's New Party (PNP or Kokumin Shinto) 0.1 
New Party Nippon (NPN or Shinto Nippon) --- 
Other political parties --- 
None 27.6 
N/A 1.8 
 
Polling methodology: The survey was conducted across the nation over 
the telephone from 8 p.m., Sept. 25 through Sept. 26. For the 
survey, respondents were chosen on a computer-aided random digit 
dialing (RDD) basis. A total of 1,557 households were found to have 
one or more eligible voters. Valid answers were obtained from 926 
persons (60 PERCENT ). 
 
(9) Poll on Fukuda cabinet, political parties (Asahi) 
 
ASAHI (Page 4) (Full) 
September 27, 2007 
 
 
TOKYO 00004557  010 OF 022 
 
 
Questions & Answers 
(Figures shown in percentage, rounded off. Bracketed figures denote 
proportions to all respondents. Figures in parentheses denote the 
results of the last survey conducted Sept. 15-16.) 
 
Q: Do you support the Fukuda cabinet? 
 
Yes 53 
No 27 
 
Q: Why? (One reason only. Left column for those marking "yes" on 
previous question, and right for those saying "no.") 
 
The prime minister is Mr. Fukuda 25(13) 10(3) 
It's an LDP-led cabinet 20(11) 49(13) 
From the aspect of policies 22(12) 27(7) 
No particular reason 30(16) 8(2) 
 
 
Q: Which political party do you support now? 
 
Liberal Democratic Party (LDP) 33 (32) 
Democratic Party of Japan (DPJ or Minshuto) 25 (24) 
New Komeito (NK) 4 (1) 
Japanese Communist Party (JCP) 3 (2) 
Social Democratic Party (SDP or Shaminto) 1 (1) 
People's New Party (PNP or Kokumin Shinto) 0 (0) 
New Party Nippon (NPN or Shinto Nippon) 0 (0) 
Other political parties 0 (0) 
None 30 (35) 
No answer (N/A) + don't know (D/K) 4 (5) 
 
Q: Do you think Mr. Fukuda is a politician close to public 
sensitivity? 
 
Yes 38 
No 41 
 
Q: Do you think Mr. Fukuda is a person of action? 
 
Yes 46 
No 32 
 
Q: Do you think Mr. Fukuda has a sense of balance? 
 
Yes 58 
No 22 
 
Q: The new cabinet has retained many of the previous Abe cabinet. Do 
you think it was good? 
 
Yes 55 
No 27 
 
 
Q: Do you think the LDP has now returned to its old self when you 
saw how the Fukuda cabinet was launched? 
 
Yes 56 
No 29 
 
Q: Do you think the LDP will change for the better, change for the 
 
TOKYO 00004557  011 OF 022 
 
 
worse, or remain unchanged under Prime Minister Fukuda? 
 
Change for the better 22 
Change for the worse 6 
Remain unchanged 65 
 
Q: Do you have expectations for the Fukuda cabinet's efforts to deal 
with pension issues among its policy challenges? 
 
Yes 67 
No 26 
 
Q: Do you have expectations for the Fukuda cabinet's efforts to deal 
with economic disparities? 
 
Yes 49 
No 41 
 
Q: Do you have expectations for the Fukuda cabinet's efforts to deal 
with diplomatic issues? 
 
Yes 55 
No 34 
 
Polling methodology: The survey was conducted over the telephone 
from the evening of Sept. 25, when the cabinet roster was announced, 
through the evening of Sept. 26, on a computer-aided random digit 
dialing (RDD) basis. Respondents were chosen from among the nation's 
voting population on a three-stage random-sampling basis. Valid 
answers were obtained from 908 persons (55 PERCENT ). 
 
(10) Understanding Prime Minister Fukuda from his sayings 
 
TOKYO SHIMBUN (Page 26 &27) (Full) 
September 27, 2007 
 
Prime Minister Yasuo Fukuda is described as a coolheaded and 
consensus-oriented politician. He is also said to be a person with 
commonsense and a late starter as a politician. The words describing 
Fukuda are completely different from those for former prime 
ministers Shinzo Abe and Junichiro Koizumi.  At the age 53, Fukuda 
was elected to the House of Representatives for the first time. He 
assumed the prime minister's post on Sunday at the age of 71, the 
same age his father was when he became prime minister. The newspaper 
probes into whether words describing Fukuda's personality were 
appropriate, based on his past sayings and a book he published two 
years ago. 
 
Ironist 
 
Fukuda worked as chief cabinet secretary for two prime ministers -- 
Yoshiro Mori and Koizumi -- from October 2000 to May 2004. He held 
two press conferences every day at the Prime Minister's Official 
Residence. He often baffled the press by giving ironical answers and 
laughing to himself. 
 
In January 2001, when he returned Takasaki City, Gunma Prefecture, 
for the first time after becoming chief cabinet secretary, Fukuda 
told a self-effacing joke to his supporters: "I am the 'excuse' 
chief cabinet secretary. I will likely continue to make excuses for 
a while." 
 
 
TOKYO 00004557  012 OF 022 
 
 
At the time the Mori government suffered from poor popular support. 
Fukuda complained about the prime minister, saying, "Since Prime 
Minister Mori is big, he meets with strong resistance when the wind 
blows. Therefore, we are having a difficult time." 
 
As the cabinet spokesman, Fukuda continued to bear the brunt of 
criticism from the opposition and the media. Due to the accumulated 
stress, he often severely attacked the opposition camp. 
 
In September 2003 when asked by reporters about a manifesto that the 
opposition was drafting for the new Lower House election campaign, 
Fukuda flatly responded: "I assume that those who don't have to bear 
responsibility for what they write will write as they wish." 
 
Asked at a press conference in November 2003 to comment on the list 
of shadow cabinet members the Democratic Party of Japan (DPJ) had 
made, Fukuda responded: "It is a virtual government, isn't it? It's 
free to do so." 
 
When the voting on a no-confidence motion against the cabinet was 
thrown into turmoil by an incident of Lower House member Kenshiro 
Matsunami throwing a glass of water at a member of the then 
Conservative Party (Hoshuto) at the Lower House plenary session, 
Fukuda commented: "The DPJ's young lawmaker's fuss is embarrassing. 
His behavior was worse than a kid's." 
 
The opposition party fiercely rebutted remarks, "worse than a kid." 
Fukuda then was forced to offer an apology to the opposition next 
day, saying, "It was an inappropriate expression." 
 
In January 2004 when DPJ Lower House member Junichiro Koga's college 
degree flap came up, Fukuda criticized Koga, saying, "Lying is the 
road that leads to stealing." 
 
Three months later, however, it was discovered that Fukuda had not 
paid his own pension premiums, and he was forced to step down in May 
¶2004. 
 
Counteroffensive 
 
The new prime minister is known for having a warm personality and 
for being a well-balanced person, but he often expressed his 
personal pique at press conferences, putting questions to reporters. 
 
 
Commenting on his violation of his pledge to keep government bond 
issuance at 30 trillion yen, then Prime Minister Koizumi said, "It's 
not a big deal." He then came under criticism from the ruling and 
opposition camps. In his speech delivered Takasaki City in January 
2003, Fukuda flatly rejected the criticism, saying: 
 
"There is no need to make a fuss about the fact that 30 trillion yen 
became 34 trillion yen. They should highly value the prime 
minister's stance of not changing his structural reform drive." 
 
Several ministers in the Abe cabinet stepped down from their posts 
due to many scandals. Fukuda as chief cabinet secretary in the Mori 
cabinet saw the resignation of Economic and Fiscal Minister 
Fukushiro Nukaga. While serving as chief cabinet secretary in the 
Koizumi cabinet, he also faced the resignation of Agriculture 
Minister Tadamori Oshima. When the Prime Minister's Official 
Residence's background check on cabinet members was criticized, 
 
TOKYO 00004557  013 OF 022 
 
 
Fukuda rebutted: 
 
"It is almost impossible to check everything beforehand. I wonder 
there is any perfect person. If we politicians have to take 
responsibility for what our secretaries did, we will have to know 
each action taken by them. In reality, it is impossible for us to do 
so." 
 
When he was criticized for getting support from eight factions in 
his party as "faction bid-rigging," in the recent LDP presidential 
race, expressed his displeasure, saying: "You should better not talk 
about a low-level thing." 
 
At a press conference after he won the LDP presidency, Fukuda told 
reporters when asked about his analysis of his victory in the 
election: "I rather want you to let me know." 
 
Self-confident person 
 
Fukuda is a person who has confidence in himself. He was the 
longest-serving chief cabinet secretary, a position that brought him 
eventually to the prime minister's post. He told his supporters in 
Gunma Prefecture in June 2001: "The chief cabinet secretary's post 
is the last cabinet post I want to serve. I think I will be able to 
do better job if I assume other cabinet post." 
 
Pi became a symbol of the so-called pressure-free education system, 
the new educational guideline introduced in 2002. As to the 
cram-free education that allows schools to teach students the value 
of pi is almost 3.0, Fukuda commented: "I don't understand that 
students can remember the value of pi being 3.0 but they cannot 
remember 3.14. I still remember pi=3.14159265358...." 
 
In April 2005, one year after he resigned as chief cabinet 
secretary, Fukuda published a book along with Seijuro Eto, a member 
 
SIPDIS 
of the Mori faction (currently the Machimura faction). He wrote in 
the book: 
 
"Anyone who cannot serve as prime minister for four years should not 
seek that position. A person who says I will do my best for one year 
should not become prime minister. After compiling the budget three 
or four times, not only once, that budget can be implemented." 
 
At a press confidence after assuming the prime minister's post on 
Sept. 25, Fukuda defined his cabinet, saying: "I call my cabinet, 
the one that will fight with its back to the wall. Even if it makes 
only one mistake, it may lose power. We must maintain a tense 
atmosphere." 
 
(11) Fukuda office altered receipts for 2006 funds report 
 
ASAHI (Page 35) (Abridged slightly) 
September 28, 2007 
 
Political funds reports for 2006 filed by the Liberal Democratic 
Party Gunma Prefecture No. 4 branch office headed by Prime Minister 
Yasuo Fukuda (representing the House of Representatives Gunma No. 4 
constituency) and a related political organization were affixed with 
copied receipts with altered names on them, the Asahi Shimbun has 
learned. The names of the recipients were changed into the political 
organization or the LDP branch office. The alterations were made by 
Fukuda's office instead of the issuers. Seventeen modified receipts 
 
TOKYO 00004557  014 OF 022 
 
 
for a total of 5.7 million yen were attached to the reports. 
 
A Fukuda office source said: "We should have asked the issuers to 
change the names of recipients. We would like to study measures to 
be taken." 
 
According to the copies of funds reports and copied receipts, 
disclosed at the request of the Asahi Shimbun, altered receipts were 
attached to the 2006 fund report by the LDP branch office. They were 
part of the 2.2 million yen disbursed as political activities 
expenses. One of them was the receipt for some 70,000 yen for a 
meeting, issued on Sept. 28, 2006 by a hotel in Takasaki City, Gunma 
Prefecture. The receipt originally carried the name of Fukuda Keizai 
Kenkyu-kai (economics study group), but it was crossed over and was 
changed into the LDP Gunma No. 4 branch office. A total of five 
receipts were modified in the same way. 
 
Additionally, four receipts carried the name of the LDP branch 
office overwritten on the name of another office or in what seemed 
to be a blank. There were six more bank payment slips that carried 
the party name. 
 
Two post office receipts for Fukuda Keizai Kenkyu-kai, apparently 
modified from the LDP branch office, were also attached to the 2006 
funds report filed by the Kenkyu-kai. 
 
In an Asahi Shimbun interview, the Corporate Taxation Institute 
(CTI) in Tokyo, which is totally responsible for checking the Fukuda 
office's political funds, offered this explanation: "Around in 2004, 
the main body conducting political activities was shifted from the 
personal political organization to the party (branch), but many 
outside people have not recognized the change." Regarding suspicion 
that the Fukuda office transferred expenses, the CTI said: "Such 
suspicion is natural. We would like to study ways to improve the 
current situation." 
 
(12) Fukuda-led branch office, political groups found to have 
rewritten addresses on receipts worth 5.8 million yen 
 
YOMIURI NET 
12:36, September 28, 2007 
 
It was learned yesterday that the Liberal Democratic Party's Gunma 
Prefecture 4th electoral district branch office in Takasaki City, 
led by Prime Minister Fukuda, and his political groups had rewritten 
or added addresses on photocopied receipts. 
 
Such corrections had been made on 17 receipts for expenditures 
totaling approximately 5.8 million yen. Chief Cabinet Secretary 
Machimura said in a press conference held after a cabinet meeting 
yesterday morning: "I received an explanation about the 
circumstances directly from the prime minister. His understanding is 
that there was no illegality. I believe he will properly deal with 
the matter." 
 
According to data that the Gunma prefectural election administration 
commission disclosed in response to a request by the Yomiuri 
Shimbun, the LDP Gunma Prefecture 4th branch office crossed out with 
double lines such addresses as the Chiyoda Economic Council, a 
funds-management organization for Fukuda, and the Fukuda Economic 
Research Council, a related political group, on eight receipts - 
worth about 1.05 million yen - issued by Japanese restaurants and 
 
TOKYO 00004557  015 OF 022 
 
 
others in 2003, 2004, and 2006 and rewrote them into the branch 
office. 
 
It was also found that the name of an electoral district branch 
office had been added to seven receipts to the Fukuda Yasuo Office 
issued in 2006. The receipts were worth 4.55 million yen in total. 
 
In addition, there were two cases in 2006 in which the Fukuda 
Economic Research Institute changed the 4th electoral district 
branch office into the institute on copied receipts worth a total of 
approximately 200,000 yen. 
 
(13) Prime Minister Fukuda: "I feel really ashamed" of political 
funds problem 
 
ASAHI NET 
13:47, Sept. 28, 2007 
 
It has been reported that a political group headed by Prime Minister 
Fukuda was found to have rewritten the addresses of receipts 
attached to their political funds reports. On this problem, Fukuda 
told reporters at the Prime Minister's Office at noon today: 
 
"Accountants probably wanted to save the trouble of re-collecting 
receipts. I think the personnel did not think that correcting 
records was wrong. But that was totally undesirable in view of 
office management. There was neither an intention of benefiting by 
it, nor did we do anything dishonest." 
 
Fukuda said that he had not known about the corrections until he was 
informed of it, adding: "I feel really ashamed as the chief 
executive." 
 
(14) Ibuki-headed LDP branch office received illicit donations from 
money-losing company for over three years 
 
ASAHI (Page 35) (Abridges slightly) 
September 28, 2007 
 
The Liberal Democratic Party Kyoto branch office headed by a 
secretary to Secretary General Bunmei Ibuki (representing House of 
 
SIPDIS 
Representatives Kyoto No. 1 district) received donations for at 
least four years from the Kyoto Hotel, which suffered a cumulative 
debt for over 10 years, the Asahi Shimbun has learned. The Political 
Funds Control Law prohibits companies suffering from a cumulative 
debt for over three consecutive business years from making political 
donations and lawmakers knowingly receiving donations from such 
companies. An Ibuki office official indicated that the branch office 
had been totally unaware that the firm was in the red. 
 
According to political funds reports and other documents, the hotel 
donated 120,000 yen annually to the branch office between 2003 and 
¶2006. Although the hotel suffered an accumulative debt from 1993 
through 2005, it reportedly climbed out of the red when the accounts 
were settled for 2006. 
 
Kyoto Hotel general affairs manager Kitada took said: "We disbursed 
the money as annual fees, not as donations. We would like to build a 
system allowing the management department to examine expenses 
closely so as not to cause any perception gaps." 
 
The branch office in question is located in Ibuki's Kyoto office in 
 
TOKYO 00004557  016 OF 022 
 
 
Shimokyo-ku, Kyoto City. The branch office received some 47 million 
yen from over 200 companies and organizations in 2005. 
 
(15) Diet to reopen at long last for a showdown; LDP to present new 
bill before antiterror law loses its effect 
 
MAINICHI (Page 2) (Abridged) 
September 27, 2007 
 
The Diet will now resume its current extraordinary session. Prime 
Minister Yasuo Fukuda and his cabinet will first face a 
parliamentary debate between the ruling and opposition parties over 
three issues: 1) extending the Antiterrorism Special Measures Law; 
2) dealing with politics-and-money problems; and 3) reforming the 
nation's pension system. The new prime minister weighs holding talks 
with the leading opposition Democratic Party of Japan (DPJ). 
However, DPJ President Ichiro Ozawa shows no willingness to 
compromise, maintaining that his party cannot translate its 
standpoints into action unless it takes the reins of government. The 
ruling and opposition benches are expected to heat up their battle 
of words in the public eye while anticipating that the House of 
Representatives may be dissolved for a general election. 
 
Antiterror legislation 
 
On the evening of Sept. 25, Prime Minister Fukuda called at the room 
of DPJ executive officers in the Diet after he was elected prime 
minister. Fukuda met Ozawa there. However, there was no conversation 
between the two. 
 
"The DPJ now holds real power in the House of Councillors, so we 
have to talk with the DPJ," Fukuda said in a press conference on 
Sept. 23 after becoming LDP president. He was referring to the issue 
of extending the antiterror law in order for the Maritime 
Self-Defense Force to continue its current refueling activities in 
the Indian Ocean. 
 
However, the DPJ is concerned about the fact that Operation Enduring 
Freedom (OEF), an antiterror drive involving the MSDF, is not a 
collective security step set up with a United Nations resolution. 
The DPJ is calling for the MSDF's withdrawal, taking the position 
that OEF actually is a "US war." The DPJ is almost unlikely to 
approve extending the MSDF's refueling mission. 
 
Nevertheless, the new prime minister is taking a low profile. One 
government official explained why: "Even if it's impossible to 
expect the DPJ to change its stance, he will carefully explain that 
Japan is appreciated by the international community. He is aiming to 
get public support for continuing the MSDF's refueling activities." 
 
The antiterror law is to expire on Nov. 1. In the meantime, the Diet 
will close its current extraordinary session on Nov. 10. Even if the 
government introduces a bill to the Diet during its current session 
to extend the law, the time left is too short to deliberate on the 
legislation. As a result, the legislation is highly likely to be 
scrapped. The new premier noted the importance of sending a message 
to the international community. Basically, the government, before 
the antiterror law loses its effect, will present a legislative 
measure to create a new law that alters the MSDF's refueling 
activities. 
 
The new antiterror legislation, however, will likely have a direct 
 
TOKYO 00004557  017 OF 022 
 
 
bearing on the issue of extending the current Diet session. One LDP 
defense-lobby lawmaker says: "If we present the new bill during the 
current Diet session, it could end up with dissolving the House of 
Representatives. The bill should be put on hold until the ordinary 
Diet session." The new premier is urged to show a cautious response 
while coordinating with the ruling coalition. 
 
(16) Fate of correction of social disparities: Striking balance with 
fiscal reconstruction is challenge 
 
YOMIURI (Page 9) (Slightly abridged) 
September 28, 2007 
 
Correcting social disparities caused by structural reforms is a 
pending issue challenging the Fukuda cabinet. Both the ruling and 
opposition parties are strengthening their calls for expanding 
expenditures for regional areas and the elderly, who were left 
behind when the economy began to grow again. A concrete path for 
correcting the reform policy while striking a balance between 
correction of social disparities and fiscal reconstruction has not 
yet come into sight. 
 
Finance Minister Nukaga in an interview to the Yomiuri Shimbun and 
other dailies stressed the need to correct income and social 
disparities, noting, "We will correct the downside of the structural 
reform policy, which has appeared as structural reforms have been 
implemented. Correcting disparities between the urban and rural 
districts and providing job opportunities to young people are 
pending issues." 
 
Fiscal reconstruction has made headway under the Koizumi and Abe 
reform drive. However, local economies have become impoverished due 
to cuts in public works. An increase in non-regular workers, such as 
part-timers and dispatched workers, has widened income disparities. 
 
 
In Akita Prefecture, minimum wage per hour is 618 yen, which is the 
lowest among all prefectures along with Okinawa Prefecture. The 
amount is 121 yen lower than that of Tokyo, which ranks first. 
Senior Managing Director Takahashi of the Akita Prefecture 
Management Association complained of difficulties his prefecture is 
faced with, noting, "We want the government to implement necessary 
public works, such as the construction of highways. The business 
sentiment in the prefecture is harsh. There are few job 
opportunities." 
 
Prime Minister Fukuda during his inauguration speech on Sept. 26 
categorically said, "I will take measures to deal with individual 
disparity caused by the implementation of the reform policy." 
 
Basic policy guidelines on economic and fiscal management and 
structural reforms to be implemented 
 
Fukuda is also paying close attention to fiscal reconstruction. He 
wants to avoid scattering about pork-barrel largesse, as he stressed 
during the LDP presidential election campaign, "Since the budget is 
limited, we must use our resourcefulness." 
 
Some in the market take the view that Fukuda would firmly maintain a 
fiscal reconstruction policy, as can be seen in his appointment of 
former Finance Minister Tanigaki, whose pet argument is that the 
consumption tax should be raised, as Policy Research Council 
 
TOKYO 00004557  018 OF 022 
 
 
chairman. 
 
Fukuda reappointed all economic ministers from Abe's reshuffled 
cabinet. His orders given to State Minister in charge of 
Rejuvenating Local Economies included a plan to press ahead with 
fiscal reconstruction, by implementing the basic policy guidelines 
on economic and fiscal management and structural reforms compiled in 
May under the Abe administration. The guidelines include the further 
delegation of power to local governments and tax and fiscal 
reforms. 
 
Policy of reconstructing  regional districts to be maintained 
 
Orders given by Fukuda also include a policy of striking a balance 
between correction of social disparities and fiscal reconstruction. 
The Council on Economic and Fiscal Policy (CEFP), the central 
command of structural reforms, planned to set reconstruction of 
local economies as a main agenda item on Sept. 12, when former Prime 
Minister Abe announced his decision to step down. The Fukuda cabinet 
will likely maintain this policy. 
 
The Cabinet Office, which is in charge of the CEFP, intends to 
realize policies that will require less fiscal disbursements, such 
as the establishment a local power revitalization organ intended to 
reconstruct local businesses and joint public-private ventures, 
measures to help young people, such as so-called freeters 
(job-hopping part-time workers) and single-mothers find jobs. 
 
The Ministry of Agriculture, Forestry and Fisheries (MAFF) plans to 
reconstruct regional districts by promoting reform instead of fiscal 
disbursements, based the aggressive agricultural policy set by the 
Abe administration. Measures under this policy include management of 
large-scale agriculture and promotion of entry of companies in the 
agricultural area. 
 
However, measures proposed by the Cabinet Office have not been 
received well, being seen as minor. It cannot be said that the 
aggressive agricultural administration was supported by farmers in 
the July Upper House election. Fukuda in the inauguration speech 
made a delicate correction to that policy, noting, "I would like to 
create an environment in which small-scale farmers can feel at 
ease." 
 
The LDP and the New Komeito during power-sharing talks on Sept. 25 
agreed to consider putting on hold plans to increase a medical 
burden to be shared by the elderly and to cut portions of child 
benefits as measures to address disparities in the social security 
area. The fiscal burden to be shouldered by the state is estimated 
to reach 100 billion yen. How to secure funding resources would 
depend on the development of talks between the government and the 
ruling camp. 
 
If the government shifts to a policy of scattering about pork-barrel 
largesse in a hurry to come up with attractive measures to address 
disparities, it would be not able to gain trust from either the 
international community or the market, as State Minister in charge 
of Economic and Fiscal Policy Ota put it. The Fukuda cabinet will 
likely be pressed to steer the economy between efforts to correct 
social disparities and efforts to reconstruct public finances. 
 
(17) Keizai Kyoshitsu (Economic Classroom): Post-Abe politics -- 
ideals and policy (part 1); Do not allow reactionary politics to 
 
TOKYO 00004557  019 OF 022 
 
 
become rampant; Continuation of reform drive at crucial state; 
Revitalization of local communities based on agriculture, 
decentralization 
 
NIKKEI (Page 19) (Full) 
September 21,2007 
 
Article by Heizo Takenaka, professor at Keio University 
 
The trend of protecting vested interests is gaining ground in Japan 
out of fear of the negative impact of globalization. The new 
administration should hold its own in order to prevent reactionary 
politics from becoming rampant. Rural regions boosted by 
agricultural reform and the promotion of decentralization hold the 
key to reinvigorating the Japanese economy, which is somehow 
starting to unravel due to the aftereffects of the Koizumi 
structural reform initiative. 
 
Perception gap between market and politics widening rapidly 
 
Prime Minister Abe's sudden announcement that he was quitting his 
post was indeed a shocking event. The selection of the next Liberal 
Democratic Party (LDP) president and the next prime minister is at 
this writing underway. Power games are a matter of daily occurrence 
in the political world. However, what is going on now is the 
selection of candidates based on factional interests, which is 
nothing but the LDP returning to its old-style factional politics. 
It would be logical for candidates to come forward with policy 
proposals so that voters can decide for whom they should cast their 
ballots. However, what is happening in reality is that LDP lawmakers 
first try to form interest groups and then put forward policy 
arguments. We must avoid by all means reactionary politics from 
derailing the reform drive. 
 
The environment surrounding the Japanese economy does not allow for 
optimism. The gross domestic product (GDP) for the second quarter of 
this year marked negative 1.2 PERCENT  growth in annual terms. When 
stock prices plunged on the global market, hit by the sub-prime loan 
fiasco, Japanese stocks suffered the largest drop among leading 
countries. Since the settlement of the non-performing loan disposal 
and postal privatization issues, there have been carried out few new 
reforms that drastically changed institutional frameworks. Under 
such circumstances, what is propping up the Japanese economy is the 
aftereffect of the Koizumi reform drive. World leaders at the World 
Economic Forum, Summer at Davos, held in Dalian, China, took a harsh 
view of Japan, suspecting that its economy might have weakened again 
because reactionary politicians depend on the government to prop 
things up. 
 
An overwhelming number of market players are hoping for the 
continuation and strengthening of reform. On the other hand, 
Japanese politicians are strongly calling for reviewing the reform 
policy. Gaps between the market and politics over reform are rapidly 
widening. 
 
Personnel appointments for government-affiliated financial 
institutions a major touchstone 
 
In one of his last policy speeches, Prime Minister Abe basically 
advocated an emphasis on the continuation of the reform initiative. 
He noted that he would do his utmost to materialize politics that is 
kind and gentle to people, using the words "the downside of the 
 
TOKYO 00004557  020 OF 022 
 
 
reform policy." This has given rise to expectations that public 
investment would spread to regional areas. Given the fact that the 
reform drive was slow even under Prime Minister Abe, an advocate of 
the Koizumi reform initiative, pressure to end the reform policy 
would be enormous if those calling for a policy switch have a high 
profile in politics. 
 
Opponents of reform policy claim adamantly that it has impoverished 
rural districts. It is true that local economies have become 
impoverished, leaving a host of policy problems to be resolved. 
However, impoverished local economies are not the downside of the 
reform policy. It is doubtful that local economies would not have 
become impoverished if non-performing loans had been left unattended 
and if postal services had not been privatized. Local economies have 
become impoverished because local industries and companies have lost 
their competitiveness due to the globalization of the economy and a 
shift to an information-intensive society. 
 
There is no panacea to solve this problem. Two things must be done 
first, though the situation is harsh. The first matter is to adopt a 
drastic policy aimed at strengthening agriculture, as a key 
industry. There can be no revitalization of local communities 
without the revitalization of agriculture. To be precise, it is 
necessary to further promote competition policy and press ahead with 
structural reforms including reform of agricultural cooperatives. 
Second, decentralization should be further promoted. If a doshu or 
regional bloc system is to be established, it would be the 
responsibility of regional blocs to consolidate the infrastructure 
of regional districts. Those blocs will also be responsible for 
adopting a policy for local industries. It is necessary to swiftly 
and powerfully move forward with decentralization like this. 
 
In other words, the impoverished local economies are the downside of 
globalization. Further structural reforms are needed in order to 
settle this problem. Local economies have become impoverished, 
because reform efforts were insufficient. If we stop our reform 
efforts now, the Japanese economy would lose its competitiveness in 
the world. As a result local economies will become further 
impoverished. 
 
"Gentleness and warmth" and "bonds" are just political slogans. No 
explanations have been given regarding what policies are to be 
implemented under such slogans. We must not allow the government to 
expand public finance as a stopgap measure and to return to an 
old-style politics of protecting those who are enjoying their vested 
interests, using expressions that are pleasant to the ear. 
 
Recent discussions of economic policy remind me of arguments between 
Marxist economists and modern economists that took place in the 
1970s. Arguments in those days supposedly concluded that amid the 
harsh international economic situation, it would not be possible to 
enhance the economic welfare of the public without a strong economy 
and an economy that can grow and that deregulation and competitive 
policy are necessary in order to create an economy that can achieve 
solid growth. 
 
It is only natural to implement the policies that have already been 
adopted, including basic policy guidelines on economic and fiscal 
management and structural reforms. However, it is not possible to 
realize an economy that can achieve solid growth only with existing 
policies.  It is imperative to press ahead with bold new policies, 
such as drastic educational reform that includes the privatization 
 
TOKYO 00004557  021 OF 022 
 
 
of Tokyo University, further promotion of the "open sky policy and 
reform of the management of foreign exchange reserves (establishment 
of Japanese equivalent of government investment corporation (GIC). 
 
In reality, however, a political trend of protecting vested 
interests, blaming the reform policy for the negative impact of 
globalization in stead of tackling it, is rising. The following 
three points symbolize this trend. 
 
First, there is a move to allow more postal rebels to return to the 
LDP. The reinstatement of postal revels last year has triggered the 
decline of cabinet support ratings. And yet, the old guard nature of 
the LDP that wants to see the return of more postal rebels is seen 
in this move. The move indicates the overt resurrection of Diet 
policy cliques. 
 
Second, a bureaucrat-led decision-making process is beginning to 
come back to life, while a politically-driven policy-making process 
is stepping back. Postal privatization would not have realized if 
the job had been left up to postal bureaucrats. It is impossible to 
regulate amakudari (golden parachute) practices at the initiative of 
bureaucrats. 
 
Nevertheless, an atmosphere of tolerating the revival of 
bureaucratic power is permeating in the name of "fully utilizing 
bureaucrats." The selection of top officials of 
government-affiliated financial institutions, which is to take place 
shortly, will be the major litmus test in telling the revival of 
bureaucratic power. 
 
Third, disciplines for budget compilation are weakening, as can be 
seen in the move to boost public works.  It is of concern that local 
governments might be tempted to increase public works in response to 
the prime minister's policy speech. 
 
Diet policy cliques, bureaucrats' initiative and public works indeed 
make a set that gave rise to the lost decade of the 1990s. They are 
symbols of the ancient regime. Amid Nagatacho (Diet) being enveloped 
with a mood that Lower House dissolution and a snap election would 
be imminent, a new prime minister and thinking legislators are urged 
to hold their own so as not to allow reactionary politics to 
prevail. 
 
CEFP shift concept 
 
American political economist A. Harshman noted that an "exit" and 
"voice" are needed in settling social issues. The exit means an 
election through which people  can express their disapproval of the 
government. However, before that, there must be various voices 
calling for continuation and promotion of the reform policy. 
 
Whatever administration will come into existence this time, the fact 
that the opposition dominates the Upper House will remain unchanged 
for the time being. It has been pointed out that the role of the 
Council on Economic and Fiscal Policy (CEFP)has diminished for the 
past few years. Its role will further decline. 
 
The panel needs to reverse its way of thinking. It had difficulty 
consolidating views centered on the prime minister, while 
private-sector members throwing a ball aiming high in order to fight 
forces of resistance. For this reason, it has been forced to make 
concessions frequently. However, it is now no longer necessary for 
 
TOKYO 00004557  022 OF 022 
 
 
the panel to put together various opinions, because even if does so, 
if its proposal is rejected by the Diet, that would be the end of 
it. That is why private-sector members are entitled to pursue just 
arguments in a far-reaching manner. The panel should fairly and 
squarely pursue discussions of originally proposed reform items, 
because it has avoided those areas out of consideration to concerned 
government offices and their ministers. Such items include 
privatization of Tokyo University and the establishment of a 
Japanese equivalent of the GIC. Private-sector members should 
vocalize their views to explore possibilities of their stand being 
reflected in policy talks. 
 
If reactionary politics touting slogans pleasant to the ear 
undermines the reform policy even slightly, it will be the public 
who will shoulder the burden totally. This is a fundamental issue of 
how each individual face the state and how political leaders respond 
to such a stance shown by individuals. 
 
Some people tend to rely on the state, blaming its reform policy, if 
they feel they are disadvantaged. Politics then caters to the wishes 
of those people. This pattern is the very point which Yukichi Fukuda 
warned of when Japan was at the threshold of constructing a modern 
nation. Since there is concern about the fate of the reform policy, 
it is necessary (for leaders) to learn from the noble ambition of 
Fukuzawa, who noted at every tune that one should support the state 
but should not depend on it, based on the perception that politics 
of a country is determined by the level of its people. 
 
Heizo Takenaka: Born in 1951. Obtained PhD from Osaka University. 
Served as state minister in charge of economic and fiscal policy. 
Now special advisor to the Japan Economic Research Center. 
 
SCHIEFFER