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UNCLAS SECTION 01 OF 08 TOKYO 005682 
 
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 12/28/07 
 
Index: 
 
(1) Fukuda administration in third month (Nikkei) 
 
(2) Interview with State Minister for Administrative Reform Minister 
Yoshimi Watanabe: "Bureaucrats had secret scenario" (Sankei) 
 
(3) Revised Political Fund Control Law requires politicians to 
attach receipts for every item costing one yen or more; Lawmakers 
too stingy (Tokyo Shimbun) 
 
(4) Number of labor union members increases for first time in 13 
years (Yomiuri) 
 
(5) Editorial: Aware of need for prompt reforms to revitalize 
economy (Nikkei) 
 
(6) Editorial: Highest priority must be given to North Korea's "full 
declaration" of nuclear programs (Asahi) 
 
ARTICLES: 
 
(1) Fukuda administration in third month 
 
NIKKEI (Page 2) (Full) 
December 28, 2007 
 
On the evening of Dec. 20, when negotiations on reforming 
independent administrative corporations entered the home stretch, 
Prime Minister Yasuo Fukuda summoned Administrative Reform Minister 
Yoshimi Watanabe to the Prime Minister's Office (Kantei) and asked 
him to accept a compromise proposal to put off the review of the 
status of the Urban Renaissance Agency and the Japan Housing Finance 
Agency for another three years. 
 
Watanabe, however, declined the proposal. Upset by this unexpected 
reply, Fukuda instructed officials to rewrite the proposal. The 
officials compiled a final proposal the next day through 
coordination of views again by the Cabinet Secretariat and the Land, 
Infrastructure and Transport Ministry. The final version called for 
moving up the reform of the Japan Housing Finance Agency by only one 
year. 
 
This was the first and last instruction on the reform of independent 
administrative corporations by the prime minister. Fukuda was eager 
to reform the negotiated contract system and the assessment system 
but did not show any interest in abolishing or privatizing public 
corporations that would lead to a drastic cut in fiscal outlays. 
Discussion was not conducted on the meaning of such corporations' 
existence, either, with priority given to only making the numbers 
balance in streamlining plans. 
 
The former Abe administration tried to maintain buoyancy by 
underscoring that Kasumigaseki government officials are the forces 
of resistance to reforms. Under the Fukuda administration, however, 
the bureaucracy came back to life, slowing down administrative 
reform efforts. 
 
A member of an expert council on reforming the public servant system 
grumbled: "Our reform plans have been watered down one after 
another." 
 
 
TOKYO 00005682  002 OF 008 
 
 
A bill to reform the public servant system that the council plans to 
submit to the next ordinary Diet session initially called for 
abolishing the career system. But the latest draft report inserted 
the phrase calling for "replacing the first-class national 
examination with an examination for the managerial track," 
indicating bureaucrats' desire to essentially retain the current 
system. Irritated by this development, conference members decided to 
set up a drafting committee and draft a report without depending on 
government officials. 
 
The prime minister has repeatedly said: "I am determined to 
thoroughly eliminate waste and establish a streamlined and effective 
government." But his eagerness to tackle administrative reform 
cannot be detected at all. 
 
(2) Interview with State Minister for Administrative Reform Minister 
Yoshimi Watanabe: "Bureaucrats had secret scenario" 
 
SANKEI (Page 3) (Full) 
December 28, 2007 
 
The independent administrative agency streamlining plan, which the 
government adopted at a cabinet meeting on Dec. 24, turned out to be 
a mere juggling of numbers with various decisions being put off. 
Responding to an interview by the Sankei Shimbun, State Minister in 
charge of Administrative Reform Yoshimi Watanabe, who has been out 
in the forefront as a coordinator of the reform drive, revealed that 
there was a so-called Kasumigaseki scenario, apart from the original 
reform plan. He also said that bureaucrats were resisting the reform 
drive behind the scenes. The following are the main portions of the 
interview. 
 
-- Some say that the plan has stepped back from the initial 
scenario. How do you rate it yourself? 
 
"The streamlining plan has on the whole put the scalpel into 
symbolic entities among independent administrative agencies, such 
the Urban Renaissance Agency. Regarding the Employment and Human 
Resources Development Organization of Japan, a decision was made to 
reach a conclusion in a year, including the possibility of scrapping 
it. Though a decision on what should be done about the Urban 
Renaissance Agency has been postponed until three years later, it 
does not mean that it was decided to be kept in place.  The package 
has also cut the cords of the discretionary contract system and the 
golden parachute system (amakudari practice). In that sense, we 
succeeded in thwarting the Kasumigaseki (bureaucratic center of 
Japan) scenario from being realized, contrary to public assessment. 
I would give it a passing mark, though it was insufficient." 
 
-- What do you mean by the Kasumigaseki scenario? 
 
"I am making the move at the order of the prime minister. However, 
there was also a Kasumigaseki scenario. Some were concerned that if 
I do it my way, their scenario would collapse. As such, various 
government agency officials adopted a bid-rigging policy in an 
effort to prevent their ministers from going ahead with the reform 
drive. 
 
-- Please be more specific. 
 
"Health, Labor and Welfare Minister Yoichi Masuzoe during 
negotiations told me that working-level officials had said to him 
 
TOKYO 00005682  003 OF 008 
 
 
that they did not want the MHLW alone to stand out. Since Mr. 
Masuzoe made an in-depth statement in the very first negotiations, 
working-level officials probably got upset. His story made me 
realize that there is a lock-step formula arrangement or the 
so-called Kasumigaseki scenario among various government agencies. 
 
"I also saw notes on Kasumigaseki's estimation regarding reform of 
independent administrative agencies. To name a few, reforming the 
Commemorative Organization for the Japan World Exposition 70 is a 
mid- to long-term theme. The Big Three -- Nippon Export and 
Investment Insurance, the Urban Renaissance Agency and the Japan 
Housing Finance Agency -- should be maintained as they are. I have 
been hit with a flood of opposition and requests from the ruling 
parties as well. I felt that they were warning that they would not 
allow me to cut into the Big Three." 
 
-- You were criticized as excessively showcasing your motivation. 
You have drawn fire for that. 
 
"Somebody perhaps tried to find fault with me. Making a negative 
campaign saying that the reform drive has failed due to my 
performance is like spitting up into the sky. Those people are 
putting their heads into the noose." 
 
-- Has there been any change in the government stance of reforming 
independent administrative agencies since the Fukuda administration 
came into existence? 
 
"(Unlike the Abe administration), the Fukuda administration uses 
different rhetoric. The Fukuda cabinet's policy is "be cautious" and 
"be gentle." The rhetoric it uses toward bureaucrats is gentle. 
However, there is no difference between the Abe cabinet and the 
Fukuda cabinet in the sense that their policy is to correct outdated 
aspects of the present bureaucratic system so that public servants 
can take pride in their work, instead of bashing them." 
 
-- Did you feel the difficulty of administrative reform? 
 
"It is self-contradictory to use bureaucrats for administrative 
reform. This will not do, because it is like having bureaucrats work 
out their own affairs. To look at the process I have undergone until 
the streamlining plan was mapped out, I found myself in a clutch 
situation from the beginning to the end. However, I have in the end 
managed to go beyond bureaucrats' estimation. All that is left is to 
how to implement the package. The reform drive would step back, if 
the proposals were not implemented." 
 
(3) Revised Political Fund Control Law requires politicians to 
attach receipts for every item costing one yen or more; Lawmakers 
too stingy 
 
TOKYO SHIMBUN (Page 24) (Full) 
December 28, 2007 
 
The revised Political Fund Control Law will come into effect on Jan. 
1, 2008. The centerpiece of the revised law is a requirement to 
attach receipts to political fund reports for every item costing one 
yen or more in view of public anger. Diet members have already 
grumbled about such a requirement, with one member saying, "What 
should we do when we have bought a bottle or can of juice from the 
vending machine?" How stingy Japanese lawmakers are! The newspaper 
looked into the foolishness of politicians' complaints, as well as 
 
TOKYO 00005682  004 OF 008 
 
 
their ignorance of popular opinion. 
 
Condolence money for funeral 
 
It is said that Diet members have complained about what they should 
do about condolence payments. One politician said: "I don't want to 
ask bereaved families for receipts." A 44-year-old salesman said in 
a strong tone:  "Of course, you should not." He continued: 
 
"Supporters for a politician are tantamount to a salesman's best 
customers, aren't they? Objectively speaking, attending a best 
customer's funeral is a business in a way. So, you should pay a 
funeral offering out of your pocket. I can't understand your 
impudence that you want a receipt for condolence payment." 
 
Fried Chinese noodle 
 
Participating in events held by neighborhood community associations 
is a kind of a job for politicians. It is said they, therefore, buy 
fried Chinese noodles at these events since the Public Offices 
Election Law prohibits them from giving gifts (to those associations 
and supporters). They grumble because they can't ask a receipt (for 
fried Chinese noodles). A 67-year-old man in Kanagawa Prefecture had 
a good laugh at this story, saying: 
 
"The lawmaker ate the noodles, didn't he? Who makes a decision on 
eating something is a political activity or one's personal meal? 
Does he want to say that all the meals of politicians are political 
activities?" 
 
Bottle of juice from vending machine 
 
Politicians like attending meetings. They give bottles of juice or 
water to participants in their meetings. Some of them have said that 
when they buy bottles of juice, they can't get receipts." A 
36-year-old organization official in Tokyo was disgusted with this 
story and said: "I don't understand why they offer beverages at all 
meetings. If they really want receipts, they should buy them at 
liquor shops or supermarkets." 
 
Politicians concerned that names of persons with whom they meet will 
be revealed 
 
Many politicians have said that once they submit receipts, the names 
of persons with whom they met will be unveiled. A 46-year-old 
organization official in Tokyo laughed: "Why? Do they have to hold 
meetings at restaurants from which they can get receipts? They are 
probably unable to hold meetings without food and drink." 
 
Clerical work to expand 
 
There seems to be politicians who have pointed that once they are 
required to submit receipts, their clerical work will be enormous; 
and as a result, such will lead to wasting tax money. However, 
citizens do such work when filing income tax returns. A 50-year-old 
management at a company listed on the First Section said with 
suppressed anger: "Private companies are required to submit specific 
receipts. Why don't they do their clerical work on weekends or twice 
a month? Why should I say what I tell new employees?" 
 
Tsutomu Shimizu, a lawyer, who is well versed in political fund 
 
SIPDIS 
affairs and information disclosure said: 
 
TOKYO 00005682  005 OF 008 
 
 
 
"It is true that voters ask politicians for bottles of juice and 
condolence payments. Politicians are concerned about being seen as 
stingy. The public should not ask them for rewards. With receipts 
alone, we cannot find the names of those with whom they have held 
meetings. It is unacceptable that they think meeting with people 
costs a lot of money." 
 
(4) Number of labor union members increases for first time in 13 
years 
 
YOMIURI (Page 2) (Full) 
December 28, 2008 
 
A survey carried out by the Ministry of Health, Labor and Welfare 
(MHLW) found that the number of labor union members as of the end of 
June this year increased for the first time in 13 years. A 
significant increase in part-timers has apparently halted the 
downward trend in the number of labor union members. 
 
According to the findings of the survey, the number of labor union 
members reached 10,079,614 as of the end of June this year, an 
increase of 39,034 from last year. Approximately 588,000 union 
members are part-timers, up by about 73,000 from last year. The 
number of trade unions was 27,226, down by 281 from the previous 
year. The ratio of companies that have labor unions was 18.1 PERCENT 
, down 0.1 point from the previous year, a downward trend that 
started in 1975. 
 
(5) Editorial: Aware of need for prompt reforms to revitalize 
economy 
 
NIKKEI (Page 2) (Full) 
December 28, 2007 
 
We should probably say we told you so, but Japan's share of the 
global economy finally dropped below 10 PERCENT  in 2006. The 
implicit meaning is that the effect does not stop with the economic 
front: we cannot help but fear Japan's diplomacy and national 
security will be affected. 
 
Japan's share of the world's nominal gross domestic product (GDP) 
last year fell to 9.1 PERCENT , below the 10 PERCENT  level for the 
first time in 24 years. In terms of per-capita nominal GDP, Japan 
slipped into 18th place among the 30 member countries of the 
Organization for Economic Cooperation and Development (OECD). 
Luxembourg took first place, with its per capita GDP 2.6 times 
larger than Japan's. 
 
The drop in GDP in dollar terms is attributed in part to the recent 
rise in the exchange rates of other countries' currencies such as 
the Euro to the dollar and the yen. However, Japan's share has 
continued to fall for more than 10 years. Japan's delay in reforming 
its economic, administrative, and financial systems, as well as its 
corporate management system, also must be considered as lying behind 
Japan's GDP problem. Many other countries have more swiftly taken 
measures in response to the advance of economic globalization and 
computerization. 
 
For instance, the five Scandinavian countries, all of which are 
included among the top 10 in terms of per-capita GNP, have 
energetically pushed ahead with policies since the 1990s that place 
 
TOKYO 00005682  006 OF 008 
 
 
emphasis on market mechanisms and being responsive to the 
globalizing economy. Specifically, they have eased regulations, 
reduced taxes, supported high-tech industries, as well as given 
priority to creativity in education programs. As a result, Nokia, 
which now enjoys the world's largest share in the cellular phone 
market, made its start in Finland. 
 
Japan was overtaken by England in terms of per-capita GDP three 
years ago. The sweeping economic reform by then Prime Minister 
Thatcher in the 1980s worked so effectively that the British economy 
has continued to expand for 15 years, starting in 1992. 
 
Some persons might question why it is necessary for the fairly 
affluent Japan to further boost its GDP. To narrow income 
discrepancy, it is necessary to expand the scale of economy, but it 
is not enough only to change the wealth-distribution method. 
Additionally, since tax revenues and insurance premiums are linked 
to the size of economy, if the nation's GDP remains flat, its social 
security programs, including pension and medical insurance, will be 
at risk, given the aging of the society. Japan's fiscal deficit and 
accumulated debt - the worst among those of the major industrialized 
countries - will also never be liquidated without economic 
expansion. 
 
Japan is losing its influence in the international community. Japan 
was always in first place in net official development assistance 
(ODA) rankings until a decade ago, but it slipped below the United 
States and Britain in 2006. Three years from now, Japan is expected 
to drop to sixth place. In recent years, such "soft power" as 
economic aid, in the place of military power, has served countries 
as a primary foreign-policy tool. The shrinkage of Japan's soft 
power may lead to its losing its international say and to the 
bringing about of uncertainty on the national security front. 
 
The policies and system reforms initiated by the Koizumi 
administration have made no significant progress since the 
inauguration of the Abe cabinet. Excluding some cases, the path of 
management reform of companies and financial institutions has slowed 
to a crawl since the financial crisis passed. The government must 
realize that it must quickly carry out the reforms that are 
necessary. 
 
(6) Editorial: Highest priority must be given to North Korea's "full 
declaration" of nuclear programs 
 
ASAHI (Page 3) (Slightly abridged) 
December 28, 2007 
 
North Korea is unlikely to honor its commitments to disabling its 
nuclear facilities and declaring all its nuclear programs, both of 
which the North has said it would carry out by the end of the year. 
 
A senior North Korean diplomat said: "Adjusting the speed of 
disablement is unavoidable." The reason is because deliveries of 
energy aid to that country, as agreed on at the six-party talks, is 
behind schedule. 
 
Reportedly, heavy fuel oil that is supposed to be supplied by Russia 
for energy aid for November has not arrived in North Korea. Until 
recently South Korea, China, and the United States have taken turns 
in providing monthly deliveries of 50,000 tons of heavy oil to the 
North. If it is true that Russia is behind the schedule in supplying 
 
TOKYO 00005682  007 OF 008 
 
 
heavy oil, we urge Moscow to live up to its promise properly. 
 
But that does not appear to be the real reason why the North is 
dragging its feet in carrying out disablement. The true reason is 
apparently related to the question of whether the U.S. delists North 
Korea from the list of states sponsoring terrorism. The U.S. and 
North Korea in their negotiations agreed to link as a set the 
North's disablement of its nuclear facilities and the declaration of 
all its nuclear programs and America's delisting of the North from 
its terror list. 
 
The dominant explanation is that North Korea is now irritated that 
although it thought that specific steps for delisting would be taken 
by the end of the year, there has been no progress in that 
direction. As a result, North Korea is now wavering back and forth. 
 
From the beginning, it was said that it would be difficult for the 
North to complete by the end of the year the disablement of the 
three major nuclear facilities used to develop nuclear weapons. 
Parts of those facilities are contaminated with radiation, so it has 
taken time to remove that danger. 
 
According to U.S. intelligence, the disablement process is by and 
large moving forward. Even though the process cannot be completed 
within the year, it may not be so serious. Now that the nuclear 
facilities have been put out of operation, no materials needed for 
making nuclear weapons can be produced. 
 
More serious is the North's delay in declaring nuclear programs in a 
complete and accurate manner. 
 
In addition to the three major facilities, what other facilities are 
there in North Korea? The North has promised to reveal all its 
nuclear programs. Included in the promise is revealing the amount of 
reprocessed nuclear fuel, the amount of extracted plutonium, the 
amount of such plutonium that was used for making nuclear weapons, 
the amount of plutonium used  for nuclear testing, and the amount of 
remaining plutonium. Also, the North has been promised to reveal 
where the remaining plutonium is stored. 
 
Once North Korea declares all its nuclear programs, negotiations 
will start, based on the declaration, on specific steps for 
denuclearization. The declaration will be a crucially important 
basis for promoting six-party talks. 
 
The declaration must not be treated lightly. The U.S. remains 
cautious about delisting the North as a state sponsoring terrorism. 
Perhaps based on the results of overtures from the North, the U.S. 
must have become cautious about delisting. 
 
It is outrageous that the North is unlikely to make a declaration of 
all its nuclear programs by the end of the year as promised, but the 
important thing is the contents of the declaration. The question of 
uranium enrichment also should be made clear. Furthermore, there is 
the suspicion that the North is proliferating nuclear technology. 
 
The U.S. should not easily give away its card of delisting the 
North. Instead, it should continue to work hard on the North. Even 
if the declaration is not issued within the year, there is no need 
to become impatient, and the five countries, including Japan and the 
U.S., should work to maintain their unity. 
 
 
TOKYO 00005682  008 OF 008 
 
 
One can say that the most difficult stage - just prior to the 
North's abandonment of its nuclear programs - has been reached. 
Unless the North carries out its promise, it can never open the way 
to normalizing diplomatic ties with the U.S. and Japan. North Korea 
should think hard about that point. 
 
DONOVAN