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UNCLAS SECTION 01 OF 13 TOKYO 000120 
 
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: JAPANESE MORNING PRESS HIGHLIGHTS 01/16/08 
 
 
Index: 
 
1) Top headlines 
2) Editorials 
3) Prime Minister's daily schedule (Nikkei) 
 
4) Asahi obtains document showing aircraft deployment scheme for 
Futenma during Korean emergency  (Asahi) 
 
Opinion polls: 
5) Yomiuri poll: Cabinet support rate slips 6.9 points to 46 PERCENT 
, with non-support rate up 3 points to 41.6 PERCENT ; Public split 
(47 for, 44 against) passage of refueling bill  (Yomiuri) 
6) Yomiuri poll reveals public's dissatisfaction with pension mess, 
slow Diet deliberations  (Sankei) 
7) Fuji-Sankei poll: Cabinet non-support rate now outstrips support 
rate 47.3 PERCENT  to 36.6 PERCENT ; Public positive about new 
antiterrorism law but not about revote method  (Sankei) 
 
Diet agenda: 
8) Prime Minister Fukuda in upcoming Diet policy speech will stress 
reorganizing administration of consumer affairs, resolve to deal 
fully with pension mess  (Nikkei) 
9) Democratic Party of Japan (DPJ) President Ozawa against skips a 
plenary session of the Diet  (Mainichi) 
 
10) DPJ hell bent to attack ruling camp in next regular session and 
force an early Diet dissolution  (Tokyo Shimbun) 
11) Prime Minister Fukuda will ask for opposition camp's cooperation 
during budget deliberations: "If budget delayed, will deal a blow to 
the nation"  (Nikkei) 
12) DPJ faces a dilemma already over what to do about passage of 
supplementary budget  (Nikkei) 
13) Deliberations in next Diet likely to bog down over issue of 
local deficit bonds  (Mainichi) 
14) Ruling parties resolved to override Upper House rejection of 
gasoline tax measure in order to secure funds needed for highway 
construction  (Tokyo Shimbun) 
 
15) CIRO employee allegedly leaked secrets to Russian diplomat 
(Mainichi) 
 
16) METI plans new law to deal with increasing problem of industrial 
spies  (Mainichi) 
 
Japan takes whaling on whaling: 
17) Japanese whaling ship holds two anti-whaling activists for 
interfering with its operations  (Yomiuri) 
18) Australian high court orders Japanese ships to halt whaling 
operations  (Yomiuri)    13 
 
Articles: 
 
1) TOP HEADLINES 
 
Asahi: 
Agreement reached between plaintiffs in hepatitis C lawsuits, 
government 
 
Mainichi, Yomiuri & Nikkei: 
Citigroup's additional subprime mortgage losses come to 2.4 trillion 
yen 
 
TOKYO 00000120  002 OF 013 
 
 
 
Sankei: 
Nikkei 225 index finishes below 14,000, nearly 2,500 lower than at 
the launch of Fukuda cabinet 
 
Tokyo Shimbun: 
Ruling bloc intends to put gasoline tax revision bill to second vote 
to secure financial sources for road construction 
 
Akahata: 
DPJ's bill that may open the path for Japan to exercise right to 
collective defense carried over to the next Diet session with 
approval from LDP, New Komeito, DPJ, and PNP 
 
2) EDITORIALS 
 
Asahi: 
(1) Earthquakes and reconstruction: Look for ways to rebuild houses 
without destroying all of them 
(2) Handball rematch for Olympic berth: Asia should unite 
 
Mainichi: 
(1) 13th anniversary of Great Hanshin Earthquake: Self-help efforts 
important 
(2) President Bush's tour of Middle East: U.S. responsible for 
easing tensions in Middle East 
 
Yomiuri: 
(1) DPJ must not use bill for issuance of deficit-covering 
government bonds as a political football 
(2) Broader application of mixed medical treatment desirable 
 
Nikkei: 
(1) Warning from falling Nikkei 225 index, which finishes below 
14,000 
(2) Pay attention to ROK's review of its policy toward DPRK 
 
Sankei: 
(1) Unnecessary confrontation not desired in the upcoming ordinary 
session of Diet 
(2) Agreement in hepatitis C lawsuits: Need to review the 
government's role 
 
Tokyo Shimbun: 
(1) Prime Minister Fukuda faces crucial test 
(2) Fee-based night cram school run by municipal junior high school 
may raise questions about public education 
 
Akahata: 
(1) No drastic change will occur even if DPJ takes power 
 
3) Prime Minister's Official Residence (Kantei) 
 
Prime minister's schedule, January 15 
 
NIKKEI (Page 2) (Full) 
January 16, 2008 
 
09:00 
Attended a cabinet meeting. 
 
09:52 
 
TOKYO 00000120  003 OF 013 
 
 
Met advisor Yamatani at the Kantei, followed by WHO Commission on 
Social Determinants of Health Chairman Michael Marmot and others. 
 
11:38 
Made courtesy calls on Upper House President Eda, Vice President 
Santo, Rules and Administration Committee Chairman Nishioka, and 
Upper House factions in the Diet building, accompanied by Upper 
House Secretary General Yamazaki and Chief Cabinet Secretary 
Machimura. 
 
11:53 
Returned to his official residence. 
 
12:01 
Met at the Kantei with Yamatani, followed by Machimura joined in by 
LDP Secretary General Ibuki. Machimura stayed on. 
 
13:55 
Met in the Diet building Waseda University Racing Department 
director Yasuo Watanabe, captain Ryota Komano and others in the 
presence of Lower House Speaker Kono and former Prime Minister 
Mori. 
 
14:02 
Attended a Lower House plenary session. Afterwards, made courtesy 
calls on Lower House Speaker Kono, Vice Speaker Yokomichi, Lower 
House Rules and Administration Committee Chairman Sasagawa, and 
Lower House factions, accompanied by LDP Diet Affairs Committee 
Chairman Omori and Machimura. 
 
15:56 
Met at the Kantei chairman Noda of the LDP group to fundamentally 
consider the pension system. 
 
16:40 
Met People's Life Minister Kishida, Vice Cabinet Minister Uchida and 
others, followed by a HCV plaintiff group, in the presence of ruling 
party hepatitis project team leader Kawasaki and MHLW Minister 
Masuzoe. 
 
18:00 
Held a press conference. 
 
19:33 
Retuned to his official residence. 
 
4) U.S. government documents reveal that during a Korean Peninsula 
contingency, Futenma would become a key attack base, with a 
four-fold increased in deployed aircraft 
 
ASAHI (Page 31) (Abridged) 
January 16, 2008 
 
It has been learned from official U.S. documents the Asahi Shimbun 
has obtained that during a contingency on the Korean Peninsula, the 
U.S. Marines has a plan to deploy to Futenma Air Station in Okinawa 
300 aircraft at a maximum and that the thinking about the alternate 
facility (at Nago City) is that it would have the same capability, 
too. The document revealed that there would be a four-fold increase 
in deployed aircraft from the 70 or so currently stationed at the 
base. It would be categorized in an emergency as a major "attack 
base" for the air unit deployed there. Even with the realignment of 
 
TOKYO 00000120  004 OF 013 
 
 
U.S. forces in Japan, the importance of the airfield would not 
change, and talks between Japan and the United States will be 
focuses on that from now. 
 
The documents are dated Jan. 23, 1996, which was just prior to the 
agreement in April between the Japanese and U.S. governments on the 
full reversion of Futenma Air Station. The material consists of an 
internal memorandum and slides prepared by the 1st Marine Aircraft 
Wing to brief then Deputy Assistant Secretary of Defense Campbell of 
the Pentagon. 
 
Campbell was the responsible official that year for deciding and 
implementing the Japan-US Special Action Committee on Okinawa (SACO) 
Agreement. According to the documents, the alternate facility to 
replace Futenma was categorized as "a strategic stronghold for air 
and ground units ready under tactical planning for a contingency on 
the Korean Peninsula." 
 
In addition, the documents state that "during a contingency, 300 
aircraft are expected to use Futenma," consisting of adding to the 
71 aircraft now at Futenma Air Station 142 aircraft that would be 
"transiting" and 82 aircraft that would be "additionally deployed." 
Of the 300 aircraft, there would be 21 fixed-wing aircraft, such as 
air refueling tankers, and 279 that would include transport aircraft 
and attack helicopters. 
 
The Marines had sought, as a condition for relocating the base, that 
the alternate facility should have the same capability, citing "a 
need for maintaining Futenma's military capability." 
 
5) Poll: Cabinet support down to 46 PERCENT 
 
YOMIURI (Page 1) (Full) 
January 16, 2008 
 
The approval rating for Prime Minister Fukuda and his cabinet fell 
6.6 percentage points from December last year to 45.6 PERCENT  in a 
face-to-face nationwide public opinion survey conducted by the 
Yomiuri Shimbun on Jan. 12-13. The Fukuda cabinet's support rate 
failed to reach 50 PERCENT  for the first time since coming into 
office. The Fukuda cabinet's disapproval rating was 41.6 PERCENT , 
up 6.3 points. The decline in the approval rating mainly seems to 
reflect public awareness of the government's failure to resolve the 
issue of pension record-keeping flaws. 
 
In the breakdown of public support for political parties, the ruling 
Liberal Democratic Party stood at 35.5 PERCENT  (35.3 PERCENT  in 
the last survey taken in December last year), with the leading 
opposition Democratic Party of Japan (DPJ) likewise leveling off at 
16.9 PERCENT  (17.1 PERCENT  in December). 
 
In the survey, respondents were asked if they supported the Diet 
passage of a new antiterrorism bill to resume the Maritime 
Self-Defense Force's refueling mission in the Indian Ocean. To this 
question, a total of 47 PERCENT  answered "yes," with a total of 44 
PERCENT  saying "no." However, the legislation was enacted in a 
second vote of the House of Representatives after it was voted down 
in the House of Councillors. When asked if it was appropriate, 46 
PERCENT  answered "no," with 41 PERCENT  saying "yes." Asked about 
the DPJ's response during the extraordinary Diet session, a total of 
59 PERCENT  said they did not support it, while a total of 34 
PERCENT  said they did. 
 
TOKYO 00000120  005 OF 013 
 
 
 
6) Cabinet support rate sinks below 50 PERCENT  line: Public 
dissatisfied with government's handling of pension issue, delay in 
Diet deliberations, but critical of DPJ's tactics, as well 
(Yomiuri) 
 
YOMIURI (Page 2) (Excerpt) 
January 16, 2008 
 
In the nationwide opinion poll just carried out by the Yomiuri 
Shimbun, the support rate for the Fukuda Cabinet slipped below the 
50 PERCENT  line, and the gap between the support and non-support 
rate shrank to only 4 points. The reason for the drop in support 
rate seems to be public dissatisfaction with the pension issue, as 
well as the pace of deliberations in the Diet due to the lopsided 
relation between the upper and lower houses. 
 
On the missing 50 million pension accounts, the government admitted 
last December that it would be difficult to find out who the owners 
are. A majority of the respondents or 55 PERCENT  consider this as a 
breach of commitment by the government.  On the revote in the Lower 
House to pass the antiterrorism special measures law, the survey 
carried out last December found 43 PERCENT  of the public 
considering such as "appropriate," while 44 PERCENT  felt it was 
"inappropriate." This time, the respondents who felt such was 
"inappropriate" (46 PERCENT ) outnumbered those who thought the move 
"appropriate" (41 PERCENT ). 
 
7) Poll: Support for Fukuda cabinet spirals down to 36.6 PERCENT ; 
34 PERCENT  want grand coalition after general election 
 
SANKEI (Page 3) (Full) 
January 16, 2008 
 
The Sankei Shimbun and Fuji News Network (FNN) conducted a joint 
public opinion survey on Jan. 13-14, in which the rate of public 
support for Prime Minister Yasuo Fukuda's cabinet further fell 4.5 
percentage points from the last survey (taken Nov. 10-11, 2007) to 
36.6 PERCENT . The Fukuda cabinet's support rate had plummeted in 
the last survey. The Fukuda cabinet's disapproval rating was 47.3 
PERCENT , outstripping its approval rating for the first time. 
Meanwhile, the ruling Liberal Democratic Party got a 32.1 PERCENT 
support rate, with the leading opposition Democratic Party of Japan 
(Minshuto) at 25.0 PERCENT . 
 
Among those who answered that they supported the Fukuda cabinet, 
women accounted for 57.1 PERCENT , with men at 42.9 PERCENT . Among 
those aged 60 and over, the Fukuda cabinet's support rate was high, 
with its approval rating at 42.9 PERCENT  and its disapproval rating 
at 28.1. The support rate slightly topped the nonsupport rate only 
among those aged 20-29. In all other age brackets, nonsupport 
outstripped support. 
 
Fukuda has now made a decision to provide across-the-board relief to 
hepatitis C victims who contracted the disease from 
government-approved blood products. Asked about this political 
decision, 74.1 PERCENT  answered that they appreciated it. In 
addition, 58.0 PERCENT  appreciated Fukuda's personal character. 
 
However, 73.2 PERCENT  did not appreciate the Fukuda cabinet over a 
series of scandals involving the Defense Ministry. Asked about other 
policy issues, 70.2 PERCENT  answered that they did not appreciate 
 
TOKYO 00000120  006 OF 013 
 
 
the Fukuda cabinet over North Korea, with 64.0 PERCENT  saying they 
did not appreciate the Fukuda cabinet over his government's way of 
handing unaccounted-for pension records. In the survey, respondents 
were asked if they appreciated Fukuda's leadership. To this 
question, 62.7 PERCENT  were negative. Fukuda's leadership was 
invisible on these policy issues, and this apparently led to the 
drop in the Fukuda cabinet's support rate. 
 
The LDP, in its support rating, was down 0.1 point, while the DPJ 
was up 1.5 points. Even so, the LDP was 7.1 points higher than the 
DPJ. 
 
Respondents were also asked which political party they would like to 
vote for in the next general election for the House of 
Representatives. In response, 34.4 PERCENT  chose the LDP, with 33.9 
PERCENT  preferring the DPJ. 
 
Asked about the desirable form of government, 34.4 PERCENT  chose a 
grand coalition involving the LDP and the DPJ, topping all other 
answers. Among other answers, 32.5 PERCENT  picked a DPJ-led 
government, with only 28.5 PERCENT  choosing an LDP-led government. 
 
Respondents were further asked when they would like the next general 
election to take place. To this question, 45.9 PERCENT  picked 
"during the latter half of this year after this July's G-8 summit," 
with 29.0 PERCENT  saying "upon the current term's expiry or shortly 
thereafter next year" and 23.6 PERCENT  saying "during the first 
half of this year." 
 
Meanwhile, a new antiterrorism bill, which is intended to resume the 
Maritime Self-Defense Force's refueling mission in the Indian Ocean, 
was passed in a second vote of the House of Representatives after it 
was voted down in the House of Councillors. In this regard, 45.1 
PERCENT  were affirmative about the legislation itself, with 43.8 
PERCENT  negative about it. However, 48.4 PERCENT  were negative 
about the lower chamber's overriding of the upper chamber's 
decision, with only 39.4 PERCENT  saying it was appropriate. 
 
8) Fukuda to announce in policy speech plan to create new body for 
consumer affairs administration 
 
NIKKEI (Page 1) (Full) 
January 16, 2008 
 
The government yesterday disclosed the draft of a speech Prime 
Minister Yasuo Fukuda will deliver at the outset of the ordinary 
Diet session to start on Jan. 18. He will announce plans to create a 
new body with strong authority and a ministerial post responsible 
for dealing with consumer affairs. The prime minister will also 
declare that the government will send pension premium records to all 
contributors every year starting in 2009. 
 
Fukuda, who touts his administration as giving priority to what is 
best for consumers, will list the administration's policy goals for 
the first time. He will state: "The government will establish a new 
organization with strong authority in order to integrate 
consumer-affairs administrative functions currently split among 
various government agencies." The prime minister will define the new 
body as a liaison center for consumers and as playing the leading 
role in implementing various measures to benefit consumers. 
 
On the pension record-keeping fiasco, Fukuda will emphasize his 
 
TOKYO 00000120  007 OF 013 
 
 
determination to make utmost effort to pave the way for resolving 
the issue under his cabinet. He will announce plans to send special 
pension-record notices to all contributors by October this year and 
regular notices to all of those who have yet to reach the 
entitlement age for receiving pension benefits every year beginning 
in 2009. 
 
To turn the national and local primary balance into the black by 
fiscal 2011, the prime minister will stress the need to drastically 
reform the nation's tax system, including the consumption tax. The 
government plans to establish a national conference on social 
security by the end of this month. Fukuda will reveal that systemic 
reform of the tax system and the social security system will be 
discussed in this panel, and will also express his desire to discuss 
the issue with the opposition camp. 
 
Key points in the prime minister's draft policy speech 
 
? Establish a new body with strong authority to integrate 
administrative functions for consumer affairs. Create a ministerial 
post for consumer affairs administration. 
? Send regular pension-record notices to all contributors who have 
yet to reach the entitlement age for receiving pension benefits 
starting in fiscal 2009. 
? Reduce more than 4,000 public servants in fiscal 2008. 
? Maintain the current provisional road tax rate. 
? Carry out drastic reform of the nation's tax system, including the 
consumption tax. 
? Achieve the goal of turning the national and local primary balance 
into the black by fiscal 2011. 
 
9) Ozawa again skips plenary session 
 
MAINICHI (Page 5) (Full) 
January 16, 2008 
 
Ichiro Ozawa, president of the leading opposition Democratic Party 
of Japan (Minshuto), was absent from a plenary sitting of the House 
of Representatives yesterday when the Diet closed its extraordinary 
session. The DPJ held a meeting of its House of Representatives 
members shortly before the plenary sitting, but Ozawa did not attend 
the meeting. The DPJ's executive office explained that he had 
something else to do. 
 
Ozawa was present at a meeting of his party's executive officers and 
a meeting of his party's board members after the plenary session. 
Prime Minister Yasuo Fukuda visited the DPJ's room after the Diet 
closed, but Fukuda could not meet Ozawa. The House of 
Representatives took a vote in its Jan. 11 plenary sitting, and 
Ozawa left his seat before the vote and went to Osaka Prefecture to 
back up a candidate running in the prefecture's gubernatorial 
election. 
 
10) DPJ looking to rally opposition parties to seek Lower House 
dissolution 
 
TOKYO SHIMBUN (Page 2) (Full) 
January 16, 2008 
 
The Democratic Party of Japan (DPJ or Minshuto), the largest 
opposition party, has stepped up its efforts to work on other 
opposition parties to fall into line with it in order to scrap 
 
TOKYO 00000120  008 OF 013 
 
 
provisional tax rates, including the gasoline tax. 
 
DPJ Policy Research Committee Chairman Masayuki Naoshima and Tax 
Research Committee Chairman Hirohisa Fujii met yesterday in the Diet 
building with People's New Party (PNP) Policy Research Council 
Chairman Shozaburo Jimi to seek understanding from the PNP for their 
party's policy of abolishing the provisional tax rates. Although 
they failed to obtain approval from the PNP, the DPJ plans to 
continue its efforts. 
 
Up until now, Naoshima attended meetings of the Social Democratic 
Party (SDP) and Diet Affairs Committee Chairman Kenji Yamaoka 
telephoned SDP lawmakers to seek their understanding. The DPJ is 
expected to explain to the Japanese Communist Party (JCP) its view 
shortly. The party leadership expects that it will be able to work 
with the JCP and SDP. 
 
In the extraordinary Diet session, which ended yesterday, the DPJ 
raised the hackles of other opposition parties due to the lack of 
its spadework. In connection with the reason for the party's 
decision to put its efforts into consensus building, a senior party 
member said: "We need to hold a solid majority (in the Upper House). 
We are also considering future election cooperation." A senior Diet 
Affairs Committee member commented: "We will make the upcoming 
regular Diet session a gasoline Diet and force (the prime minister) 
to dissolve the Lower House." Therefore, the DPJ wants to form a 
coalition of all opposition parties under the banner of "gasoline" 
 
As Secretary General Yukio Hatoyama said, "We have reflected on our 
insufficient efforts" for consensus building in the extra Diet 
session. The DPJ appears to be trying to demonstrate its efforts to 
other opposition parties. 
 
Since some in the DPJ, however, are still critical about abolishing 
the provisional tax rates, it is difficult to iron out differences 
of opinions within the party. 
 
11) Premier asks for cooperation from opposition parties, noting 
that delay in budget deliberations would deal blow to people's 
lives; Extraordinary Diet session closes 
 
NIKKEI (Page 2) (Full) 
January 16, 2008 
 
Prime Minister Yasuo Fukuda on Jan. 15 held a press conference at 
the Prime Minister's Office following the close of the extraordinary 
Diet session. Referring to the fiscal 2008 budget bill and related 
bills, he pointed out that given falling stock prices, soaring crude 
oil prices and the future of the economy, any delay in Diet 
deliberations would deal a blow to people's lives. He thus indicated 
a stance of seeking understanding from the opposition camp for the 
passage of the bills within the fiscal year. Regarding adoption of 
related bills in a second vote in the Lower House, he simply stated, 
"It is too early to say whether we will do it." 
 
Concerning abolition of the provisional tax, special purpose 
road-construction revenues, which the DPJ is calling for, Fukuda 
expressed a negative view: "It would be good if gasoline prices will 
drop. However, scrapping the gas tax would affect other aspects of 
people's lives. We must also consider environmental measures." He 
expressed hopes for consultation with the ruling camp, saying, "They 
may understand, if we talk." 
 
TOKYO 00000120  009 OF 013 
 
 
 
Regarding a dissolution of the Lower House and a snap election, he 
noted: "I will dissolve the Lower House at some point. It must not 
affect the economy and people's lives. The Lower House must not be 
dissolved so easily." He thus indicated a cautious view of a 
dissolution of the Lower House before the Group of Eight Summit 
(Lake Toya Summit) in July. 
 
In relation to the mishandling of pension premium payment records, 
Fukuda stressed his policy of having a social security national 
council set up before the end of the month to discuss the 
possibility of reforming the public pension system. Concerning 
recourses to finance the payment of social security benefits, he 
said, "We must consider the issue from various angles, such as which 
revenues should be used, tax money or insurance money. I will not 
categorically say at this point that consumption tax revenues will 
be used." 
 
12) DPJ in dilemma over battle over supplementary budget 
 
NIKKEI (Page 2) (Full) 
January 16, 2008 
 
The Democratic Party of Japan (DPJ or Minshuto) is having difficulty 
deciding what approach it should take to bills related to a fiscal 
2007 supplementary budget and a bill amending the Local Allocation 
Tax Law, which the government is set to introduce in the regular 
Diet session to be convened on Jan. 18. It is criticizing the 
government for its lax estimates of tax revenues. However, if 
related bills fail to secure Diet approval within the current fiscal 
year, local governments, which are to be urged to pay the local 
allocation tax to the central government, would be thrown into 
chaos. The DPJ is also unsure as to which issue should be made a 
critical point of confrontation between the ruling and opposition 
camps, with a battle over the gas tax close at hand in late March. 
 
DPJ approves supplementary budget bill only once 
 
The supplementary budget will be automatically enacted on Jan. 30, 
after the Lower House sends it to the Upper House. Though this rule 
does not apply to related bills, they could also be enacted if the 
ruling camp adopts them in a second vote by more than a two-thirds 
majority in the Lower House, even if the opposition camp votes them 
down in the Upper House. 
 
The DPJ has approved a supplementary budget only once in the past 
five years, the fiscal 2004 supplementary budget. Criticism that 
there are some disagreeable points about the fiscal 2007 
supplementary budget is growing in the DPJ, as Secretary General 
Yukio Hatoyama put it. 
 
The DPJ is making an issue over the government's downward estimate 
of tax revenues of both the central and local governments, with one 
mid-ranking senior official saying, "The government distributed tax 
allocations based on lax revenue estimates." That is because a local 
allocation tax resource for distributing a set ratio of national tax 
revenues to local governments has a shortfall of 299.2 billion yen, 
requiring as many as 80 local governments to issue deficit-covering 
local bonds, a practice that is not allowed in principle. 
 
Revenue shortfalls reach 480 billion yen 
 
 
TOKYO 00000120  010 OF 013 
 
 
The Ministry of Internal Affairs and Communications, which holds 
jurisdiction over local finances, is increasingly alarmed about the 
situation. It distributed to lawmakers of both the ruling and 
opposition camps leaflets noting that there is a possibility of many 
entities going into the red if the local allocation tax bill fails 
to secure Diet approval. MIC Minister Hiroya Masuda during a press 
conference after a cabinet meeting on Jan. 15 underscored, "Unless 
the bill is passed into law by the end of the fiscal year, there 
will be chaos." According MIC, revenue shortfalls are estimated to 
total 480 billion yen. 
 
The DPJ leadership aims to highlight the "tyranny of numbers," by 
forcing the ruling camp to adopt the related bills through a revote 
in the Lower House at the outset of the regular Diet session. Its 
strategy is to play up a confrontational stance right from the 
beginning of the Diet session, ahead of the issue of whether to 
maintain the provisional tax rate imposed on the gas tax, which it 
characterizes as the major bone of contention. 
 
However, if local administration gets into a mess, the ruling camp 
might make a counterattack on the DPJ noting that it lacks the 
capability to run the government. Some DPJ members have made 
weak-spirited remarks, with one senior official of the Policy 
Affairs Council saying, "It would be difficult to say that local 
governments should return the tax allocation revenues that have 
already been distributed to them." Thus, the DPJ has yet to decide 
what approach it should take. 
 
13) Deliberations on deficit-covering bonds by local governments 
likely to run into trouble 
 
MAINICHI (Page 2) (Excerpts) 
January 16, 2008 
 
The government has decided to allow local governments to issue 
deficit-covering bonds as a measure to cover local tax revenue 
shortages in fiscal 2007. This decision, however, revealed that 
local finances are rapidly worsening due to the cooling down of the 
economy. The opposition camp will surely point out the government's 
unrealistically optimistic view in estimating local finances when it 
compiled the budget. At this point, there is no telling whether 
related bills will be passed in the ordinary Diet session to start 
on Jan. 18. 
 
According to a senior member of the Internal Affairs and 
Communications Ministry, it was early December when significant 
falls in local tax revenues were confirmed. Corporate enterprise tax 
and corporate inhabitant tax revenues sharply dropped in fiscal 
2007, falling far short of initial estimates by the government, 
prompting local governments to send out an SOS to the central 
government. 
 
In the case of tax revenue shortages, the government usually allows 
local governments to float bonds intended only for construction 
projects. However, given that the number of public works projects 
has been reduced over the past several years, the government judged 
it necessary to revise relevant laws to allow local governments to 
issue deficit-covering bonds that can be issued with no limitation 
to purposes. 
 
This special measure to cover tax revenue shortages was taken in 
fiscal 1975 (to issue bonds worth about 340 billion yen) after the 
 
TOKYO 00000120  011 OF 013 
 
 
oil shock and in fiscal 2002 (worth about 120 billion yen), when a 
recessionary fears mounted. This time, the government expects 80 
local governments to float bonds worth 180 billion yen. 
 
Revenue resources for tax grants to local governments are also 
lacking, reflecting a sharp drop in national tax revenue, including 
from the income tax, the corporate tax, and the consumption tax. 
About 30 PERCENT  of local grants come from national tax revenue. 
Under the local fiscal plan, the government planned to distribute 
approximately 15.2 trillion yen in fiscal 2007 to local governments. 
But a financial shortage of 299.9 billion yen was found afterward. 
The government intends to cover the deficit with money from the 
general account. To do so, it is necessary to revise relevant laws. 
 
14) Ruling camp plans to pass gasoline tax bill by two-thirds 
override vote in Lower House to secure fiscal resources for road 
projects 
 
TOKYO SHIMBUN (Top Play) (Excerpts) 
January 16, 2008 
 
The ruling parties decided yesterday to enact a bill amending the 
Special tax Measures Law, including measures to maintain the 
provisional gasoline tax, by resorting to a two-thirds majority 
override vote in the House of Representatives if the legislation is 
voted down in the House of Councillors. In case the main opposition 
Democratic Party of Japan (DPJ or Minshuto) delays putting the bill 
to a vote, the ruling coalition will take a second vote in the Lower 
House based on Article 59 of the Constitution, which stipulates that 
if the upper chamber fails to put a bill to a final vote within 60 
days, it can be passed by a lower chamber overriding vote. The 
ruling camp has determined that it is necessary to maintain the 
provisional tax to secure fiscal resources for road projects in 
fiscal 2008 and after. 
 
The secretaries general and Diet affairs committee chiefs of the 
ruling Liberal Democratic Party (LDP) and its coalition partner New 
Komeito from the two Diet chambers held a meeting yesterday, in 
which they agreed that it would be necessary to pass the legislation 
before the end of this fiscal year (March) in an attempt to avoid 
major confusion caused by a hike in gas prices. 
 
They affirmed a policy of submitting the bill as early as Jan. 25 to 
the Lower House and send it to the Upper House in mid-February. They 
also confirmed a plan to urge the LDP to put it a vote in the Upper 
House before the end of the March. 
 
15) CIRO official leaks internal data to Russia; Papers on the case 
to be sent to prosecutors 
 
MAINICHI (Page 1) (Full) 
January 16, 2008 
 
A Cabinet Intelligence and Research Office (CIRO) official in his 
fifties has been quizzed several times by the Metropolitan Police 
Department Public Security Bureau on suspicion that he leaked 
Japan's internal information to the Russian Embassy in Japan, the 
Mainichi Shimbun has learned. Once charges are established, the MPD 
plans to send papers on the case to prosecutors on suspicion of 
violating the National Civil Service Law (obligation to observe 
confidentiality). 
 
SIPDIS 
 
 
TOKYO 00000120  012 OF 013 
 
 
The CIRO official, who is responsible for cabinet affairs, is 
suspected to have made several contacts with a Russian Embassy 
officer at Tokyo restaurants over the last year and handed him data 
on Japan's domestic situation. 
 
Placed under the Cabinet Secretariat, CIRO is an intelligence 
organization responsible for collecting, analyzing, and researching 
information on the cabinet's important policies. In addition to 
three departments of domestic, international, and economic affairs, 
there is the Cabinet Satellite Intelligence Center as well. 
 
CIRO is headed by director of cabinet intelligence. The government 
has decided to establish this April the Counterintelligence Center 
to analyze intelligence leaks that occurred outside Japan. 
 
16) METI eyes new legislation to crack down on industrial espionage 
 
MAINICHI (Page 2) (Full) 
January 16, 2008 
 
The Ministry of Economy, Trade and Industry (METI) has unveiled a 
plan to establish a new law to crack down on industrial espionage, 
the act of stealing vital corporate information. The aim is to 
prevent the outflow of corporate information by clamping down on 
acts of theft that were not prohibited under the criminal code. Also 
by revising the Patent Law, the ministry plans to keep patents vital 
for national security secret. The government intends to submit two 
bills to the regular Diet session next year. 
 
In a press conference after a cabinet meeting yesterday, METI 
Minister Akira Amari underlined the need to enact a new law by 
citing compact discs (CDs) containing critical data, saying: 
"Stealing CDs is a crime in Japan, but there is no law governing 
what is on a CD." METI plans to enact legislation that will make 
illicitly obtaining or leaking vital information a crime. The 
ministry will consult with the Industrial Structure Council, an 
advisory panel to the METI minister, about specific contents this 
spring. By revising the Patent Law, the ministry plans to introduce 
a secret patent system to keep patents that are designated as 
critical technologies from the public eye. 
 
17) Two anti-whaling activists detained for trespassing on Japanese 
survey ship in Antarctic Ocean 
 
YOMIURI (Page 2) (Full) 
January 16, 2008 
 
The Fisheries Agency (FA) yesterday revealed that anti-whaling 
activists of the U.S.-based environmental protection organization 
"Sea Shepherd" blocked a Japanese whale research vessel from 
navigating in the Antarctic Ocean by throwing rocks against it, and 
that two male activists who had climbed aboard the whale research 
vessel were placed under restraint on trespassing charges. This is 
the first case of restraint due to trespassing since research 
whaling began in 1987. The FA is consulting with the Ministry of 
Foreign Affairs (MOFA) and other government offices about how to 
treat those two persons. 
 
According to the FA, the two activists who were aboard a large 
rubber raft approached "No. 2 Yushinmaru" (of 747 tons) that was 
hunting minke whales, wound rope around the screw of No. 2 
Yushinmaru, and threw bottles that contained some kind of 
 
TOKYO 00000120  013 OF 013 
 
 
odoriferous liquid at it. 
 
No crew member of No. 2 Yushinmaru was injured. 
 
The Japanese whale research fleet had been likewise obstructed by 
Sea Shepherd in last February, as well. At the time, two Japanese 
crew members suffered a minor injury on the face by bottles thrown 
by anti-whaling activists. 
 
According to Sea Shepherd's website, a 28-year-old Australian and a 
35-year-old British were detained by the Japanese side. Those two 
persons climbed aboard No. 2 Yushinmaru in order to tell the captain 
of the vessel that the vessel is violating the international 
protection law. 
 
18) Australia's Federal Court orders Japanese whaling fleet to stop 
whaling 
 
YOMIURI (Page 2) (Full) 
January 16, 2008 
 
Eki Arai 
 
The Federal Court of Australia accepted the appeal by an Australian 
animal protection organization that the Japanese whale research ship 
that is killing whales in the "whale protection zone" as designated 
by Australia in the Southern Ocean in accordance with that country's 
domestic law is a violation of the law and ordered the Japanese ship 
to stop whaling. The Japanese government has rejected the ruling and 
intends to continue whaling. 
 
The lawsuit was filed by (Australia's) Humane Society International 
(HSI) against Japan's private-sector shipping company Kyodo Senpaku 
(based in Tokyo), which has contracted with Japan's Institute of 
Cetacean Research on availability of ships for whaling. HSI filed 
suit to stop whaling in 2004. In 2005, the Federal Court dismissed 
the case, but HSI filed an appeal. 
 
DONOVAN