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UNCLAS SECTION 01 OF 13 TOKYO 000189 
 
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 01/24/08 
 
INDEX: 
 
(1) Interview with Vice Environment Minister for Global 
Environmental Affairs Toshiro Kojima: Environment diplomacy to get 
underway at Davos Forum; Japan intends to lead world, by winning 
trust (Tokyo Shimbun) 
 
(2) Business world and LDP calling for depriving FTC of judge's role 
(Asahi) 
 
(3) Iwakuni mayoral election (Part 1): Prelude to election heating 
up with public opinion divided over plan for transfer of U.S. 
carrier-based aircraft to Iwakuni (Tokyo Shimbun) 
 
(4) Iwakuni mayoral election (Part 2-conclusion): Residents weary of 
a row over transfer of carrier-based aircraft to Iwakuni; shopping 
area deserted (Tokyo Shimbun) 
 
(5) Consumer administration: Government plans to set up and launch 
in fiscal 2009 new organization to serve as control tower; Authority 
to give orders to correct business practices also to be given 
(Mainichi) 
 
(6) Hard times for "Japanese flag" oilfields; Resource nationalism 
rising in oil-producing countries that are clinging to interests 
(Asahi) 
 
(7) Editorial: We oppose both government and DPJ plans on gasoline 
tax rate (Asahi) 
 
(8) Editorial: Is wasting public funds the DPJ's plan? (Mainichi) 
 
ARTICLES: 
 
(1) Interview with Vice Environment Minister for Global 
Environmental Affairs Toshiro Kojima: Environment diplomacy to get 
underway at Davos Forum; Japan intends to lead world, by winning 
trust 
 
TOKYO SHIMBUN (Page 2) (Excerpts) 
January 24, 2008 
 
The World Economic Forum (Davos Forum) started in Switzerland on 
Jan. 23. Prime Minister Yasuo Fukuda will stage environment 
diplomacy, by sending Japan's initiative for the prevention of 
global warming to the world. Prior to the meeting, Tokyo Shimbun 
interviewed Vice Environment Minister for Global Environmental 
Affairs Toshiro Kojima, who will accompany the prime minister on his 
participation in the meeting, about prospects for Japan's 
environment diplomacy. 
 
-- What role will Prime Minister Fukuda play at the Davos Forum? 
 
"Key members of political and economic circles in the world, 
including highest-level corporate managers in the world and UN 
Secretary General Ban Ki-Moon, will take part in the meeting. A 
 
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special seat will be prepared for Prime Minister Fukuda as the 
chairman of the G-8 summit. The prime minister will reveal major 
agenda items at the G-8, including climate change. 
 
-- A series of international conferences to discuss global warming 
issues, such as the G-20 Climate Change Dialogue in March in Chiba, 
 
TOKYO 00000189  002 OF 013 
 
 
the G-8 Environmental Ministers' meeting in May in Kobe City and the 
G-8 summit, will take place in Japan this year. 
 
"A final report on such issues as technology and funds needed for 
measures to prevent global warming will be adopted at the G-20, 
based on the action program adopted at the Gleneagles Summit in 
Britain. Climate change, biodiversity and recycling will top the 
agenda at a G-8 environment ministerial meeting. What have been 
discussed will be reflected in a paper on the results of the Lake 
Toya Summit and an accompanying document. 
 
-- An agreement was reached in December last year in Bali, Indonesia 
on the Bali roadmap for adopting a post-Kyoto framework by 2009. Do 
you think things adopted at the G-8 Summit will affect this 
roadmap? 
 
"For instance, the U.S. has joined the framework of the roadmap this 
time. President Bush made a statement at the Heiligendamm Summit in 
Germany last year, noting that the U.S. would respect the UN-led 
process. The U.S. participation this time is based on that 
statement. Meetings on the roadmap will be held intermittently. Top 
leaders' statements and decisions will be reflected in those 
meetings." 
 
-- Climate change will be discussed at the G-8. What will be the key 
issues? 
 
''To begin with, the target of halving greenhouse gas emissions in 
the world, the issue that has been carried over from the 
Heiligendamm Summit, has to be discussed. Regarding a post-Kyoto 
framework, the duration of a commitment period, carbon dioxide 
emissions cuts by industrialized countries and developing countries, 
such as China and India, which are emitting a great deal of 
greenhouse gases, measures to adapt to the effects of global warming 
and transfers of technology and funds will be talked about as basic 
issues. 
 
-- Japan along with the U.S. opposed the inclusion of numerical 
emissions reduction goals at the Bali conference. Its action invoked 
international criticism. Do you think Japan can display leadership? 
 
"The Japanese government's Cool Earth 50 calls for a 50 PERCENT  cut 
in greenhouse gas emissions and participation of all major emitters 
in the framework. According to post-Kyoto Protocol discussions, 
provided that the next commitment period is set for 10 years from 
2013 through 2022, emissions must peak during that period, and then 
take a downward turn. To achieve that goal, it is essential for the 
U.S., China and the EU, major carbon dioxide emitters, to take part 
in the framework. Whether Japan can come up with a proposal 
acceptable to those countries holds the key. It is said that the 
U.S. makes rules on the strength of power, the EU does so with 
resourcefulness, and China does so with numbers. In order for Japan 
to act as a leader, it is necessary for it to first win the 
confidence of the international community. To that end, it is 
imperative for it to achieve its goal of cutting greenhouse gas 
emissions 6 PERCENT , compared with the 1990 level and show a 
proactive stance toward global efforts to cut such gases beyond 
¶2013. 
 
(2) Business world and LDP calling for depriving FTC of judge's 
role 
 
 
TOKYO 00000189  003 OF 013 
 
 
ASAHI (Page 9) (Full) 
January 22, 2008 
 
The Fair Trade Commission (FTC), the watchdog of the market, is now 
facing a crisis. The FTC, which has exposed a number of bid-rigging 
cases under Chairman Kazuhiko Takeshima, is about to lose the 
function of being able to make judgments. The FTC is poised to raise 
its opposition, but an increasing number of business leaders are 
becoming more vocal in criticizing the current system in which the 
FTC plays the dual role of prosecutor and judge. 
 
The first trial this year started on the morning of January 17 at 
the Fair Trade Commission in Kasumigaseki, Tokyo. In a bid-rigging 
case in a bridge-building project commissioned by a government 
agency, 22 companies had been ordered to cease activities in 
violation of the Antimonopoly Law. Dissatisfied with the ruling, the 
companies filed a complaint with the FTC. 
 
 
Doubts voiced about fairness 
 
With three judges sitting at the center of the room, the lawyers of 
the companies and FTC officers serving as "prosecutors" were sitting 
face-to-face on both sides of the judges' table. The room was just 
like a courtroom, but the judges and the investigators were all FTC 
officials. There are seven judges - two temporarily dispatched 
judges, two lawyers, and three FTC members. 
 
Under the so-called "umpire system," the FTC judges appeals filed by 
companies against its punishment. A senior member of Nippon 
Keidanren (Japan Business Federation) complained: "I doubt if fair 
proceedings have been taken." 
 
The FTC compiled a bill amending the Antimonopoly Law last December, 
but the Liberal Democratic Party's Special Committee on Antimonopoly 
Laws instructed it to rewrite the bill, stressing that it is 
desirable from a commonsense standpoint that the duties of screening 
and judging cases should be performed by separate bodies. The LDP 
study group plans to reach a conclusion by the end of February and 
submit the necessary legislation to amend the Antimonopoly Law to 
the current Diet session. 
 
The FTC is now on the defensive, but in 2005, when the law was 
amended, it was given a powerful "weapon," that is, a rise in 
administrative surcharges and a leniency system in which immunity 
from criminal prosecution or a reduction in surcharge payments is 
applied to companies that voluntarily report their illegal 
activities to authorities. 
 
Under the current system, an administrative surcharge as 
administrative punishment and a fine as criminal punishment are 
imposed on an offender. But Keidanren requested that the system 
should be changed into a system to collect only administrative 
surcharges. Despite the request, the LDP panel, reflecting on a 
series of bid-rigging cases, toughened the penalties. The council on 
basic problems related to the Antimonopoly Law, a private advisory 
council to the chief cabinet secretary, also approved last June the 
imposition of both a surcharge and a fine. Even while referring to 
the possibility of changing the umpire system into the former prior 
screening system in the future, the council regarded it proper to 
keep the double-charge system for the time being. 
 
 
TOKYO 00000189  004 OF 013 
 
 
Last summer, the tide began to turn in Keidanren's direction. In the 
wake of the LDP's devastating defeat in the House of Councillors 
election in July, momentum began to gather for reviewing the 
pro-competition policy. An argument for abolishing the umpire system 
is also gaining influence in the LDP research panel. 
 
Seeing such a trend, an expert voiced concern that "if the umpire 
system is abolished, the FTC's ability to expose offenses might be 
undermined as a result of the FTC becoming cautious in making a 
judgment." Further, the FTC emphasized the advantageous point of 
being able to make a flexible response as an administrative organ. 
 
Take the case of merger between Yawata Steel Corporation and Fuji 
Iron & Steel Co. in 1970. The FTC initially instructed the two 
companies to scrap their merger plan, reasoning that they will 
result in gaining an excessively large market share. But the two 
companies proposed lowering their share by selling business units. 
The FTC finally approved the merger of the two companies into Nippon 
Steel Corporation. 
 
FTC scale-down unavoidable 
 
However, since the Yawata-Fuji merger case, no case has been brought 
into the FTC for a judgment. Because of this, the watchdog finds it 
difficult to make a counterargument. It may be unavoidable for the 
FTC to see its authority shrink even if it succeeds in avoiding the 
role of judge from being taken away from it. 
 
Growing calls for scraping the umpire system is to prove that "a 
strong FTC" has begun to be deeply rooted in Japan. The FTC is 
further aiming to reinforce its investigatory powers, including 
authority to search houses and seize data, in a bid to make its 
powers as strong as those in Western countries. 
 
The European Union (EU) unearths international cartel cases and levy 
huge fines on offenders, as part of efforts to enhance its 
deterrence capability. In Europe and the U.S., a person who feels 
dissatisfied with a ruling is allowed to file a complaint with a 
court. Keidanren managing director Kubota emphasized: "If the FTC 
insists that its authority should be strengthened in accordance with 
international standards, it also should take procedures in 
accordance with international standards." 
 
Will the FTC be able to grow into a watchdog respected in the 
international community? The FTC is now at a crossroads. 
 
(3) Iwakuni mayoral election (Part 1): Prelude to election heating 
up with public opinion divided over plan for transfer of U.S. 
carrier-based aircraft to Iwakuni 
 
TOKYO SHIMBUN (Page 26) (Abridged) 
January 21, 2008 
 
Makoto Hashimoto 
 
A preliminary skirmish is intensifying over the question of whether 
to allow the transfer of U.S. carrier-based aircraft to the Iwakuni 
Marine Corps Air Station (in Iwakuni City, Yamaguchi Prefecture). A 
one-on-one battle is expected to occur between former Mayor 
Katsusuke Ihara (57), who is backed by opponents to the transfer 
plan, and House of Representatives member Yoshihiko Fukuda (37) from 
the ruling Liberal Democratic Party (LDP), who is supported by those 
 
TOKYO 00000189  005 OF 013 
 
 
in favor of the transfer plan. The election will be announced on 
Feb. 3 with voting set for Feb. 10.  Which side the public will 
choose in the third round of a repeat mayoral election? This 
reporter visited Iwakuni City, which is known as a military base 
town. 
 
Opponents/former mayor's camp in high spirits; aim to win third 
victory 
 
"It's unreasonable not to listen to the voices of the Iwakuni 
people. It's also unreasonable to threaten the city government with 
a subsidy cut on the grounds that the city does not behave as it is 
told." Ihara made this remark at a rally for his campaign held at 
the Iwakuni Citizen Hall on Jan. 19. Ihara, who wore a yellow scarf 
- yellow being his campaign color -- continued his criticism of the 
central government for its carrot-and-stick approach. 
 
In March 2006, the city held a referendum. The result was that 90 
PERCENT  of the residents were opposed to the transfer plan. In the 
mayoral election held one month later after the referendum, Ihara 
defeated a candidate favoring the transfer plan by a big margin. 
This time, Ihara will run in his third mayoral campaign. He asserts: 
"I don't intend to call for removing the base, but I think the 
central government should not force the local municipality to accept 
the central government's policy, and instead, based on the wishes of 
locals, it should negotiate with the United States." Most of some 
1,700 participants in the rally were elderly persons wearing 
windbreakers. 
 
Former Mayor Saburo Yamashita of Hatsukaichi City, Hiroshima 
Prefecture, who was portrayed as an atomic-bomb survivor mayor, 
joined the rally to encourage Ihara. Present also was political 
commentator Minoru Morita, who declared he would give full backing 
to Ihara, describing Iwakuni City as a "rising star in terms of 
protecting democracy." Ihara shouted himself hoarse: "When I faced 
the fourth rejection by the city assembly of a budget bill, I 
thought I would have to go on a pilgrim's walking tour across the 
country for ascetic self-discipline. But placing my faith in the 
residents of Iwakuni and people across the country, I will win this 
election." 
 
Meanwhile, on the evening of that day, the Fukuda camp held a 
gathering of supporters at a hotel in the city. 
 
The gathering was held in the form of a buffet-style party. It was 
joined by some 700 politicians and business persons dressed in 
suits. Shunichi Harada, manager of the "Iwakuni no Akarui Mirai o 
Tsukuru Kai," a civic group to create a bright future for Iwakuni 
 
SIPDIS 
City, said in high spirits: "It's lucky that (Mr. Ihara) decided to 
step down. We will accept his challenge." Iwakuni Chamber of 
Commerce and Industry President Hisahi Nagano declared: "The 
consensus of business leaders in the city is to see House of 
Representatives member Fukuda head this city's government." 
 
Fukuda said: "The central government is indeed to be blamed for lots 
of things. I'd like to represent the voices of the Iwakuni people 
and speak to the central government on their behalf. I'll dispel the 
public's misgivings by discussing such specific matters as expanding 
the noise control area and shortening flight hours." Fukuda 
indicated his intention to "wage a struggle that would only be ended 
when certain conditions were fulfilled." Fukuda continued, "I'll 
without fail measure up to your expectations." In response, someone 
 
TOKYO 00000189  006 OF 013 
 
 
there encouraged him by saying, "You must win the election." 
 
Ahead of the start of a short campaign battle, Fukuda, less known in 
the city than Ihara, plans to visit mountainous and island areas to 
make his name known to the residents there. 
 
The Fukuda camp stresses the significance of the debts amounting to 
100 billion yen or more held by the city government. Fukuda's 
campaign strategy is to stress that the city finances will collapse 
or that taxes will be hiked. Fukuda also attaches importance to 
public services, asserting that child-care fees, school lunch fees, 
and medical expenses for school children should be free or be 
lowered and that elementary and junior high school buildings should 
be reinforced to resist earthquakes in five years. Fukuda's 
supporters pin their hopes on him with one saying, "Even though we 
raise objections, the transfer plan will be implemented." Another 
argued, "Subsidies should be used for measures that will be 
beneficial to the public." 
 
Ihara argues against Fukuda: "I reduced the city government's debts, 
but the debts swelled owing to the merger of towns and villages in 
the neighborhood (in 2006). Given that the city has the industrial 
district and the express highway, it is incorrect to say that 
Iwakuni will collapse like Yubari City, Hokkaido. There will be no 
tax hikes. I have a lot of things to do, for instance, cutting 
salaries of the mayor and civil servants and reducing the number of 
the city assembly members. 
 
A city assembly member backing Ihara explained: "Iwakuni as well as 
other municipalities are in financial difficulties. Because of the 
lack of justice, the other side focuses on financial matters." 
 
(4) Iwakuni mayoral election (Part 2-conclusion): Residents weary of 
a row over transfer of carrier-based aircraft to Iwakuni; shopping 
area deserted 
 
TOKYO SHIMBUN (Page 27) (Abridged) 
January 21, 2008 
 
Makoto Hashimoto 
 
What are views of the residents (about the plan to transfer 
carrier-based aircraft to Iwakuni) ahead of the mayoral election? 
 
1,194 base-related complaints filed last year 
 
There were 220 complaints filed to the city government against noise 
and flights in 2004, but the figure increased to 1,194 in 2007. 
 
Residents living in the vicinity of the U.S. Marine Corps Air 
Station Iwakuni even now suffer from the roar of jet fighters. One 
74-year-old man complained: "I feel like I live under a railroad 
overpass. The roar of aircraft sometimes continues until late at 
night; as a result, some people suffer from headaches or become 
neurotic." 
 
Carrier-based aircraft assigned to the U.S. Naval Air Facility 
Atsugi (sitting in the cities of Yamato and Ayase, Kanagawa 
Prefecture) are well known for their touch-and-go landing practices. 
"In the past, there was one week of touch-and-go training. That was 
terrible. If 59 more planes come here to do such training...," the 
man added. He will bring the first lawsuit this spring in Iwakuni 
 
TOKYO 00000189  007 OF 013 
 
 
City, where there has been no such case lodged against the base in 
the past asking for suspension of flights. 
 
Residents are enraged at (the central government) with one arguing, 
"Their approach is mean. Instead of telling us, 'This is the only 
place across the country to be chosen as a location for the 
transfer,' they simply asked us, 'Yes or no?' This is outrageous." 
 
Meanwhile, the bar district, which at one point flourished at the 
outbreak of the Vietnam War, is now totally deserted. A taxi driver 
in his sixties claimed: "Public works projects have dwindled. The 
bars are not doing well. Our business has reached a dead end. I hate 
seeing even the face (of Mr. Ihara)." 
 
The atmosphere at the shopping area located in front of JR Iwakuni 
Station is likewise dead. A self-employed man (49) said, "It may be 
the right thing to oppose the transfer plan, but doing so is not a 
pragmatic choice." A 61-year-old woman, who voted for Ihara in the 
previous mayoral election, expects change by saying, "I don't know 
what kind of trouble exists behind the scenes, but this time, I am 
weary of him." 
 
The Iwakuni base divides the city into two and prevents it from 
rebuilding itself because of height restrictions. The city has a 
population of some 150,000 persons, but if there is no base 
presence, Iwakuni would have developed into a city of a half 
million. Should the city call on the central government to 
compensate for that? Or should the city reject the transfer plan on 
the condition that because of the base, companies tend to move out 
from here to somewhere else. These are not easy questions to 
answer. 
 
How about Mt. Atago, which was sliced up as part a project to 
relocate the base one kilometer offshore. This relocation came about 
as a measure to reduce base noise, but the idea is said to have 
motivated the central government to consider Iwakuni as a candidate 
site for relocation (of carrier-based jets). Mt. Atago's grove with 
its village shrine was destroyed in order to construct a housing 
area, and there is a strong possibility that houses for the U.S. 
military will also be constructed there. 
 
Masami Fukuda, a 46-year-old housewife living near the Mt. Atago 
development area, is opposed to the transfer plan. She argued: "I am 
concerned about public security. Because of extra-territorial 
rights, U.S. soldiers can go outside the fence, but we can't enter 
inside the fence. I hear there are cases of hit-and-run accidents 
caused by U.S. soldiers or cases where U.S. soldiers intruded into 
private citizens' premises. Once the base functions are reinforced, 
there will be no moving out of it for at least for another century. 
I will cast a ballot, taking fully into account the future of my 
children." 
 
When this reporter asked passengers in front of Iwakuni Station whom 
they might vote for, most answered promptly: "Mr. Ihara" or "Mr. 
Fukuda." There seem to be a few who have not decided for whom they 
will vote, even though no panel discussion has been held so far for 
the two candidates-to-be to exchange views. This may be the result 
of the city being divided. 
 
Defense Minister Shigeru Ishiba made this comment: "Of course, I am 
interested in (the mayoral election) to see what is the public's 
will, but there will be no change in our attitude of advancing the 
 
TOKYO 00000189  008 OF 013 
 
 
transfer plan as part of the realignment of the U.S. forces in 
Japan." 
 
Both camps have shown no sign that they will lay down their arms, 
even though the public's will is shown anew in the election. In 
fact, one member of the Fukuda camp argued, "Mr. Ihara caused the 
public to be divided by holding a referendum and hatred emerged 
eventually among the public." A resident opposing the transfer plan 
offered a counterargument: "City assembly members who had been 
opposed to the transfer plan changed their mind at a time when the 
subject of subsidies (from the central government) cropped up. That 
is attributable to the central government and the United States." 
 
(5) Consumer administration: Government plans to set up and launch 
in fiscal 2009 new organization to serve as control tower; Authority 
to give orders to correct business practices also to be given 
 
MAINICHI (Page 1) (Full) 
January 19, 2008 
 
Prime Minister Yasuo Fukuda in a policy speech revealed a plan to 
revise consumer administration. The outline of a new organization 
that will facilitate the new proposal in a unified manner was 
revealed on Jan. 18. The envisaged organization will be given the 
role of a control tower that will lead concerned government 
agencies. It will be empowered to issue a recommendation to 
government agencies to rectify the situation, according to need. A 
proposal for establishing a new organization by transferring 
relevant government agencies' consumer administration under its wing 
as it is will be put on hold. The government will work out a 
specific plan over six months, while determining discussions pursued 
within the Liberal Democratic Party (LDP). 
 
Consumer administration involves 10 government agencies, including 
the Cabinet Office, the Ministry of Health, Labor and Welfare and 
the Ministry of Agriculture, Forestry and Fisheries. Since they have 
different laws under their jurisdiction, the adverse effects of 
bureaucratic sectionalism have been pointed out. 
 
The LDP Consumer Problems Research Group (chaired by Seiko Noda) is 
negative toward the idea of setting up a consumer agency, which 
government agencies are fiercely opposing, as their vested interests 
will be deprived. It also goes against the administrative reform 
drive. The panel will map out a set of proposals before the end of 
February, but it is unlikely that it will adopt the consumer agency 
plan. 
 
In contrast, a plan to make the Cabinet Office Quality-of-Life 
Policy Bureau, which is responsible for planning and formulating 
consumer-related basic policies, an independent entity. The aim is 
to improve consumer administration by turning it into an 
administrative committee like the Fair Trade Commission. The prime 
minister on the evening of Jan. 18 told reporters at the Kantei, 
"(The new organization) must be given a position where it can say 
things to concerned government agencies, if problems arise." 
 
(6) Hard times for "Japanese flag" oilfields; Resource nationalism 
rising in oil-producing countries that are clinging to interests 
 
ASAHI (Page 10) (Excerpts) 
January 24, 2008 
 
 
TOKYO 00000189  009 OF 013 
 
 
Japanese corporations' rights to develop in overseas oilfields are 
undergoing a series of trials. The reason is because resource 
nationalism is rising, as evidenced by Russia's and Kazakhstan's 
requests for the transfer of rights against a backdrop of surging 
crude oil prices. Although the government is trying to find a way 
out by means of resource diplomacy, a dark cloud is hanging over the 
government's goal of doubling Japanese-flag drilling rights, amid 
intensifying competition with up-and-coming nations, such as China 
and India. 
 
The Kashagan oilfield in the Caspian Sea is said to be one of the 
largest oilfields in the world. The Kazakh government announced on 
Jan. 14 that it would allow a state-owned enterprise to purchase 
part of the rights owned by foreign capital. The share of concession 
rights held by Inpex and other Japanese corporations has declined 
from 8.33 PERCENT  to 7.56 PERCENT . 
 
Kazakhstan suspended the construction last August ostensibly for 
environmental reasons. What actually lies behind it is discontent 
with a loss from a delay in the development construction as well as 
with greater contributions to the development cost. The Ministry of 
Economy, Trade and Industry (METI) welcomes the resumption of the 
construction, although it has come at the cost of reduced interests 
on the part of Japan. 
 
Russia also applied pressure on the development of Sakhalin 2, now 
underway by the Royal Dutch/Shell Group, Mitsui & Co., and 
Mitsubishi Corp., citing environmental destruction. The three 
companies in April 2007 handed over more than 50 PERCENT  of the 
management right to a state-run energy corporation. 
 
Ken Koyama, director of the Institute of Energy Economics, Japan, 
said: 
 
"Oil-producing countries are increasingly discontent with the 
development contracts that were concluded when crude oil prices were 
still low. The practice of collecting financial resources by linking 
them to environmental issues might turn into a model." 
 
Japanese firms' rights to develop Iran's Azadegan oil field have 
also markedly diminished due to the country's suspected nuclear 
development. The Khafji oilfield off the dividing zone between Saudi 
Arabia and Kuwait is the first oilfield Japan developed 
independently. Arabian Oil Co., which had been engaged in production 
there, completely withdrew on Jan. 4. 
 
Government focused on resource diplomacy 
 
The government in 2006 set a goal of increasing the share of 
independently developed oil to imported crude oil from the current 
19 PERCENT  to 40 PERCENT  by 2030. The step came from the prospects 
that the unstable situation in the Middle East and growing demand in 
China and India would make it difficult to secure crude oil. 
 
Japan aims to win drilling rights in such countries as Venezuela, 
Libya, and Angora where iron fists are often used. Winning rights in 
such countries comes with the danger of losing those rights or 
having them reduced due to resource nationalism there. 
 
METI Minister Akira Amari has played up his determination to 
actively pursue resource diplomacy, saying that oil-producing 
countries' attempts to fence around and nationalize oilfields are 
 
TOKYO 00000189  010 OF 013 
 
 
current trends. 
 
As part of the government's resource diplomacy, then Prime Minister 
Shinzo Abe and METI Minister Amari visited in succession a number of 
Middle Eastern countries last April through May. Amari, who visited 
Abu Dhabi earlier this month, promised cooperation in a wide range 
of fields, such as industry, medical care, and education. Looking 
back on the trip, Amari said: "I was able to extract positive 
statements for the first time about renewing oilfield interests held 
by Japanese companies." 
 
Developing oilfields itself has become difficult. 
 
Exploring deep seabed oil is technically difficult and may cost as 
much as 100 billion yen. The equipment and labor costs necessary for 
oil exploration have doubled over the last three years. 
 
Fierce competition with developing countries, such as China and 
India, has also elevated the breakeven point. According to an oil 
company executive, the breakeven point, which was 40 dollars a 
barrel two years ago, has now increased to nearly 60 dollars a 
barrel. In some cases, it is 80 dollars. "In many cases, we just 
have to look on with folded arms," an oil industry source said 
discouragingly. 
 
(7) Editorial: We oppose both government and DPJ plans on gasoline 
tax rate 
 
ASAHI (Page 3) (Full) 
January 23, 2008 
 
Will the current temporary high gasoline tax rate have to be 
extended or not? Debate on this issue is heating up in the current 
ordinary Diet session. This question is tantamount, so to speak, to 
whether the gasoline tax should be reduced or not. 
 
The price of regular gasoline has risen to 154 yen per liter due to 
oil price hikes. If the temporary tax rate expires at the end of 
March, the price of gas at the pump will drop by about 25 yen, 
making consumers happy. 
 
Even so, we need to think of this issue more deeply. The government 
and the ruling camp have come up with a plan for extending the 
current rate, but the Democratic Party of Japan (DPJ) has called for 
scrapping the rate. In view of the nation's finances and the global 
environment, however, we find both sides' proposals unacceptable. 
 
Among major industrialized countries, Japan is in the most serious 
fiscal predicament. Under its austere fiscal situation, the 
government has to squeeze out money to finance social security 
outlays, which have been swelling as the nation ages rapidly. Japan 
must first reorder priorities and allocate government funds based on 
this new scheme. To that end, tax revenues for road construction 
should be allocated for general expenditures to enable the revenues 
to be used for medical and educational purposes. 
 
Since tax revenues for road projects automatically are collected, 
the government has allocated the money to road projects without 
closely checking whether the planned roads are actually necessary. 
As a result, various parties concerned began to hunt for road tax 
revenues. Now, it might be a good chance to destroy this traditional 
collusive structure. 
 
TOKYO 00000189  011 OF 013 
 
 
 
Gasoline prices in Japan are higher than in the United States, which 
is called "a society that gobbles up oil," but they are still at a 
low level, compared to other major industrialized countries. At a 
time when the nation is stepping up efforts to constrain gasoline 
consumption, as part of efforts to fight global warming, a cut in 
the gasoline tax is a measure that undermines efforts to end global 
warming. 
 
When considering such circumstances, it might be necessary to keep 
the current high gasoline tax rate. 
 
The government plan, however, proposes maintaining the current tax 
rate for 10 years from fiscal 2008 while limiting the use of 
gasoline tax revenues only for road-related projects. The plan says 
that since roads are still necessary in local areas, and also in 
order to rectify disparities among regions, the government will 
implement road-construction projects worth 59 trillion yen with road 
tax revenues over the next 10 years. This argument is tantamount to 
a call for road construction in order to prevent such revenues from 
being allocated for general expenditures, so it is totally 
unacceptable. 
 
Meanwhile, the DPJ plan calls for allocating the road-related tax 
revenues for general expenditures and for completely abolishing the 
provisional tax rates. If the current high rates are scrapped, the 
central and local governments will lose a total of 2.6 trillion yen 
in tax revenues, almost half of their total tax revenues. Despite 
this estimate, the main opposition says that road-construction 
projects will not be reduced in local areas. In such a case, 
financial sources will naturally fall short. 
 
Even money set aside for welfare purpose may be used to finance road 
maintenance or construction projects. There is the possibility that 
people may have to pay the price for an abolishment of the high tax 
rates in the form of downgraded welfare services and an increased 
financial burden. 
 
Some opposition members insist that an environment tax should be 
introduced in exchange for abolishing the temporary tax rates. This 
point of view is important. It might be necessary to consider 
setting up environment taxation on wide-ranging energy and rearrange 
gasoline taxation to include some of it in the environment tax. 
 
The tug-of-war between the ruling and opposition parties may make it 
impossible to reach a conclusion by the end of March, and gasoline 
prices could go up and down. Such a situation must be avoided 
without fail. Both camps must sit at the table for negotiations on 
changes in their bills, also keeping environment legislation in 
mind. 
 
(8) Editorial: Is wasting public funds the DPJ's plan? 
 
MAINICHI (Page 5) (Full) 
January 22, 2008 
 
How will the opposition parties tide over the Prime Minister Yasuo 
Fukuda's policy speech, in which he said that he would carry out a 
policy of "placing the public at the political center" and shifting 
to a "low-carbon-producing society." Interpellations by 
representatives from each political party, the first battle field 
for Diet debate, have begun. 
 
TOKYO 00000189  012 OF 013 
 
 
 
Yukio Hatoyama, secretary general of the largest opposition 
Democratic Party of Japan (DPJ or Minshuto) stressed the expansion 
of the growing economic gaps in society and the decline in Japan's 
national strength as key issues. 
 
Hatoyama gave a warning that as a result of former Prime Minister 
Junichiro Koizumi's "false reform in which the strong prey on the 
weak," rural areas have lost their vitality and the daily lives of 
people have grown worse. He added that at the same time, a fall in 
Japan's economic standing and children's academic performance 
decline have become serious problems. 
 
Hatoyama strongly criticized the Fukuda cabinet's policy vacuum, 
noting: "The cabinet, neglecting the people's lives and economic 
management, has only been intent on providing oil without charge to 
U.S. warships in the Indian Ocean." 
 
The DPJ secretary general argued that the Fukuda government has just 
been standing idly by instead of tackling such issues as the social 
divide, falling stock prices and Defense Ministry scandals. 
 
Some points Hatoyama mentioned are true. Economic and Fiscal Policy 
Minister Hiroko Ota even said: "the Japanese economy can no longer 
be called first-rate." However, we did not detect a sense of crisis 
in the prime minister's policy speech. Our strong impression was 
only that the price of crude oil was hovering at a high level at the 
same time that stock prices were plummeting. 
 
Hatoyama spent a lot of time explaining what the DPJ would do if it 
assumed the reins of government. Under a DPJ-led government, he said 
that: all the consumption tax money would be used for the basic 
pension program; a system of providing the child allowance of 26,000 
yen would be created; high school education would be free; a 
compensation system for family farms would be created to directly 
support them; and, excluding some urban areas, expressway tolls 
would scrapped. In response to calls from the public who are 
suffering from high oil prices, the DPJ considers the current Diet 
regular session as a session to reduce gasoline prices, placing top 
priority on the daily lives of the people. 
 
Most of the DPJ's assertions were included in its campaign pledges 
for last summer's House of Councillors election. Looking at the 
items, what stands out is the DPJ's willingness to lavishly spend 
public funds. The public would have been pleased if they were 
realized, but where will the money come to pay for the programs? 
Didn't we learn the significance of fiscal discipline when the 
government coped with huge issuances of government deficit bonds, 
issued under the guise of being economic stimulus packages? 
 
Hatoyama asserted that it would be possible to secure fiscal 
resources by avoiding wasteful spending, citing such measures as 
eradication of bid-rigging practices and the practice of amakudari 
or placing retired senior bureaucrats into high-paying posts at 
government-affiliated organizations, as well as a reduction in labor 
costs for national public servants. However, the DPJ's ideas are too 
abstract and optimistic. As long as the DPJ publicizes its campaign 
pledges for the next Lower House election without referring to the 
pain the public would have to pay, a government led by the DPJ will 
never come into being. 
 
DPJ President Ichiro Ozawa, who left the Lower House plenary hall 
 
TOKYO 00000189  013 OF 013 
 
 
before the new antiterrorism bill was put to a vote, rejected any 
criticism against him, arguing, "I don't think the bill was 
important." It was as if to say that the role of the opposition camp 
is to engage in a power struggle, so he had no interest in that bill 
once he knew the result. We hope that the full-fledged Diet debate 
will not become such a power game. 
 
SCHIEFFER