VZCZCXRO2421
PP RUEHFK RUEHKSO RUEHNAG RUEHNH
DE RUEHKO #0333/01 0390231
ZNR UUUUU ZZH
P 080231Z FEB 08
FM AMEMBASSY TOKYO
TO RUEHC/SECSTATE WASHDC PRIORITY 1601
INFO RUEKJCS/SECDEF WASHDC PRIORITY
RHEHAAA/THE WHITE HOUSE WASHINGTON DC PRIORITY
RUEAWJA/USDOJ WASHDC PRIORITY
RULSDMK/USDOT WASHDC PRIORITY
RUCPDOC/USDOC WASHDC PRIORITY
RUEAIIA/CIA WASHDC PRIORITY
RUEKJCS/JOINT STAFF WASHDC//J5//
RHHMUNA/HQ USPACOM HONOLULU HI
RHHMHBA/COMPACFLT PEARL HARBOR HI
RHMFIUU/HQ PACAF HICKAM AFB HI//CC/PA//
RHMFIUU/USFJ //J5/JO21//
RUYNAAC/COMNAVFORJAPAN YOKOSUKA JA
RUAYJAA/CTF 72
RUEHNH/AMCONSUL NAHA 8378
RUEHFK/AMCONSUL FUKUOKA 5985
RUEHOK/AMCONSUL OSAKA KOBE 9654
RUEHNAG/AMCONSUL NAGOYA 4597
RUEHKSO/AMCONSUL SAPPORO 6590
RUEHBJ/AMEMBASSY BEIJING 1572
RUEHUL/AMEMBASSY SEOUL 7632
RUCNDT/USMISSION USUN NEW YORK 8267

UNCLAS SECTION 01 OF 13 TOKYO 000333 
 
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 02/08/08 
 
 
Index: 
 
1) Top headlines 
 
2) Editorials 
 
3) Prime Minister's daily schedule (Nikkei) 
 
4) Yomiuri poll: 83% of Japanese complain about economic disparity 
in the country (Yomiuri) 
 
Defense issues: 
5) Chief Cabinet Secretary Machimura hints at changing the 
government's plan for relocating Futenma base (Yomiuri) 
 
6) Government showing flexibility in stance toward the Futenma 
alternate site issue (Nikkei) 
 
7) Okinawa governor agrees to start environmental assessment of 
Futenma relocation site (Mainichi) 
 
8) Defense ministry puts off reform effort until at least June 
(Yomiuri) 
 
9) LDP panel working on draft permanent-SDF-dispatch law (Yomiuri) 
 
10) Tokyo worried for Assistant Secretary Hill in congressional 
testimony on North Korea did not link abduction issue to removing 
DPRK from terror list (Tokyo Shimbun 
 
Fukuda diplomacy: 
11) Prime Minister Fukuda finding that there may be no resolution of 
the northern islands in sight as he prepares for trip to Russia 
(Sankei) 
 
12) In addition to the northern territories issue, Fukuda seeking to 
focus on North Korea, energy development of Siberia in talks with 
Russian leader (Nikkei) 
 
Diet scramble: 
13) Democratic Party of Japan (DPJ) may have miscalculated its 
approach to road revenues as long term battle with ruling camp 
settles in (Mainichi) 
 
14) DPJ to submit four bills as counterproposals to government's 
budget bill (Mainichi) 
 
15) DPJ readies counterproposal to road revenue tax (Sankei) 
 
16) Joint Kyoto-Protocol report of environment and trade ministries 
optimistic about Japan attaining CO2 reduction target 
17) Deputy BOJ Governor Iwata sees U.S. economy recovering later in 
the year (Nikkei) 
 
18) Japan to sound out South Korea on early resumption of EPA talks 
(Nikkei) 
 
There will be no Morning Highlights on Monday, February 11 - a 
Japanese holiday. 
 
1) TOP HEADLINES 
 
 
TOKYO 00000333  002 OF 013 
 
 
Asahi, Yomiuri, Sankei & Tokyo Shimbun: 
Former stable master Tokitsukaze arrested over fatal beating of sumo 
wrestler 
 
Mainichi: 
Insecticide detected inside sealed package of China-made gyoza 
dumplings, suggesting tampering during manufacturing process 
 
Nikkei: 
Major Japanese steelmakers to help China, India to save energy in 
steel production 
 
Akahata: 
Health, Labor and Welfare Ministry orders people with hypertension 
excluded from health checkup system 
 
2) EDITORIALS 
 
Asahi: 
(1) Sumo stable master arrested: Sumo Association in desperate 
straits 
(2) Gasoline tax: Search for ways to break the impasse through 
debate 
 
Mainichi: 
(1) Fatal assault of sumo wrestler: Aim to establish system to 
investigate death 
(2) Book report: Power of books to support academic ability 
 
Yomiuri: 
(1) Debate on budget: DPJ needs to present road tax alternatives 
(2) Arrest of former stable master: Urgent need to restore public 
confidence 
 
Nikkei: 
(1) Concern about mergers of major mining firms 
(2) Arrest of stable master a stain on sumo history 
 
Sankei: 
(1) Gyoza poisoning: Speed up through investigation on the incident 
(2) Budgetary deliberations: What happens with consultations on 
revising the government-sponsored bill? 
 
Tokyo Shimbun: 
(1) Road debate: Government's explanations hardly convincing 
(2) Arrest of Tokitsukaze: Punishment led to fatal assault of young 
sumo wrestler 
 
Akahata: 
(1) Exchange of notes on new antiterrorism law cannot prevent 
Japanese oil from being diverted 
 
(08020802kn)  Back to Top 
 
3) Prime Minister's Official Residence (Kantei) 
 
NIKKEI (Page 2) (Full) 
February 8, 2008 
 
0805 
Met with Deputy Chief Cabinet Secretary Ono at the Kantei. 
 
 
TOKYO 00000333  003 OF 013 
 
 
09:00 
Lower House Budget Committee meeting. 
 
12:15 
National convention to demand return of the Northern Territories at 
the Kudan Kaikan Hall. 
 
13:00 
Lower House Budget Committee meeting. 
 
17:21 
Met with Luxembourg Prime Minister  Juncker 
 
18:07 
Met with LDP Election Committee Chairman Makoto Koga and Vice 
Chairman Suga. Chief Cabinet Secretary Machimura was present. 
Then met with Secretary General Ibuki, followed by New Komeito 
Deputy President Higashi. 
 
19:21 
Arrived at the official residence. 
 
4) BBC-Yomiuri poll: 83% in Japan unhappy with economic disparity 
 
YOMIURI (Page 2) (Full) 
February 8, 2008 
 
The Yomiuri Shimbun for the first time conducted a joint public 
opinion survey with British Broadcasting Corporation (BBC). In 
Japan, those dissatisfied with economic disparity accounted for 83%. 
This figure was the second highest next to 84% in Italy among the 
Group of Eight (G-8) summit members. The survey was conducted in 34 
countries, among which the figure in Japan was the fourth highest. 
The survey shows that the Japanese public is growing increasingly 
frustrated. 
 
About economic disparity, respondents were asked if they thought 
people in their countries were fairly well off. In Japan, 33% 
answered "not well off at all," and a total of 83%, including "not 
very well off," were dissatisfied. "Fully well off" accounted for 
only 1%. Affirmative answers, including "somewhat well off," added 
up to 12%. The average of those dissatisfied among the 34 countries 
was 64%. Japan's figure markedly outstripped the average. 
 
The highest figure of dissatisfaction was 86% in South Korea, 
followed by 84% each in Italy and Portugal and by Japan's figure. 
Among the major nations, France was at 78%, Britain at 56%, and the 
United States at 52%. 
 
The BBC-Yomiuri poll was conducted from October last year through 
January this year. Answers were obtained from a total of 34,528 
persons in the 34 countries. 
 
Economic disparity awareness 
(G-8 summit member nations only. Figures shown in percentage.) 
Italy 84 
Japan 83 
France 78 
Russia 77 
Germany 71 
U.K. 56 
U.S. 52 
 
TOKYO 00000333  004 OF 013 
 
 
Canada 39 
 
DEFENSE ISSUES 
 
5) Machimura hints at revising Futenma plan 
 
YOMIURI (Page 4) (Full) 
February 8, 2008 
 
The government yesterday held a sixth consultative meeting at the 
prime minister's office with officials from Okinawa Prefecture and 
its four municipalities to discuss the issue of relocating the U.S. 
Marine Corps' Futenma Air Station in the island prefecture's central 
city of Ginowan. The government plans to lay down a V-shaped pair of 
airstrips in a coastal area of Camp Schwab in the prefecture's 
northern coastal city of Nago as an alternative for Futenma 
airfield. "There is a proposal to move the construction site out 
toward the sea," Machimura said in the meeting. "Bearing this in 
mind," he added, "we will make our utmost efforts so we can reach a 
settlement as early as possible." With this, the top government 
spokesman referred for the first time to the possibility of revising 
the government plan. 
 
Meanwhile, Okinawa Gov. Hirokazu Nakaima appreciated the government 
for its representation of a procedural plan to assess the newly 
planned facility's potential impact on its environs. "We also think 
the relocation is a matter of the highest importance," Nakaima said. 
"We're now giving our first consideration to the environmental 
impact assessment," he added. With this, the governor expressed his 
de facto approval of the assessment. In response, the Defense 
Ministry is expected to set about with the assessment within the 
month. 
 
6) Government shows flexibility on Futenma relocation; Coordination 
underway for resuming realignment subsidies to municipalities 
 
NIKKEI (Page 2) (Abridged slightly) 
February 8, 2008 
 
The government, Okinawa and affected municipalities held a 
consultative meeting on the planned relocation of U.S. Futenma Air 
Station at the Prime Minister's Office (Kantei) yesterday. The 
affected municipalities have been critical of the planned 
environmental impact assessment, saying that the explanation on it 
was insufficient. Governor Hirokazu Nakaima, however, announced that 
he would address what is necessary for the relocation as a top 
priority, in reaction to the Ministry of Defense's (MOD) 
presentation of additional documentation. The members reached a 
broad agreement to start the assessment within this month. 
 
Chief Cabinet Secretary Nobutaka Machimura said in the session: "We 
would like to exchange views closely and make efforts to reach a 
good conclusion." Defense Minister Shigeru Ishiba also expressed 
eagerness to do more regarding the assessment procedures, as 
necessary. The government has started arrangements to unfreeze 
subsidies to Nago and other municipalities. 
 
The environment assessment aims at grasping the current state of 
coral and the marine habitat around the relocation sight of Camp 
Schwab in Nago as a condition for starting construction work. Behind 
Okinawa's compromise also lies the Kantei's dialogue-oriented 
stance. 
 
TOKYO 00000333  005 OF 013 
 
 
 
Following the arrest last November of former Vice-Defense Minister 
Takemasa Moriya, the government has removed MOD officials close to 
Moriya, who had pressed for an early relocation, from the Futenma 
relocation issue. The government has also underlined a shift in 
policy, unfreezing the 9.5 billion-yen economic package to the 
northern area of the prefecture. 
 
But in order to finish constructing the replacement facility by 2014 
in accordance with the Japan-U.S. agreement, the government needs to 
begin reclamation work at Camp Schwab as early as 2010. Some in the 
government are concerned that if the assessment procedures are 
delayed further, the overall realignment plan might be affected. 
 
7)Okinawa governor agrees to starting environmental assessment for 
Futenma relocation 
 
MAINICHI (Page 2) (Abridged slightly) 
February 8, 2008 
 
The consultative council on the relocation of the U.S. Marine Corps' 
Futenma Air Station that includes the government and affected 
municipalities met at the Prime Minister's Office (Kantei) 
yesterday. In the session, Okinawa Governor Hirokazu Nakaima praised 
the Defense Ministry's presentation of additional documentation on 
the method of the planned environmental impact assessment in 
compliance with a request from the prefecture. He explicitly said, 
"I will address the matter as a top priority." As a result, the 
government is likely to start the assessment this month, as 
planned. 
 
Nakaima also renewed his call for moving the location of a Futenma 
replacement facility specified in the government plan further 
offshore. The focus will now shift to whether or not the governor 
will approve the government's request for reclamation work around 
Camp Schwab, expected to start in the summer of 2009. 
 
In response to Nakaima's call for moving the new facility further 
offshore, Chief Cabinet Secretary Nobutaka Machimura said: "While 
keeping your request in mind in the process of advancing the 
assessment procedures, we would like to make maximum efforts in 
order to resolve the matter at the earliest possible time." 
 
Ahead of the assessment, the Defense Ministry started last May a 
preliminary survey to look into the current state of the waters 
around Camp Schwab. The ministry presented an assessment plan to 
Okinawa in August, but the prefectural government refused to accept 
it. Okinawa eventually accepted the plan after the consultative 
council resumed its meeting in November under the Fukuda 
administration. Okinawa also asked the government to rewrite it, 
saying that its contents were insufficient. 
 
Okinawa is scheduled to make a final decision after screening by the 
prefectural environmental impact assessment council. The council is 
slated to meet today. Depending on how the deliberations turn out, 
the start of the assessment might slip to March or beyond. 
 
8) Defense Ministry reform put off to June 
 
YOMIURI (Page 4) (Full) 
February 8, 2008 
 
 
TOKYO 00000333  006 OF 013 
 
 
A government panel, which has been discussing a drastic reform of 
the Defense Ministry, is falling behind in working out a report of 
recommendations. The panel, chaired by Nobuya Minami, an advisor to 
Tokyo Electric Power Co., had initially planned to come up with a 
report in February. The panel report is now expected to be out 
around June. 
 
The panel was launched in November last year in the wake of former 
Administrative Vice Defense Minister Takemasa Moriya's bribery case 
and other scandals involving the Defense Ministry. The panel was 
expected to show a course of action for the Defense Ministry's 
reform in February. 
 
The panel, however, has so far met only four times. The panel's 
discussion has therefore yet to deepen. Moreover, Defense Minister 
Ishiba, in a Feb. 1 meeting of the panel, advocated integrating the 
Defense Ministry's bureaucracy and the Self-Defense Forces' 
respective staff offices. "We need to clear up what we've 
discussed," a government source said. "That's all we can do in 
February," the source added. 
 
9) LDP sets up panel on permanent legislation for SDF activities 
overseas 
 
YOMIURI (Page 4) (Full) 
February 8, 2008 
 
The ruling Liberal Democratic Party launched an intraparty panel 
yesterday to discuss permanent legislation for Japan to send the 
Self-Defense Forces on overseas peacekeeping missions. The panel 
will hold its first meeting on Feb. 13, with former LDP Vice 
President Taku Yamasaki presiding. 
 
10) Government concerned about Hill's statement rejecting linking 
abduction issue to delisting North Korea 
 
TOKYO SHIMBUN (Page 2) (Abridged) 
February 8, 2008 
 
U.S. chief delegate to the six-party talks Assistant Secretary of 
State Christopher Hill said that the issue of Japanese nationals 
abducted by North Korea must not be linked to the question of 
delisting North Korea as a state sponsor of terrorism. The 
government is taking his statement calmly, at least outwardly, with 
a senior Foreign Ministry official saying, "He did not say anything 
new." But given the fact that Hill made that statement in his 
testimony before Congress, the government is in fact is worried that 
it might lose leverage for resolving the issue. 
 
During the Japan-U.S. summit last November, President George W. Bush 
stressed that the United States "will never forget the abduction 
issue." Hill, too, indicated in his testimony that the United States 
would give to Japan as much consideration as possible. 
 
The six-party talks have stalled, with the North failing to present 
a complete list of its nuclear programs. This year, U.S. State 
Department Office of Korean Affairs Director Sung Kim has visited 
North Korea, and Wang Jiarui, head of the Chinese Communist Party's 
International Department, also held talks with North Korean leader 
Kim Jong Il. But the Japanese government thinks that nothing 
noteworthy has come from it. 
 
 
TOKYO 00000333  007 OF 013 
 
 
For this reason, the view is dominant that Hill's statement was 
designed to send a message to North Korea with the aim of breaking 
the impasse in the situation. 
 
Should the United States delist the North, that would deal a serious 
blow to Japan. 
 
The Japan-DPRK working group on diplomatic normalization to discuss 
the abduction issue has not met since last September. 
 
The delisting of North Korea would leave Japan with "carrots" only, 
such as lifting sanctions on North Korea and resuming energy and 
food aid to that country. Unless Japan reviews its pressure policy, 
it will have no cards to play. Tokyo therefore has no option but to 
keep urging Pyongyang to take action sincerely. 
 
FUKUDA DIPLOMACY 
 
11) Prime Minister Fukuda declares his resolve to make breakthrough 
on Northern Territories issue but his feelings were not in it 
 
SANKEI (Page 2) (Full) 
February 8, 2008 
 
Keiichi Takagi 
 
Prime Minister Yasuo Fukuda yesterday attended the National 
Convention for Calling for Return of Northern Territories held at 
the Kudan Kaikan Hall in Tokyo's Chiyoda Ward and declared his firm 
resolve to address the territorial issue in talks with Russia. 
Fukuda also emphasized the need for the government and the public to 
work together to settle the issue. A major diplomatic agenda in 
relations with Russia is how to restart the territorial 
negotiations, which have been on hold for the past six years during 
the Koizumi and Abe administrations, and to put them back on a 
negotiation track. In this sense, Fukuda indicated his intention to 
make a breakthrough on the Northern Territories issue, but his 
two-minute speech, given in a way of his simply reading from a 
script, was not sufficient for us to feel his "resolve." 
 
Coordination is underway in the government for Fukuda to visit to 
Russia during the Golden Week holidays in May and meet with 
President Putin just before he steps down. One Foreign Ministry 
official welcomed the invitation and noted, "It is an expression of 
the president's enthusiasm to resolve the outstanding territorial 
issue." But there is a pitfall in his soft approach. 
 
The Putin administration's fundamental strategy toward Japan remains 
unchanged: while posing as being willing to engage in the 
territorial talks, Moscow's ultimate desire is to seal the 
territorial issue permanently. One former cabinet minister of the 
ruling Liberal Democratic Party (LDP) made this sharp comment: "The 
Japanese Foreign Ministry overrates Russia's honey-coated words and 
is trying to cover its failure to act on the diplomatic front." 
 
In the Russian presidential election in March, first Deputy Prime 
Minister Medvedev, named by Putin as his preferred successor, will 
be certain to win the election. But many observers forecast that 
Putin will pull the strings behind the scenes, even after stepping 
down as president. 
 
At the national convention, Fukuda indicated he will hold talks with 
 
TOKYO 00000333  008 OF 013 
 
 
Russia's next president on the sidelines of the Group of Eight 
Summit in Lake Toya, Hokkaido in July and discuss the territorial 
issue. Although the Russian president will set foot for the first 
time on Hokkaido, to which the disputed four Northern Islands 
belong, Fukuda was silent on whether he as the host nation of the G8 
Toyako Summit would take up the territorial issue during the plenary 
session. 
 
According to a source familiar with Japan-Russia relations, there is 
a strong observation that Putin's outward soft attitude toward Japan 
is no more than a trick to prevent Japan from bringing up the 
territorial issue at the G8 Toyako Summit. But Fukuda appears to 
throwing away a good opportunity to work with other countries to put 
pressure on Russia on the territorial issue. 
 
In fact, Fukuda said in his book "Ikkoku wa Hitori o Motte Okori 
Hitori o Motte Horobu" (One country can rise with one person's 
efforts but one country can fall with one person's failure), which 
he coauthored and published in May 2005, that: "The only way to 
resolve the territorial issue (with Russia) is for both countries to 
discuss it. Other countries will never be involved in the issue nor 
can cooperation from other countries be expected." 
 
Apparently Russia has taken advantage of the Fukuda administration's 
"inability" to manage the divided Diet, where the ruling bloc 
controls the Lower House but the Upper House is under the opposition 
bloc's control. 
 
An aide to Fukuda spoke about Fukuda's dilemma, noting, "The current 
unstable political situation in Japan may give Russia a way out." 
But Fukuda's impassive attitude toward the territorial issue may 
give Russia the wrong message that Japan has no leeway to deal with 
the territorial issue. Fukuda can never be allowed to retreat to the 
situation that existed in the Koizumi and Abe administrations when 
it comes to diplomacy toward Russia. 
 
12) With technical cooperation in mind, Putin trying to woo Japan by 
inviting Prime Minister Fukuda to discuss territorial issue 
 
NIKKEI (Page 2) (Full) 
February 8, 2008 
 
Russian President Putin has begun to woo Japan by inviting Prime 
Minister Yasuo Fukuda to visit Russia before his tenure of office as 
president expires on May 7. Putin's ulterior motive is apparently to 
get technical cooperation from Japan in such areas as resource 
exploitation in East Siberia, a priority issue for Russia. But it is 
unclear whether tangible progress can be expected when it comes to 
the Northern Territories. 
 
Russia's unusually active approach to Japan 
 
"The President says he would like to meet directly with Prime 
Minister Fukuda to discuss such issues as the Northern Territories, 
Russian Vice Foreign Minister Losyukov told Deputy Foreign Minister 
Kenichiro Sasae during his visit to Japan early this month. A 
similar desire was revealed in Putin's written reply to Fukuda's 
personal letter handed by former Prime Minister Yoshiro Mori when he 
visited Russia late last year. 
 
According to a diplomatic source familiar with Japan-Russia 
relations, it is unusual for the Russian president to make a 
 
TOKYO 00000333  009 OF 013 
 
 
positive approach like this to the Japanese prime minister for a 
top-level dialogue. This is in stark contrast to the Koizumi and Abe 
administrations, when Russia was notably least interested in holding 
territorial negotiations with Japan. One Foreign Ministry official 
gave this analysis: "Mr. Putin has begun to seriously consider 
somehow moving forward the now sluggish relationship with Japan 
before he steps down as president." 
 
Russia's changing attitude entails a number of ulterior motives. One 
aim would be to obtain cooperation from Japan in the development of 
East Siberia. Russia is flourishing thanks to the high price of oil, 
but observers analyze that because of the delay in developing new 
oil and gas fields, the country would probably not be able to meet 
demand in the near future for oil or gas exports let alone their 
domestic consumption. Reportedly, Putin's real intention is to 
elicit financial and technical assistance from Japan in order to 
accelerate the speed of the development of East Siberia, which has 
been left almost untouched. 
 
Tokyo is well aware of Moscow's intention. Still, the Japanese 
government is mulling a plan for Fukuda to visit Russia at an early 
date. The reason is because Tokyo anticipates that Putin, even after 
stepping down as president, will retain latent powers. In the 
Russian presidential election slated for March, First Deputy Prime 
Minister Medvedev, named by Putin as his preferred successor, is 
certain to be elected. Given this, it is indispensable for Japan to 
maintain communications with Putin for the sake of territorial 
talks. 
 
What will happen to territorial talks remains uncertain 
 
The reality is, however, that although Putin "is concerned about the 
territorial issue, he is showing no signs of coming to terms with 
Japan in actuality," a senior Foreign Ministry official said. Vice 
Foreign Minister Losyukov told the ITAR-TASS news agency yesterday: 
"Both sides want to resolve the issue, but both lack understanding 
about the situation." 
 
Russia has been opposed to the United States' planned deployment of 
missile defense facilities in East Europe and its diplomatic 
offensive toward former Soviet Union member states. Moreover, there 
seems to be another ulterior motive of giving a warning to the U.S. 
by strengthening relations with Japan - an apparent attempt to drive 
a wedge in the Japan-U.S. alliance. 
 
"We must hold talks sooner or later," Fukuda said late yesterday and 
revealed his resolve to break the impasse in the territorial talks, 
but it is never easy to engage in horse-trading with Putin. 
 
DIET SCRAMBLE 
 
13) DPJ to submit budget bills to Diet, as road strategy did not 
turn out as DPJ planned 
 
MAINICHI (Page 5) (Full) 
February 8, 2008 
 
The Democratic Party of Japan (DPJ or Minshuto) decided yesterday to 
submit to the current Diet session four budget-related bills. The 
bills are based on the DPJ's manifesto for the next House of 
Representatives election, with the party attempting to demonstrate 
what kind of budget it will compile if it assumes the reigns of 
 
TOKYO 00000333  010 OF 013 
 
 
government. However, as a result of the fierce battle over a stopgap 
bill on revenues for road construction, the largest opposition 
party's strategy of pressing Prime Minister Yasuo Fukuda to dissolve 
the Lower House as soon as late March ended in failure. The DPJ was, 
therefore, forced to shift its strategy to a long-term frontal 
attack by steadily advocating its manifesto in Diet debate. 
 
Deputy President Naoto Kan explained the four counterproposals in a 
press conference yesterday: "The bills are to substantiate the whole 
picture of the (budget) that the DPJ has called for." 
 
The DPJ has focused on the gasoline tax in the current Diet session 
and had looked to abolish the provisional tax rate, which expires at 
the end of March, in order to force the government and ruling 
parties to cut gasoline prices. 
 
After reaching an agreement with the ruling coalition on the stopgap 
bill, DPJ President Ichiro Ozawa suggested that the Lower House 
would be dissolved in the fall or later. The DPJ was forced to 
substantially review its strategy. The DPJ included pledges similar 
to the four bills in its manifesto for last summer's House of 
Councillors election. It believes that unless it runs the 
government, the plans will not be brought to fruition. Submitting 
the bills to the Diet is preparatory work for the DPJ to draft a 
manifesto for the next Lower House election. 
 
A drastic change in the budgetary system is necessary for reform of 
the pension systems and agricultural policy. A bill to reform the 
tax structure for road projects, including ending the burden on 
local governments, would never be accepted by the government and 
ruling camp. 
 
Therefore, chances are slim that the four bills will be taken up in 
consultations on revising the government-sponsored bill, which the 
government and ruling bloc have called for. The DPJ plans to submit 
the four bills to the Diet in order to control the pace of 
consultations. Haruo Nakagawa, finance minister in the DPJ's shadow 
cabinet, commented: "We need to submit them to the Diet at the right 
time while watching the situation." 
 
14) DPJ to submit four budget-related bills to Diet to play up 
ability to hold political reins 
 
MAINICHI (Page 2) (Full) 
February 8, 2008 
 
The Democratic Party of Japan (DPJ) decided yesterday to submit four 
budget-related bills as its counterproposals to the government's 
FY2008 budget bill to the current Diet session. It will be the first 
time for the DPJ to present bills reflecting its views about the 
budget. The main opposition party is apparently aiming to play up 
its capability to assume the reins of government, with an eye on the 
next House of Representatives election. 
 
Prime Minister Yasuo Fukuda replied in a meeting of the Lower House 
Budget Committee yesterday: "The opposition camp should submit its 
counterproposals if it wants to revise (the government's budget 
bill). Since the opposition camp has yet to present its 
counterproposal, it is improper for it to demand a revision of the 
government's bill." The DPJ, though, is concerned that if talks on 
revising the bill start at an early date, the party could be caught 
in a trap set by the government and the ruling camp. The party 
 
TOKYO 00000333  011 OF 013 
 
 
leadership intends to decide on the timing for submission while 
carefully watching development in deliberations at the Budget 
Committee. 
 
The main bill among the envisioned four is a budget function 
conversion bill. The bill would define as priority policies the 
challenges the party set forth in its policy platform for the House 
of Councillors election last year, such as pension system reform, 
and pledge to secure funds to implement such policy tasks. 
 
A bill amending the Special Taxation Measures law would call for 
abolishing the current provisional gasoline and other road-related 
tax rates and lowering the preferential tax rates for small 
businesses, with the aim of reflecting its tax system reform outline 
released last year. 
 
A road tax system reform bill would call for scrapping the provision 
tax rates and placing the tax revenues into the general account 
budget and then would pledge to secure fiscal resources to cover the 
revenue shortfalls for local governments. A bill designed to make 
taxation transparent would be designed to review all the special 
taxation measures that the DPJ claim are preferential tax reduction 
measures for specified industries. 
 
Only the cabinet has the right to submit a budget bill under the 
Constitution. Under this situation, the DPJ so far has just 
publicized its views on the government's budget bills. 
 
However, the government and the ruling parties have criticized the 
DPJ's policy, focusing on fiscal resources and other issues, in the 
ongoing debate on the road tax system. In reaction, the main 
opposition party decided to present its counterproposals to the 
government's budget bill in the form of bills, based on the 
assumption that it will be able to assume political power. 
 
15) DPJ decides to submit bills on road tax system to Diet 
 
SANKEI (Page 5) (Full) 
February 8, 2008 
 
The Democratic Party of Japan (DPJ) decided yesterday to draft a 
plan that would include measures to scrap the current provisional 
gasoline tax rate and to place the tax revenues into the general 
account budget. The party plans to submit it to the current Diet 
session. 
 
In a joint meeting of the Road Tax System Reform Project Team and 
the Budget Research Committee, the DPJ confirmed that the envisioned 
draft would include: (1) a road tax system reform bill that would 
abolish the provisional gasoline tax rate and put the tax revenues 
into the general account, as well as to discontinue local 
governments' contributions to projects commissioned by the central 
government, like road and river projects, as a measure to secure 
local governments' fiscal resources; (2) a bill designed to make 
taxation transparent by verifying the actual state and effect of the 
current special taxation measures; and (3) a bill amending the 
Special Taxation Measures Law that would include the items the DPJ 
agrees on in the government's bill. The third bill would refuse 
extending the government's four proposals, including the provisional 
gasoline tax rate and the preferential capital gains tax. 
 
In the joint meeting, the DPJ also decided to submit a budget 
 
TOKYO 00000333  012 OF 013 
 
 
function conversion bill aimed to show its policy of budgetary 
compilation if the party takes over the reins of government. 
 
The DPJ will adopt these bills in a meeting of its "Next Cabinet" on 
Feb. 13. Regarding the timing for submission, the leadership will 
make a decision in a cautious manner. 
 
16) CO2 emissions cuts set under Kyoto Protocol: "Possible to 
achieve goal," notes joint report issued by Environment Ministry, 
METI; Additional measures to be looked into 
 
NIKKEI (Page 5) (Full) 
February 8, 2008 
 
The joint advisory council of the Environment Ministry and the 
Ministry of Economy, Trade and Industry (METI) has mapped out a 
final report aimed at achieving the goal of cutting greenhouse gas 
emissions as stipulated under the Kyoto Protocol. The report notes 
that the goal set under the pact could be achieved if the central 
government, local governments, and companies steadily implement 
measures to reduce CO2 emissions. The report will be released by the 
two ministries on Feb. 8. 
 
The specifics of the final report will be reflected in the 
government's program to achieve Kyoto Protocol targets, which is to 
be revised shortly, and adopted at a cabinet meeting in late March. 
The report notes that as a result of new statistics provided in the 
draft report released late last year, it would be possible to cut 
more than 37 million tons of carbon dioxide emissions if additional 
measures are taken, though implementing the existing measures alone 
would fall short of the target by 22-36 million tons. 
 
Of the 37 million tons, 21.3 million can be reduced through 
voluntary cuts by industry and national campaigns, such as the "cool 
biz" campaign. The government will consider additional measures by 
March, when it will revise the program. 
 
A Kyoto Protocol CO2 emissions cut campaign will start in April in 
Japan. 
 
17) U.S. economy could recover later this year: BOJ Deputy Governor 
Iwata hails interest rate cut; Replacements of governor, deputy 
governor could bring about policy change 
 
NIKKEI (Page 5) (Full) 
February 8, 2008 
 
Referring to the U.S. economy, Bank of Japan (BOJ) Deputy Governor 
Kazumasa Iwata during a press conference held in Kochi City 
yesterday said, "There is the possibility of the U.S. economy 
regaining a firm footing later in the year due to the effects of 
monetary and fiscal policies." He gave high scores to the quick 
response by the U.S. Regarding the expiration of the tenures of the 
BOJ governor and deputy governor on March 19, he noted, "I think the 
replacement of board members would bring about changes in 
decision-making on monetary policy." 
 
He also indicated his perception of the present state of the U.S. 
economy, noting that it is markedly slowing, He said, "Economic 
indicators are not so good." 
 
However, Iwata commented, "The U.S. government's fiscal policy will 
 
TOKYO 00000333  013 OF 013 
 
 
begin to shore up the economy in May through June. The U.S. has also 
lowered interest rates, which will begin to produce positive effects 
in the middle of the year." 
 
Regarding the BOJ's monetary policy, he said, "The BOJ adopts a 
method of gradually forming a consensus, respecting the views of 
nine Policy Board members, including the governor and the deputy 
governors." Then, referring to the selection of a new governor and a 
new deputy governor, Iwata said, "There could be changes if 
one-third of the Policy Board members are replaced." He then said, 
"It depends on who will be assigned." 
 
Stabilization of financial markets will take center-stage at the 
meeting of finance ministers and central bank governors from the 
Group of Seven (G-7) in Tokyo on Feb. 9. Commenting on this, Iwata 
said, "It may be a correct prescription that each country adopts the 
most appropriate measure, depending on the situation." 
 
18) Japan to sound out South Korea on early resumption of EPA talks, 
eyeing expanded coverage, including technical cooperation 
 
NIKKEI (Page 5) (Full) 
February 8, 2008 
 
Nikkei has learned that Tokyo has secretly sounded out Seoul on an 
early resumption of now-suspended talks on an economic partnership 
agreement (EPA). The government is considering expanding the 
coverage of cooperation and talks to include not only the scrapping 
of tariffs on agricultural and manufactured products but also the 
international standardization of manufactured goods and environment 
issues. It wants to resume talks South Korea, using president-elect 
Lee Myung Bak's assumption of office on Feb. 25 as the occasion. 
 
The government wants to resume talks after South Korea's general 
election in April. It hopes to obtain the ROK's agreement to restart 
at an early date. It also plans to expand the coverage of the accord 
to go beyond such conventional items as the scrapping of tariffs and 
the acceptance of workers. It is now considering which areas would 
be subject to such expanded cooperation. Industrial technology, 
energy-conserving technology, assistance to franchise chains in the 
services sector, a qualification system and the nurturing of small 
and medium-sized businesses are all up for consideration. 
 
Japan and South Korea started working-level talks in Dec. 2003. The 
two governments have so far held six rounds of talks. However, talks 
bogged down in Nov. 2004 over a disagreement on the scrapping of 
tariffs on agricultural, forestry and fishery products. 
President-elect Lee during a press conference in January said that 
South Korea should look into the possibility of signing an EPA with 
Japan and China in stages. He thus indicated enthusiasm for resuming 
the EPA talks. 
 
DONOVAN