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UNCLAS SECTION 01 OF 09 TOKYO 000707 
 
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 03/17/08 
 
INDEX: 
 
(1) Survey of top executives of leading companies: 23 PERCENT  see 
economy deteriorating; Many wary of strong yen, weak U.S. economy 
(Nikkei) 
 
(2) G-20 ends; New framework proposed for global warming dialogue; 
Idea of setting targets draws fire from developing countries; Japan 
expected to run into difficulties in handling matter (Nikkei) 
 
(3) Last-ditch battle over nomination for BOJ governorship to avoid 
creating vacancy (Nikkei) 
 
(4) Interview with Kunihiko Miyake, former minister at Japanese 
Embassy in Iraq: Japan benefited from SDF dispatch to Iraq; Japan 
secured U.S. confidence by sharing risk with other countries 
(Mainichi) 
 
(5) Australian prime minister enjoying high public support for 
anti-whaling posture; Makes light of Japan while placing importance 
on China (Yomiuri) 
 
ARTICLES: 
 
(1) Survey of top executives of leading companies: 23 PERCENT  see 
economy deteriorating; Many wary of strong yen, weak U.S. economy 
 
NIKKEI (Top Play) 
March 17, 2008 
 
The Nikkei yesterday released the results of a survey of 100 
presidents of major corporations. According to the result, those 
executives who replied, "The economy is deteriorating" reached 23.8 
PERCENT , three times higher than the 7.5 PERCENT  who held that 
view in the survey last December. The top corporate executives thus 
are increasingly alarmed about the sharp rise in the yen and the 
rapid slowdown of the U.S. economy. In the survey of 500 regional 
companies also carried out by the Nikkei, 30 PERCENT  of the top 
executives replied, "The economy has taken a turn for the worse." 
Regional companies are increasingly taking defensive actions to deal 
with the rising cost of raw materials that is squeezing corporate 
profits and dampening desires for increased capital investment. 
 
The survey of 100 top executives was conducted in mid-March, 
targeting presidents of leading domestic companies, including 
chairmen and bank presidents. The survey elicited responses from the 
leadership at 134 firms. The survey of 500 regional companies 
received replies from 422 top executives at leading regional 
companies, business establishments and groups. 
 
In the survey of 100 top executives, 23.8 PERCENT  of respondents 
chose one of the following views:  "The economy has taken a turn for 
the worse," "The economy is slowly deteriorating" or "The economy is 
rapidly deteriorating." A total of 7.5 PERCENT  in the survey 
conducted in December last year replied that the economy was 
deteriorating. The outcome of the survey this time indicates that 
corporate managers' feelings about the state of the economy have 
rapidly cooled down. The number of those who replied, "The economy 
is expanding" has dropped from the 64.2 PERCENT  in the previous 
survey to 27 PERCENT . 
 
The diffusion index (DI) for current economic conditions, calculated 
 
TOKYO 00000707  002 OF 009 
 
 
by subtracting the percentage of those who replied that the economy 
is deteriorating from the percentage of those who said that the 
economy is expanding, has plummeted from the 56.7 PERCENT  recorded 
in the previous survey to 3.8 PERCENT . The figure is well below 
45.5 PERCENT  posted in February 2005, which also saw a drop in the 
DI due to inventory adjustment in the information and technology 
(IT) sector. Top executives are most concerned about the movements 
of the U.S. economy. As the country or region facing the biggest 
threat of an economic slowdown, a total of 94.9 PERCENT  cited the 
U.S. The number of those who replied that the U.S. economy is 
deteriorating came to 76.9 PERCENT . 
 
Following the dollar's brief fall to the 99 yen level on March 13, 
100 top executives were asked additional questions, of whom 73 
responded. Asked about the currency's impact on operations in the 
event the yen appreciation trend that has exceeded the 100 to the 
dollar level continues, many respondents felt a strong sense of 
crisis, with 26 PERCENT  replying that the dollar below 100 yen 
would hurt earnings as a result of declining exports, with 52.5 
PERCENT  saying that corporate performances would deteriorate as a 
result of a domestic economic slowdown. It has been anticipated that 
the high-yen trend would ease high prices in raw materials. However, 
the number of those who replied, "Advantage of importing raw 
materials and finished products is greater (than the negative impact 
of the strong yen)," was no more than 12.3 PERCENT . 
 
Compared with the survey of 100 top executives, the survey of 500 
regional companies, of whom many are small businesses found 32.2 
PERCENT  who felt the economy is deteriorating, and 28.2 PERCENT 
seeing the economy as expanding. DI dropped to negative 4. DI in the 
previous poll, carried out in August 2007, stood at 52.9. 
 
According to region, DIs of all blocs thought the nation were in the 
plus column.  However, those of six blocs excluding the Tokai, 
Kinki, Chugoku and Shikoku blocs  moved into the minus column. The 
drop in the DIs of the Hokkaido and Koshinetsu blocs were pronounced 
due to a strong impact of high prices of raw materials. 
 
(2) G-20 ends; New framework proposed for global warming dialogue; 
Idea of setting targets draws fire from developing countries; Japan 
expected to run into difficulties in handling matter 
 
NIKKEI (Page 3) (Abridged slightly) 
March 17, 2008 
 
Cabinet ministers of the Group of 20 (G-20) wound up their three-day 
meeting on global warming on March 16, after discussing a new 
framework to succeed the Kyoto Protocol, which is to expire in 2012. 
In the meeting, the last of its kind, the member countries shared 
the need to establish a new arena for dialogue and discussion 
between industrialized and developing countries, such as China and 
India. 
 
Greenhouse gas emissions by the G-20 account for 80 PERCENT  of the 
global total. The participating countries agreed on the need to 
continue discussing the matter at the same table. As the chair of 
this year's G-8 Lake Toya Summit, Japan before long will make a 
proposal to relevant countries on establishing a new venue for 
dialogue with the aim of reaching an agreement at the Summit in 
July. 
 
Economy, Trade and Industry Minister Akira Amari, co-chair of the 
 
TOKYO 00000707  003 OF 009 
 
 
meeting, summed up the meeting, saying: "Firm unity has been 
confirmed between the industrialized and developing countries to 
work together to contribute to the global environment." Environment 
Minister Ichiro Kamoshita made a speech yesterday in which he 
announced a plan to hold an international meeting in May to study 
the sector-specific approach to set a common target for each 
industry, such as steel and cement, and for each field, such as 
office and household, to help reduce greenhouse gas emissions. 
 
But there still exists a wide gap in views between industrialized 
and developing countries. The sector-specific approach drew 
objections from developing countries, which fear that industries in 
their countries would be required to achieve energy efficiency on a 
par with industrialized countries and that they would be integrated 
into global targets that combine each country's projected 
sector-specific reduction target. 
 
There have been strong negative reactions to setting numerical 
targets from long before. In the G-20 meeting, advanced countries 
argued that certain levels of targets must also be placed on 
developing countries under a post-Kyoto framework, while China and 
India called for common but differentiated responsibilities. Their 
logic is that although they would accept certain responsibilities, 
industrialized nations should first reduce emissions ahead of them. 
 
The G-20 also exposed differences in views on financing. The clean 
development mechanism (CDM), now in force based on the Kyoto 
Protocol, is a system allowing industrialized countries to assist 
developing countries in technologies and funds. "It is easy on 
countries with large room for emission reductions," as a METI 
official put it. The Japanese government envisions reviewing this 
system to launch a mechanism giving assistance first to developing 
countries that are actively addressing global warming with the aim 
of encouraging competition among developing countries. But 
developing countries are calling for the continuation of the current 
system. 
 
The G-20 was the first international cabinet ministerial to discuss 
global warming since the 13th session of the Conference of the 
Parties to the United Nations Framework Convention on Climate Change 
(COP13), held last December in Bali, Indonesia. Looking back on the 
G-20 meeting, Environment Minister Kamoshita said: "Attendants 
expressed a variety of views, making clear differences in views." As 
host of this year's G-8 Summit, Japan is likely to find it difficult 
to bridge gaps in views. 
 
International standardization of EU emissions trading rules gaining 
momentum; Japan under pressure for swift response 
 
Commentary: The Tokyo metropolitan government has announced that it 
would join the International Carbon Action Partnership (ICAP) 
specifying a set of rules on greenhouse gas emissions trading, 
adopted under the leadership of the European Union (EU). An 
expansion of the ICAP membership is likely to accelerate the pace of 
the growing international carbon market, effectively giving a boost 
to the international standardization of the EU model. The Japanese 
government, which is studying its own system, now finds itself under 
pressure to respond to it speedily. 
 
ICAP is made up of countries and regions that have implemented or 
are actively pursuing the implementation of carbon markets through 
mandatory cap and trade systems. Japan is now only an observer of 
 
TOKYO 00000707  004 OF 009 
 
 
ICAP due to stiff resistance from steel and other industries about 
capping emissions. 
 
Environment Minister Kamoshita in a symposium on March 16 said: 
"Heavy industries will not always bring wealth to Japan. A certain 
type of cap will bring about technological innovation and 
competitiveness. We would like to make Japanese rules into 
international standards without following the EU-model." 
 
The Tokyo metropolitan government does not think it can immediately 
implement the emission trading system, with a senior official 
saying: "Joining ICAP does not mean abiding by the EU rules." 
Environmental protection ordinances must be reviewed, and rules 
inconsistent with those of other areas in Japan make it difficult 
for enterprises to map out their business strategies. 
 
Japan still can use the EU's know-how in designing its system. 
Former British Prime Minister Tony Blair described emission trade 
using the EU system as a global trend. Formally joining ICAP and 
actively taking part in discussion would be a shortcut to getting 
Japan's view reflected in work to establish international rules. 
 
9 industries set independent targets 
 
In order to meet greenhouse gas reduction targets set under the 
Kyoto Protocol, nine industries, such as school and broadcasting, 
have drawn up new independent action programs. Four industries, 
including supermarkets and convenience stores, will reduce a total 
of 300,000 tons of CO2 annually, increasing their targets from the 
existing independent programs. 
 
The programs will be announced at a joint council meeting today of 
the Environment Ministry and METI. 
 
The nine industries include private schools, commercial 
broadcasters, NHK (Japan Broadcasting Corporation), and cable 
television operators. Seven industries listed numerical targets, 
with commercial broadcasters aiming to increase energy efficiency by 
10 PERCENT  in fiscal 2010 from fiscal 2004 levels. 
 
Supermarkets and convenience stores, department stores, and 
construction machinery have raised their targets. 
 
(3) Last-ditch battle over nomination for BOJ governorship to avoid 
creating vacancy 
 
NIKKEI (Page 2) (Full) 
March 17, 2008 
 
The government made every possible effort to break the impasse over 
the issue of nominating a successor to Bank of Japan Governor 
Toshihiko Fukui, whose term of office expires on March 17. The 
Democratic Party of Japan (DPJ) and other opposition parties are 
adamantly opposed to the government's plan to promote BOJ Deputy 
Governor Toshiro Muto to become governor. Even if the government 
proposes an alternative to Muto, however, it will not be easy to 
gain approval from the opposition bloc. To break the impasse, some 
suggest having Kyoto University Professor Masaaki Shirakawa, whose 
nomination as BOJ deputy governor was approved in the two Diet 
chambers, serve as acting governor. Others propose extending the 
term of the incumbent governor for the time being, without 
presenting another nominee. 
 
TOKYO 00000707  005 OF 009 
 
 
 
(1) Possibility of submitting another nomination upon ascertaining 
DPJ response 
 
An increasing number of ruling party members have begun to say that 
the government may have to propose an alternative to Muto for the 
BOJ governorship, given the Democratic Party of Japan's (DPJ) tough 
stance. Opposition parties, which control the House of Councillors, 
have declared that they would not agree if the government resubmits 
the Muto plan. Prime Minister Fukuda has also begun to consider that 
it will be unavoidable to nominate another candidate. 
 
Appearing on a TV program yesterday, Liberal Democratic Party member 
Kaoru Yosano indicated a negative view about resubmitting the Muto 
plan, saying: "It is reckless to resubmit a plan that was once 
rejected in the Upper House." He also stressed the need for prior 
talks to be held with the opposition bloc, remarking: "We must hold 
negotiations with each party before coming up with a specific 
name." 
 
DPJ Secretary General Yukio Hatoyama hinted that the party might 
agree if the government nominated Asian Development Bank President 
Haruhiko Kuroda or Hiroshi Watanabe, an advisor to the Japan center 
for International Finance, both former vice finance ministers for 
international affairs. But it is difficult to judge whether this is 
Hatoyama's personal view or the party's collective opinion. If the 
prime minister easily gives consent on the DPJ proposal, he could 
give the impression that he is under the control of the DPJ and lose 
his grip on the party, as a result. 
 
It will not be easy for Prime Minister Fukuda, who has continued to 
say that Muto is the best choice to find another candidate at this 
stage. It has been reported that although Fukuda unofficially asked 
a person outside the bureaucracy to assume the governorship, the 
person declined the offer, citing the reason that a high decree of 
specialization is required for monetary policy. Aides to the prime 
minister reportedly were busily engaged in selecting a new candidate 
last night, too. 
 
(2) Possibility of Shirakawa serving as acting governor, with no 
alternative presented 
 
A close aide to Prime Minister Fukuda said: "The prime minister 
cannot easily give up on the plan. Since there was no other proper 
candidate, he nominated Mr. Muto." Government officers also said 
yesterday that the prime minister has not changed his mind. Even so, 
the DPJ, the largest party in the Upper House, remains tough in 
opposition to the Muto plan. 
 
A senior LDP member said last night: "There is the possibility that 
the Prime Minister's Office will not be able to nominate a new 
candidate for the governorship today." This remark is based on a 
scenario in which the government asks the ruling and opposition 
camps to take more time for the selection process to set a 
cooling-off period. In this case, it will become necessary to take 
some measures to avoid creating a vacancy in the governor's post 
after Fukui's term of office expires. 
 
To avoid creating a vacancy, some suggest revising the Bank of Japan 
Law to enable Fukui to continue to perform his duties until his 
successor is appointed. 
 
 
TOKYO 00000707  006 OF 009 
 
 
As the condition for allowing the incumbent governor to perform his 
duties even after the expiration of his term, the DPJ is expected to 
thrust before the government a pledge not to re-nominate Muto in the 
future. Even if a bill amending the said law is voted down in the 
Upper House, the government will be able to readopt the bill in the 
House of Representatives, based on the relevant provision in the 
Constitution. 
 
Some persons suggest the idea of letting Shirakawa serve as acting 
governor for the time being. In this case, too, the vacant post must 
be filled at least by the next monetary policymaking meeting 
scheduled for April 8. 
 
In the government, some propose having Shirakawa serve as acting 
governor and enacting a bill amending the Bank of Japan Law by an 
override vote in the Lower House, based on the 60-day rule, while he 
is in office as acting governor. Since this proposal is intended to 
leave the possibility of a "Governor Muto" by setting a provision 
that recognizes the Lower House's superiority for the appointment. 
But if this proposal is translated into action, the government and 
the DPJ will unavoidably clash head-on. 
 
(4) Interview with Kunihiko Miyake, former minister at Japanese 
Embassy in Iraq: Japan benefited from SDF dispatch to Iraq; Japan 
secured U.S. confidence by sharing risk with other countries 
 
MAINICHI (Page 6) (Full) 
March 16, 2008 
 
-- How do you see the governing of postwar Iraq? 
 
Miyake: When I went to Iraq after the war, I was surprised at what 
an U.S. responsible official told me: "We succeeded in the 
occupation of Germany and Japan. So, we will win here." But I 
thought that the U.S. would definitely fail with such thinking. The 
U.S. official, who was only in his twenties, said: "I will teach 
Iraq democracy." I wondered whether proud Iraqis would welcome such 
an attitude. I thought I had come to an unbelievable place. 
 
-- International opinion was divided on the Iraq war. 
 
Miyake: Opinion is divided on the Iraq war, depending on each 
country's internal situation, as well as the international 
situation. At that time, however, then Iraqi President Saddam 
Hussein's defiant attitude toward the international community had 
exceeded the tolerance level. The war itself was not wrong in the 
sense of forcing the former president out of power. But I think the 
postwar occupation of Iraq was a mistake because sufficient troops 
were not sent there, and there was no plan to run the country. 
 
-- Japan sent its Self-Defense Forces (SDF) personnel to the 
southern Iraq city of Samawah. 
 
Miyake: What Japan had to do was clear. With the economies of China 
and India growing fast, all eyes have been focused on energy 
security. To ensure a stable crude oil supply, it is only natural 
for Japan to support Iraq in rebuilding itself. Japan's economic 
assistance in the Iraq war (in 1991) was not appreciated. In that 
context, Japan gained much benefit from the small investment of 
dispatching SDF troops to Iraq. If Japan did not dispatch the SDF, 
its status would have been downgraded in the international 
community. 
 
TOKYO 00000707  007 OF 009 
 
 
 
-- What was changed by the SDF deployment? 
 
Miyake: The United States and other countries treated Japan as their 
true partner and provided us with intelligence, as well. I really 
felt the respect given Japan for sharing the risks with other 
countries; there was a difference from the past in the international 
community's treatment of Japan. 
 
Another important factor is that all SDF personnel returned home 
safely. Japan learned from the failure in World War II, during which 
the Japanese military acted recklessly. It proved, too, that the SDF 
is under civilian control, which led to gaining the public's 
confidence in the SDF. Japan should carry out this kind of SDF 
dispatch. But it will be difficult to do so due to the lack of 
political leadership. 
 
-- What is your view on the appropriateness of future dispatches of 
SDF troops overseas? 
 
Miyake: If Japan dispatches the SDF overseas, it would probably send 
them during an emergency. The reason East Asia has enjoyed peace for 
such a long time is that the causes of disputes were frozen because 
of the legacy of ideological confrontation during the Cold War 
period. In short, Japan has been in an easy situation. If tensions 
grow, however, public opinion would run ahead at high speed and 
mistakes would be made. In order to prevent such a situation, Japan 
needs to prepare for emergencies. There is nothing wrong with having 
a military capability, but how to use it is important. 
 
Kunihiko Miyake worked at the Japanese Embassy in Iraq for about two 
years since 1982. He left the Foreign Ministry in 2005 after serving 
in such posts as director of the Japan-U.S. Security Treaty 
Division, minister at the embassy in China, minister at the embassy 
in Iraq, and director general of the Middle Eastern and African 
Affairs Bureau. He is currently a visiting professor at Ritsumeikan 
University. 
 
(5) Australian prime minister enjoying high public support for 
anti-whaling posture; Makes light of Japan while placing importance 
on China 
 
YOMIURI (Page 9) (Full) 
March 14, 2008 
 
(Arai, Sydney) 
 
Some changes have been occurring in relations between Japan and 
Australia since the Labor Party assumed power in Australia last 
November. Prime Minister Kevin Rudd will make a round of visits to 
the U.S., European countries, and China in his first overseas trip 
after coming into office. He will not visit Japan, against the 
backdrop of the ongoing bilateral dispute over Japan's research 
whaling in the Southern Ocean. This decision also reflects the 
Australian government's new foreign policy of giving priority to 
China. 
 
Expectations growing in business world 
 
Rudd announced that he would visit Washington, New York, Brussels, 
Bucharest, London, and Beijing from March 27 through April 13. In 
China, he will meet President Hu Jintao and other Chinese officers 
 
TOKYO 00000707  008 OF 009 
 
 
in a bid to increase business chances in China for his country's 
firms in cooperation with the Australian business community. 
 
Australia and China have deepened their bilateral ties on the 
economic and security fronts. For Australia, Japan had long been its 
largest trade partner, but China captured the top position in 2007. 
The two countries' foreign ministers held their first strategic 
dialogue in February 2008, in which Australian Foreign Minister 
Smith voiced opposition to an initiative for holding a strategic 
dialogue among Japan, the U.S., Australia, and India, out of 
consideration to China. 
 
Prime Minister Rudd used to be a diplomat who once served in the 
Australian Embassy in China. Through this experience, he has 
established extensive personnel ties in China. He is also proficient 
in Chinese. His daughter is married to a Chinese-Australian, and his 
son studied in China. As it stands, he is closely connected with 
China. The Australian business world has placed high expectations 
for the prime minister's efforts to strengthen relations with 
China. 
 
Criticism as weak-kneed stance 
 
Prime Minister Rudd dispatched Foreign Minister Smith to Tokyo this 
January. Smith and Foreign Minister Koumura agreed to do their best 
to avoid the whaling issue from negatively affecting the bilateral 
relationship. A source connected to Japan-Australia relations said: 
"Should Prime Minister Rudd visit Japan, the whaling issue will 
inevitably be brought up in a meeting between Rudd and Prime 
Minister Fukuda. The two countries now share the view that they 
don't want to hold a bilateral summit for the time being." The 
effect of whaling issue on bilateral relations has become quite 
serious. 
 
In Australia, many people are strongly opposed to whaling 
operations. The ruling and opposition parties are both against 
whaling, and the former John Howard administration was no exception. 
However, Prime Minister Howard, who established "a honeymoon period 
with Japan," according to a Foreign Ministry source, as represented 
by his signing of a joint security declaration with the then 
Japanese prime minister, was labeled as "week-kneed toward Japan." 
That is because he gave priority to economic and security relations 
with Japan, without tackling the whaling issue head-on. 
 
The Rudd administration absorbed the deep-seated public 
dissatisfaction by dispatching vessels to watch Japan's whaling 
operations in the Southern Ocean, as well as by expressing a 
willingness to look into bringing the case to international court. 
The prime minister offered an historic official apology to the 
original inhabitants Aborigines. Dennis Shanahan, political editor 
of the Australia's national daily newspaper The Australian, said: 
"'The anti-whaling stance' and his 'apology' showed the effect of 
the change of government to the people." 
 
As a result, the latest public opinion survey conducted by the 
Australian set a record high of public support for Prime Minister 
Rudd at 73 PERCENT , while the rate of support for opposition leader 
Brendan Nelson hit a record low of 7 PERCENT . Prime Minister Rudd 
is now enjoying his "honeymoon with the people." 
 
Consideration to U.S. 
 
 
TOKYO 00000707  009 OF 009 
 
 
Given Australia's decision to withdraw about 500 of its 1,500 troops 
or so now being deployed in Iraq, there were views worrying about 
its impact on relations between the U.S. and Australia 
 
Nonetheless, in regular U.S.-Australia foreign and defense 
ministerial talks held in Australia on Feb. 23, an Australian 
representative emphasized that the Australia-U.S. alliance will 
continue to be the cornerstone of Australia's diplomacy and 
indicated that the government would dispatch more police troops to 
Afghanistan. By revealing these plans, the Rudd administration 
succeeded in reconstructing the relationship with the U.S., blowing 
off Washington's concerns. 
 
Australia is not a member of the North Atlantic Trade organization 
(NATO), but the prime minister will attend a summit meeting of NATO 
to be held in Bucharest during his visit there soon. Rudd is 
expected to underscore the need for NATO member nations to 
strengthen their involvement in Afghanistan. Australia has 
dispatched about 1,000 troops to Afghanistan. 
 
SCHIEFFER