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RUCNDT/USMISSION USUN NEW YORK 9826

UNCLAS SECTION 01 OF 13 TOKYO 001335 
 
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 05/15/08 
 
INDEX: 
 
(1) Japan chosen by China as the first country to send rescuers for 
victims of Sichuan earthquake (Mainichi) 
 
(2) Government coordinating dispatch of SDF to Sudan for PKO, with 
survey team traveling there possibly next month (Asahi) 
 
(3) U.S. Assistant Secretary of State Sullivan: Agreement on a 
long-term target for reducing emissions of greenhouse gases at an 
expanded summit meeting (Nikkei) 
 
(4) Government to offer low-interest yen loans totaling up to 500 
billion yen to developing countries over five years to cut 
greenhouse gas emissions (Nikkei) 
 
(5) Japan to set up new framework for dialogue with Africa with eye 
on China's rapid approach to Africa (Nikkei) 
 
(6) Association of governors hosting U.S. bases to ask government to 
review SOFA today (Ryukyu Shimpo) 
 
(7) Government informally decides to offer 1.3 billion yen in 
first-portion realignment subsidy to five municipalities (in 
Okinawa) in fiscal 2008 (Okinawa Times) 
 
(8) Interview with Masaaki Gabe, professor at University of the 
Ryukyus: No possibility of Marines coping with emergency (in and 
around Japan) (Ryukyu Shimpo) 
 
(9) U.S. military's leisure-purpose rental cars also toll free 
(Akahata) 
 
(10) Counting chickens, government agencies engaged in road revenue 
battle; Prime minister eyes improving national livelihood (Asahi) 
 
(11) Security and foreign investment restrictions: J-Power incident 
questions: Rise of protectionism in Europe, U.S.; Japan caught on 
horns of dilemma, intertwined with internationalization (Nikkei) 
 
(12) Review of new elderly healthcare system: High wall for securing 
fiscal resources to reduce burden on elderly (Tokyo Shimbun) 
 
ARTICLES: 
 
(1) Japan chosen by China as the first country to send rescuers for 
victims of Sichuan earthquake 
 
MAINICHI ONLINE NEWS (Full) 
May 15, 2008, 12:57 
 
Seiji Nishioka, Beijing 
 
The Chinese Foreign Ministry this morning announced that it would 
"accept emergency rescuers from Japan," although China until then 
had shown reluctance to accept foreign rescuers, for instance, from 
an international relief team, on the grounds of road conditions due 
to the recent powerful Sichuan earthquake. Countries around the 
world had offered assistance to China, but Japan has now chosen by 
China as the first country to send a disaster relief unit to that 
country. 
 
 
TOKYO 00001335  002 OF 013 
 
 
Given Chinese President Hu Jintao's visit to Japan early this month, 
Beijing's choice of Japan as the first country to send rescuers 
would be taken to mean that China not only has recognized Japan's 
broad experience in disaster relief activities but it also has 
attached importance to relations with Japan. 
 
According to the Chinese Foreign Ministry, China will announce in 
the days ahead that it will accept rescuers from other countries in 
addition to Japan. 
 
(2) Government coordinating dispatch of SDF to Sudan for PKO, with 
survey team traveling there possibly next month (Asahi) 
 
ASAHI (Page 1) (Excerpts) 
Eve., May 15, 2008 
 
The government has started coordinating the sending, possibly in 
June, a site survey team to the southern part of Sudan to determine 
the feasibility of dispatching Self-Defense Forces personnel there 
for United Nations peacekeeping operations (PKO). Following the end 
of over 20 years of hostilities there, the public security of the 
southern portion of the country is relatively stable. After 
determining whether the five principles of participating in PKO, 
such as the agreement of the country to accept the troops, the 
government will begin considering a specific plan. This was revealed 
by several government sources. The policy direction was reportedly 
set on May 13 at a meeting of three cabinet ministers: the chief 
cabinet secretary, foreign minister, and defense minister. 
 
Until now, although the Foreign Ministry has been positive about 
participation, some officials in the Defense Ministry have been 
reluctant to go along, expressing concerns about public security and 
the like. As a result of coordination within the government, it was 
judged necessary to have a stance of being directly involved in the 
peace building process prior to the Hokkaido Lake Toya G-8 Summit 
conference in July. The Defense Minister, as well, has concurred 
with the sending of a survey team. 
 
According to a concerned source, the survey team of approximately 20 
participants will consist of personnel from the Foreign Ministry, 
Defense Ministry, and International Peace Cooperation Headquarters 
secretariat in the Cabinet Agency. They will visit the UN's Sudan 
dispatch headquarters in the capital city of Khartoum, and the local 
headquarters in a city in the central portion of southern Sudan, as 
well as observe the situation of units sent by other countries. 
 
(3) U.S. Assistant Secretary of State Sullivan: Agreement on a 
long-term target for reducing emissions of greenhouse gases at an 
expanded summit meeting 
 
NIKKEI (Page 5) (Full) 
May 10, 2008 
 
Meeting with a Nikkei reporter on May 9, U.S. Assistant Secretary of 
State for Economic, Energy and Business Affairs Daniel Sullivan 
said, "I hope to see an agreement on a long-term target for reducing 
greenhouse-gas emissions" at a meeting on global warming that will 
be held among major emitters during the G-9 Summit meeting at Lake 
Toya, Hokkaido, in July. He expressed his expectations of the 
leadership of Japan, the host nation. On the issue of soaring food 
prices in the world, he expressed his view that mid to long range 
measures should be hammered out by advanced nations at the G-8 
 
TOKYO 00001335  003 OF 013 
 
 
Summit that would lead to increased production by developing 
countries. 
 
The assistant secretary serves as the sous-sherpa, assisting the 
Sherpa, who is the U.S. president's personal representative in the 
run up to the Lake Toya Summit. Regarding the follow-up framework to 
the Kyoto Protocol, which expires in 2012, he said, "The 
participation of all major economies is essential." He thought that 
such major emitters of greenhouse gases as China and India should 
make steady efforts to reduce emissions. On the long-range target, 
as well, he stated: "The United States is placing importance on a 
target that would have the participation of all major economies." 
 
However, based on the history of advanced industrialized countries 
having emitted most of the global-warming gases, he said that the 
principle should be respected of them taking more responsibility. 
The responsibility, he said, was something "held in common but 
distinct for each country." He mentioned that the U.S. is prepared 
to provide developing countries with financial and technical 
assistance for reducing emissions. He positively evaluated the 
"sector-specific approach," which promotes emission reduction based 
on industry and area. He said, "It is an extremely important means 
for reduction to be promoted in accordance with each country's 
situation." 
 
Regarding President Bush's target announced in April that would 
reduce growth of domestic emissions to zero by 2025, he called it a 
"pragmatic figure." But there has been a critical rebuttal from the 
EU and some countries that the target being set is too lax. 
 
Turning to the issue of soaring food prices, Assistant Secretary 
Sullivan asserted, "We should send a strong message to developing 
countries," by such means as assistance that disseminates technology 
to increase food production in developing countries and to improve 
crop varieties. He also made an appeal about the importance of 
reaching agreement in the Doha Round of the World Trade Organization 
(WTO). 
 
(4) Government to offer low-interest yen loans totaling up to 500 
billion yen to developing countries over five years to cut 
greenhouse gas emissions 
 
NIKKEI (Top Play) (Full) 
May 15, 2008 
 
The government has decided to launch a new yen-loan program to 
assist developing countries in Africa and Asia in fighting global 
warming. In the new program, yen loans will be offered at about half 
the rates of conventional aid loans normally given to developing 
countries. The government will provide up to 500 billion yen in 
total over the next five years as loans to countries actively taking 
steps to curb global warming. Japan will announce this plan at the 
Group of Eight (G-8) Summit (the Lake Toya Summit) in July in a 
drive to underscore its eagerness to support other countries' 
efforts to fight global warming. 
 
Typical 40-year yen loans have annual interest rates of 1 to 1.2 
PERCENT , depending on the recipient country. The new yen loans, 
however, are to have rates of 0.4 to 0.5 PERCENT . By lowering 
interest rates, Japan will reduce the burden on developing countries 
and urge them to proactively address the task of cutting greenhouse 
gas emissions. 
 
TOKYO 00001335  004 OF 013 
 
 
 
The government plans to offer the new loans for such alternative 
energy projects as wind and solar power generation, as well as for 
the installation of energy-saving equipment at power plants and 
forestation projects. It also intends to cover reservoir 
construction projects. 
 
Japan and Indonesia have already started discussing specific 
projects and loan amounts for the first offering. Japan has invited 
Indonesia to attend the Lake Toya Summit. It hopes to reach an 
agreement on providing loans when the leaders of the two countries 
meet on that occasion. The government expects to offer 20 to 30 
billion yen in loans for projects to construct geothermal power 
plants and to improve the energy efficiency of thermal power 
plants. 
 
Japan hopes to increase the number of countries eligible for the 
loans through talks with countries in Asia, Africa, and Latin 
America. It believes there is much potential demand for such 
projects. Nigeria and Guyana in South America are now among 
potential recipients for the yen loans. 
 
In the World Economic Forum in Davos in late January, Prime Minister 
Yasuo Fukuda proposed the initiative called the "Cool Earth 
Partnership," a fund mechanism worth 10 billion dollars to fight 
global warming. The yen-loan program is the first step of this 
mechanism. 
 
In negotiations on forming a new international framework following 
the 2012 expiration of the Kyoto Protocol, a leadership struggle is 
intensifying among major gas emitters, such as Japan, the United 
States, Europe, China, and India. The Japanese government hopes to 
turn the tide of international negotiations in its favor by making 
use of the new yen-loan program and increasing the number of 
countries supportive of Japan's plan. Japan's yen loans have so far 
been given mainly to Asia, but Japan wants to also extend loans to 
Africa and South America. 
 
As financial aid in combating global warming, Britain announced last 
year plans to provide developing countries with 800 million pounds 
(approximately 163 billion yen) over the next three years, and the 
U.S. government announced this January that it would disburse 2 
billion dollars (21 billion yen). Japan, the U.S. and Britain are 
planning to establish an environmental fund. The industrialized 
countries are thus aiming to display leadership while cooperating 
with each other. 
 
The government intends to boost yen loans, given that the nation's 
official development assistance (ODA) disbursements have been on the 
decrease. Owing to their booming economies, such main recipient 
countries as China, India, and Vietnam have smoothly paid back 
loans, so the outstanding balance of offered yen loans have been 
flat over the past several years. In part because it is possible to 
procure low-interest funds in Japan, the government thinks it 
unnecessary to take new budgetary steps. 
 
(5) Japan to set up new framework for dialogue with Africa with eye 
on China's rapid approach to Africa 
 
NIKKEI (Page 2) (Full) 
May 15, 2008 
 
 
TOKYO 00001335  005 OF 013 
 
 
The government will embark on creating a new framework for policy 
dialogue with African countries in order to strengthen relations 
with them. Japan will do so with an eye on rapid approaches by China 
and India to Africa. Those two countries apparently aim to obtain 
ample natural resources, including rare metals, from Africa. Japan 
will formally adopt the new framework at the upcoming session of the 
Tokyo International Conference on African Development (TICAD) in 
Yokohama City, which is to kick off on May 28. 
 
TICAD is an international conference co-sponsored by Japan, the 
United Nations and other organizations in order to support economic 
growth in Africa. It has been held once every five years since 1993. 
The upcoming conference will be the fourth. 
 
The new framework for dialogue with Africa that Japan will shortly 
set up is intended for working-level officials to check on a regular 
basis progress in Japan's aid policy toward Africa, as well as for 
Japan and Africa to have dialogue in a multilevel fashion. 
 
Japan plans to hold dialogue with Africa once a year, assuming that 
the African Union (AU) will participate in the dialogue. Japan 
intends to improve its assistance measures to Africa in line with 
requests from African countries by having more opportunities for 
dialogue with African countries, besides the forum of TICAD, which 
is held once every five years. 
 
The reason why Japan has now decided to step up its engagement in 
Africa is because of Africa's potential for economic growth and also 
because other countries of the world are paying attention to Africa 
for its abundant natural resources. Reportedly, China allocates 40 
PERCENT  or more of its economic aid budget to Africa and is rapidly 
increasing its influence there. China also has held once every three 
years an international conference of top leaders from African 
countries since 2000. 
 
The European Union (EU) and India also are doing the same. This past 
April, India hosted the first India-Africa summit, in which top 
leaders from 14 African countries took part. 
 
Tokyo is looking for ways to join hands with China on Africa. It is 
planning to hold working-level policy talks with China and South 
Africa on Africa. 
 
For Japan, political power of 53 African countries is also 
attractive. Given Japan's bid for a permanent seat on the United 
Nations Security Council, it is essential for it to garner votes 
favoring its bid from African countries. Lying behind Japan's 
ongoing efforts to build a continuing relationship with Africa are 
those elements. 
 
The upcoming TICAD is expected to have the participation of the 
heads of state from 45 countries, a figure double the number of 
those who came to the previous TICAD in 2003. Prime Minister Yasuo 
Fukuda is going to spare at least 20 minutes for talks with each 
leader. 
 
Japan also plans to chart an action plan that will list specific 
assistance measures. Included in the plan will be (1) doubling the 
production of rice in sub-Saharan African countries in 2018; and (2) 
building 1,000 elementary schools in five years. 
 
As to how much money Japan will use for assistance measures to 
 
TOKYO 00001335  006 OF 013 
 
 
Africa, coordination is underway. One idea floating in the 
government is to vastly increase the official development assistance 
(ODA), but a cautious view is still deep-seated in government 
officials, particularly in the Ministry of Finance. 
 
Policies toward Africa by Japan and China 
 
 Japan China 
Economic cooperation 10.5 PERCENT  directed for Africa (in 2005) 
Reportedly, 44 PERCENT  directed for Africa. 
Dispatch of personnel to PKOs No dispatch 1,273 personnel 
dispatched 
International conferences TICAD held once every five years since 
¶1993. The Forum on China-Africa Cooperation held once every three 
years since 2000. 
Number of embassies Have embassies in 24 countries Have embassies in 
47 countries 
VIPs' visits to Africa (within the past two years)  In 2006, then 
Prime Minister Junichiro Koizumi visited Ethiopia and Ghana. 
President Hu Jintao visited three African countries in 2006, and 
eight countries in 2007. Premier Wen Jiabao visited Africa in 2006. 
 
(6) Association of governors hosting U.S. bases to ask government to 
review SOFA today 
 
RYUKYU SHIMPO (Page 2) (Full) 
May 15, 2008 
 
Kanagawa Governor Shigefumi Matsuzawa, chairman of the association 
of the governors of 14 municipalities hosting U.S. military bases, 
and Okinawa Governor Hirokazu Nakaima, vice chairman, will visit the 
Prime Minister's Official Residence this afternoon to deliver a 
letter calling for reviewing the Status of Forces Agreement (SOFA). 
 
The letter also calls for establishing a regional special committee 
composed of representatives from the 14 municipalities in the 
Japan-U.S. Joint Committee. 
 
On April 4, in reaction to a taxi driver killed by a U.S. Navy 
seaman in Yokosuka City, Kanagawa Prefecture, Chairman Matsuzawa and 
other representatives of the association urgently asked the 
government verbally to review the SOFA. 
 
Today, the association will ask the government in a written form to 
review the SOFA and to establish a regional special committee, 
reacting to a series of incidents involving U.S. soldiers, such as 
the rape of a schoolgirl in Okinawa and the case in Yokosuka,. But 
the government has continued to say that the way the SOFA is applied 
should be improved. 
 
(7) Government informally decides to offer 1.3 billion yen in 
first-portion realignment subsidy to five municipalities (in 
Okinawa) in fiscal 2008 
 
OKINAWA TIMES (Page 2) (Full) 
May 15, 2008 
 
Tokyo 
 
Informally outlining the first portion of fiscal 2008 subsidies to 
be offered to affected municipalities in accordance with their level 
of cooperation on the realignment of U.S. forces in Japan, the 
 
TOKYO 00001335  007 OF 013 
 
 
government decided by May 14 to inform the affected municipalities 
of its decision. Specifically, the government has informally decided 
to provide 6.168 billion yen to 38 municipalities across Japan. As 
for Okinawa, the government will offer a total of 1.295 billion yen 
to five municipalities for the planned relocation of Futenma Air 
Station, the joint use of Camp Hansen with the Ground Self-Defense 
Force, and the relocation of Naha Naval Port facilities. 
 
The amount includes 970 million yen to the city of Nago, the Futenma 
relocation site, and 160 million yen to the village of Ginoza. 
Following the start of an environmental impact assessment, the 
government has decided to offer 25 PERCENT  of the maximum amount to 
be paid when the replacement facility is completed. Additional 
amounts are expected to be paid in the informal second portion. 
 
The government in March lifted the freeze on subsidies to Nago and 
Ginoza saying, "We have been able to obtain their understanding and 
cooperation." The government is also expected to pay 460 million yen 
(397 million yen to Nago and 67 million yen to Ginoza) for fiscal 
2007 that have yet to be implemented. 
 
Regarding the GSDF's joint use of Camp Hansen, the government has 
also informally decided to offer 85 million yen to the village of 
Kin, 33 million yen to the village of Onna, and 20 million yen to 
Ginoza. Joint use of and drills at (Camp Hansen) started in March. 
Regarding this as the "completion of the realignment," the 
government is expected to pay the maximum amounts. The subsidies to 
the three municipalities are expected to total 200 million yen for 
fiscal 2008 in the end. 
 
Additionally, the government has informally decided to extend 26 
million yen to the city of Urasoe which has announced to accept the 
Naha Naval Port replacement facilities. In the end, the amount is 
expected to be 37 million yen, the same as that of the previous 
year. 
 
(8) Interview with Masaaki Gabe, professor at University of the 
Ryukyus: No possibility of Marines coping with emergency (in and 
around Japan) 
 
RYUKYU SHIMPO (Page 3) (Full) 
May 15, 2008 
 
Interviewer: Takumi Takimoto 
 
Even after the reversion of Okinawa to Japan, U.S. bases have 
remained in Okinawa on the grounds of the Japan-U.S. Security 
Treaty. The Ryukyu Shimpo interviewed University of the Ryukyus 
Prof. Masaaki Gabe of international politics about prospects for the 
Japan-U.S. Special Action Committee on Okinawa (SACO) and the U.S. 
military transformation centering on the return of the site of the 
Futenma Air Station to Okinawa. 
 
-- (The Japanese and United States governments) have continued to 
emphasize the military importance of the U.S. bases in Okinawa in 
terms of dealing with a threat of North Korea. 
 
Gabe: Speaking of examples in the Korean War, the importance of the 
bases in Okinawa was found not in ground troops but in air bases. Of 
the 12,000 ground U.S. troops in Okinawa at the time, 3,000 were 
sent to the Korean Peninsula. The full number of the Marines 
stationed in Okinawa is supposed to be 18,000 but the actual number 
 
TOKYO 00001335  008 OF 013 
 
 
is some 12,000. Should the Marines be sent (to the peninsula), the 
number would be 3,000 or so. Such a number could be transported 
directly from Guam or Hawaii (to the peninsula). Given this, I think 
it is improper to say that U.S. bases in Okinawa will play an 
important role, should war break out on the Korean Peninsula. 
 
-- Has the focus shifted from SACO to the U.S. military 
transformation? 
 
Gabe: Linked to America's policies toward Iraq and Afghanistan, the 
way troops are trained and deployed has now been significantly 
changed. Reflecting this change, the U.S. military transformation is 
going on and in that process, a plan to transfer (the Marines in 
Okinawa) to Guam has emerged. In Guam, a facility that can 
accommodate all functions of the Yokosuka, Sasebo, and Okinawa bases 
will be constructed. The U.S. forces' operations seem to be 
changing. 
 
-- What do you think the U.S. bases in Okinawa mean to both the 
Japanese and U.S. governments? 
 
Gabe: For the U.S., its bases (in Okinawa) have served as an 
important device to put the Japanese government under its control. 
Meanwhile, the Japanese government appeared at the beginning to be 
placating Okinawa under the strength of money in dealing with the 
base issue, but in the process, money has become the only means to 
maintain the bases in Okinawa. In order to get out of this 
situation, (the Japanese government) is spending money in a more 
business-like manner, as seen in providing Okinawa with subsidies in 
return for cooperation on the U.S. force realignment plans. 
 
-- What do you think will happen to the presence of the U.S. Marines 
in Okinawa? 
 
Gabe: Since the 1996 SACO agreement, the U.S. forces have decided to 
trim its Marine Corps' bases in Okinawa. The planned runways of an 
alternative facility for the Futenma Air Station will be short and 
their area will be half the current area. The necessary facilities 
have been downsized. This move perhaps reflects the U.S. thinking 
that keeping helicopters in Okinawa would be enough since the 
Marines in Okinawa no longer engage in strategic transport. The 
Marines in Okinawa are moving in the direction of downsizing. This 
means that in Okinawa, the Marine Corps will no longer deal with 
emergencies. 
 
(9) U.S. military's leisure-purpose rental cars also toll free 
 
AKAHATA (Page 15) (Full) 
May 15, 2008 
 
The U.S. military issues certificates for free use of toll highways 
even for vehicles rented on base by personnel for leisure. The U.S. 
Yokota Air Base last month erased its website description showing 
such a fact. It was shortly after Satoshi Inoue, a legislator of the 
Japanese Communist Party, took up this problem in an April 17 
meeting of the House of Councillors Foreign Affairs and Defense 
Committee. 
 
The U.S. military has deleted advertisements and agreements for 
rental cars, such as: "If you pay for a car you rent, you don't have 
to pay tolls for almost all highways in Japan." The U.S. military 
issues toll-free certificates even for leisure-purpose rental cars. 
 
TOKYO 00001335  009 OF 013 
 
 
This even goes against the purport of the Japan-U.S. Status of 
Forces Agreement, under which the Japanese government shoulders 
highway tolls for U.S. military vehicles for "official business" 
only. 
 
Inoue pursued this problem again before the committee in its May 13 
meeting. Yoshiyuki Jibiki, director general of the Local Cooperation 
Bureau at the Defense Ministry, admitted to the website description. 
He stated that the Defense Ministry has inquired of U.S. Forces 
Japan about whether toll-free certificates are issued for rental 
cars. "If they are suspected of using the certificate against the 
purport of the Japan-U.S. Status of Forces Agreement," he replied, 
"we will have to respond to this matter in an appropriate manner." 
 
Inoue stressed, "I can't say they have only to erase their website's 
description so it cannot be seen in the public eye." Foreign 
Minister Masahiko Koumura replied, "I will ask about the facts, and 
then we will make efforts so it will be used in an appropriate 
way." 
 
Inoue asserted: "If you let them use it even for leisure-purpose 
rental cars, and if there is an accident or a crime on their way, 
the U.S. military may hold them because they were on duty. This is 
the question of how to use the taxpayers' money, so the government 
should take resolute action." 
 
(10) Counting chickens, government agencies engaged in road revenue 
battle; Prime minister eyes improving national livelihood 
 
ASAHI (Page 4) (Excerpts) 
May 15, 2008 
 
The government has decided to free up road-related tax revenues for 
general spending starting in fiscal 2009. A fierce road-revenue 
battle is already underway. Prime Minister Yasuo Fukuda indicated 
that road revenues would be spent for the environment, the declining 
birthrate, and other areas. Government agencies involved in those 
areas are busy counting their chickens before they are hatched. 
Liberal Democratic Party lawmakers with vested interests in the road 
industry are on the defensive. The Finance Ministry fears that the 
spending-cut policy might collapse. 
 
New Komeito Deputy Representative Toshiko Hamayotsu, calling on 
Prime Minister Fukuda yesterday, present him with a set of policy 
proposals, such as establishing comprehensive consultation counters 
for women and a one-year preschool free education system. Hamayotsu 
also asked the prime minister to spend a portion of the road 
revenues on them. 
 
It was the prime minister himself that first mentioned using the 
road revenues for improving the people's livelihood. 
 
In a press conference in late April, the prime minister said: "There 
is a lack of pediatricians. The emergency medical system and higher 
education must be improved. Solar energy and fuel cells must be 
developed. There are a plethora of tasks. We are going to free up 
the road revenues to spend them for improving the people's 
livelihood." He also expressed his desire to use part of the 
revenues for improving the newly introduced medical system for the 
elderly, which is drawing fire from the public. 
 
Chief Cabinet Secretary Nobutaka Machimura, too, indicated in a 
 
TOKYO 00001335  010 OF 013 
 
 
press conference in Sapporo on May 11 that the government was 
searching for ways to use part of the road-related tax revenues to 
build a Shinkansen bullet-train line in Hokkaido. Machimura was 
asked by reporters the following day if a Shinkansen program falls 
under "national livelihood." 
 
The eagerness of Fukuda and Machimura has begun charging up the 
Kasumigaseki bureaucratic district. Government agencies that are 
responsible for policies with Fukuda's seals of approval are 
particularly in high spirits. 
 
A senior official of the Ministry of Economy, Trade and Industry 
(METI) expressed his hope for more funds for such sectors as solar 
energy and fuel battery. 
 
The government stopped providing household solar cell subsidies in 
fiscal 2005, and Japan was immediately displaced by Germany, giving 
up its world's No. 1 position in photovoltaic generation. METI is 
considering support measures, including the reinstatement of the 
subsidies, with the road revenues in mind. 
 
The Ministry of Health, Labor and Welfare (MHLW), which is 
responsible for healthcare and the declining birthrate, is also 
highly responsive to the government's policy to free up road-related 
taxes. MHLW is hoping to use extra funds for increasing the number 
of medical students, an effective and expanded use of nurses and 
midwives, and improving treatment of female doctors. 
 
The size of funds that can actually be used for improving the 
everyday lives of the people is not known. On May 13, the government 
adopted a cabinet decision that incorporated its policy of building 
highways as necessary. The size of funds for improving national 
livelihood depends on how far the road budget can be curbed. 
 
According to the government's basic policy guidelines for fiscal 
2006, public works spending must be reduced 1 PERCENT -3 PERCENT  in 
a five-year period from fiscal 2007. The spending was slashed 3 
PERCENT  in 2007 and 2008. In order to squeeze out funds for 
improving the national livelihood, the spending must be slashed over 
3 PERCENT . 
 
The dominant view in the government and ruling parties is that of 
the road-related revenues, only the "portion for expanded use" that 
covers road projects other than road construction can be used for 
improving national livelihood. 
 
In the fiscal 2008 state budget, the road construction budget 
amounts to 3.3 trillion yen, including 400 billion yen in the 
portion for expanded use to cover lowering expressway tolls and 
interest-free loans. A fierce battle is expected in fiscal 2008 
among government agencies over the expanded-use portion and some 500 
billion yen in the general account. 
 
(11) Security and foreign investment restrictions: J-Power incident 
questions: Rise of protectionism in Europe, U.S.; Japan caught on 
horns of dilemma, intertwined with internationalization 
 
NIKKEI (Page 5) (Full) 
May 15, 2008 
 
A British hedge fund's bid to increase its stake in J-Power has 
caused a tough issue of how to strike a balance between promotion of 
 
TOKYO 00001335  011 OF 013 
 
 
foreign investment and foreign investment restrictions for security 
reasons. Promoting inward foreign direct investment is one of the 
pillars for Japan's growth strategy. However, guidelines for to what 
extent the door to foreign companies can be open in areas involving 
national interests are not clear. There are signs of protectionist 
moves aimed at defending domestic companies from takeover bids 
spreading in Europe and the U.S. The way regulations should be 
introduced in the age of globalization is being questioned. 
 
In Washington, the Committee on Foreign Investment in the United 
States (CFIUS), chaired by the secretary of the treasury, in late 
April released new screening guidelines targeting foreign companies 
planning to acquire U.S. firms, based on the notion that there is a 
possibility of screening even a takeover bid involving a 10 PERCENT 
stake after acquisition. 
 
Seeking to check oil-producing countries 
 
The previous guide for examining takeover bids was that such 
involving a stock-holding ratio of 10 PERCENT  should be subject to 
screening from the perspective of security. However, the guideline 
the U.S. has introduced this time is so severe that it covers 
takeover bids involving stakes below 10 PERCENT , as well. Many 
market insiders conjecture that the new U.S. guidelines were 
intended to check China and oil-producing countries, which are 
increasing their presence. 
 
The CFIUS in 1988 began screening foreign companies' plans to 
acquire U.S. firms, based on the Exon-Florio Provision, which was 
added to the Defense Production Act. The Provision is feared as 
"super power," because it targets all industries. 
 
It is said that the only takeover bid that was banned in compliance 
with the Provision was a Chinese company's bid to acquire an 
aircraft parts manufacturer in 1990. One government source said, 
"There have been many cases in which foreign companies gave up on 
their plan to acquire U.S. companies in advance with the Provision 
serving as a major deterrence." 
 
The true motive of the U.S. strengthening its screening guidelines 
is not known. It is ironical that even the U.S., which is going 
ahead of Japan in terms of the solidness of its M&A market, are 
trying to refine the last resort to close the country. 
 
In Europe, border-crossing corporate reorganization moves are under 
way in the energy field. The representative case is seen in Spain. 
German and Italian companies joined in a race to buy out Endesa, a 
leading energy company in that nation, in a bid to grab an 
opportunity for growth. 
 
When Gas Natural, a leading Spanish gas company, launched a TOB, E. 
ON AG, a leading German energy company, also proposed a take-over 
bid. Furthermore, Enel, a leading Italian energy company, also took 
part in the acquisition race in alliance with a Spanish company. 
 
In contrast, European countries are increasingly alert to foreign 
access from outside the region. The European Commission last fall 
toughened regulations on the entries of companies from outside the 
region in the electric power and gas fields. Kunihiro Tokai?a fellow 
at the Japan Electric Power Information Center (JEPIC), said, 
"European countries, which are aiming to form an integrated market, 
have adopted moderate regulations within the region. They have now 
 
TOKYO 00001335  012 OF 013 
 
 
begun taking into consideration foreign companies outside the 
region, such as Gazprom of Russia." 
 
Drifting principle 
 
The principles of European countries and the U.S. are drifting, as 
they are taking pains in balancing market opening with imposing 
regulations for the sake of security. Behind the move is that the 
state-run companies of emerging and resource-rich countries are 
increasing their presence in the M&A market on the strength of ample 
funds. As the economy further globalizes, each country has to become 
aware of its national interest. 
 
However, the Children's Investment Fund (TCI), which was made the 
target of Japan's investment restriction, is a British investment 
fund. Japan's ratio of inward direct investment to GDP is the lowest 
among leading countries. Under such a circumstance, is it possible 
to discuss such on the same plane as the situation in Europe and the 
U.S.? 
 
Commissioner Mandelson of the European Commissioner (EC) responsible 
for trade affairs met with Economic, Trade and Industry Minister 
Amari in late April. He said that he had no intention of bringing up 
the case this time as a diplomatic issue. However, he drove the 
point home, saying, "I hope Japan's investment environment will 
improve." 
 
(12) Review of new elderly healthcare system: High wall for securing 
fiscal resources to reduce burden on elderly 
 
TOKYO SHIMBUN (Page 2) (Full) 
May 15, 2008 
 
The government and ruling parties are now been seriously reviewing 
the newly introduced medical service system to which 13 million 
people aged 75 and older contribute. Opposition parties plan to 
submit to the Diet a bill abolishing this healthcare system this 
month. The government and ruling coalition have no plan to change 
the system but instead intend to appease the criticism being leveled 
by the elderly population by improving the system to reduce their 
burden. 
 
One of the measures being considered is to continue a system to 
reduce and exempt insurance premiums of approximately 2 million 
elderly persons who joined corporate health insurance societies 
supported by their children. Under the current medical system, the 2 
million people are exempted from paying their insurance premiums 
until September but then, from October, they will have to pay 10 
PERCENT  of the original premiums for about six months. So, the 
government and ruling camp will look into the possibility of 
extending the reduction and exemption program. 
 
Another issue up for consideration is to improve burden-reduction 
measures for low-income elderly persons. Although the Ministry of 
Health, Labor and Welfare (MHLW) explained that the burden on the 
low-income elderly would be lowered, there are many low-income 
persons whose insurance premiums were raised. So, the public's 
backlash against the medical service system has grown fierce. 
 
Insurance premiums consist of an income levy and a per capita levy. 
Under the present system, an income levy and a per capita levy on 
the annual income by a husband are as follows: 
 
TOKYO 00001335  013 OF 013 
 
 
 
Annual income earned by husband Income levy Per capita levy 
Up to 1.53 million yen  None 30 PERCENT 
Up to 1.68 million yen Based on income 30 PERCENT 
Up to 1.925 million yen Based on income 50 PERCENT 
Up to 2.38 million yen  Based on income 80 PERCENT 
 
The idea that has been floated involves increasing the number of 
people whose burden would be reduced by raising the threshold of 
annual income. 
 
Some in the ruling camp have called for entrusting the unpopular 
withholding of medical insurance premiums from the pension benefits 
to municipalities. However, since the local government's side is 
reluctant, it will likely be difficult to realize that idea. 
 
It is certain that calls will grow for re-freezing a hike in medical 
fees paid by people aged 70-74 at medical institutions. An increase 
of the medical fees from 10 PERCENT  to 20 PERCENT , which had been 
scheduled to be implemented in April, was suspended for one year. 
The government and ruling bloc will look for the possibility of 
extending the suspension for another one year. 
 
However, it is difficult to secure fiscal resources for lightening 
both burdens on those 75 and over and on those 70-74. In a 
supplementary budget for fiscal 2007, a total of 172 billion yen was 
earmarked: 45 billion yen for reducing and exempting insurance 
premiums of about 2 million people, who previously joined corporate 
health insurance societies, and 127 billion yen for freezing the 
raise in medical fees paid by those 70-74 at hospitals. 
 
In addition to those extensions, should burden-reduction measures be 
expanded to low-income earners, it remains to be seen whether 
effective measures can be set forth to quite down criticism given 
the limited fiscal resources. 
 
DONOVAN