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UNCLAS SECTION 01 OF 13 TOKYO 001600 
 
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 06/12/08 
 
 
Index: 
 
1) Top headlines 
2) Editorials 
3) Prime Minister's daily schedule (Nikkei) 
 
North Korea problem: 
4) North Korea nuclear facility used Japanese pumps obtained 
illegally via Taiwan, IAEA discloses  (Yomiuri) 
5) In first day of formal talks with DPRK, Japanese delegate asks 
for return of JAL highjackers  (Asahi) 
6) Japan-North Korea talks to focus on abduction issue today  (Tokyo 
Shimbun) 
7) - North Korea could be readying a reply on the abductions, aimed 
at removing its name from U.S. terror-sponsoring list  (Tokyo 
Shimbun) 
 
Diet turmoil: 
8) For the first time, the opposition-controlled Upper House passes 
a censure motion against a prime minister, bring Diet business to a 
sudden halt  (Mainichi) 
9) Prime Minister Fukuda after censure vote says that he and the 
Japanese people are the "biggest victims"  (Yomiuri) 
10) Text of the Upper House censure motion against the prime 
minister  (Yomiuri) 
11) DPJ head Ozawa's tactic of using censure motion to force Diet 
dissolution fizzles, although it deals a heavy body blow to the 
ruling party  (Tokyo Shimbun) 
 
12) Japanese Communist Party (JCP), which opposed the censure 
motion, pursues the Democratic Party of Japan for passing it "at an 
inappropriate time"  (Asahi) 
13) Only one party-heads debate occurred in this Diet session, with 
Ozawa refusing to engage Fukuda on the 11th, the day his party filed 
censure motion  (Yomiuri) 
14) Next Diet session to start in state of turmoil (Asahi) 
 
15) Private panel to the government reports that Japan should 
welcome foreign investment by introducing a sovereign wealth fund 
(Nikkei) 
 
Articles: 
 
1) TOP HEADLINES 
 
Asahi, Mainichi, Yomiuri, Nikkei, Sankei, Tokyo Shimbun & Akahata: 
Censure motion against Fukuda approved for the first time 
 
Nikkei: 
Japan Post to commission management of postal offices to private 
firm Secom 
 
2) EDITORIALS 
 
Asahi: 
(1) Censure motion against prime minister: Parties need to be ready 
for the day to elicit the will of the public 
(2) Court's ruling against loan sharks: Cut off financial sources 
for crime syndicates 
 
Mainichi: 
(1) DPJ should not fetter itself by censure motion 
 
TOKYO 00001600  002 OF 013 
 
 
(2) Supreme Court's ruling can be used as weapon to eliminate loan 
sharks 
 
Yomiuri: 
(1) For what purpose was the censure motion approved? 
(2) Risks underlying international division of labor 
 
Nikkei: 
(1) How do we take the first approved censure motion against the 
prime minister? 
(2) FRB officials' move to defend dollars will be put to the test 
 
Sankei: 
(1) Unproductive DPJ's confrontational stance 
(2) DPRK's anti-terrorism statement: It's dangerous to hurriedly 
delist it as state sponsor of terrorism 
 
Tokyo Shimbun: 
(1) Significance of censure motion 
(2) Daily part-timers should be banned 
 
Akahata: 
(1) Censure motion against Fukuda approved: Drive the prime minister 
into tight spot with debate and public opinion 
 
3) Prime Minister's Official Residence (Kantei) 
 
Prime Minister's schedule, June 11 
 
NIKKEI (Page 2) (Full) 
June 12, 2008 
 
09:20 
Arrived at the Kantei. 
 
10:01 
Upper House plenary session. 
 
10:17 
Met with Vice Health, Labor and Welfare Minister Erikawa at the 
Kantei. 
 
11:13 
Met with LDP Reform Implementation Headquarters chief Takebe, 
followed by former Secretary General Nakagawa. 
 
12:08 
Party State Strategy Headquarters debrief session. 
 
13:39 
Met with former General Council Chairman Horiuchi. 
 
14:14 
Party Reform Implementation Headquarters plenary session. 
 
15:04 
Met with Nobuo Tanaka, director   general of the IEA Secretariat. 
Then videotaped a message for the East Asia Conference under the 
World Economic Forum. 
 
16:01 
Upper House plenary session. 
 
TOKYO 00001600  003 OF 013 
 
 
 
17:19 
IT Strategic Headquarters meeting at the Kantei. 
 
18:26 
Dined with former U.S. Ambassador to Japan Baker and former Finance 
Minister Shiokawa at French restaurant in Ginza. Tokyo Stock 
Exchange Chairman Taizo Nishimuro was present. 
 
20:47 
Met with members of "group of junior, mid-ranking and like-minded 
lawmakers who support Prime Minister Fukuda," including Lower House 
members Chuko Hayakawa and Satsuki Katayama, at Toranomon Pastoral 
Hotel. 
 
21:39 
Arrived at the official residence. 
 
4) Japanese parts used at N. Korean nuclear facility: IAEA 
 
YOMIURI (Page 1) (Full) 
June 12, 2008 
 
Vacuum pumps made in Japan were discovered at a nuclear-related 
facility in North Korea when the International Atomic Energy Agency 
inspected the facility in 2007, the Yomiuri Shimbun has found. The 
vacuum pumps in question were used for the uranium enrichment 
devices at the facility. The IAEA reported this discovery to the 
Japanese government. Early this month, police in Kanagawa Prefecture 
investigated five localities, including Tokyo Vacuum, the maker of 
the vacuum pumps and a manufacturer of machinery and equipment based 
in the Kanagawa prefectural city of Sagamihara, and the head office 
of Nakano Corporation, an export and import agent located in Tokyo's 
Minato Ward, on the charge of violating the Foreign Exchange and 
Foreign Trade Control Law (export without permission). Police 
authorities sent investigators to Taiwan, where the vacuum pumps 
were exported, to clear up the North Korea route. This is the first 
time that the IAEA has discovered Japanese-made parts in its 
inspection of nuclear facilities in North Korea. 
 
The vacuum pumps were discovered by a team of IAEA inspectors that 
entered Yongbyon and other nuclear facilities in North Korea in July 
last year, investigative authorities said. The IAEA team inspected 
those nuclear facilities in order to verify whether North Korea 
implemented its initial steps, such as suspending and sealing the 
nuclear facilities, in accordance with an agreement reached at the 
six-party talks over North Korea's nuclear programs. 
 
Police authorities, with cooperation obtained from Taiwan's 
investigative authorities, looked into the records of exports in the 
past and other documentations. As a result, they judged that the 
pumps are strongly suspected of having been exported from Taiwan to 
North Korea. 
 
According to investigative authorities, the two companies are 
suspected of having exported the vacuum pumps without permission 
from the Ministry of Economy, Trade and Industry, which lists vacuum 
pumps as materials restricted under the Export Trade Control 
Ordinance as they could be used for weapons of mass destruction like 
nuclear weapons. A vacuum pump can be used to vacuum a centrifugal 
separator to improve the efficiency of enrichment, so it is on the 
list of restricted items. 
 
TOKYO 00001600  004 OF 013 
 
 
 
Nakano Corp., according to its account, exported 10 vacuum pumps to 
a Taipei-based trading firm in the summer of 2003 for a total of 
about 500,000 yen. 
 
Both Tokyo Vacuum and Nakano Corp., when questioned by the 
prefectural police, explained that they did not know that the pumps 
would be used at a nuclear facility. 
 
"Our president is in bad health, so we can't answer," a Tokyo Vacuum 
official told the Yomiuri Shimbun. "It's true that we were 
investigated," a Nakano Corp. official said, adding: "The maker 
explained to us that the pumps were not restricted under the forex 
law. We've never done business and have nothing to do with North 
Korea." 
 
5) Japan asks N. Korea to turn over JAL hijackers 
 
ASAHI (Page 4) (Full) 
June 12, 2008 
 
BEIJING-Japan and North Korea kicked off a formal meeting of 
working-level officials from their foreign ministries in Beijing 
yesterday. In the meeting, Japan sought progress on the pending 
issue of Japanese abductees. In addition, Japan called for North 
Korea again to turn over Japan Airlines hijackers. North Korea 
answered that it would formally clarify its position in a meeting to 
be held this morning. 
 
The meeting was held at the North Korean embassy in Beijing for 
about two and a half hours with the participation of the Foreign 
Ministry's Asian and Pacific Affairs Bureau Director General Akitaka 
Saiki from Japan and Song Il Ho, ambassador for negotiations over 
the normalization of diplomatic relations between North Korea and 
Japan, from North Korea. 
 
"The North Koreans were very serious," Saiki told reporters after 
the meeting, "and we frankly stated our views to each other." 
 
Yesterday's meeting focused on the abduction issue as proposed by 
Japan. Saiki explained Japan's position in detail, calling for North 
Korea to let all survivors return to Japan, clear up the facts about 
the abductions, and turn over those responsible for the abductions. 
 
Japan and North Korea reaffirmed that the two countries would hold 
negotiations in conformity with a bilateral declaration issued in 
Pyongyang in September 2002. The two countries also agreed to take 
up the question of how to clear past issues as a matter of concern 
to North Korea in today's meeting. 
 
According to sources familiar with Japan-North Korea relations, 
Pyongyang wants to reach an agreement in the meeting this time to 
repatriate the JAL hijackers, since the United States cites this 
issue as one of its reasons for listing North Korea as a state 
sponsor of terrorism. Furthermore, North Korea is expected to urge 
Japan to call off its sanctions on North Korea while implying that 
it will look again into the issue of Japanese abductees. North Korea 
is also considering documenting an agreement if there is progress to 
a certain extent in the meeting this time. 
 
However, Japan takes the position that the JAL hijackers' 
repatriation has nothing to do directly with the abduction issue. 
 
TOKYO 00001600  005 OF 013 
 
 
 
6) North Korea to explain its position on abduction issue today in 
official talks 
 
TOKYO SHIMBUN (Page 1) (Full) 
June 12, 2008 
 
(Yuji Nishikawa, Beijing) 
 
Working-level officials from the governments of Japan and North 
Korea met for formal talks at the North Korean Embassy in Beijing on 
the afternoon of June 11. A Japanese representative demanded that 
North Korea take specific action to solve a dispute over the 
abductions of Japanese nationals by North Korean agents. In 
response, a North Korean representative said he would explain his 
government's position on the issue in the second-day meeting on the 
morning of the 12th. Both sides confirmed the need for the two 
countries to promote bilateral ties based on the Pyongyang 
Declaration issued in 2002. 
 
The meeting lasted for about two and a half hours between Akitaka 
Saiki, director general of the Foreign Ministry's Asian and Oceanian 
Affairs Bureau, and Song Il Ho, North Korea's ambassador for 
normalization talks with Japan. 
 
On the abduction issue, Saiki renewed the Japanese government's 
calls for North Korea to (1) return the abduction victims to Japan 
for reunion with their families at an early date; (2) clear up the 
truth of the issue; and (3) hand over the perpetrators. 
 
Saiki also demanded that the Japanese radicals who hijacked a Japan 
Airlines plane to North Korea in 1970 be handed over to the Japanese 
side. 
 
Song made no specific reference to the abduction issue, just saying: 
"I will explain our government's position in details in the meeting 
tomorrow morning." 
 
In the second-day talks, which will be held at the Japanese Embassy, 
both sides are expected to discuss such disputes as Japan's 
colonization of the Korean Peninsula, following North Korea's 
expression of its position on the abduction issue. 
 
Saiki told reporters after the meeting: "I expect North Korea will 
make a sincere, concrete response. 
 
7) North Korea might be preparing specific reply in response to 
Japan's request on abduction issue 
 
TOKYO SHIMBUN (Page 2) (Excerpts) 
June 12, 2008 
 
From the very outset of the resumed official working-level talks 
that started on the 11th, the Japanese side urged North Korea to 
resolve the dispute over the abductions of Japanese nationals by 
North Korean agents, Japan's top priority issue. The focus of 
attention is on what response North Korea will make in the 
second-day meeting on the 12th. 
 
The Japanese side has repeatedly demanded that Pyongyang take 
specific action on the abduction issue. Akitaka Saiki, director 
general of the Foreign Ministry's Asian and Oceanian Affairs Bureau, 
 
TOKYO 00001600  006 OF 013 
 
 
said last night after the first day of meetings: "I said what Japan 
should say." 
 
The Japanese government has continuously applied pressure to the 
North with its own economic sanctions and other means, but the 
government began recently to indicate the possibility of easing the 
sanctions in an attempt to urge the North to take positive action. 
Foreign Minister Masahiko Koumura noted: "Should the other side move 
a step forward and take specific action, our side will also take one 
step toward specific action." 
 
Even so, the precondition for what the foreign minister said is that 
North Korea should take action first. Asked if North Korea will 
change its usual assertion that the abduction issue has already 
settle, Saiki just replied: "I cannot say anything before I hear the 
other side's official view." 
 
8) Upper House approves censure motion against Fukuda for the first 
time; Diet to essentially go into recess 
 
MAINICHI (Top play) (Full) 
June 12, 2008 
 
Nakae Ueno 
 
A censure motion against Prime Minister Yasuo Fukuda was approved 
yesterday evening at an Upper House plenary session by a majority of 
votes from four opposition parties, the Democratic Party of Japan 
(DPJ), the Japanese Communist Party (JCP), the Social Democratic 
Party (SDP), and the People's New Party (PNP). This is the first 
time for the censure motion to be approved in the Diet. The 
opposition bloc calls on the prime minister to dissolve the Lower 
House for a snap election or resign en masse, but the censure motion 
has no legal binding force. So, the prime minister has assumed a 
stance of ignoring it. Meanwhile, the ruling bloc, in an effort to 
counter the opposition bloc's move, submitted a confidence motion 
toward the prime minister to the Lower House. It intends to get it 
approved at today's Lower House plenary session. 
 
The censure motion was jointly submitted yesterday afternoon by the 
DPJ, the SDP, and the PNP. 
 
The current Diet session has now been extended until June 21, but 
those three opposition parties intend to boycott deliberations in 
both houses of the Diet as the censure motion has been approved. The 
JCP intends to attend Diet deliberations without interruption, but 
the Diet is likely to go essentially into recess on June 12 or 
later. A battle between the ruling and opposition parties will be 
carried over to the next extraordinary Diet session to be convened 
in August. 
 
In the Upper House plenary session yesterday evening, the DPJ's 
Upper House Caucus Chairman Azuma Koshiishi gave an account of the 
reasons for the submission of the censure motion against the prime 
minister. Speaking of the medical system for the elderly, Koshiishi 
noted: "The prime minister lacks both resolve and enthusiasm to deal 
with the 'negative legacy' from the Koizumi and Abe cabinets." 
Koshiishi also criticized the government for its restoration of the 
provisional tax rate for gasoline. 
 
After that, the censure motion was put to the vote after affirmative 
views by a DPJ representative and opposing views by representatives 
 
TOKYO 00001600  007 OF 013 
 
 
from the ruling Liberal Democratic Party (LDP) and its junior 
coalition partner New Komeito were both voiced. Yasuhiro Oe and 
Yoshitake Kimata of the DPJ were absent from voting for poor health 
conditions and Yasuo Yamashita of the same party was also absent 
from voting in order to attend a memorial ceremony for a relative. 
 
With the submission of the censure motion against the prime 
minister, a debate of party leaders between the prime minister and 
DPJ President Ichiro Ozawa slated for yesterday afternoon was 
cancelled. 
 
After the censure motion was approved, Ozawa met the press and 
explained: "We submitted a censure motion in order to make the 
public aware that 'the prime minister is not qualified for the 
position.'" Ozawa also stressed, "A general election will be the 
only solution to the current situation," and added, "We will set in 
motion our preparations for a snap election once the Diet closes." 
 
LDP Secretary General Bunmei Ibuki criticized the DPJ at a press 
briefing: "They submitted it at this point in time when even though 
they will boycott Diet deliberations, the period of boycotting 
deliberations is limited and the shortest. Their intention is thus 
clear and obvious." 
 
9) Upper House adopts censure motion against prime minister 
 
YOMIURI (Page 4) (Excerpts) 
June 12, 2008 
 
The government and the ruling bloc are reacting furiously to the 
adoption of a censure motion by the House of Councillors by a 
majority of vote by the Democratic Party of Japan and other 
opposition parties. But given the divided Diet, they need to explore 
ways to hold talks with the DPJ for the next extraordinary Diet 
session, expected to open in late August. 
 
"It's like bullying" 
 
Prime Minister Fukuda delivering a speech at yesterday's LDP Reform 
Headquarters general meeting lamented the current situation of the 
Diet: 
 
"I am a victim. The general public is the main victim. Necessary 
legislation has not passed the Diet, yet unnecessary revisions must 
be made. I have been forced to be patient in managing Diet 
affairs." 
 
In a bid to find a way out of the current deadlock in the divided 
Diet, the prime minister has explored ways to form a grand coalition 
between the LDP and the DPJ, showing eagerness to build a line of 
talks with the DPJ. The adoption of the censure motion against the 
prime minister by the Upper House, the first in post-war history, 
was particularly painful for Fukuda as it signified an end to his 
line of talks with the DPJ. 
 
The ruling parties, too, criticized the Upper House's adoption of 
the censure motion. 
 
LDP Secretary General Ibuki yesterday said to reporters: "The 
censure motion has no binding legal grounds. If there is criticism 
of the Fukuda cabinet, a no-confidence motion should be submitted to 
the House of Representatives." New Komeito Secretary General 
 
TOKYO 00001600  008 OF 013 
 
 
Kitagawa, too, slammed the DPJ, saying, "The only explanation I can 
think of is that the DPJ introduced the motion in order to play up 
its confrontational stance at the last phase of the current Diet 
session." 
 
Former Prime Minister Koizumi also remarked in a speech in Yokohama, 
"The censure motion does not mean much. It's tantamount to 
bullying." 
 
Nevertheless, given the fact that the DPJ holds control over the 
Upper House, generating a confrontational mood with the DPJ is not 
desirable for the government and ruling bloc. 
 
The ruling parties had initially planned to enter into deliberations 
with the Japanese Communist Party and in a June 12 Lower House 
plenary session to criticize the DPJ for rejecting deliberations on 
the bills, including one to abolish the healthcare system for people 
aged 75 and over, presented by the DPJ itself. But the ruling bloc 
is now set to forgo any deliberations so as not to further irk the 
DPJ. 
 
As priority legislation in the extraordinary Diet session in the 
fall, the government and the ruling parties are considering 
extending the Antiterrorism Special Measures Law beyond the January 
2009 expiry. They also aim to enact a bill amending the Health 
Insurance Government Subsidy Special Measures Law and a bill 
establishing a consumer affairs agency. The government and ruling 
coalition therefore wish to avoid the upcoming Diet session falling 
into a stalemate from the start. 
 
10) Full text of censure motion against Prime Minister Fukuda 
 
YOMIURI (Page 4) (Abridged slightly) 
June 12, 2008 
 
The following is the full text of and reason for the censure motion 
against Prime Minister Yasuo Fukuda, adopted by the House of 
Councillors in its plenary session on June 11: 
 
(Body) 
The chamber shall censure Prime Minister Yasuo Fukuda. The chamber 
shall adopt the motion below. 
 
(Reason) 
It has been two months since the medical insurance system for people 
75 and older was introduced. There are calls across Japan for the 
abolition of the system. Despite that, Prime Minister Fukuda has 
continued to reject abolishing the system and only agreed to make 
minor changes to it. A bill designed to abolish the medical 
insurance system for the elderly, sent to the House of 
Representatives after being adopted by the House of Councillors, has 
not been discussed due to the ruling bloc's numerical superiority in 
the Lower House. 
 
That is not the only reason for censuring the prime minister. Lower 
gasoline prices from April 1 were the only bright news for the 
general public in the spring, a season of price hikes. Unaware of 
the national pain, Prime Minister Fukuda, putting the interests of 
ruling party lawmakers and bureaucrats first, took measures that 
ignored calls for protecting the people's livelihood from soaring 
crude oil prices. It was a policy mistake that cannot be 
overlooked. 
 
TOKYO 00001600  009 OF 013 
 
 
 
The government and ruling parties had the Lower House readopt a bill 
reinstating the provisional tax rate on gasoline by abusing their 
two-thirds majority under Article 59-2 of the Constitution before 
the Upper House reached its conclusion. It was an absolute insult to 
the Upper House, a chamber under the bicameral system that reflects 
the popular will expressed in the latest election. Our failure to 
introduce a censure motion against the prime minister at this stage 
would have undermined the authority of the Upper House. 
 
In the previous Upper House election, the LDP promised to resolve 
the issue of 50 million unidentified pension payment records. Less 
than 10 PERCENT  of those records were identified by March 31, the 
deadline. The LDP also consistently offered an explanation implying 
that the public was to blame for viewing (what the LDP promised) as 
a public pledge. The violation of such a public pledge deserves a 
censure motion. Further, confusion and anxiety are spreading under 
the government policy, including the issue of missing records of 
paid premiums. 
 
It has been over nine months since the prime minister assumed 
office. In the initial stage, his approval rating exceeded 60 
PERCENT  but it is now low, below 20 PERCENT . The general public, 
which does not know what Prime Minister Fukuda wants to do, has 
turned its back on the prime minister. 
 
Coming this far, the prime minister must choose between cabinet 
resignation en masse and dissolving (the Lower House) for a snap 
general election to ask for a public vote of confidence. We hereby 
submit a censure motion against Prime Minister Fukuda. 
 
11) DPJ has no next hand of cards to play, its tactic of forcing 
Diet dissolution having fizzled, although the ruling camp has been 
shaken in its deliberations 
 
TOKYO SHIMBUN (Page 2) (Excerpts) 
June 12, 2008 
 
The Democratic Party of Japan (DPJ) together with other opposition 
parties passed a motion in the Upper House plenary on June 11 
censuring Prime Minister Fukuda. There is no doubt that it has 
struck a blow against the Prime Minister using the "family sword" 
that it had previously kept in reserve, but there is yet no prospect 
in sight of it leading to dissolution of the Diet and a general 
election. 
 
After the motion was passed yesterday, DPJ President Ichiro Ozawa 
stressed at a press conference: "The Prime Minister himself must now 
take this as an extremely serious development. If he takes this as 
the will of the people, it would be better that he win by dissolving 
the Diet and calling a general election." 
 
Although the DPJ took the stance that with the passage of a censure 
motion against the Prime Minister, their pressure on the ruling camp 
would heighten all the more, instead, the Prime Minister, whose 
cabinet support rate has continued to fall due to public reaction 
against the medical system for the elderly, has only reaffirmed his 
stance of avoiding Diet dissolution for the time being. 
 
President Ozawa himself recognized that the resolution has no 
binding force, so the passage of the censure motion was meant to 
emphasize the confrontational stance against the government and 
 
TOKYO 00001600  010 OF 013 
 
 
ruling coalition. A veteran lawmaker also said, "The censure motion 
was no more than a bamboo sword." 
 
That being said, with the Prime Minister's decision to ignore the 
motion, the DPJ has lost completely any leverage to force Diet 
dissolution. If there is not going to be an early general election, 
Ozawa, who has been touted a change in government through the next 
Lower House election, can only lose his lock on the party. 
 
12) JCP tells DPJ before censure motion submitted: Timing of 
submission not good 
 
ASAHI (Page 4) (Full) 
June 12, 2008 
 
In a meeting yesterday of the secretaries general of four opposition 
parties, in which the opposition camp finalized a policy of 
submitting a censure motion against Prime Minister Yasuo Fukuda (to 
the House of Councillors), the Japanese Communist Party's Tadayoshi 
Ichida told his Democratic Party of Japan (DPJ) counterpart Yukio 
Hatoyama, arguing: "Now is not right timing to submit the motion." 
 
Ichida said: 
 
"A censure motion should be submitted when we force (Prime Minister 
Fukuda) to a situation in which he cannot avoid resigning with his 
cabinet and calling a snap election. Do you think he will do so?" 
 
Hatoyama then explained: 
 
"Such may not happen soon, but if we continue fighting in a tense 
atmosphere even after the Diet is closed, such efforts will lead 
into the extra Diet session. Should the current session end without 
the submission of a censure motion, all eyes will be focused on the 
Group of Eight summit and the Olympic Games." 
 
Ichida also posed a question about the cancellation of a party-heads 
debate (between Fukuda and DPJ President Ichiro Ozawa), noting: "Why 
was the party-heads debate cancelled? (Ozawa) should have grilled 
(Fukuda) in a Diet debate." When Hatoyama told Ichida his party's 
policy of boycotting deliberations in the next extraordinary 
session, Ichida said: "That means abandonment of debate." 
 
13) Fukuda-Ozawa debate held only once during current Diet session 
 
YOMIURI (Page 4) (Full) 
June 12, 2008 
 
The national basic policy committees of the two Diet chambers 
cancelled a debate between Prime Minister Yasuo Fukuda and 
Democratic Party of Japan (DPJ) President Ichiro Ozawa planned for 
the afternoon of June 11. The DPJ asked the ruling camp to cancel 
the debate and the ruling camp agreed. The outlook is that there 
will be no more party-heads debate other than the one held on April 
¶9. 
 
The party-heads debate practice was introduced in 2000. Essentially, 
the party heads are supposed to hold a debate once a week. When the 
practice was begun, three debates were held in a month. Because of 
the agreement between the ruling and opposition parties that the 
party-heads debate should not be held during the weeks when the 
prime minister attends plenary sessions and budget committee 
 
TOKYO 00001600  011 OF 013 
 
 
meetings of the two Diet houses, the number of weeks in which the 
debate has not been held has increased recently. Since last 
September when the Fukuda government was inaugurated, only two 
party-heads debates have been held. 
 
Regarding the agreement, DPJ Secretary General Yukio Hatoyama made 
this proposal in a meeting yesterday of the secretaries general of 
the two Diet chambers: "Since we agree to the idea of activating the 
party-heads debate, the agreement should be returned to the drawing 
board and a new rule created." 
 
14) Next extra Diet session likely to tend to be turbulent right 
from beginning 
 
ASAHI (Page 4) (Full) 
June 12, 2008 
 
Since opposition parties, including the Democratic Party of Japan 
(DPJ), approved a censure motion against Prime Minister Yasuo Fukuda 
(in the House of Councillors), an extraordinary Diet session slated 
for the fall will likely be tumultuous. The reason is that there is 
a possibility of the DPJ boycotting deliberations from the start, 
since it has stepped up its offensive, with Secretary General Yukio 
Hatoyama saying: "I don't think the significance of the censure 
motion will disappear at the time when the (current regular Diet 
session) closes." 
 
In the fall extra Diet session, the ruling and opposition parties 
are expected to engage in a fierce battle over many important bills. 
Among those bills, the focus will be on a bill to extend the special 
measures law that allows the Maritime Self-Defense Forces to 
continue its refueling operation in the Indian Ocean. Although the 
special law was extended in January with a two-thirds overriding 
vote in the House of Representatives, it will expire in January 
¶2009. The opposition camp is certain to oppose another extension of 
the law. 
 
The government and ruling coalition wish to enact in the next extra 
session a government-managed health insurance special measures law, 
intended to slash the payment from the national treasury to the 
government-managed health insurance program and to have the health 
insurance societies of major companies assume the payment for one 
year. The opposition camp, however, is opposed to the legislation. 
 
In a bid to pass the two bills through the Diet, the government and 
ruling bloc have no other choice but to use a two-third overriding 
vote in the Lower House. They envisage applying Article 59 of the 
Constitution, the so-called 60-day rule, which allows the Lower 
House to take a second vote on a bill if the Upper House fails to 
vote within 60 days after it received. The government and ruling 
camp intend to convene the extra session in late August earlier than 
usual to secure about 100 days for the session. 
 
However, Fukuda's stance of ignoring the censure motion and a Diet 
timetable envisioned an overriding majority vote could backfire on 
the opposition camp. 
 
The government and ruling coalition also aim to enact a bill 
establishing a Consumer Agency. The DPJ has come up with its own 
proposals for bills which have Fukuda's strong policy image. 
Therefore, the ruling and opposition camps may clash on those 
bills. 
 
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15) Draft report compiled by private round-table reporting to state 
minister for financial services clarifies readiness to accept 
investment in Japan by sovereign wealth funds, stressing 
non-discrimination between domestic and foreign companies 
 
NIKKEI (Page 3) (Full) 
June 12, 2008 
 
A draft report readied by a private round-table reporting to State 
Minister for Financial Services Yoshimi Watanabe, which has been 
looking into measures to deal with the turmoil in the financial 
market triggered by the U.S. subprime mortgage crisis, has been 
revealed. The draft mentions that investment in Japan by overseas 
sovereign wealth funds (SWF), which have increased their presence 
because of their investment in European and U.S. banks, should be 
welcomed. It points out the need to set up a mechanism for investor 
nations and Japan to exchange information so as to create the 
environment for Japan to accept such investments. It also stresses 
the importance of non-discrimination between domestic and foreign 
companies for the creation of an open market. 
 
The round-table is called the Financial Market Strategy Team, 
chaired by Yoshikazu Takao, managing director and operating officer 
at Asahi Life Asset Management. The report is the second step 
following one on measures for securitized financial products issued 
last fall. It will be released on July 12, today. The Financial 
Services Agency plans to reflect proposals made in the report in its 
future financial administration, though the report was not compiled 
in response to its consultation for amending the related law. 
 
The draft report underscores that it is a pressing issue to lure 
funds from both within and outside the country in making Japan's 
financial market attractive, although it at the same time points out 
that there is concern that SWF's investment behavior may reflect the 
intention of the governments of their home countries. It then 
indicates the notion that non-discrimination between domestic and 
foreign companies should be maintained. 
 
Some European and U.S. banks have accepted a huge amount of capital 
from SWF in order to cover heavy losses incurred due to the turmoil 
in the financial market. Though Japanese banks are not suffering 
from a capital shortfall, voices calling for more active use of SWF, 
instead of regulating them out of caution have been growing 
stronger. In response to such a call, the report stresses the stance 
of welcoming investment by SWF. 
 
Determining that that it is necessary to ensure market fairness in 
order to improve foreign companies' investment environment and 
remove a sense of distrust in SWF felt by the Japanese side, the 
draft points out that the market monitoring system should be 
improved. Japan exchanges little information with countries that 
operate SWF, such as Middle East nations and China. The draft 
indicates the notion that though the International Monetary Fund 
(IMF) has launched discussion for the setting of guidelines, it is 
also necessary for Japan to strengthen financial officials' 
monitoring function, by looking into ways to collect information and 
how information should be disclosed. 
 
However, in view of Britain's The Children's Investment Fund's 
recent bid to increase its stake in J-Power, the draft points out 
that some areas require consideration in security terms regarding 
 
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investment in Japan by foreign capital. 
 
Since the report serves as guidelines for financial administration, 
it will not directly affect various laws regulating investment. For 
instance, The Foreign Exchange and Foreign Control Law mandates 
prior notification regarding the acquisition of more than 10 PERCENT 
 of companies in specified industries. The Ministry of Economy, 
Trade and Industry and the Finance Ministry have authority on that 
area. Even so, the panel has come up with a stance of promoting 
investment in Japan from the stance of supervising the financial 
market. This will likely have the effect of curbing the excessive 
application of such a regulation. 
 
SCHIEFFER