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UNCLAS SECTION 01 OF 12 TOKYO 002067 
 
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 07/29/08 
 
Index: 
 
1) Top headlines 
2) Editorials 
3) Prime Minister's daily schedule (Nikkei) 
 
Defense and security affairs: 
4) Government plans to withdraw ASDF from Iraq when UN resolution 
expires late this year  (Sankei) 
5) PAC-3 drill staged on Defense Ministry property  (Nikkei) 
 
North Korea problem: 
6) Abductee family association questionnaire to all Diet members 
finds 80 PERCENT  against removing sanctions on North Korea 
(Sankei) 
7) LDP's Yamasaki on TV says Japan should take on burden of 
contributing energy aid to North Korea in support of Six-Party Talks 
 (Tokyo Shimbun) 
 
8) Prime Minister Fukuda will separately meet President Hu and 
Premier Wen on sidelines of Olympics opening ceremony in Beijing 
(Sankei) 
 
9) Japan, Kuwait agree on importance of stabilizing the oil markets 
(Nikkei) 
 
Doha Round: 
10) Japan gives up on securing 8 PERCENT  tariff target in WTO farm 
trade negotiations  (Asahi) 
11) Having accepted the WTO compromise on farm trade, the Japanese 
government will find domestic coordination of the decision difficult 
 (Sankei) 
12) Council on Economic and Fiscal Policy turning attention now to 
agricultural reform  (Yomiuri) 
 
Political agenda: 
13) Cabinet shuffle to be postponed until after the WTO negotiations 
are settled, placing it in early August  (Asahi) 
14) LDP, Komeito heads discuss cabinet shuffle but bog down on list 
of candidates  (Mainichi) 
15) Komeito's Yamaguchi hints at Diet dissolution at start of 
regular Diet session early next year  (Mainichi) 
16) Ruling parties are split over timing of extra Diet session, 
irritated because they cannot read the intentions of the Prime 
Minister  (Mainichi) 
17) Democratic Party of Japan (DPJ) President Ozawa sees possibility 
of an early Diet dissolution  (Mainichi) 
18) DPJ, expecting Diet dissolution, is hard at work preparing by 
putting up posters, drafting final manifesto of campaign promises 
(Asahi) 
 
19) Budget ceiling set at 47.8 trillion yen, but the prime 
minister's hand is hardly visible in the process  (Nikkei) 
 
Articles: 
 
1) TOP HEADLINES 
 
Asahi: Mainichi: Yomiuri: 
Four die in river in Kobe 
 
Nikkei: 
 
TOKYO 00002067  002 OF 012 
 
 
Matsushita on way to releasing 40-inch OEL TVs in 2011: Production 
at Himeji plant 
 
Sankei: 
Government plans to withdraw ASDF from Iraq before year's end due to 
expiration of UN resolution 
 
Tokyo Shimbun: 
TEPCO to raise average monthly electric bill for households by 800 
yen starting next year: TEPCO expected to suffer loss of 280 billion 
yen 
 
Akahata: 
Not delivered 
 
2) EDITORIALS 
 
Asahi: 
(1) Decentralization should be taken from central government rather 
than bestowed by bureaucrats 
(2) Passing on know-how to rejuvenate companies 
 
Mainichi: 
(1) Political gridlock: Politicians should consider the people over 
their party 
(2) Agriculture contest: Creating hope in agricultural field 
 
Yomiuri: 
(1) Fiscal 2009 budget: When will the government come with an answer 
on basic pensions? 
(2) Frequent uprisings in China: Can safety of Olympics be ensured? 
 
Nikkei: 
(1) Crude oil market in adjustment phase due to temporary lull in 
financial markets 
(2) Meaning of the listing of U.S. fund on the New York Stock 
Exchange 
 
Sankei: 
(1) Amendment to Worker Dispatch Law: Correct distortions in 
irregular employment system 
(2) Heavy rains: Be prepared for violent weather 
 
Tokyo Shimbun: 
(1) Hike in utility rates: Will TEPCO fulfill its accountability? 
(2) Employment of school teachers: Learn lessons from Oita 
Prefecture's case 
 
Akahata: 
Not delivered 
 
3) Prime Minister's Official Residence (Kantei) 
 
Prime Minister's schedule, July 28 
 
NIKKEI (Page 2) (Full) 
July 29, 2008 
 
10:01 
Posed for a photo with Kuwait Prime Minister Nasser at the Kantei. 
Attended a welcome party. 
 
 
TOKYO 00002067  003 OF 012 
 
 
10:18 
Held a summit and then a signing ceremony. 
 
11:34 
Held a luncheon meeting. 
 
13:07 
Met Chief Cabinet Secretary Machimura. 
 
15:06 
Met Cabinet Office Vice Minister Yamamoto. Followed by Deputy Chief 
Cabinet Secretary Futahashi. 
 
16:01 
Attended a meeting of the Council on Economic and Fiscal Policy. 
 
16:54 
Met Machimura. 
 
17:02 
Attended a policy council meeting of the government and the ruling 
camp. 
 
17:33 
Met New Komeito President Ota, with LDP Secretary General Ibuki and 
New Komeito Secretary General Kitagawa present. Joined by 
Machimura. 
 
18:23 
Attended a send-off party for the nation's Olympic team at the 
Prince Park Tower Tokyo. 
 
18:55 
Met members of the team to help reconstruct Sichuan Province in 
China at the Hotel New Otani. 
19:22 
Returned to his official residence. 
 
4) Gov't mulls ASDF pullout from Iraq within year 
 
SANKEI (Top play) (Abridged) 
July 29, 2008 
 
The government and the ruling parties decided yesterday to withdraw 
an Air Self-Defense Force detachment from Iraq at the end of this 
year. Japan currently deploys ASDF troops to Iraq for airlift 
services under a law for special measures to assist with Iraq's 
reconstruction or the Iraq Special Measures Law. Japan needs to 
conclude a status of forces agreement with the Iraqi government 
within this year in order for Japan to continue the ASDF's mission 
in that country. However, the government deemed it difficult for 
that agreement to be ratified in the Diet since its upper chamber is 
dominated by the opposition parties. The government has deployed 
Ground Self-Defense Force and ASDF troops to Iraq under the Iraq 
Special Measures Law since 2004. In 2006, however, the GSDF pulled 
out of Iraq. After the ASDF is recalled from Iraq, the Self-Defense 
Forces' Iraq mission will be completed within the year. 
 
The Iraq Special Measures Law, which came into effect in July 2003, 
is intended to back up the international community's assistance to 
Iraq for its nation-rebuilding efforts. The ASDF launched its Iraq 
activities in March 2004. On its Iraq mission, the ASDF, basing 
 
TOKYO 00002067  004 OF 012 
 
 
three C-130 transport planes in Kuwait, has airlifted personnel and 
supplies for the United Nations and multinational forces to Baghdad 
Airport and other locations in Iraq. The GSDF also worked in the 
southern Iraqi city of Samawah from February 2004 through July 
¶2006. 
 
The government, based on the decision, will issue a withdrawal order 
to the ASDF detachment in December and envisions completing the 
ASDF's pullout by January next year at the latest. 
 
The Iraq Special Measures Law is valid until the end of July next 
year. However, a U.N. resolution, under which the multinational 
forces have been deploying troops in Iraq with the ASDF's 
participation, is due to expire at the end of this year. Japan will 
therefore need to enter into a status of forces agreement with the 
Iraqi government in order for Japan to continue the ASDF's Iraq 
mission after that. 
 
However, the leading opposition Democratic Party of Japan 
(Minshuto), which holds a majority of the seats in the House of 
Councillors, passed a bill repealing the Iraq Special Measures Law 
at an extraordinary Diet session late last year. The DPJ has been 
strongly calling for the ASDF to be recalled from Iraq. As seen from 
such facts, the DPJ is likely to oppose the ASDF's continued 
activities in Iraq. New Komeito, the ruling Liberal Democratic 
Party's coalition partner, remains cautious about engaging the 
Self-Defense Forces in overseas activities, is now growing reluctant 
to focus on the ASDF's Iraq deployment in Diet debate. 
 
5) PAC-3 drill conducted at Defense Ministry 
 
NIKKEI (Page 2) (Full) 
July 29, 2008 
 
The Defense Ministry conducted an antiballistic missile drill 
yesterday evening on its premises at Ichigaya, Tokyo, deploying the 
Patriot Advanced Capability 3, a ground-to-air guided missile 
system. With missile launchers brought in, the Self-Defense Forces 
checked the PAC-3's performance with its radar data transmissions 
before launching the PAC-3. The PAC-3 is currently deployed at Iruma 
base in Saitama Prefecture and other SDF bases. However, this is the 
first time to conduct such full-fledged off-base training with PAC-3 
batteries. In September, the SDF will carry out its first PAC-3 
live-fire training in the United States. 
 
6) Abductee families poll lawmakers; 80 PERCENT  of respondents 
opposed to calling off N. Korea sanctions, but answers from only 34 
PERCENT 
 
SANKEI (Page 3) (Full) 
July 29, 2008 
 
The families of victims kidnapped by North Korea and their 
supporters yesterday released the results of a questionnaire survey 
sent to all 722 members of the House of Representatives and House of 
Councillors on the Japanese government's announced plan to lift some 
economic sanctions on North Korea. In the survey, 79.2 PERCENT 
opposed the idea of lifting sanctions in the event North Korea fails 
to produce results from its promised reinvestigation for all 
abductees' repatriation, with 82 PERCENT  supporting the idea of 
taking additional sanctions against North Korea. However, the 
response rate was low at 33.9 PERCENT . The families of abductees 
 
TOKYO 00002067  005 OF 012 
 
 
have a growing sense of crisis. 
 
The survey asked two questions about: 1) when the government should 
partially lift sanctions on North Korea; and 2) whether the 
government should impose additional sanctions on North Korea if its 
promised reinvestigation does not result in abductees' 
repatriation. 
 
In response to the first question, 194 persons (79.2 PERCENT ) 
answered "after seeing the outcome of North Korea's reinvestigation 
for all abductees' repatriation." To the second, 201 persons (82 
PERCENT ) supported the idea of taking additional sanctions against 
North Korea. 
 
Among other answers to each question, many called for the government 
to take a strong stance toward North Korea, insisting that the 
government should not call off any of its sanctions until all 
abductees are repatriated to Japan. 
 
There were Diet members who did not respond to the survey, reasoning 
that they are cabinet ministers or in a position to preside over the 
Diet's lower or upper chamber. There was no answer from Koichi Kato, 
who was a secretary general of the ruling Liberal Democratic Party 
and who recently remarked that the repatriated abductees "should 
have been returned to North Korea, because it was a promise between 
two countries." The Japanese Communist Party came up with its view 
in the name of Chairman Kazuo Shii, and there was no answer from any 
of its lawmakers. 
 
"This will become a strong message to the Japanese government and 
North Korea," said Shigeo Iizuka, 70, chairman of the Association of 
the Families of Victims Kidnapped by North Korea. However, the 
response rate to the survey was low. Iizuka said: "If they are 
serious about the abductions, they can answer. I have a question 
about their mindset." 
 
Teruaki Masumoto, 52, chief of the association's secretariat, 
stressed: "This response rate is very regrettable. We will wait for 
their answers, so we want them to show their views to the electorate 
as Diet members." 
 
The Diet is now out of session, so many of its members cannot be 
contacted. The association will ask them to answer by Aug. 11 and 
will later make public the final results. 
 
7) Former LDP Vice President Yamasaki: Japan also should share 
burden of energy assistance for DPRK 
 
TOKYO SHIMBUN (Page 2) (Full) 
July 29, 2008 
 
Former Liberal Democratic Party (LDP) Vice President Taku Yamasaki, 
in a recorded program for Asahi News-Star Cable TV, repeatedly 
stressed in connection with the Six-Party Talks on the North Korean 
nuclear problem, "Japan, too, should bear its share (of energy 
assistance costs)." 
 
Regarding the government's policy course of not joining (energy 
assistance) unless there is progress on the abduction issue, 
Yamasaki pointed out: "There is a misunderstanding that this 
assistance would be part of the economic cooperation that would be 
carried out when Japan and North Korea normalize relations." He 
 
TOKYO 00002067  006 OF 012 
 
 
added, "The (energy) assistance is an international agreement 
related to the nuclear isssue; it is not a bilateral agreement 
between Japan and North Korea." 
 
8) Fukuda to hold meetings with Hu and Wen on sidelines of Beijing 
Olympics opening ceremony 
 
SANKEI (Page 5) (Full) 
July 29, 2008 
 
It was decided by yesterday that Prime Minister Yasuo Fukuda would 
hold separate meetings on August 8 with Chinese President Hu Jintao 
and Premier Wen Jiabao on the sidelines of the Beijing Olympics 
opening ceremony. Chances initially had seemed slim for Japan-China 
talks on August 8 due to a tight timetable, but Japan arranged the 
schedule in compliance with a request from China for top-level 
talks. 
 
The opening ceremony will be attended by the top leaders of dozens 
of countries, including U.S. President George W. Bush and French 
President Nicolas Sarkozy. A government source described the two 
Chinese leaders' decision to meet with Prime Minister Fukuda despite 
their busy schedules that day as exceptional treatment reflecting 
Beijing's stance of placing high priority on relations with Japan. 
At present, whether the two Chinese leaders will hold talks with 
President Bush and President Sarkozy is uncertain. 
 
Prime Minister Fukuda is scheduled to leave Japan on the morning of 
August 8 on an Air Self-Defense Force U-4 multipurpose transport 
aircraft and arrive in Beijing in the afternoon. He is expected to 
hold a meeting with Premier Wen for about 50 minutes and with 
President Hu for about 30 minutes on the evening of August 8. The 
prime minister is also scheduled to attend a reception that will be 
attended by the two Chinese leaders. 
 
9) Japan-Kuwait summit: Agreement reached on importance to stabilize 
oil market 
 
NIKKEI (Page 2) (Full) 
July 29, 2008 
 
Prime Minister Yasuo Fukuda on July 28 met with Kuwaiti Prime 
Minister Nasir at his office. Concerning the surging crude oil 
prices, the two leaders shared the view that it is important to 
stabilize the oil market and that the steep rise in crude oil prices 
are against the interests of both oil producing countries and 
consuming countries. Nasir stated that his country would make 
efforts to ensure a stable supply of oil to Japan. 
 
Fukuda pointed out, "I am concerned about the steep rise in oil 
prices. It is necessary to take specific actions in order to improve 
the supply-demand balance and transparency of the oil market." 
 
10) Japan finding it difficult to get 8 PERCENT  target for 
sensitive items in WTO talks 
 
ASAHI (Page 7) (Excerpts) 
July 29, 2008 
 
(Oyamada, Ogata, Murayama, Geneva) 
 
Haggling heated up in a meeting on July 28 in the final phase of the 
 
TOKYO 00002067  007 OF 012 
 
 
new round of World Trade Organization (WTO) global trade talks (Doha 
Round). Japan, the U.S., and Europe have indicated a willingness to 
reach a broad agreement on a mediation plan presented by WTO 
Director General Pascal Lamy on July 25, while emerging and 
developing countries, such as India, are raising strong objections. 
 
U.S. Trade Representative Susan Schwab said on the evening of the 
28th: 
 
"There are countries calling for changes (in the measures on which 
industrialized countries have already agreed in general). They might 
disrupt the balance. I am worried that the new round may be 
threatened." 
 
According to a U.S. government source, Schwab has criticized India 
and China. An Indian government source, though, said: "That is a 
strategy of the U.S. in a quest for a concession." 
 
The issue of the maximum ratio of mainstay farm products to all 
items, in which Japan is greatly interested, has been treated as 
already agreed on. Japan therefore is finding it difficult to secure 
its 8 PERCENT  target. 
 
The mediation plan states that each developed country is allowed to 
designate 4 PERCENT  of all farm products as sensitive products to 
be exempted from steep tariff cuts in principle but 6 PERCENT  with 
conditions for certain countries. 
 
11) Japan set to accept mediation plan in WTO talks, but difficult 
domestic coordination expected 
 
SANKEI (Page 11) (Excerpts) 
July 29, 2008 
 
(Kyodo News, Geneva) 
 
The Japanese government yesterday started coordinating views to 
accept a mediation plan for the agriculture and industry sectors, 
which was presented by World Trade Organization (WTO) Director 
General Pascal Lamy. In its ministerial meeting on July 28, the new 
round of WTO global trade talks (Doha Round) reached a decisive 
phase for an accord on details in the plan, which includes rules on 
tariff cuts in the two sectors. But since discussion over the 
special safeguard system for developing countries heated up in a 
meeting of major seven economies, delaying the start of a plenary 
session by about 30 countries where final draft written agreements 
in the two sectors are scheduled to be presented. 
 
The mediation plan states that each advanced country is allowed to 
designate up to 6 PERCENT  of all farm products as sensitive 
products, which are exempted from steep tariff cuts.  Although Japan 
has been calling for an 8 PERCENT  exception, other industrialized 
countries are likely to accept the mediation plan in general. 
 
Agriculture, Forestry and Fisheries Minister Masatoshi Wakabayashi 
said with a stern look last night: "I no longer have any prospect 
(of securing the 8 PERCENT  target)." His remark indicates that 
Japan has been placed in a tight position in the ongoing 
negotiations. 
 
In the talks this time, Japan formed a group with 10 food importing 
countries, such as South Korea and Switzerland, and continued to 
 
TOKYO 00002067  008 OF 012 
 
 
insist on over 10 PERCENT  as the maximum ratio of sensitive 
products to all products. 
 
Once negotiations started, however, other countries began to grope 
for compromise proposals so as not to be treated as the culprit for 
breaking down the trade talks. In reaction, Wakabayashi switched the 
target from over 10 PERCENT  to 8 PERCENT , but at that time, other 
countries began to support the mediation plan. 
 
12) Council on Economic and Fiscal Policy places agricultural reform 
high on agenda 
 
YOMIURI (Page 9) (Full) 
July 29, 2008 
 
Members from the private sector of the government's Council on 
Economic and Fiscal Policy, chaired by Prime Minister Fukuda, have 
decided to present a 15-item proposal, including agricultural 
reform, as priority tasks for the latter half of FY2008, according 
to informed sources yesterday. The members will submit the package 
in a meeting today. 
 
The ongoing informal ministerial meeting in Geneva over the new 
round of World Trade Organization (WTO) global trade talks is likely 
to reach an agreement that presses Japan to open its agricultural 
market further. 
 
Four private-sector members, including Nippon Keidanren (the Japan 
Business Federation) Chairman Fujio Mitarai, intend to stress the 
need to improve the nation's agricultural productivity by 
introducing a concentrated farming system, revitalizing fallow land, 
and liberalizing the use of farmland. They apparently keep in mind 
the possibility that maintaining the current high tariff rates to 
protect domestic farmers will become difficult. 
 
The council took up agricultural reform in the fall of 2007, but the 
Ministry of Agriculture, Forestry, and Fisheries had to give up 
submitting related bills as wrangling intensified between the ruling 
and opposition camps. 
 
The proposal also includes measures to counteract the falling 
birthrate, to deal with job-hopping part-timers, to advance fiscal 
reconstruction, and cope with skyrocketing oil prices. 
 
13) Prime minister, ruling party executives agree to make decision 
on cabinet shuffle after WTO meeting 
 
ASAHI (Page 4) (Excerpts) 
July 29, 2008 
 
Prime Minister Yasuo Fukuda, New Komeito Representative Akihiro Ota 
and others, meeting yesterday at the Prime Minister's Office, 
exchanged views on important matters that lie ahead, such as a 
policy for budget compilation. They confirmed a policy course to 
make decisions on such critical issues as a cabinet shuffle and the 
timing of convening the next extraordinary Diet session after the 
ongoing World Trade Organization (WTO) talks are settled. 
 
The meeting, which lasted about 30 minutes, was also attended by LDP 
Secretary General Bunmei Ibuki, his New Komeito counterpart Kazuo 
Kitagawa and Chief Cabinet Secretary Nobutaka Machimura. 
 
 
TOKYO 00002067  009 OF 012 
 
 
After the meeting, Ibuki explained to the press corps: "We don't 
know when the WTO talks will end, so it's hard to begin discussing 
the duration (of the extraordinary Diet session) and a cabinet 
shuffle." Economy, Trade and Industry Minister Akira Amari and 
Agriculture, Forestry and Fisheries Minister Masatoshi Wakabayashi 
were originally scheduled to return home from the WTO meeting on 
around July 27. They might not be able to return home until July 31 
or later due to the hard-going trade talks. Ibuki indicated that the 
prime minister would not shuffle his cabinet until after the two 
ministers return home. 
 
There is a view in the government and ruling bloc that the prime 
minister will shuffle his cabinet soon, possibly in early August. 
 
14) LDP, Komeito heads discuss cabinet shuffle, but bog down on list 
of candidates 
 
MAINICHI (Page 2) (Excerpts) 
July 29, 2008 
 
Prime Minister Yasuo Fukuda met for approximately 30 minutes last 
evening at the Prime Minister's Official Residence with New Komeito 
Representative Akihiro Ota to discuss the cabinet shuffle and timing 
of the extraordinary Diet session. After the meeting, an aide to the 
Prime Minister said, "The Prime Minister will most likely decide to 
shuffle his cabinet." And a senior Liberal Democratic Party official 
who is close to the Prime Minister suggested, "The Prime Minister is 
considering (a shuffle) on Aug. 4." 
 
In contrast, a Komeito senior official said, "The Prime Minister 
will likely do it, but in the end, the key question will be whether 
there are appropriate persons in it?" He indicated that choosing 
candidates has bogged down. Komeito Deputy Policy Council Chairman 
Yamaguchi stressed that the decisions should be cautiously made in 
order to result in boosting the administration: "The point is 
whether the appointments will raise the support rates." 
 
15) New Komeito's Yamaguchi indicates that Lower House will be 
dissolved at beginning of regular Diet session in January 
 
MAINICHI (Page 5) (Full) 
July 29, 2008 
 
Appearing on a TV program yesterday, New Komeito Policy Research 
Council Deputy Chairman Natsuo Yamaguchi stated: "The ruling 
coalition can show its power to the public at the time of compiling 
a state budget. This is the proper course." He indicated that he was 
focusing on the beginning of the next regular Diet session in 
January as the date for the dissolution of the Lower House. 
 
16) Two views in ruling camp over Lower House dissolution, Diet 
convocation 
 
MAINICHI (Page 5) (Excerpts) 
July 29, 2008 
 
There are two groups in the Liberal Democratic Party-New Komeito 
ruling coalition who are divided over future political options, 
including the timing of dissolution of the House of Representatives 
and the opening of the next extraordinary Diet session. The New 
Komeito and senior LDP Election Strategy Council officials are 
setting their sights on convening the extra session in late 
 
TOKYO 00002067  010 OF 012 
 
 
September and dissolving the Lower House at the end of the year or 
early next year, while the other group, including LDP Secretary 
General Bunmei Ibuki, is asserting that the extra session be 
convened in late August to extend the New Antiterrorism Special 
Measures Law and the Lower House be dissolved next spring. The 
reason for the divided ruling camp is because under Prime Minister 
Yasuo Fukuda, they have been unable to fathom future political 
prospects. Therefore, a cabinet shuffle, on which all eyes are now 
being focused, will become an initial test of the Prime Minister. 
 
"I have yet to say anything about a cabinet shakeup. If I say 
something, it will be troublesome. I will not say anything today, as 
well," Fukuda told reporters after his meeting with New Komeito 
leader Akihiro Ota and the secretaries general of the LDP and New 
Komeito. 
 
The reason why a cabinet shuffle is drawing attention is that it is 
seen an index of Fukuda's determination to manage his 
administration, for which public support has been poor. If he 
forgoes shuffling his cabinet, he will lose political impetus 
quickly. 
 
The New Komeito has called on Fukuda to delay the convocation of the 
next extra Diet session to late September with the aim of putting 
off an extension of the New Antiterrorism Special Measures Law. The 
party intends to seek compilation of a supplementary budget to be 
used for measures to deal with soaring oil prices. Because the party 
is eying Lower House dissolution before the end of the year. It also 
wonders if it is good to conduct such under Fukuda's leadership. 
Secretary General Kazuo Kitagawa made a cool comment: "There is no 
guarantee that a cabinet shakeup will boost the Fukuda 
administration's popularity." Some LDP Election Strategy Council 
officials fall in line with the New Komeito, since the LDP cannot 
conduct election campaigning without the New Komeito's cooperation. 
 
17) DPJ President Ozawa: Lower House dissolution will occur earlier 
than expected 
 
MAINICHI (Page 5) (Full) 
July 29, 2008 
 
Democratic Party of Japan (DPJ) President Ichiro Ozawa, asked about 
his prospects for the timing of dissolution of the House of 
Representatives at a press conference in Yokohama yesterday, stated: 
"My perception has become stronger that it has come closer." 
 
Ozawa had reiterated: "The Lower House will be dissolved early next 
year, at the latest. I thought that dissolving the Lower House after 
compiling a lavish budget would be one of the strategies." 
 
He then pointed out: "Since (Prime Minister Fukuda) is at the beck 
and call of the bureaucracy, he may be unable to adopt the Liberal 
Democratic Party's (LDP) method (of compiling a lavish budget), as 
the economy used to expand year after year. If he delays (Lower 
House dissolution), he won't be able to get any benefits." 
 
18) DPJ to accelerate efforts to produce manifesto and policy flyers 
to be prepared for Lower House dissolution near at hand 
 
ASAHI (Page 4) (Excerpts) 
July 29, 2008 
 
 
TOKYO 00002067  011 OF 012 
 
 
Democratic Party of Japan President Ichiro Ozawa, Secretary General 
Yukio Hatoyama, Diet Affairs Committee Chairman Kenji Yamaoka, and 
other executives, holding a meeting at party headquarters yesterday, 
agreed on the view that a move to unseat Prime Minister Fukuda is 
intensifying in the ruling bloc. Envisaging an early Lower House 
dissolution, the party plans to expedite preparations for the next 
general election and to determine its response to the extraordinary 
Diet session after closely monitoring the government and ruling 
coalition's moves. 
 
Ozawa made the following comment in a press conference in Yokohama 
after the meeting: "The timing of the election will not be 
determined by the interest of the Liberal Democratic Party and 
government alone. They have to listen to the people's voice at the 
earliest possible time. I have a strong feeling that the next 
general election is near. We want to make as much preparations as 
possible in August (before the September party leadership race)." 
 
In yesterday's meeting, the DPJ executives, based on their analysis 
of the situation in the ruling bloc, confirmed a policy course to 
expedite preparations for Lower House dissolution and a general 
election that could occur next January at the latest. The party also 
plans to accelerate efforts to draft a manifesto (campaign pledges) 
and to reproduce the party's policy flyers that were used in the 
last summer's Upper House election in order to distribute them to 
all constituencies. 
 
One attendant reportedly pointed out the possibility that the Lower 
House would be dissolved at the outset of the extraordinary Diet 
session. Another attendant expressed a desire for Prime Minister 
Fukuda to hold on, describing him as an easy rival for the DPJ. 
 
In the previous regular Diet session, a censure motion against Prime 
Minister Fukuda was adopted. Given the situation, in order for the 
DPJ to attend deliberations in the upcoming session, some kind of 
trigger is necessary, such as a major cabinet shuffle or the 
resignation of the prime minister. 
 
19) Government, ruling parties approve 47.8 trillion yen in general 
expenditures: Issues regarding fiscal resources put off; Prime 
minister fails to show presence; Mounting pressure for more 
spending 
 
NIKKEI (Page 2) (Excerpts) 
July 29, 2008 
 
The government and ruling parties at a policy roundtable adopted 
budget request guidelines for fiscal 2009. The upper limit of 
general-account expenditures is approximately 47.8 trillion yen, up 
about 600 billion yen from the level of fiscal 2008, posting a 
year-on-year increase for the second consecutive year. They also 
confirmed the policy of appropriating approximately 300 billion yen 
to a priority budget quota (framework to promote key issues) for 
funds to be distributed for measures to strengthen growth and 
address a shortage of doctors on a priority basis. 
 
Budget request guidelines for fiscal 2009 have been adopted, but the 
settlement of pending issues has been put off until year's end, when 
the budget is scheduled to be compiled. It can hardly be said that 
the Prime Minister's Office, starting with Prime Minister Yasuo 
Fukuda, fully played its role as the command center. While the 
ruling parties are increasing pressure for more spending with the 
 
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next Lower House election in mind, how to achieve a good balance 
between fiscal reconstruction and making a selective approach on the 
policy front will likely become a challenge. 
 
Budget aims to have it both ways 
 
Fukuda during the policy roundtable expressed his desire to put 
public finances on a recovery track and take necessary measures to 
achieve that end, noting, "I would like to make fiscal 
reconstruction and measures to address key issues compatible." 
 
As a symbol of a good balance, Fukuda came up with a framework to 
promote key issues worth about 300 billion yen. The additional 
prioritization promotion framework (50 billion yen) set last year 
has been substantially boosted under the new framework. Objectives 
have been set in a manner of covering a wider range of spending 
areas so that the new framework can reflect the ruling parties' 
expectations. However, it is not easy to reinforce a cut in policy 
expenses by another 2 PERCENT  in order to obtain funds to finance 
measures incorporated in the framework. 
 
Hidehisa Otsuji, head of the LDP caucus in the Upper House, at the 
roundtable called for constraining growth in social security 
expenses to 220 billion yen. The finance minister replied, "I will 
consider that and all other issues when compiling the budget." 
Fukuda avoided active involvement in the guideline compilation 
process by effectively dumping coordination of views on the finance 
minister to work out. 
 
SCHIEFFER