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UNCLAS SECTION 01 OF 08 TOKYO 002129 
 
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 08//08 
 
INDEX: 
 
(1) Prime minister orders package of economic stimulus measures that 
employs "all policy measures": Outline to be created possibly in 
first half of August (Nikkei) 
 
(2) Government to produce economic package possibly in September to 
cope with soaring oil prices, assist small businesses (Nikkei) 
 
(3) Finance minister: Discussion will start this fall on scenario 
about consumption tax hike (Nikkei) 
 
(4) Response of business circles: Call for structural reforms to 
find breakthrough in economic gridlock (Nikkei) 
 
(5) Defense Ministry to establish crisis management center to 
exclusively handle information to speedily respond to terrorist 
attacks and disasters (Nikkei) 
 
(6) Defense Minister Hayashi: Continuation of refueling operations 
in Indian Ocean necessary (Nikkei) 
 
(7) Poll: 36 PERCENT  in Japan, 67 PERCENT  in China see bilateral 
ties as good (Yomiuri) 
 
(8) Fukuda or Ozawa for prime minister? (Mainichi) 
 
(9) Fissure between LDP and New Komeito over Lower House dissolution 
and term of next extraordinary Diet session (Yomiuri) 
 
(10) TOP HEADLINES 
 
(11) EDITORIALS 
 
ARTICLES: 
 
(1) Prime minister orders package of economic stimulus measures that 
employs "all policy measures": Outline to be created possibly in 
first half of August 
 
NIKKEI ONLINE (Full) 
12:40, August 4, 2008 
 
The shuffled Fukuda cabinet got underway on the morning of August 4. 
Prime Minister Yasuo Fukuda in the morning called State Minister for 
Economic and Fiscal Policy Kaoru Yosano to his office and ordered 
him to complete, possibly by the end of early August, an outline of 
a package of economic stimulus measures that employ all policy 
measures to address price rises caused by soaring crude oil and food 
prices and a slowing economy. Now that the transfer of business from 
outgoing to incoming ministers has been completed, efforts to 
dissolve people's anxieties, which the reshuffled cabinet aims at, 
will get into full swing. 
 
The prime minister moved from the official residence to the Kantei 
(Prime Minister's Office) shortly after 10:00 a.m. and held talks 
with Yosano. He during the meeting noted that as the Japanese 
economy is facing challenges, it is imperative for the government to 
do whatever it can, by fully mobilizing every policy measure 
available. He then ordered him to immediately compile economic 
stimulus measures by putting together views of various government 
agencies and the ruling parties. 
 
TOKYO 00002129  002 OF 008 
 
SUBJECT:  DAILY SUMMARY OF JAPANESE PRESS 08//08 
 
 
Yosano told reporters, "The prime minister is concerned about the 
daily life of the public and small- and medium-size businesses." He 
revealed the government policy of considering reducing the burden of 
fuel expenses borne by people who live in remote areas and helping 
small- and medium-size businesses that are experiencing funding 
difficulties, as they are unable to pass higher costs along to 
consumers. 
 
(2) Government to produce economic package possibly in September to 
cope with soaring oil prices, assist small businesses 
 
NIKKEI (Page 1) (Full) 
August 3, 2008 
 
The government yesterday started work to compile a comprehensive 
economic package to cope with soaring commodity prices following the 
recent steep rise in oil prices and to buoy up the economy. The 
package is likely to include energy measures and assistant measures 
for small businesses and industries related to agriculture, 
forestry, and fisheries, which have been directly affected by 
skyrocketing oil prices. The government will also study the 
possibility of compiling an extra budget to finance these measures. 
A group under the lead of Minister for Economic and Fiscal Policy 
Kaoru Yosano will launch full-scale coordination early next week and 
finalize a package as early as September. 
 
In a press conference after a cabinet meeting yesterday, Yosano 
said: "It is inconceivable that we will come up with a package of 
pork-barrel measures. Instead, we will conduct discussions with 
government agencies concerned to hammer out effective measures. 
Budgetary and tax policy means will need to be employed." Reflecting 
Prime Minister Yasuo Fukuda's intention, Yosano plans to hurriedly 
have specific measures drafted. 
 
Finance Minister Bunmei Ibuki indicated his willingness to secure 
fiscal resources by compiling a supplementary budget or utilizing 
reserve funds. Minister of Economy, Trade and Industry Toshihiro 
Nikai and Minister of State for Financial Services Toshimitsu Motegi 
also expressed their views that measures for troubled small 
companies are necessary. 
 
Even so, Japan is facing a tight fiscal condition. The new cabinet 
will be put to the test over whether it is capable of working out 
effective measures without remarkably boosting expenditures. 
 
(3) Finance minister: Discussion will start this fall on scenario 
about consumption tax hike 
 
NIKKEI (Page 1) (Slightly abridged) 
August 3, 2008 
 
The second Fukuda cabinet was formally launched yesterday. Cabinet 
ministers gave press conferences after their first meeting and spoke 
of what policies they planned to take. Finance Minister Bunmei Ibuki 
indicated his willingness to determine such details as the timing 
for raising the consumption tax and the level of increase in 
discussing fundamental tax reform starting in the fall through the 
end of the year. Ibuki said: "To carry out (a certain policy plan) 
over a long period, securing permanent stable fiscal resources are 
imperative. This issue must be discussed in the process of 
discussion on fundamental system reform later this year." 
 
TOKYO 00002129  003 OF 008 
 
SUBJECT:  DAILY SUMMARY OF JAPANESE PRESS 08//08 
 
 
Prime Minister Yasuo Fukuda stated in a press conference in June: 
"We want to consider the issue of increasing the consumption tax 
over a long period, for instance, taking two or three years." Ibuki 
said he has interpreted this remark as meaning that it will take two 
or three years until the entire work is completed. Asked when he 
plans to increase the tax, Ibuki replied: "There are a variety of 
political judgments." 
 
The terms of the Lower House members will expire about a year from 
now. In this connection, Ibuki stated: "When both ruling and 
opposition camps submit their policy manifestos, they should show 
what measures they plan to take and how much money is needed to fund 
the measures. 
 
The government plans to raise by 50 PERCENT  the national government 
subsidy rate for basic pension benefits starting in FY2009. 
Regarding this plan, Ibuki stressed that he would give priority to 
maintaining the policy of keeping fiscal soundness, remarking: "I 
have no intention of floating government bonds." He also indicated 
that he would look into utilizing the so-called "buried money" 
(untapped funds) at government agencies, such as reserve funds in 
special accounts, saying: "If we may hold out even without raising 
the consumption tax in the first year, that would be fine." 
 
Taking up Economy and Fiscal Policy Minister Kaoru Yosano's 
revelation of his plan to work out economy-spurring measures, Ibuki 
praised the plan as stemming from an accurate judgment. 
 
Former Finance Minister Fukushiro Nukaga had also stressed the need 
to discuss the possibility of increasing the consumption tax in 
discussions on tax system reform this fall. 
 
(4) Response of business circles: Call for structural reforms to 
find breakthrough in economic gridlock 
 
NIKKEI (Page 5) (Full) 
August 2, 2008 
 
Many in business circles have called on the shuffled cabinet to 
implement structural reforms. Fujio Mitarai, chairman of the Japan 
Business Federation (Nippon Keidanren), commented, "It is necessary 
to drastically reform tax and fiscal administration in order to find 
a breakthrough in the economic impasse." Masamitsu Sakurai, 
representative director of the Japan Association of Corporate 
Executives (Keizai Doyukai), released a statement that went: 
"Continuing and accelerating reform is the only recourse." 
 
Fujio Mitarai, chairman of Nippon Keidanren 
 
"The global economy is stalled. The Japanese economy also has paused 
temporarily. Companies feel their situations are worsening. The 
cabinet shuffle this time is the reflection of a consensus that the 
government is determined to tackle a difficult situation with one 
heart by forming a strong cabinet. Bringing about a reform of the 
social security system and drastically reforming the tax code are 
indispensable. I would like the government to discuss the timing of 
a consumption tax hike and the scope of the increase" 
 
Masamitsu Sakurai, Keizai Doyukai Representative Director: "The 
shuffling shows that the prime minister aims to run his 
administration through his own leadership. The only way to 
 
TOKYO 00002129  004 OF 008 
 
SUBJECT:  DAILY SUMMARY OF JAPANESE PRESS 08//08 
 
revitalize the economy is by continuing and accelerating structural 
reforms, based on fiscal reconstruction and administrative reform, 
and by realizing an open market economy. I would like the government 
to immediately show the nation specific policy measures and their 
order of priority." 
 
Tadashi Okamura, Japan Chamber of Commerce and Industry President: 
"Assisting small to medium-sized businesses, which are suffering 
from soaring crude oil and raw material prices, is a matter of 
urgent necessity. It is important to put the economy, which has 
begun showing signs of decline, back on the recovery track through 
reform of the tax code and budget compilation. I hope the government 
will revitalize industries, in particular, by coming up with 
assistance measures that will be effective in boosting small to 
medium-sized businesses." 
 
(5) Defense Ministry to establish crisis management center to 
exclusively handle information to speedily respond to terrorist 
attacks and disasters 
 
NIKKEI (Page 2) (Abridged) 
Evening, August 2, 2008 
 
The Ministry of Defense (MOD) has begun discussions on establishing 
what is called the crisis management center tasked with collecting 
information in an integrated fashion in the wake of the occurrence 
of an emergency situation, such as a large-scale terrorist attack, a 
major disaster and an accident. The ministry's response to emergency 
situations and its public relations activities have been hindered by 
poor communications between MOD bureaucrats and SDF officers that 
have become clear in past events, such as a collision between an 
Aegis vessel and a fishing boat. The ministry eyes a system in which 
the internal bureaus and SDF staff offices properly respond to 
situations as a team at the order of the defense minister. 
 
The step is part of the government's efforts to reform the MOD, 
which was hit by a series of misconducts by MOD officials, such as 
the underreport of the fuel the Maritime Self-Defense Force supplied 
to a U.S. supply ship and a bribery case involving former 
Vice-Defense Minister Takemasa Moriya. 
 
The MOD envisages a body similar to the Cabinet Intelligence and 
Crisis Management Center that collects information and responds to 
emergency situations around the clock. A plan to establish the 
crisis management center will be incorporated in a MOD reform road 
map due out later this month. 
 
In past news conferences, discrepancies were often evident in what 
was announced by MOD senior officers and by SDF officers. The 
envisaged system is designed to allow the non-uniformed MOD public 
relations officer to exclusively grasp information and to establish 
a set of rules that applies to all public relations activities and 
media responses. 
 
The emergency response manual for senior officers will also be 
reexamined. The results of unannounced drills will be reflected in 
the response manual. 
 
New Defense Minister Yoshimasa Hayashi, appearing on a Yomiuri 
televising program on the morning of August 2, emphatically said 
about MOD reform: "It is important to realize policies one by one 
that are included in a report (produced by the government's Council 
 
TOKYO 00002129  005 OF 008 
 
SUBJECT:  DAILY SUMMARY OF JAPANESE PRESS 08//08 
 
on Reform of the Defense Ministry)." 
 
(6) Defense Minister Hayashi: Continuation of refueling operations 
in Indian Ocean necessary 
 
NIKKEI (Page 2) (Full) 
Evening, August 2, 2008 
 
Defense Minister Yoshimasa Hayashi, appearing on a Yomiuri 
television program on the morning of August 2, underlined the 
importance of extending the Maritime Self-Defense Force's refueling 
operations in the Indian Ocean. He said: "The Ministry of Defense 
will make preparations to obtain public understanding by explaining 
why the operations are necessary." 
 
(7) Poll: 36 PERCENT  in Japan, 67 PERCENT  in China see bilateral 
ties as good 
 
YOMIURI (Page 1) (Abridged) 
August 4, 2008 
 
The Yomiuri Shimbun and Outlook Weekly, a weekly journal published 
by China's Xinhua News Agency, conducted a joint public opinion 
survey in Japan and China. In Japan, 36 PERCENT  answered that 
Japan-China relations are in good shape, with 57 PERCENT  saying 
Japan-China relations are in bad shape. In China, "good" accounted 
for 67 PERCENT , with "bad" at 29 PERCENT . As seen from these 
figures, the Japanese and Chinese public differed widely in their 
views of bilateral ties. In Japan, there is a deep seated sense of 
distrust in China over its military buildup and pesticide-tainted 
frozen 'gyoza' dumplings made in China. Meanwhile, China has now 
shifted to future-oriented diplomacy toward Japan. The survey showed 
a clear difference between the Japanese public's awareness and the 
Chinese public's. 
 
The survey was conducted July 12-13 in Japan and July 11-16 in China 
on a face-to-face basis. 
 
In Japan, the question about the state of Japan-China relations was 
asked in the three surveys from 2006 through the one this time. In 
the three surveys, "good" was up and down-27 PERCENT  in 2006, 42 
PERCENT  in 2007, and 36 PERCENT  this time. In May, Chinese 
President Hu Jintao visited Japan and signed a bilateral joint 
statement with Prime Minister Fukuda to push forward "strategic and 
reciprocal" relations. As seen from this, Japan and China has made 
headway to a certain extent in their diplomacy toward each other. 
However, the survey shows that the Japanese public's view of China 
has deteriorated. 
 
In the survey this time, respondents were also asked if they could 
trust each other's country. To this question, "yes" accounted for 19 
PERCENT  in Japan and 56 PERCENT  in China, with "no" at 78 PERCENT 
in Japan and 42 PERCENT  in China. Asked what would become of 
Japan-China relations, 38 PERCENT  in Japan and 75 PERCENT  in China 
answered that bilateral ties would change for the better, with 51 
PERCENT  in Japan and 21 PERCENT  in China saying there would be "no 
change" and 8 PERCENT  in Japan and 3 PERCENT  in China saying 
bilateral ties would worsen. As seen from these figures, the 
Japanese public takes a harsh view of China, while the Chinese 
public is optimistic about bilateral ties with Japan. 
 
(8) Fukuda or Ozawa for prime minister? 
 
TOKYO 00002129  006 OF 008 
 
SUBJECT:  DAILY SUMMARY OF JAPANESE PRESS 08//08 
 
 
MAINICHI (Page 3) (Full) 
August 4, 2008 
 
The Asahi Shimbun conducted a telephone-based nationwide public 
opinion survey on Aug. 1-2, in which respondents were asked to 
choose between Prime Minister Yasuo Fukuda and Ichiro Ozawa, 
president of the leading opposition Democratic Party of Japan 
(Minshuto), as to who would be more appropriate to be prime 
minister. To this question, 19 PERCENT  picked Fukuda, with 18 
PERCENT  preferring Ozawa. This question was asked for the third 
time following the April and May surveys. Fukuda was up 5 percentage 
points from May, and Ozawa has leveled off. Fukuda has edged out 
Ozawa again. The proportion of those who think "neither is 
appropriate" decreased 7 points but still remains high at 56 PERCENT 
. 
 
Among those who support the ruling Liberal Democratic Party, Fukuda 
was at 52 PERCENT  and Ozawa at 4 PERCENT , with 40 PERCENT  saying 
"neither is appropriate." Among DPJ supporters, Fukuda was at 4 
PERCENT  and Ozawa at 42 PERCENT , with 51 PERCENT  saying "neither 
is appropriate." The figures show that both Fukuda and Ozawa are 
precarious among their parties' respective supporters. Ozawa is more 
precarious among his party's supporters. 
 
"Neither" accounted for 70 PERCENT  among those with no particular 
party affiliation, 66 PERCENT  among those who support New Komeito, 
the LDP's coalition partner, and 62 PERCENT  among those who support 
the Japanese Communist Party. Among those unaffiliated, Fukuda was 
at 9 PERCENT  as appropriate for prime minister and Ozawa at 14 
PERCENT . 
 
(9) Fissure between LDP and New Komeito over Lower House dissolution 
and term of next extraordinary Diet session 
 
YOMIURI (Page 1) (Abridged slightly) 
August 4, 2008 
 
"What do you think of the idea of giving two cabinet posts to the 
New Komeito?" Prime Minister Yasuo Fukuda asked former Prime 
Minister Yoshiro Mori on the night before shuffling his cabinet. In 
the eight years of the LDP-New Komeito administration, the number of 
cabinet posts granted to the New Komeito has always been kept at 
one. Aware of Fukuda's consideration for the New Komeito, Mori said: 
"I think it's good. When the coalition government was first launched 
with the Liberal Party and New Komeito, we limited the number of 
portfolios to the New Komeito to one simply to prevent the Liberal 
Party from demanding two." 
 
The idea of giving two cabinet posts to the New Komeito with the aim 
of strengthening ties with that party did not materialize because 
the coalition partner ended up declining the offer. 
 
A New Komeito executive explained: "Cabinet ministers are hostages 
for keeping the coalition arrangement intact. We don't need two 
posts." This comment clearly reflects the New Komeito's lack of 
trust in the Fukuda administration. 
 
New Komeito Representative Akihiro Ota, after LDP-New Komeito party 
head talks on August 1, told reporters: "The prime minister said he 
wanted solidarity and cooperation. We share the view that reform is 
necessary for the sake of the people's livelihood." The need to call 
 
TOKYO 00002129  007 OF 008 
 
SUBJECT:  DAILY SUMMARY OF JAPANESE PRESS 08//08 
 
for solidarity tells much about the seriousness of the rift growing 
between the LDP and New Komeito. 
 
The gulf has resulted from two sticking points. One is the timing of 
the dissolution of the Lower House and the other is over how to 
proceed with the next extraordinary Diet session. 
 
The New Komeito and its support base, Soka Gakkai, have kept sending 
the same message to the LDP, namely, that the Lower House should be 
dissolved before next summer's Tokyo Metropolitan Assembly election, 
if possible, by late December or early January. 
 
The New Komeito also wants the term of the extraordinary Diet 
session to be as short as possible. Former Komeito Chairman Junya 
Yano has filed a damage suit against Soka Gakkai. "The New Komeito 
and Soka Gakkai desperately want to avoid the opposition bloc 
demanding Yano's Diet testimony and making a big issue out of it," 
an LDP executive said. 
 
The New Komeito's request for an early general election and a short 
Diet session fetters the prime minister's right to dissolve the 
Lower House. It also makes it difficult for Fukuda to realize his 
plan to extend the new Antiterrorism Special Measures Law in the 
extra Diet session. 
 
Resolving the issues of the timing of the next Lower House election 
and the course of the extraordinary Diet session depend on the 
outcome of maneuvering between Prime Minister Fukuda and the New 
Komeito. A source connected with Soka Gakkai noted: "The effects of 
the shuffled cabinet will gradually fade away. Unless the Lower 
House is dissolved early, calls for handing the helm to Mr. Aso will 
grow louder. Chances are that Mr. Fukuda will dissolve the Lower 
House for a snap general election before the end of the year. So we 
will begin making reparations for the next election once the O-bon 
mid-August holidays are over." 
 
How will the prime minister deal with the New Komeito, which is 
undermining him by fanning the winds of dissolution and spreading 
talk about a power transfer to Aso? 
 
(10) TOP HEADLINES 
 
Asahi: 
In run-up to Olympics, 1.4 million police officers on guard in 
Beijing 
 
Mainichi: 
Fukuda persuades Aso to be LDP secretary general by taking advantage 
of Aso's ambition to succeed him 
 
Yomiuri: 
Sharaku original found in Greek museum 
 
Nikkei: 
Itochu, Chinese trading giant tie up in food purchasing and 
distribution 
 
Sankei: 
Soaring oil prices significantly reducing overseas tourists 
 
Tokyo Shimbun: 
Prosecutors to start investigation of ex-PCI heads today on 
 
TOKYO 00002129  008 OF 008 
 
SUBJECT:  DAILY SUMMARY OF JAPANESE PRESS 08//08 
 
suspicion of bribery in ODA project in Vietnam 
 
Akahata: 
Town in Nagano collects signatures from majority of residents to 
protect Article 9 
 
(11) EDITORIALS 
 
Asahi: 
(1) Heat-island phenomenon: Winds and greenery prevent heat 
pollution 
 
Mainichi: 
(1) Toyosu should review plan to move central wholesale market in 
response to final report on soil contamination 
 
Yomiuri: 
(1) Think of mergers and realignment to cope with fewer new students 
at private universities 
(2) Aim at unifying emerging markets 
 
Nikkei: 
(1) Problem of dispatched workers cannot be resolved with 
shortsighted regulations 
(2) Meaning of Karadzic trial questioned 
 
Sankei: 
(1) Economic and Fiscal Policy Minister Yosano expected to lead tax 
and fiscal reforms 
(2) Government must take some measures in reaction to Chinese 
antimonopoly law 
 
Tokyo Shimbun: 
(1) What standard should be used in judging whether the Beijing 
Olympics is a success or not? 
 
Akahata: 
(1) U.S. submarine radiation leak: We must continue fight against 
deployment of nuclear-powered carrier to Yokosuka. 
 
SCHIEFFER