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RUCNDT/USMISSION USUN NEW YORK 1237

UNCLAS SECTION 01 OF 08 TOKYO 002229 
 
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 08/14/08 
 
Defense and security: 
1) Prime Minister Fukuda, LDP Secretary General Aso concur on 
submission during extra Diet session of bill extending MSDF 
refueling services  (Asahi) 
2) Government distressed by tendency in ruling parties to put end to 
Indian Ocean refueling mission and substitute some other Afghan 
contribution  (Tokyo Shimbun) 
3) Sasebo mayor demands measures that will prevent a recurrence of 
submarine radiation leakage  (Tokyo Shimbun) 
 
North Korea problem: 
4) Japan, North Korea agree that abduction reinvestigation will be 
completed by the fall, but there is a risk for Japan in easing of 
sanctions in return  (Nikkei) 
5) U.S. official welcomes the progress in Japan-North Korea 
abduction talks  (Yomiuri) 
 
Economy: 
6) Prime Minister Fukuda now positive about compiling a large-scale 
supplementary budget this fall to help the slowing economy  (Tokyo 
Shimbun) 
7) Aso and the New Komeito are in line on a large-scale 
supplementary budget to stimulate the economy, but Fukuda fears it 
could be filled with pork-barrel  (Nikkei) 
8) If the ruling camp's economic stimulus package is on a 1-trillion 
yen scale, the problem will be where to find the fiscal resources to 
pay for it  (Yomiuri) 
 
Political agenda: 
9) With Aso lining up with the New Komeito, the parties are taking 
the lead in managing the policy agenda, including the timing for 
opening the Diet  (Mainichi) 
10) Yomiuri poll on the DPJ presidential election finds 71 PERCENT 
of nation (76 PERCENT  of DPJ supporters) wants to see a real 
election with several candidates  (Yomiuri) 
 
Articles: 
 
1) Gov't to present bill for MSDF refueling extension 
 
ASAHI (Page 1) (Abridged) 
August 14, 2008 
 
Prime Minister Fukuda yesterday met with Taro Aso, secretary general 
of his ruling Liberal Democratic Party, and discussed the 
government's course of action toward this fall's extraordinary Diet 
session. Fukuda indicated that he would give priority to extending 
the new Antiterror Special Measures Law, under which the Maritime 
Self-Defense Forces is currently tasked with refueling activities in 
the Indian Ocean to back up antiterror operations in Afghanistan. 
Fukuda and Aso confirmed that the government would present a bill to 
the Diet at its forthcoming extraordinary session. Earlier in the 
day, the LDP and its coalition partner, New Komeito, held a meeting 
of their executives and agreed to submit a supplementary budget at 
the extra Diet session. "We must boost the economy," Fukuda said. 
"This priority is extremely high," he added. With this, Fukuda told 
Aso that he would consider measures to turn the economy around. 
 
In the meeting was LDP Diet Affairs Committee Chairman Tadamori 
Oshima. Fukuda and the LDP executives discussed the MSDF's refueling 
activities in the Indian Ocean. "My understanding is that this is a 
huge international issue," Fukuda said, "so we must make a strong 
 
TOKYO 00002229  002 OF 008 
 
 
appeal." With this, he voiced his strong intention to extend the law 
at the extra Diet session so the MSDF mission can be continued. 
 
However, the leading opposition Democratic Party of Japan (Minshuto) 
will oppose extending the law. It would become unavoidable for the 
ruling coalition to take a second vote in the House of 
Representatives in order for the legislation to get through the Diet 
since the bill would be voted down in the opposition-controlled 
House of Councillors. But New Komeito is reluctant to do so. 
 
The LDP and New Komeito will continue to coordinate a timetable 
aiming to call the extra Diet session in early September or later. 
 
2) With ruling camp clamoring for alternate plan to refueling 
mission, gov't at a loss to come up with any ideas 
 
TOKYO SHIMBUN (Page 1) (Full) 
August 14, 2008 
 
The government is now in a fix over the Maritime Self-Defense 
Force's refueling activities in the Indian Ocean as the ruling 
Liberal Democratic Party's executives are calling for the government 
to consider taking other measures to satisfy Japan's international 
contribution instead of continuing the MSDF's refueling mission. 
 
A number of key lawmakers in the LDP and its coalition partner New 
Komeito are reluctant for the House of Representatives to take an 
overriding second vote on a bill to amend the new Antiterrorism 
Special Measures Law in order to pass the legislation after its is 
voted down in the opposition-controlled House of Councillors. In 
particular, the New Komeito is strongly resistant to taking a second 
vote in the lower chamber. 
 
Given such circumstances, LDP Secretary General Taro Aso told the 
press in an interview on Aug. 5: "If they say no, then we'll have to 
think about what we can do instead of continuing refueling 
activities." LDP General Council Chairman Takashi Sasagawa also 
referred to the necessity of alternative measures. 
 
Former LDP Secretary General Koichi Kato also said on an Aug. 12 
satellite TV program: "It would be difficult to take a second vote. 
We should reconstruct a grand design for the war on terror." 
 
Aso and Sasagawa advocated tasking the MSDF with escorting Japanese 
oil tankers in the Indian Ocean. 
 
3) Sasebo mayor asks for preventive steps over nuclear sub's 
radiation leak 
 
TOKYO SHIMBUN (Page 2) (Full) 
August 14, 2008 
 
The USS Houston, a U.S. nuclear-powered submarine, was recently 
found to have leaked radiation in Nagasaki Prefecture's Sasebo port. 
On this issue, Sasebo Mayor Norio Tomonaga and his city's municipal 
assembly speaker, Hiroyuki Matsuo, called at the Foreign Ministry 
yesterday and met with North American Affairs Bureau Director 
General Shinichi Nishimiya. In the meeting, Tomonaga and Matsuo said 
the United States should look into the cause of the incident and 
take steps to prevent a recurrence. 
 
At the same time, the two asked the government again to inform 
 
TOKYO 00002229  003 OF 008 
 
 
base-hosting municipalities about incidents involving U.S. 
nuclear-powered vessels and to release a statement over safety. 
 
"Sasebo City's residents are very concerned about even a small 
amount of radiation leaking," Tomonaga said. "Sasebo City is where 
U.S. nuclear-powered submarines make frequent port calls," he added, 
"so it's very regrettable." 
 
Nishimiya said: "We immediately asked the U.S. government to 
determine the cause of the radiation leak and take steps to prevent 
such an incident from recurring. We will convey the request this 
time (to the U.S. government) as well, and we will wait for them to 
come up with a report." 
 
4) Japan, North Korea agree on plan to complete abduction probe by 
fall, but Fukuda may face risk over lifting sanctions 
 
NIKKEI (Page 2) (Excerpts) 
August 14, 2008 
 
Japan and North Korea in their official working-level talks in 
Shenyang, China, agreed in the early morning of the 13th that North 
Korea would reinvestigate the issue of Japanese nationals abducted 
by its agents as soon as possible and try to complete the process by 
this fall. Japan has agreed to lift two economic sanction measures, 
including one banning chartered flights between the two countries, 
once the reinvestigation starts. Even so, many details have yet to 
be determined, leaving a possible risk for the Fukuda 
administration. 
 
Song Il Ho, North Korean envoy in charge of normalization talks with 
Japan, showed up at a Shenyang hotel before dawn on the 13th, and 
said angrily: "Why were the talks restarted so many hours late?" It 
took as many as 10 hours until talks were resumed after a break 
following the end of the morning session on the 12th. An informed 
Japanese source said that in the process of both sides reporting to 
their governments on the contents of the agreement, "the Japanese 
government complained of the contents as insufficient." 
 
One of the contentious points was the timing for Japan's partial 
removal of sanctions. North Korea had insisted this be done quickly, 
but Japan had proposed the time when the investigation starts. 
Coordination in the Japanese government reportedly lasted until an 
hour before dawn. 
 
There are many points remaining. Both sides agreed that the North 
would complete the investigation by the fall to the extent possible, 
but they have yet to decide when to start the investigation. The two 
countries also have not determined the details of an investigative 
organization Japan has proposed to set up this month and a mechanism 
to enable Japan to check the state of the investigation. 
 
5) U.S. welcomes progress in Japan-North Korea talks 
 
YOMIURI (Page 3) (Full) 
August 14, 2008 
 
Speaking before reporters on Aug. 13, Sung Kim, director of the 
State Department's Office of Korean Affairs and special U.S. envoy 
to the six-party talks, praised the outcome of the latest 
Japan-North Korea talks. He said: "I understand the talks were 
constructive. I expect to see specific progress." 
 
TOKYO 00002229  004 OF 008 
 
 
 
Washington's welcoming stance toward the progress in the Japan-North 
Korea talks stems from the judgment that improvement in Japan-North 
Korea relations and Japan's participation in the program of energy 
aid for the North based on a six-party agreement are indispensable 
to move the six-party process forward. 
 
The Bush administration has indicated that a removal of North Korea 
from its list of state sponsors of terrorism is not directly linked 
to the abduction issue. Even so, if the abduction issue, which is 
cited as one of the reasons for the U.S. to keep the North on the 
list, comes closer to a settlement, the administration will 
certainly find itself easier to take the North off the list. 
 
Conversely, should the Bush administration drop the North from the 
list before seeing satisfactory progress on the abduction issue, 
criticism will inevitably mount in the U.S., as Senator Lieberman 
said: "The U.S. may harm the relationship with Japan, which is a 
close ally for the U.S." The U.S. government is expected to continue 
to watch carefully the process and outcome of a reinvestigation by 
the North. 
 
6) Fukuda indicates willingness to compile large-scale supplementary 
budget 
 
TOKYO SHIMBUN (Page 1) (Full) 
August 14, 2008 
 
Prime Minister Fukuda, Liberal Democratic Party's (LDP) Secretary 
General Taro Aso and Diet Affairs Committee Chairman Tadamori Oshima 
met at the Prime Minister's Official Residence for about one hour 
yesterday afternoon. In the meeting, Fukuda responded positively to 
a proposal by Aso and Oshima to compile a large-scale supplementary 
budget for fiscal 2008 to finance an economic stimulus package and 
to submit it to the upcoming extraordinary Diet session. Fukuda 
said: "We must take some measures (to buoy up the economy). The 
order of priority of this is extremely high." 
 
Prior to the meeting, the secretaries general and the Diet Affairs 
Committee chairmen of the LDP and the New Komeito met in Tokyo and 
decided to ask the government to compile a large-scale second 
budget. 
 
The LDP insisted that the government should submit an extra budget 
bill at the outset of the next session and show its eagerness to 
tackle such issues as the recent steep rise in commodity prices and 
the looming economic recession. The New Komeito called for a budget 
worth more than one trillion yen. 
 
In the talks by senior members of the LDP and the New Komeito, no 
conclusion was reached on when to convene the next extraordinary 
Diet session. In the trilateral meeting, it was confirmed that a 
decision would be made next week. 
 
On the timing for the opening of the session, the LDP has insisted 
on "early September," aiming at enacting a bill amending the new 
Antiterrorism Special Measures Law to continue the Maritime 
Self-Defense Force's refueling mission in the Indian Ocean. 
Meanwhile, the New Komeito, which remains cautious about using 
revote in the House of Representatives to force through the bill, 
has asserted "late September." 
 
 
TOKYO 00002229  005 OF 008 
 
 
7) War of nerves over scale of supplementary budget: Aso, New 
Komeito in agreement in pursuit of large scale budget; Prime 
minister concerned about pork-barrel 
 
NIKKEI (Page 2) (Excerpts) 
August 14, 2008 
 
Prime Minister Yasuo Fukuda yesterday evening met with Secretary 
General Taro Aso of the Liberal Democratic Party (LDP). The Prime 
Minister in the meeting took a positive stance toward compiling a 
fiscal 2008 supplementary budget, saying, "Compiling an economic 
stimulus package is high-priority." However, he stopped short of 
clarifying the size of a supplementary budget, out of concern that 
the compilation of a supplementary budget could incur criticism as 
being filled with pork-barrel measures. He is conscious that the New 
Komeito, which is seeking a large-scale supplementary budget, is 
cautious about a bill extending the law governing the Maritime 
Self-Defense Force's (MSDF) refueling operation in the Indian Ocean. 
Bargaining between the ruling camp and the prime minister over 
tradeoffs will likely continue, intertwined with the issue of when 
to convene the next extraordinary Diet session. 
 
Bargaining intertwined with refueling law, timing of convening 
extraordinary Diet session 
 
The focus of the meeting was on how to handle a supplementary budget 
that will incorporate an economic stimulus package featuring 
measures to address the steep rise in crude oil prices and 
assistance to small- and medium-size businesses. Meeting the press 
after his talks with the prime minister, Aso revealed the prime 
minister's comment, "The prime minister said that economic stimulus 
measures must be taken." 
 
However, the two did not reach an agreement on the scale of the 
proposed supplementary budget. Aso said, "If an economic stimulus 
package is to be compiled, figures might be set in a manner that 
makes resorting to compiling a supplementary budget a foregone 
conclusion. There still are some elements that need further 
consideration." 
 
Senior officials of the LDP and the New Komeito at their lunch 
meeting, held prior to the meeting between the prime minister and 
Aso, agreed on the policy of submitting a large-scale supplementary 
budget bill to the next extraordinary Diet session. The New Komeito 
called for a large-scale package. Aso agreed, saying, "Piecemeal 
measures will not do." One senior New Komeito official called for a 
one-trillion yen scale package. 
 
Though the prime minister is positive toward compiling a 
supplementary budget, he did not give the go-ahead to Aso, who 
shares the same view with the New Komeito, because he is concerned 
that a large-scale supplementary budget would draw criticism. One 
senior official of the ruling parties on the evening of the same day 
underscored, "It would be meaningless to compile a small-scale 
budget, listening to bureaucrats." There is an atmosphere that the 
ruling parties will increase pressure on the prime minister, whose 
stance remains vague. 
 
Regarding the extension of the law governing the MSDF's refueling 
operation in the Indian Ocean, which expires next January, a gap 
between the New Komeito, which is cautious about the extension, and 
the prime minister remains unfilled. The prime minister indicated 
 
TOKYO 00002229  006 OF 008 
 
 
his desire to extend the law, saying, "I must strongly make a public 
appeal that this is a very serious issue for Japan from an 
international perspective." 
 
Since opposition parties, such as the Democratic Party of Japan (DPJ 
or Minshuto), in the Upper House are bound to vote down the bill, it 
is necessary to take a revote in order to pass the bill by a 
two-thirds majority or more in the Lower House. However, the New 
Komeito is negative toward the idea, because such a method would 
give the impression that the ruling parties railroaded the bill. 
 
According to one senior ruling party official, the prime minister 
during the meeting with Aso gave consideration to the New Komeito, 
noting that he does not take the view that there must be a 
two-thirds majority second vote, though he at the same time 
indicated a stance of adhering to his desire to see the bill gain 
Diet approval. One senior New Komeito official on the evening of the 
same day said, "We will approve as far as the passage of the bill in 
the Lower House." However, the party is strongly opposing the idea 
of putting the bill to a revote in the Lower House after it is voted 
down in the Upper House. The path leading to passage of the bill is 
not yet in sight. 
 
8) Supplementary budget: Fiscal resources to finance economic 
stimulus package contentious issue: Additional issuance of 
deficit-covering government bonds likely, if budget scale reaches 1 
trillion yen 
 
YOMIURI (Page 2) (Full) 
August 14, 2008 
 
The government and the ruling parties on August 13 started 
considering the submission of a fiscal 2008 supplementary budget 
bill to the next extraordinary Diet session. Two points of 
contention are likely: the specifics of the planned economic 
stimulus package and where to find the necessary fiscal resources, 
given the nation's serious fiscal straits. 
 
The scale of the envisaged supplementary budget will depend on the 
amount of specific measures incorporated in a comprehensive economic 
stimulus package, which the government is expected to release in 
late August, according to a senior official at the Finance 
Ministry. 
 
Specific measures will likely include steps to address soaring crude 
oil prices, such as fuel subsidies to farmers who grow vegetables in 
vinyl greenhouses and subsidies to households that install a 
photovoltaic electrical system, and measures to promote energy 
saving and the development of new energy. 
 
Measures that would not have been included in past packages, such as 
measures on medical services and irregular employment, and speedy 
settlement of pension premium contribution record errors, will also 
likely be incorporated. The package will also most likely include a 
cut in expressway tolls. 
 
Funds to finance the supplementary budget will likely be drawn from 
portions of funds reserved in the fiscal 2008 budget (334.9 billion 
yen) that have been earmarked for unexpected expenditures, such as 
natural disaster-related spending, and leftover budget funds (631.9 
billion yen) from the fiscal 2007 budget. 
 
 
TOKYO 00002229  007 OF 008 
 
 
However, if the scale of the supplementary budget jumps to 1 
trillion yen, which some ruling party members are seeking, there 
would be a strong possibility of additional deficit-covering 
government funds having to be issued. Should that occur, there would 
be a potential downside effect on the prices of government bonds 
(though the interest rate would rise), because this would be 
regarded as a measure running counter to the ongoing fiscal 
reconstruction policy. The Finance Ministry is increasingly alarmed 
about such a development, with one official noting, "If all demands 
made by the ruling parties are met, there would be a shortfall in 
fiscal resources." 
 
Other proposals up for consideration are the introduction of a 
fixed-rate tax break of deducting a designated amount from 
individuals' income, which the New Komeito is demanding, and a 
measure to make dividends worth less than 2 million yen tax-free, as 
Secretary General Aso of the Liberal Democratic Party (LDP) has 
proposed. 
 
The introduction of a large-scale fixed-rate tax cut in the middle 
of fiscal 2008 would put a dent in tax revenues, necessitating 
additional issuances of deficit-covering government bonds, the 
Finance Ministry has warned. 
 
Prime Minister Fukuda ordered the Financial Services Agency to look 
into a tax-free measure on dividends proposed by Aso. However, the 
New Komeito is opposing the proposal as a tax measure that gives 
preferential treatment to the affluent population. This issue will 
likely become a future source of contention among the government, 
the LDP and the New Komeito. 
 
9) Aso-New Komeito combination taking lead in managing political 
administration, including when to convene Diet session 
 
MAINICHI (Page 2) (Excerpts) 
August 14, 2008 
 
The leadership of the ruling Liberal Democratic Party (LDP) and New 
Komeito, the LDP's junior coalition partner, are urging Prime 
Minister Yasuo Fukuda to submit a supplementary budget to the next 
extraordinary Diet session, as well as to convene an extra session 
in the middle of September or later. In order to stabilize his 
administration, Fukuda picked Taro Aso as secretary general of the 
LDP. However, it has now become clear that the Aso-New Komeito 
combination is gradually grabbing the initiative to manage political 
administration on such issues as the timing of the opening for the 
next Diet session and issues for Diet deliberation. 
 
According to Aso, Fukuda told him yesterday at the Prime Minister's 
Official Residence: "Japan must underscore its view (that war 
against terror is) an extremely important international issue." 
Fukuda then underscored the view that it would be necessary to 
extend the new Antiterrorism Special Measures Law, which will expire 
on Jan. 15, 2009. 
 
However, an extension of the antiterrorism law has now become 
difficult since the view is strong among LDP lawmakers that the 
extra session should be convened in the middle of September or later 
in a bid to give sole priority to an economic stimulus package. The 
opposition camp, which controls the House of Councillors, intends to 
oppose the extension of the law. At present, therefore, in order to 
extend the law, the ruling bloc would have to take an overriding 
 
TOKYO 00002229  008 OF 008 
 
 
vote in the House of Representatives 60 days after the bill was 
voted down in the Upper House in order to pass it in the Lower 
House.  But if the extra session were convened in mid-September, it 
is uncertain whether the bill could be enacted before the end of the 
year since chances are strong that deliberations on the bill would 
not start until mid-October. 
 
The New Komeito has taken over active leadership in the ruling 
coalition, which is calling for placing more importance on economic 
measures rather than the extension of the new Antiterrorism Special 
Measures Law. If the coalition camp takes a second vote in the Lower 
House, public criticism is likely. If so, the New Komeito is 
concerned that its scenario for having the Lower House be dissolved 
at the end of the year or early next year may fail. 
 
10) Poll: 71 PERCENT  hope DPJ presidential race will be contested 
by more than one candidate; 23 PERCENT  want Ozawa to serve another 
term 
 
YOMIURI (Page 2) (Full) 
August 14, 2008 
 
According to the result of an (interview-based) nationwide survey on 
the September presidential election of the Democratic Party of Japan 
(DPJ) the Yomiuri Shimbun conducted on Aug. 9-10, 71 PERCENT  of 
respondents said that the election should be contested by more than 
one candidate, greatly topping the other 18 PERCENT  of the 
respondents who did not think so.  Among those who supported the 
DPJ, the rate of respondents favoring a multi-candidate election was 
76 PERCENT . The poll unveiled that many voters think it desirable 
for the DPJ to carry out a real election, even though there is a 
view in the party calling for the uncontested reelection of Ichiro 
Ozawa for a third term. 
 
Regarding a question about who would be desirable for president, 23 
PERCENT  picked Ozawa, followed by Naoto Kan with 14 PERCENT , Seiji 
Maehara with 10 PERCENT , Katsuya Okada with 9 PERCENT , and Yukio 
Hatoyama with 7 PERCENT . Among respondents who support the DPJ, 49 
PERCENT  said Ozawa would be a desirable person, followed by Kan 
with 17 PERCENT , Okada with 14 PERCENT , Hatoyama with 8 PERCENT 
and Maehara with 6 PERCENT . Among unaffiliated voters, Ozawa got 
the highest support rate of 19 PERCENT . 
 
However, only 47 PERCENT  of the respondents said they had a strong 
or somewhat interest in the DPJ presidential race, falling short of 
52 PERCENT  of the respondents who said they did not have any 
interest in it. 
 
Regarding a question about whether the DPJ has the capability of 
assuming the political reins, only 33 PERCENT  responded, "Yes," 
while 55 PERCENT  said, "No." As to whether the largest opposition 
party can implement its policies, 68 PERCENT  said the party would 
not be able to do so. 
 
SCHIEFFER