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UNCLAS SECTION 01 OF 11 TOKYO 002242 
 
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 08/14/08 
 
INDEX: 
 
(1) Reinvestigation of abduction issue premised on agreement (Asahi) 
 
 
(2) Prediction of what action Fukuda will take impossible (Yomiuri) 
 
 
(4) Can Fukuda display his policy imprint? Civil service reform to 
enter crucial stage (Mainichi) 
 
(5) DPJ policy (Part 2): Ozawa's security initiative a touchstone 
(Asahi) 
 
(5) Ruling parties on offensive in pursuit of large-scale 
supplementary budget in order to produce results with next Lower 
House election close at hand (Asahi) 
 
(6) TOP HEADLINES 
 
(7) EDITORIALS 
 
(8) Prime Minister's schedule, Aug. 13 (Nikkei) 
 
ARTICLES: 
 
(1) Reinvestigation of abduction issue premised on agreement 
 
ASAHI  (Page 2) (Full) 
August 14, 2008 
 
By Yoshihiro Makino and Toru Tamakawa in Shenyang, and Katsuhisa 
Kuramae 
 
Working-level officials of the Japanese and North Korean foreign 
ministries concluded their formal talks held after a two-month 
hiatus by agreeing that they would try to complete the 
reinvestigation of the abduction issue by this autumn. North Korea 
wants to reopen the path toward normalization of its diplomatic 
relations with Japan that has been stalled over the abduction issue, 
while Japan hopes that the reinvestigation will lead to bringing 
home survivors. Difficulties still lie ahead before either country 
can reap their fruits. 
 
The talks held at a hotel in Shenyang, China, were suspended on the 
afternoon of August 12, the second day, but it was not until past 
midnight on August 13 that the Japanese and North Korean 
working-level officials returned to hold their final round, more 
than 10 hours after the break. 
 
After the talks ended, Song Il Ho, North Korea's envoy in charge of 
normalization talks with Japan, with bloodshot eyes told reporters 
in a dissatisfied tone: "I do not understand (why the meeting was 
delayed). I had initially heard that it was going to be held in the 
evening." 
 
Japan was responsible for the prolonged break. Japanese officials, 
who had received a briefing on the draft agreement, were wavering 
over whether Japan really should go ahead and lift some of the 
sanctions merely in return for North Korea's starting the 
reinvestigation. 
 
 
TOKYO 00002242  002 OF 011 
 
 
According to a Japanese Government official, Kyoko Nakayama, who was 
appointed minister in charge of the abduction issue in the recent 
cabinet reshuffle, asserted that the government should take a 
cautious approach. Prime Minister Yasuo Fukuda, who was asked to 
make the final decision, reportedly decided to accept the draft 
agreement and gave the following instruction: "Proceed cautiously. 
Exert utmost efforts so that survivors can be found." After the 
Japanese and North Korean officials returned to the table, the 
meeting was adjourned in only 15 minutes. 
 
Until they struck the final deal, Akitaka Saiki, director general of 
the Foreign Ministry's Asian and Oceanian Affairs Bureau, and Song 
engaged in heated verbal battle from time to time. Song rebuked 
Japan for "breaking a promise," while Saiki retorted," You also have 
not put into action what you had promised." In response to Saiki's 
asserting that Japan wanted "to see the investigations lead to the 
discovery of survivors and their return to Japan," Song said, "No 
preconditions can be attached." 
 
Despite the hostile atmosphere, both Japan and North Korea hardly 
had the option of letting the talks collapse this time. 
 
Japan suspected that North Korea was trying to achieve progress in 
its relations with Japan in order to have the United States remove 
it from the list of terrorist-sponsoring states, as Washington has 
postponed North Korea's delisting. In contrast, a North Korean 
source has pointed out that through behind-the-scenes contacts, 
North Korea last summer shifted to promoting positive diplomacy 
toward Japan with a view to normalizing its diplomatic relations 
with Japan. Song felt that "it was rather Japan that was 
procrastinating." When he received a detailed proposal concerning 
the reinvestigation process from Japan on the afternoon of August 
11, the first day of the talks, Song reportedly decided to accept it 
immediately. 
 
The same source said that some North Korean officials have expressed 
wariness at the possibility that Taro Aso, a hardliner against North 
Korea who became the secretary general of the Liberal Democratic 
Party in the course of the reshuffling of the Fukuda cabinet, could 
become the next prime minister. A North Korean government authority 
told an Asahi Shimbun reporter, "It does not mean that large-scale 
exchanges involving the use of chartered flights could take place 
(even if such flights were authorized as a result of the lifting of 
sanctions)," stressing that North Korea was not changing its 
attitude to pursue practical benefits. Nevertheless, there is still 
no guarantee that a "political decision" envisaging normalization 
will lead to reinvestigation that will produce results. 
 
Meanwhile, Japan, which seeks progress in both the nuclear issue and 
the abduction issue, wants to avoid stalling bilateral issues. At 
the end of October, the deadline will approach when provision of 
energy aid to North Korea agreed at the six-party talks will have to 
be completed. Amidst the rise in the price of energy, it is certain 
that Japan, which is the only country among the related countries 
that has refused to participate in the energy aid on the ground that 
progress has not been made on the abduction issue, will come under a 
lot of pressure from the other countries. 
 
However, a senior Japanese Foreign Ministry official has said, "It 
will be difficult to gain public understanding on Japan's 
participation in energy aid merely in return for North Korea's 
starting the reinvestigation." The bottom line is that the Japanese 
 
TOKYO 00002242  003 OF 011 
 
 
Government wants to obtain concrete results in the abduction issue 
by all means by then. 
 
(2) Prediction of what action Fukuda will take impossible 
 
YOMIURI (Page 4) (Full) 
August 13, 2008 
 
When will Prime Minister Yasuo Fukuda dissolve the House of 
Representatives for a snap election? 
 
Is he going to dissolve the Lower House on his own? 
 
It is difficult to find answers to these questions because he has 
taken "contrary" responses when faced with critical situations in 
the past. 
 
Day when the cabinet was shuffled 
 
Such occurred on Aug. 1 when he shuffled his cabinet, as well. A 
person close to him said: "The Prime Minister initially had his 
heart set on shuffling the cabinet in late July. He therefore took 
his summer vacation in early July to consider personnel selections 
for the shuffle." What this person meant to say was that the cabinet 
shuffle was put off just one day due to the delay of return home of 
the trade and farm ministers from talks of the World Trade 
Organization. 
 
Many take the view in the capital hill of Nagatacho that Fukuda 
might have carried out the shuffle one day earlier because he became 
ornery when everybody was jumping to the conclusion that he would 
change the cabinet lineup on Aug. 4. 
 
In fact, Fukuda appeared to have made a snap decision before 
deciding the framework of a new executive lineup of the Liberal 
Democratic Party (LDP) that took place just before he shuffled the 
cabinet. 
 
On the night of July 31, Fukuda phoned Taro Aso to sound him out on 
an offer to take the LDP secretary general's post. Fukuda had 
already decided on the evening of July 31 to carry out a cabinet 
shuffle on Aug. 1. Aso told Fukuda: "I would like you to call me 
after 7:00 p.m." Fukuda reportedly was finally able to talk with Aso 
around 10:00 p.m., but Aso did not accept the offer at the time. 
 
Fukuda reportedly also transferred Toshihiro Nikai from the LDP 
General Council chairman's post to the minister of economy, trade, 
and industry in another snap decision. 
 
Prior to the cabinet shuffle, Fukuda heard from the New Komeito, the 
LDP's coalition partner, and the religious sect Soka Gakkai, the New 
Komeito's main backer, that they wanted Nikai to be retained in the 
LDP General Council chairman's post. Fukuda had intended to retain 
Nikai and Election Strategy Council Chairman Makoto Koga in their 
respective posts. However, since the Tsushima faction, which wanted 
to get one of the four party executive posts, reacted strongly on 
Aug. 1 against Fukuda's plan, Fukuda had to change it. 
 
G8 summit statement 
 
Similar things occurred at the Group of Eight (G-8) summit in 
Hokkaido, which Fukuda chaired. 
 
TOKYO 00002242  004 OF 011 
 
 
 
On the night of July 7, sherpas, representatives of the leaders of 
the G-8 countries, were suddenly summoned. It was because Japan said 
that it wanted to make a minor change in the summit statement to be 
released on Aug. 8. 
 
Individuals connected with the G-8 summit expressed displeasure 
because the agreement that the world would share the goal to halve 
greenhouse gas emissions by 2050 had been reached during the 
previous week. There was a growing view that Fukuda had probably 
reacted to media reports on the contents of the summit declaration. 
In the end, all that the sherpas did until late at night of July 7 
was just change some words in the statement, while keeping the 
agreed outline intact, according to an informed source. On Aug. 8, 
Fukuda announced first the main themes of the declaration. This 
procedure was decided the preceding week, according to a senior 
Foreign Ministry official. Minor changes in the expressions in the 
declaration were unexpected, however. 
 
There is a famous story about Fukuda. In January 2004 while serving 
as chief cabinet secretary in the Koizumi cabinet, he ordered to put 
off by one day the date of dispatching Ground Self-Defense Force 
troops to Iraq to support the reconstruction of the country because 
the media had already announced the day. As a result, it looked like 
the media had made a mistake in their reports. 
 
In the capital district of Nagatacho, speculation has been rife that 
Fukuda would transfer power to Aso and that he would dissolve the 
Lower House before the end of the year. A person familiar with the 
LDP said: "Mr. Fukuda might try to ruin our prediction." Nobody can 
predict Fukuda's political agenda. 
 
(4) Can Fukuda display his policy imprint? Civil service reform to 
enter crucial stage 
 
MAINICHI (Page 5) (Slightly abridged) 
August 14, 2008 
 
In the Financial Services Agency, a handover ceremony was held on 
Aug. 5 between Toshimitsu Motegi and Michio Watanabe, incoming and 
outgoing minister of state for financial services, administrative 
reform, and civil service reform. The ceremony was delayed because 
of Watanabe's business trip. 
 
Watanabe took a strategy of arousing public interest in reform of 
the independent administrative agencies by repeatedly criticizing 
the bureaucracy through the media. He even did not hesitate to lock 
horns with other cabinet ministers, including Chief Cabinet 
Secretary Nobutaka Machimura. Therefore, his image of being a 
reformist has gradually taken root. 
 
In contrast to former Prime Minister Shinzo Abe, who took an 
adversarial stance toward bureaucrats, Prime Minister Yasuo Fukuda 
was believed to be lenient toward the bureaucracy. However, due to 
the discovery of the inappropriate use of road tax revenues, as well 
as the Health, Labor and Welfare Ministry's lack of explanations of 
the health insurance system for people aged 75 or over, Fukuda has 
begun tackling seriously the reform of the civil service system. 
 
At a press briefing held immediately before the shuffle of the 
cabinet, Watanabe expressed his obsession with remaining in his 
post, saying: "There are many jobs I have yet to complete. If 
 
TOKYO 00002242  005 OF 011 
 
 
ministers are replaced just one year, fulfilling political 
leadership would be impossible." However, Fukuda did not reappoint 
Watanabe, who has close ties to former LDP Secretary General Hidenao 
Nakagawa, known for his emphasis on the importance of economic 
growth. 
 
Motegi, however, takes a somewhat different stance from Watanabe. 
After assuming the post, he stated: "Not satisfying ourselves by 
just criticizing civil servants, it is important to build reliable 
organizations and develop human resources." He has good relations 
with Nakagawa, who wants radical change in the civil service system, 
as well as with Machimura, who seeks moderate reform of the civil 
service system. Some in the government are concerned that if the 
government fails to reform the civil service system, Motegi would be 
criticized. 
 
Ministries and agencies rebut private sector leadership 
 
The government's taskforce to promote reform of the civil service 
system, which came into being in July, will be a main body to 
discuss the issue. Hiroshi Tachibana, former managing director of 
the Japan Business Federation's (Keidanren) Secretariat, serves as 
chief of secretariat of the taskforce. Of the 13 senior officials of 
the panel, five came from the private sector. 
 
An informal panel on reform promotion, made up of about 15 members, 
will be set up before the end of August. The names of former 
economic planning agency chief Taichi Sakaiya, Keidanren Chairman 
Fujio Mitarai and Masamitu Sakurai, president of the Japan 
Association of Corporate Executives, have been floated as candidates 
when a chairman is picked for the planned panel. 
 
However, voices of dissatisfaction are coming from the ministries 
and agencies about how much those individuals know about 
bureaucratic organization. The main future of the reform is that the 
chief cabinet secretary would draft a list of senior officials of 
the ministries and agencies. Regarding the creation of a Cabinet 
Personnel Bureau, the reform basic law, which came into force in 
June, stipulates that legal measures will be made within one year. 
The government intends to come up with the outline of relevant bills 
as early as the fall. However, there are many issues to be boiled 
down such as that whether the chief cabinet secretary will be able 
to get a handle on all of the senior officials of the ministries and 
agencies. 
 
Over the expansion of the civil servants' basic right, how far the 
government can make concessions will likely greatly affect reform of 
the civil service system. 
 
(5) DPJ policy (Part 2): Ozawa's security initiative a touchstone 
 
ASAHI (Page 4) (Slightly abridged) 
August 14, 2008 
 
On July 22, as the midsummer sun was beating down, a group of 
lawmakers from the House of Representatives Foreign Affairs 
Committee visited two U.S. military bases in Kanagawa Prefecture, 
the Navy's Yokosuka base and the Army's Camp Zama. The purpose of 
their base tour was to inspect the Japanese government's burden 
sharing of costs for the stationing of U.S. forces in Japan 
(omoiyari yosan, or literally "sympathy budget"). 
 
 
TOKYO 00002242  006 OF 011 
 
 
"Do you have utility meters? Do you fulfill your obligations for 
economization?" 
 
One member of the lower chamber committee, who is a lawmaker of the 
leading opposition Democratic Party of Japan (Minshuto), asked these 
questions about wasting utilities. "I don't think we're wasting," a 
U.S. military officer answered. "We would like more," this officer 
stressed. "Every one of the soldiers is willing to shed blood to 
defend Japan; they are ready to die for Japan," he added. 
 
Against the backdrop of North Korea's nuclear development and 
China's military expansion, the Japanese government plays up 
security arrangements for the United States to defend Japan. In 
July, Prime Minister Fukuda met with U.S. President Bush. After 
that, Fukuda was full of praise, saying the Japan-U.S. alliance has 
deepened since the Bush administration came into office. After the 
Sept. 11, 2001 terrorist attacks on the United States, Japan sent 
the Self-Defense Forces overseas for the U.S.-led war on terror 
although it was said to be contradictory to Article 9 of the 
Constitution. Japan did so to keep its credibility. 
 
In April, the DPJ rejected the sympathy budget, which the government 
says is indispensable for Japan to remain allied with the United 
States. The DPJ opposed a special agreement that extends the budget, 
reasoning that it is wasteful. The proposed special agreement failed 
to get the opposition-dominated House of Councillors' approval. This 
was the first case of a special treaty disapproved under the current 
Constitution. 
 
DPJ President Ichiro Ozawa's view of the Japan-U.S. alliance differs 
from the government's. Sekai, a (left-of-center) monthly magazine, 
carried Ozawa's criticism of the Bush administration in its November 
2007 issue. He wrote: "The United States is not aware that its 
isolationism and its excessive pride always confuse harmony in the 
international community, including the United Nations." 
 
Ozawa criticized the government for "kowtowing" to the United 
States. He is calling for the government to recall the Self-Defense 
Forces from the Indian Ocean and Iraq. In his Sekai essay, Ozawa 
categorically said the Maritime Self-Defense Force's refueling 
activities in the Indian Ocean are the same as rear echelon support 
for U.S.-led military operations that are outside the scope of 
U.N.-initiated activities. He further referred to the International 
Security Assistance Force (ISAF), which is operating in Afghanistan 
under a U.N. resolution. Ozawa said, "If I had taken the reins of 
government, I would like to realize Japan's participation in ISAF." 
 
Ozawa's advocacy of Japan's ISAF participation, which is more 
dangerous than refueling at sea, created a stir within and outside 
his party. In December 2006, the DPJ came out with its platform, 
which incorporated Japan's proactive participation in U.N. 
peacekeeping operations. Based on this standpoint, Ozawa asserted 
that proactive participation in U.N. activities-even if it includes 
using armed force-does not conflict with the Constitution at all. 
 
Ozawa also said: "To advise the United States, Japan must ready 
itself to share the world's peacekeeping responsibility." With this, 
Ozawa made clear his difference from the ruling coalition of the 
Liberal Democratic Party and the New Komeito. Aside from this 
political motive, he strongly insists on an "ordinary country" as he 
had a hard time of it to deal with the Gulf War when he was 
secretary general. 
 
TOKYO 00002242  007 OF 011 
 
 
 
Ozawa has been laying emphasis on his idea of building a "truly 
equal" alliance between Japan and the United States. "If there is a 
U.N. resolution, Japan is allowed to use armed force." With this 
logic, Ozawa has advocated Japan's ISAF participation. However, the 
government's constitutional interpretation is that Japan's use of 
force is limited to self-defense. The government must change this 
interpretation in order for Japan to participate in ISAF 
operations. 
 
The United States' policy of attaching importance to Afghanistan 
would remain unchanged if the Republican Party or the Democratic 
Party comes into office next year after the presidential election. 
Pentagon officials have been in touch with Ozawa's aides since 
September last year over Japan's cooperation except for refueling. 
Taro Aso, now LDP secretary general, has come up with his idea of 
having the MSDF escort Japanese oil tankers in the Indian Ocean 
instead of extending its refueling mission there. 
 
The DPJ is aiming to take the reins of government through a general 
election. The question is how the DPJ will face Afghan assistance. 
This will become a touchstone for Ozawa's advocacy of developing 
U.N.-centered diplomacy while remaining allied with the United 
States. 
 
DPJ proposal a complex mosaic 
 
On Aug. 5, the DPJ's shadow cabinet members, including Foreign 
Minister Yoshio Hachiro and Defense Minister Keiichiro Asao, 
gathered in a conference room of the House of Representatives 
members' office building. 
 
The DPJ's shadow cabinet ministers discussed the issue of extending 
the new Antiterrorism Special Measures Law, which will be a point of 
contention at this fall's extraordinary Diet session. DPJ Secretary 
General Yukio Hatoyama has recently advocated upgrading the DPJ's 
counterproposal of Afghan assistance. Hachiro, who derives from the 
now-defunct Japan Socialist Party, said to Hatoyama: "The DPJ's 
Afghan assistance bill has been carried over for continued 
deliberations in the House of Representatives. The government and 
the LDP are not determined, and they cannot set even the extra Diet 
session in connection with the New Komeito. We should be cautious 
about working out another proposal." 
 
Hatoyama wants to consider working out even more realistic measures 
for Afghan assistance, envisioning a change of government in the 
next general election for the House of Representatives. However, 
House of Representatives Vice Speaker Takahiro Yokomichi and DPJ 
House of Councillors Chairman Azuma Koshiishi, who shore up Ozawa, 
and other JCP-affiliated DPJ lawmakers are cautious about expanding 
the SDF dispatch. 
 
When the Diet was in an extraordinary session last fall, the DPJ 
worked out its counterproposal, which also reflected the DPJ's 
circumstances. At that time, the DPJ agreed to send SDF troops to 
Afghanistan. However, the DPJ did not agree to allow them to use 
armed force there and limited their role to humanitarian and 
reconstruction assistance. Moreover, the DPJ limited the scope of 
their activities to ceasefire areas only. Actually, the SDF 
therefore can conduct almost no activities there, so the DPJ 
counterproposal was called a "complex mosaic." 
 
 
TOKYO 00002242  008 OF 011 
 
 
(5) Ruling parties on offensive in pursuit of large-scale 
supplementary budget in order to produce results with next Lower 
House election close at hand 
 
ASAHI (Page 4) (Excerpts) 
August 14, 2008 
 
Prime Minister Fukuda has now no other choice but to put up an 
economic stimulus package as a subject of debate in the 
extraordinary Diet session to be convened in the fall. That is 
because the Liberal Democratic Party (LDP) and the New Komeito have 
fallen in step in a call for the compilation of a large-scale 
supplementary budget out of concern about an economic downturn in 
the wake of the steep rise in crude oil prices. However, the 
calculations of the Prime Minister's Office (Kantei), the LDP and 
the New Komeito for a dissolution of the Lower House for a snap 
election differ. The scale of the proposed supplementary budget and 
specific economic stimulus measures have yet to be worked out. 
 
New Komeito Secretary General Kazuo Kitagawa: "A large-scale 
economic stimulus package should be compiled." 
 
LDP Secretary General Taro Aso: "Piecemeal economic stimulus 
measures will not do." 
 
Senior officials of the LDP and the New Komeito on August 13 met at 
a Tokyo hotel. The meeting turned into a venue for them to call for 
compiling an economic stimulus package and to vow to compile a large 
scale supplementary budget. 
 
New Komeito members are openly declaring that an economic stimulus 
package is the major policy issue that the Fukuda cabinet should 
tackle in the next extraordinary Diet session, as Diet Affairs 
Committee Chairman Yoshio Urushibara noted. Probably aware of such a 
situation, LDP Diet Affairs Committee Chairman Tadamori Oshima 
responded, "If a supplementary budget is to be compiled, it should 
be submitted to the extraordinary Diet session in order for the 
Fukuda cabinet to indicate its stance as well." 
 
The New Komeito is recently increasing pressure on the government 
for fiscal disbursements. It at a meeting between the government and 
the ruling parties, where the compilation of a comprehensive 
economic stimulus package was adopted, called for introducing a 
fixed-rate tax break for low-income earners and offering subsidies 
not only to commercial fishermen but also to small- and medium-size 
businesses to directly make up for the soaring fuel prices. 
 
The New Komeito is calling for an economic stimulus package with an 
eye on a general election. If they succeed in making the government 
to pledge assistance measures for middle to low-income earners and 
small- and medium-size businesses, their support base, they would be 
able to quickly make a public appeal noting that it was their 
achievement. 
 
Aso, who is aspiring to become the next prime minister, is conscious 
of the New Komeito's political aim, as an aide to him said, "If a 
supplementary budget bill is submitted, there will appear a mood for 
a Lower House dissolution from within the ruling camp." Aso is 
moving in step with the New Komeito, while aware of the New 
Komeito's intention, because he knows that the New Komeito expects 
him to act a key person in the election. 
 
 
TOKYO 00002242  009 OF 011 
 
 
However, both the government and the ruling parties are unable to 
pick up the real intention of the prime minister, who has the right 
to dissolve the Lower House. A senior official of a certain economic 
ministry said, "I cannot see what the central command thinks. What 
extraordinary Diet session does he want? Does he intend to go as far 
as to dissolve the Lower House?" 
 
Aso gave an inarticulate explanation to a news conference held after 
his meeting with the prime minister on August 13: "(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." 
 
Prime minister's decision on whether to opt for firmly maintaining a 
policy to achieve fiscal soundness or to shift to a pork-barrel 
policy now focus of attention 
 
A certain key minister explained the pressure the secretaries 
general of the LDP and the New Komeito applying on the prime 
minister this way: "This is the major political bargaining, whether 
it is good or bad. Since the approach to a bill extending the New 
Antiterrorism Special Measures Law has yet to be set, it would be 
impossible to discuss when to compile a supplementary budget." This 
is because the timing of compiling a supplementary budget and its 
scale as well as to boil down key issues (to be handled in the 
extraordinary Diet session) are closely related to a strategy of 
dissolving the Lower House election for a snap election. 
 
The prime minister is pressed to make a difficult decision, while 
taking the steering of his own administration fully into account, on 
whether to veer from the fiscal reconstruction policy to a 
pork-barrel policy in response to a demand the ruling parties are 
making with an eye on a dissolution of the Lower House for a snap 
election or to partially maintain the policy of restoring fiscal 
health. 
 
The prime minister stressed that settling difficulties facing the 
nation's economy -- the steep rise in prices and the sluggish 
economy -- is the shuffled cabinet's key policy challenges. However, 
he has been cautious about immediately compiling a supplementary 
budget as an economic stimulus measure, indicating his stance of 
attaching emphasis to eliminating wasteful expenditures. 
 
An economic stimulus measures using a large-scale second budget is a 
means, which the government since the Koizumi cabinet, which has 
pursued the fiscal soundness restoration policy, has constrained. 
The Finance Ministry's stance is to finance an economic stimulus 
package with more than 300 billion yen worth of reserve funds from 
this fiscal year's budget and consider a supplementary budget, if 
the reserve funds do not suffice. 
 
If the government submits a large scale supplementary budget to the 
extraordinary Diet session to be convened in the fall in response to 
a call by the ruling parties, in particular, the New Komeito, it is 
bound to be taken as has having made a policy switch. However, given 
the sagging approval ratings for his cabinet, the prime minister 
would find it difficult to steer his administration without 
cooperation from the ruling camp. The New Komeito is persistently 
calling on the government to stop short of putting the bill 
extending the Special Measures Law to a revote in the Lower House to 
be approved by a two-thirds majority. 
 
TOKYO 00002242  010 OF 011 
 
 
 
If the continuation of Japan's refueling operation in the Indian 
Ocean and bills related to the establishment of a consumer agency 
are upset, it could deal an immeasurable blow to Fukuda's 
administration. However, the present situation is that even the 
timetable to convene the extraordinary Diet session has yet to be 
set, though the prime minister has indicated his desire to extend 
the special measures law. 
 
(6) TOP HEADLINES 
 
Asahi: Mainichi: Yomiuri: Sankei: Tokyo Shimbun: Akahata: 
Ueno defends women's judo title, fencer Ota wins men's foil silver 
 
Nikkei: 
MOF to offer advice for municipalities to prevent bankruptcies 
 
(7) EDITORIALS 
 
Asahi: 
(1) Reinvestigation into abduction of Japanese nationals: 
Investigation that has little substance unforgivable 
(2) Negative growth: Real potential of private sector will be 
tested 
 
Mainichi: 
(1) Japan-North Korea talks: Give real power to investigation 
committee 
(2) Negative growth: Healthy family budget most important 
 
 
Yomiuri: 
(1) Agreement at Japan-North Korea talks: Urge North Korea to 
conduct far-reaching reinvestigation into abduction cases 
(2) Beijing Olympic Games: We want to enjoy more excitement 
 
Nikkei: 
(1) Negative growth is a warning that urges reform 
(2) Will the agreement reached at Japan-North Korea talks lead to 
sincere investigation? 
 
Sankei: 
(1) Reinvestigation into abduction cases: Checking investigation 
process important 
(2) Noguchi, marathon runner, shock: Thorough crisis management by 
Japan Association of Athletics Federations urged 
 
Tokyo Shimbun: 
(1) Negative growth: Economy has entered cautionary zone 
(2) Reinvestigation into abduction cases would be meaningless, 
unless abduction victims return home 
 
Akahata: 
(1) Abandonment of jurisdiction over U.S. servicemen: Scrap secret 
deal that torments the people 
 
 (8) Prime Minister's schedule, Aug. 13 
 
NIKKEI (Page 2) (Full) 
August 14, 2008 
 
11:47 
 
TOKYO 00002242  011 OF 011 
 
 
Met with Environment Minister Saito and Vice Environment Minister 
Nishio at his official residence. 
 
13:58 
Met with Financial Services Minister Motegi and National Civil 
Servant System Reform Promotion Headquarters Chief of Secretariat 
Tachibana. 
 
15:30 
Met with Cabinet Intelligence Director Mitani. 
 
16:25 
Met with LDP Secretary General Aso and Diet Affairs Committee 
Chairman Oshima. 
 
SCHIEFFER