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UNCLAS SECTION 01 OF 12 TOKYO 002564 
 
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 09/18/08 
 
Index: 
 
1) Top headlines 
2) Editorials 
3) Prime Minister's daily schedule (Nikkei) 
 
Defense and security affairs: 
4) ASDF successfully shoots down mock missile in first test of PAC-3 
in U.S.  (Tokyo Shimbun) 
5) Defense Ministry panel meets to begin revision of National 
Defense Program Outline  (Mainichi) 
6) Out of consideration for European and U.S. concerns over Georgia, 
Japan will not carried out scheduled joint drill between MSDF and 
Russian Navy  (Asahi) 
 
Political agenda: 
7) LDP, New Komeito agree to hold general election on October 26 
(Asahi) 
8) Global financial crisis pours cold water over LDP's political 
strategy  (Mainichi) 
9) LDP may postpone acting on supplemental budget, giving priority 
to holding a general election, to which the Democratic Party of 
Japan (DPJ) objects  (Asahi) 
10) DPJ proposes talks with LDP on timing of Diet dissolution 
(Nikkei) 
11) DPJ to propose to ruling camp set of measures to stabilize the 
financial system  (Nikkei) 
 
12) Peoples New Party to merge with DPJ out of fear it would be 
isolated  (Yomiuri) 
13) Japan's Business Federation in report card of parties' 
accomplishments gives LDP an "A" in 10 areas, but an "F" to DPJ 
across the board  (Yomiuri) 
 
14) Two former agricultural ministers - Tamazawa and Endo  will 
retire from politics at end of current Diet session  (Nikkei) 
 
Economy: 
15) Bank of Japan governor calls FRB decision to bail out AIG 
appropriate  (Asahi) 
16) Survey of 209 major firms finds 80 PERCENT  in agreement that 
economy is in recession  (Tokyo Shimbun) 
 
Articles: 
 
1) TOP HEADLINES 
 
Asahi: 
Ruling coalition agrees to hold general election on Oct. 26 
 
Mainichi: 
Senior Oita education official arrested over bribe 
 
Yomiuri: 
Realignment in financial circles spreads to Britain, following U.S. 
decision to pour public funds into AIG 
 
Nikkei: 
U.S. to expand short-selling restriction in response to financial 
crisis 
 
Sankei: 
 
TOKYO 00002564  002 OF 012 
 
 
U.S. government to bail out AIG with 9 trillion yen loan 
 
Tokyo Shimbun: 
Poll of 209 major firms: 85 PERCENT  see economy sliding into 
recession 
 
Akahata: 
Average hourly wage of rice farmers in 2007 drops 77 yen to 179 yen 
 
 
2) EDITORIALS 
 
Asahi: 
(1) Academic ability survey: Analysis, countermeasures needed 
(2) Administrative litigation: Quick rulings sought in remaining 
cases 
 
Mainichi: 
(1) U.S. financial crisis: Don't be relaxed with AIG bailout 
(2) U.S. financial crisis: Japan urged to review emergency measures 
 
Yomiuri: 
(1) U.S. uses public funds for AIG 
(2) Blame for rice scandal also rests with Agricultural Ministry 
 
Nikkei: 
(1) BOJ expected to take proper countermeasures to U.S. financial 
crisis 
(2) Agreement on anti-postal privatization policy between opposition 
parties unreasonable 
 
Sankei: 
(1) AIG bailout: Plunge scalpel into structure of financial crisis 
(2) Consumers urged to composedly respond to problem of tainted 
rice 
 
Tokyo Shimbun: 
(1) Continue to be alert, though AIG is bailed out 
(2) Review privatized postal services before users 
 
Akahata: 
(1) Uncover details of radiation leak from U.S. submarine 
 
3) Prime Minister's Official Residence (Kantei) 
 
Prime Minister's schedule, September 17 
 
NIKKEI (Page 2) (Full) 
September 18, 2008 
 
10:15 
Met Deputy Chief Cabinet Secretary Futahashi at the Kantei. 
 
11:08 
Met Assistant Chief Cabinet Secretary Saka and Cabinet Office policy 
directors-general Matsumoto and Yamazaki. 
 
12:16 
Met Futahashi and assistant chief cabinet secretaries Saka, Kawai 
and   Yanagisawa. Futahashi stayed on. 
 
14:33 
 
TOKYO 00002564  003 OF 012 
 
 
Met Prime Minister Wickremanayake of Sri Lanka. 
 
15:14 
Met Administrative Reform Minister Motegi, administrative 
streamlining blue-ribbon panel chairman Mogi and his deputy 
Asakura. 
 
16:01 
Met Saka, Deputy Chief Cabinet Secretary for Crisis Management Ito, 
and MHLW Health Bureau Director-General Ueda, followed by advisor 
Ito. 
 
17:28 
Met METI Minister Nikai joined by New Komeito leader Ota. 
 
18:00 
Attended a meeting of the Council on Economic and Fiscal Policy. 
 
19:14 
Met CEFP members at his official residence. 
 
4) ASDF shoots down mock missile in 1st PAC-3 test in U.S. 
 
TOKYO SHIMBUN (Page 3) (Full) 
September 18, 2008 
 
Japan tested the Air Self-Defense Force's Patriot Advanced 
Capability-3 (PAC-3), a ground-to-air missile making up Japan's 
missile defense (MD) systems designed to intercept ballistic 
missiles, at the White Sands Missile Range in New Mexico in the 
United States late at night on Sept. 17. According to the Defense 
Ministry, the ASDF fired two PAC-3 interceptors and shot down a mock 
missile launched by U.S. forces. 
 
Japan's MD systems are two-tiered with the Standard Missile-3 
(SM-3), a surface-to-air missile mounted on Aegis-equipped 
destroyers, and the PAC-3. The sea-based SM-3 system intercepts 
ballistic missiles, and the land-based PAC-3 system is to back up 
and shoot down missed ones. The ASDF has deployed the PAC-3 at four 
air defense missile units in the metropolitan area since March. 
 
In the PAC-3 intercept test, a PAC-2 ground-to-air missile, which is 
designed to intercept aircraft, was used as a mock missile. The 
PAC-2 ranges approximately 100 kilometers. Its falling speed is a 
far cry from that of North Korea's Rodong ballistic missile, which 
reportedly has a range of 1,300 kilometers. The Rodong, in its 
terminal phase, falls at Mach 2. 
"The test this time was intended to check the system's 
functionality," said an official of the Defense Ministry's 
Communication Systems and Guided Missile Systems Division. With 
this, the Defense Ministry does not seem to be particular about 
hitting accuracy. 
 
The PAC-3 test cost about 2.5 billion yen, including payments to the 
U.S. government for on-site services and those for PAC-3 
acquisition. The ASDF has annually test-fired PAC-2 missiles at the 
missile range. However, the PAC-3 costs so much that the ASDF will 
carry out only one more test next year and will not conduct any more 
live-fire practice. 
 
The Defense Ministry began in fiscal 2004 to introduce the MD 
systems and made an investment of 676.5 billion yen for four years 
 
TOKYO 00002564  004 OF 012 
 
 
up until last fiscal year. The MD systems are said to total 1 
trillion yen, and their deployment is well under way with defense 
spending. Japan is the only country that has introduced the 
U.S.-developed MD systems. The United States currently deploys the 
PAC-3 at its bases in foreign countries but does not use it for its 
homeland defense. 
 
5) Defense Ministry meets to overhaul defense program 
 
MAINICHI (Page 2) (Full) 
September 18, 2008 
 
The Defense Ministry has set up an in-house board, headed by Defense 
Minister Yoshimasa Hayashi, to review Japan's defense capability, 
and held its first meeting yesterday of senior officials from its 
internal bureaus and brass officers from the Ground, Maritime, and 
Air Self-Defense Forces to go over the National Defense Program 
Guidelines (NDPG) (formerly known as the National Defense Program 
Outline or NDPO for short). The board will wrap up its views next 
summer. After the next prime minister is elected, a private advisory 
panel for the prime minister will also enter into full-fledged 
discussion. The guidelines will be revised by the end of next year. 
 
This time around, the board will base its discussions on a report 
submitted by the government's Defense Ministry reform panel. It will 
focus mainly on reorganizing the Defense Ministry through such 
measures as integrating its bureaucracy and the SDF's uniformed 
staff for Japan's defense buildup. In addition, it is also expected 
to discuss changes in the international situation, such as the 
realignment of U.S. forces in Japan and North Korea's nuclear 
testing. 
 
6) Japan-Russia ties in Georgia aftermath 
 
ASAHI (Page 4) (Abridged) 
September 18, 2008 
 
Japan and Russia have annually conducted joint seaborne search and 
rescue drills. This year, however, the Maritime Self-Defense Force's 
annual training exercises with the Russian navy cannot be expected 
to take place. The United States and Russia have been at odds over 
the Georgian situation, so the Japanese government deems it 
unavoidable to forgo bilateral cooperation between Japan and Russia 
in the security area for the time being. 
 
What lies behind such a volatile situation is the Georgia issue. 
Russia has been squaring off with the United States and Europe, and 
the North Atlantic Treaty Organization (NATO) has announces its plan 
to call off joint military training exercises with Russia. The 
United States will think twice about its military cooperation with 
Russia. In the economic area as well, the United States has decided 
to freeze its nuclear energy deal with Russia. As it stands, Foreign 
Ministry officials handling Japan-U.S. relations and security 
arrangements wonder if it is appropriate for Japan to do something 
military with Russia. "Japan-U.S. relations should come before 
Japan-Russia relations," one official said. 
 
Meanwhile, Foreign Minister Lavrov, Industry and Energy Minister 
Khristenko, and Prime Minister Putin are scheduled to visit Japan 
toward the end of the year. There are also some officials in the 
Foreign Ministry who are concerned about a possible impact on 
Japan-Russia relations. One of them asserted that the Georgia issue 
 
TOKYO 00002564  005 OF 012 
 
 
took place in the expansion of NATO and that Japan, which is not a 
NATO member, is different. This assertion can be taken as suggesting 
the need for Japan to keep away from the United States and Europe 
over Georgia. 
 
Foreign Minister Koumura said: "We will work on Russia for what we 
should do, while maintaining our bilateral reciprocal relationship. 
Regarding the joint training exercises as well, the government will 
likely make a careful judgment while watching the future course of 
Russia's talks with the United States and Europe. 
 
7) LDP, New Komeito agree to dissolve Lower House Oct. 3 and hold 
general election Oct. 26 
 
ASAHI (Top play) (Abridged slightly) 
September 18, 2008 
 
The Liberal Democratic Party and the New Komeito have agreed to 
dissolve the Lower House on Oct. 3 and kick off the official 
campaign on Oct. 14 for a general election on Oct. 26, ruling party 
executives said. The New Komeito and its support base Soka Gakkai 
had tried to arrange the schedule to hold the election on Nov. 9, 
but the LDP decided that the election should be held while the next 
prime minister is still highly popular. The New Komeito accepted the 
LDP plan. 
 
A final decision is likely to be made by Secretary General Taro Aso, 
who is enjoying a dominant lead in the LDP presidential race, after 
becoming the new LDP president on Sept. 22. 
 
In a bid to carry the momentum of the LDP presidential race over to 
the next election, the LDP considered three possible election dates: 
Oct. 26, Nov. 2 and Nov. 9. Meanwhile, the New Komeito envisioned 
starting the official campaign on Oct. 28 for a Nov. 9 general 
election in order to secure a sufficient preparatory period to let 
the election sink in among its supporters. 
 
The collapse of the U.S. major securities house Lehman Brothers also 
triggered strong financial concerns, and some LDP lawmakers called 
for postponing Lower House dissolution in order to have the fiscal 
2008 supplementary budget enacted in the next extraordinary Diet 
session as a top priority. But the party leaned toward an early 
date, concluding that a late election would dampen the 
"congratulatory effects" of the new administration and that the 
economy would become worse sooner or later. 
 
LDP Election Strategy Council Chairman Makoto Koga met Soka Gakkai 
officials in Osaka on Sept. 16 and obtained their informal consent 
to hold the election on Oct. 26. The New Komeito is likely to 
endorse the plan, and Soka Gakkai intends to inform its supporters 
of the decision later this week. 
 
Koga met with Aso on Sept. 17 and briefed him on such developments. 
Koga also dined with Koga faction executives later in the day and 
confirmed the policy direction to make preparations for the Oct. 26 
election. 
 
The ruling bloc wants to ask the opposition camp for deliberations 
on important bills, including the supplementary budget bill, during 
the extraordinary Diet session. But given poor prospects for finding 
a settlement line on the timetable and other factors, the ruling 
coalition has decided to dissolve the Lower House on Oct. 3, the 
 
TOKYO 00002564  006 OF 012 
 
 
final day of the representative interpellations. The ruling bloc 
intends to have the supplementary budget enacted before the end of 
the year after the Lower House election. 
 
8) Worldwide financial crisis dampens LDP's dissolution strategy 
 
MAINICHI (Page 5) (Abridged slightly) 
September 18, 2008 
 
By Takuji Tanaka 
 
The worldwide financial shock resulting from the collapse of the 
U.S. major securities house Lehman Brothers has dampened the ruling 
coalition's strategy of carrying out an early Lower House 
dissolution and snap general election by taking advantage of the 
momentum of the upcoming LDP presidential election even by 
postponing the supplementary budget. The LDP remains unable to find 
any effective countermeasures, with one member saying, "The 
optimistic mood has disappeared." Meanwhile, the major opposition 
Democratic Party of Japan has proposed Diet deliberations on the 
supplementary budget and its adoption. Taking an aggressive 
approach, the DPJ is set to pursue the political vacuum resulting 
from the imminent changeover of the prime minister and the ruling 
coalition's lack of solid economic policy. 
 
LDP Policy Research Council Chairman Kosuke Hori on Sept. 16 called 
the representatives of the camps of the five LDP presidential 
candidates to the party headquarters and urged them to touch on the 
Lehman issue in their ongoing campaign tours. Amid growing concerns 
that the U.S. financial turmoil might spill over to the Japanese 
economy, the LDP presidential candidates must play up their 
proactive responses to the matter so as not to draw national 
criticism. 
 
Momentum was gaining strength in the ruling camp to dissolve the 
Lower House at an early date without waiting for the enactment of 
the fiscal 2008 supplementary budget backing the government's 
package of economic stimulus measures. But in the wake of the Lehman 
shock, a joint council, including the LDP Finance and Banking 
Systems Research Council, presented to the government and the Bank 
of Japan on Sept. 17 a proposal calling for early enactment of a 
supplementary budget. 
 
Economic and Fiscal Policy Minister Kaoru Yosano said to reporters: 
"It is lawmakers' responsibility to deliberate on the supplementary 
budget and obtain Diet approval for it at an early date to help 
small and medium-sized businesses." An aide to Secretary General 
Taro Aso also discouraged talk of an early Lower House dissolution, 
saying: "Mr. Aso will generate his policy imprint by beefing up the 
economic stimulus package. There will be no dissolution without 
it." 
 
Once the next extraordinary Diet session opens, the opposition bloc 
is certain to pursue the tainted rice issue and other matters. The 
Democratic Party of Japan is waiting for a delayed Lower House 
election, thinking it will befit the party. The LDP is increasingly 
jittery, but without anyone in control, the party remains unable to 
make decisions. 
 
Representative Akihiro Ota of the New Komeito, which is united for 
an early dissolution, asked Prime Minister Yasuo Fukuda on Sept. 17 
for speedy responses to the Lehman and tainted rice issues. The 
 
TOKYO 00002564  007 OF 012 
 
 
prevailing view in the party is that those issues must not be linked 
to the dissolution. 
 
9) LDP decides to hold general election on Oct. 26, putting extra 
budget bill on backburner 
 
ASAHI (Page 4) (Excerpts) 
September 18, 2008 
 
The Liberal Democratic Party (LDP) has decided to hold the next 
general election on Oct. 26. When concerns about the nation's 
economy is growing in the wake of the U.S. financial crisis, the 
Democratic Party of Japan (DPJ) unofficially proposed a plan to 
dissolve the House of Representatives through talks after the 
supplementary budget bill clears the Diet, but the LDP declined it, 
seeing the proposal as intended to delay Lower House dissolution. 
The New Komeito also accepted the LDP's new plan. 
 
LDP Diet Affairs Committee Chairman Tadamori Oshima and his DPJ 
counterpart Kenji Yamaoka met in the Diet Building yesterday. 
 
Yamaoka: "How about considering a plan to dissolve the Lower House 
through talks after the two parties make as many concessions as 
possible on the supplementary budget bill." 
 
Oshima: "The bill includes expenses to finance highway construction 
and maintenance. Will you support the bill that includes the measure 
you opposed?" 
 
Yamaoka proposed that the ruling and opposition parties in 
cooperation should first dispose of key bills through negotiations 
and then dissolve the Lower House. Yamaoka also suggested that party 
head talks be held after the new administration is inaugurated. But 
Oshima retorted: "Although Secretary General Hatoyama has said over 
the past year that the prime minister who has yet to seek the 
people's confidence should seek the judgment of the people at an 
early date after the Lower House is dissolved. Did he change his 
mind?" 
 
In the politically divided Diet situation, the LDP has been stabbed 
in the back by the DPJ over bills related to tax reform, the 
selection of new Bank of Japan chief, and other issues. The 
supplementary budget bill for fiscal 2008 appropriates 66 billion 
yen to cover the loss accrued from the one-month invalidation of the 
provisional high rates of the gasoline and other road-related taxes. 
Because the rates lost effect due to the DPJ's opposition, Oshima 
declined the proposal made by the DPJ while remaining noncommittal 
about the extra budget bill. 
 
After meeting Yamaoka, Oshima emphasized: "Considering what the DPJ 
has done over the past year, we cannot easily accept the proposal." 
 
10) DPJ proposes plan to dissolve Lower House through discussion, 
seeking to constrain LDP from doing so at beginning of extra Diet 
session 
 
NIKKEI (Page 2) (Slightly abridged) 
September 18, 2008 
 
Democratic Party of Japan (DPJ) Diet Affairs Committee Chairman 
Kenji Yamaoka, in his meeting yesterday with Liberal Democratic 
Party (LDP) Diet Affairs Committee Chairman Tadamori Oshima, 
 
TOKYO 00002564  008 OF 012 
 
 
proposed a plan to dissolve the House of Representatives through 
discussions, which means that the DPJ would cooperate with the LDP 
to pass a supplementary budget for fiscal 2008 through the Diet 
during the upcoming extraordinary Diet session on the condition that 
the Lower House would be dissolved during the extra Diet session. 
Oshima, however, avoided giving an answer, just saying: "That's 
something the new prime minister will consider." The ruling 
coalition is mulling Lower House dissolution at the outset of the 
extra Diet session. 
 
In their meeting yesterday, Yamaoka and Oshima attempted to probe 
the intentions of each other. 
 
Yamaoka: "Don't you think the Lower House should be dissolved after 
holding deliberations at least two days in both chambers of the 
Diet?" 
 
Oshima: "Unless the DPJ makes its position clear on the 
supplementary budget, we won't be able to tell the next prime 
minister." 
 
Yamaoka suggested setting four days for deliberations on the 
supplementary budget on Oct. 6-9 and modifying the contents of the 
supplementary budget. Yamaoka also told Oshima: "We will not 
unnecessary delay deliberations." Oshima, however, expressed his 
distrust of the DPJ, saying: "When thinking about the last one year 
of our dealings with the DPJ, I cannot easily accept your proposal." 
 
 
The LDP's basic strategy is to dissolve the Lower House at the 
outset of the extra Diet session immediately after receiving 
attentions from voters through its presidential election. The ruling 
coalition has focused on a schedule -- kicking off the official 
campaign of a general election on Oct. 14 and setting the voting 
date for Oct. 26, after the Lower House is dissolved on Oct. 3, 
after ending each party's representative interpellations in both 
Diet houses. 
 
Many in the ruling coalition have become doubtful and suspicious 
about the DPJ because they have been badly let down many times since 
last July when the divided Diet was created through the Upper House 
election. The dominant view in the ruling coalition is that the DPJ 
aims to tarnish the image of the new government through 
deliberations at the Diet." 
 
The ruling camp has a weak point, as well. It describes its 
comprehensive economic stimulus package as "emergency" measures. 
There are many issue to address, including the U.S. Lehman Brothers 
bankruptcy and the illegal resale of tainted rice. If the ruling 
camp dissolves the Lower House unilaterally, the opposition bloc 
would criticize it for giving priority to the political situation 
rather than the daily lives of people. 
 
Meanwhile, the opposition camp, which has called for an early Lower 
House dissolution, wants to avoid holding a general election soon 
after the new prime minister is inaugurated. In order also to pursue 
the responsibilities of the government for the illegal resale of 
tainted rice and the pension-record mess, they strongly want to 
secure enough time for deliberations. 
 
The DPJ predicts that even if it suggestion is turned down, it would 
be able to fend off criticism that the it killed an emergency 
 
TOKYO 00002564  009 OF 012 
 
 
economic stimulus package. Yamaoka indicated yesterday that the DPJ 
would accept a party-heads meeting for an agreement between the 
ruling and opposition camps. 
 
11) LDP makes recommendations for financial stabilization 
 
NIKKEI (Page 2) (Full) 
September 18, 2008 
 
All ruling and opposition parties yesterday played up the need for a 
strong response to financial uncertainty, following the failure of 
the U.S. major securities firm Lehman Brothers Holding Inc. The 
ruling Liberal Democratic Party (LDP), in a joint meeting of its 
Research Commission on the Finance and Banking Systems and other 
commissions, came up with a set of recommendations, which include 1) 
securing the stability of financial markets through cooperation with 
other countries, and 2) compiling a package of emergency economic 
measures, including a supplementary budget, by the government. The 
LDP submitted it to the Bank of Japan and the Financial Services 
Agency. 
 
Akihiro Ota, chief representative of the New Komeito, the LDP's 
coalition partner, yesterday asked Prime Minister Yasuo Fukuda to 
quickly come up with measures for smaller companies experiencing 
funding difficulties. Fukuda told Ota: "I will take adequate 
measures." 
 
The main opposition Democratic Party of Japan set up a financial 
task team, headed by Upper House member Kohei Otsuka. 
 
12) PNP to merge with DPJ out of worry that it might be shunted into 
background in Lower House election 
 
YOMIURI (Page 4) (Full) 
September 18, 2008 
 
The People's New Party (PNP, Kokumin Shinto led by Tamisuke 
Watanuki) on September 17 decided to accept a proposal for a merger 
with the Democratic Party of Japan (DPJ or Minshuto) before the 
envisaged Lower House election. This is because with the approaching 
dissolution of the Lower House for a snap election, the party felt a 
sense of crisis that it might be shunted into the background of the 
two major parties -- the Liberal Democratic Party (LDP) and the 
DPJ. 
 
The PNP has five Lower House lawmakers, of whom President Watanuki 
(Toyama No. 3 constituency), Deputy President Shizuka Kamei (the 
Hiroshima No. 6 constituency) and Lower House member Mikio Shimoji 
(Okinawa No. 1 constituency. Unaffiliated at the time of election) 
were elected from single-seat constituencies. Secretary General 
Hisaoki Kamei was elected from the Chugoku proportional 
representation bloc, although he also ran for a single-seat 
constituency. Masaaki Itokawa, chairman of the Election Committee, 
was elected from the Hokuriku proportional representation bloc. He 
ran only for the proportional representation system. Candidates who 
have already been endorsed informally by the PNP and the DPJ are 
expected to compete in two constituencies in the next Lower House 
election. There is also a possibility of the two parties competing 
in five more constituencies. 
 
Many observers say that next Lower House election would be a 
decisive battle between the LDP and the DPJ, as a senior DPJ 
 
TOKYO 00002564  010 OF 012 
 
 
official said. Under such a circumstance, an increasing number of 
PNP members have been strengthening their view that if the PNP 
merges with the DPJ, the possibility of PNP candidates winning in 
single-seat constituencies or making a come back would increase. At 
such time, the DPJ has timely decided to incorporate a revision to 
postal privatization, the starting line of the PNP's formation, into 
its manifesto, paving the way for the party to accept the merger 
proposal. 
 
13) Policy evaluation by Nippon Keidanren: LDP receives 10 A's; DPJ 
all zeros 
 
YOMIURI (Page 2) (Abridged slightly) 
September 18, 2008 
 
Nippon Keidanren (Japan Business Federation) on September 17 
released its policy evaluation for 2008, which will serve as 
guidelines when its member companies and organizations donate money 
to the Liberal Democratic Party or to the Democratic Party of Japan 
(DPJ or Minshuto). 
 
Regarding the LDP, the organization highly evaluated its efforts to 
address the global warming issue at the Hokkaido Lake Toya Summit 
(G-8) and gave a record high of 10 A's among 30 evaluation items 
under the categories of "consistency," "effort" and "actual 
achievement." It determined that the direction of individual 
policies is consistent." However, no A's were given to items under 
the "actual achievement" category. 
 
The DPJ, which visibly took a confrontational stance in the divided 
Diet, received harsh marks -- six D's -- up two from the preceding 
year's evaluation, the second lowest mark, for 20 items under the 
"consistency" and "effort" categories. 
 
Nippon Keidanren member companies and organizations in 2007 donated 
2.91 billion yen to the LDP and 80 million yen to the DPJ. 
 
14) Former Agriculture Minister Tamazawa to retire from politics 
 
NIKKEI (Page 2) (Full) 
September 18, 2008 
 
It was learned yesterday that Tokuichiro Tamazawa, a House of 
Representatives member belonging to no party, 70, would not run in 
the next Lower House election and retire from politics. Tamazawa, 
who is now serving in his 9th term in the Diet, served as director 
general of the former Defense Agency, and minister of agriculture, 
forestry and fisheries. He left the Liberal Democratic Party (LDP) 
last September to take responsibility for the LDP local chapter, 
which he headed, having fabricated receipts included in a political 
funds report. 
 
Former Agriculture Minister Endo plans to retire from politics 
 
It has been learned that Former Agriculture, Forestry and Fisheries 
Minister Takehiko Endo, a member of the ruling Liberal Democratic 
Party (LDP), who represents the Yamagata No. 2 constituency, will 
not run in the next House of Representatives election and retire 
from politics. He is expected to formally announce his intention as 
early as today. Endo is now serving in his 6th term in the Lower 
House. 
 
 
TOKYO 00002564  011 OF 012 
 
 
15) Bailout of AIG: "FRB has made the best decision," says BOJ 
governor: Bumpy road ahead for U.S. financial situtation 
 
YOMIURI (Page 8) (Excerpts) 
September 18, 2008 
 
Bank of Japan (BOJ) Governor Masaaki Shirakawa during a press 
conference held after the Policy Board meeting on monetary policy on 
September 17 gave a high score to the U.S. Federal Reserve Board's 
(FRB) decision to take to bail out AIG, the largest insurance 
company in the U.S. He said, "The FRB has made the best decision 
under the current situation." Regarding the U.S. financial 
situation, which is increasingly becoming unstable in the wake of 
the failure of Lehman Brothers, a leading securities firm, he said, 
"There still will be a bumpy road ahead." He thus indicated his view 
that the situation will require continued vigilance after the 
bailout of AIG as well." 
 
The focus of highest attention at the BOJ meeting was what impact 
the financial situation in the U.S., which is moving quickly as 
dictated by such incidents as the collapse of Lehman Brothers and 
the bailout of AIG, would have on the global economy. Citing the 
fall in housing prices and the expanding losses from securitized 
products, Shirakawa expressed concern that the current financial 
crisis could become protracted. He noted, "The root-cause of the 
problem remains unsettled." 
 
Comparing the difficulty of settling the problem with the financial 
crisis Japan experienced in 1997, he said, "The negative synergism 
of the capital shortfall that banks are now facing due to increased 
non-performing loans spilling over to the real economy is still at 
work." 
 
The FRB has decided to bailout AIG the same day when the BOJ held 
the meeting. Regarding this decision, a point has been made that the 
extension of massive funds by the FRB to a faltering company could 
damage the fiscal soundness of the central bank. Shirakawa indicated 
his perception that the injection of public money should be carried 
out, based on fiscal funds. He then noted, "The most important role 
of the central bank is to prevent risks involving the financial 
system from surfacing. The FRB's response has contributed to 
stabilizing the dollar." 
 
16) Poll of 209 major firms: 85 PERCENT  see economy sliding into 
recession, half of respondents expect recovery in latter half of 
next year 
 
TOKYO SHIMBUN (Top Play) (Full) 
September 18, 2008 
 
In a survey of 209 major companies across the nation (conducted from 
late August through mid-September) by the Tokyo Shimbun, about 70 
PERCENT  of respondents replied that the Japanese economy was 
moderately slipping into recession. About half said that the economy 
would start on an upward slop in the latter half of the next year. 
The government has already recognized that the economy has entered a 
recessionary phase, given global economic slowdown and soaring raw 
material prices. 
 
In the survey, 70.7 PERCENT  of respondents said that the economy 
was moderately sliding into recession, up 19.2 PERCENT  in the 
previous survey in April. Those who said the economy was sliding 
 
TOKYO 00002564  012 OF 012 
 
 
into recession accounted for 14.4 PERCENT . The survey showed that 
85.1 PERCENT  recognized that the economy has been in a recessionary 
phase. 
 
In the previous poll, about 20 PERCENT  said that the economy was 
expanding, but this time, no optimistic reply was presented. 
 
Asked about prospects for economic conditions in the latter half of 
fiscal 2008, more than 70 PERCENT  said that the economy would be on 
a downward trend, with 61.5 PERCENT  replying that the economy would 
be moderately slipping into recession while 13.0 PERCENT  saying 
that the economy would be slipping into recession. 
 
In reply to a question about the timing for recovery, 23.2 PERCENT 
cited July-September in 2009, and 27.5 PERCENT  predicted 
October-December in 2009. The survey showed that about half of the 
respondents expected that the economy would get back on its feet in 
the latter half of 2009. Companies that cited the first half of 2009 
accounted for 24.5 PERCENT . But 16.4 PERCENT  said that the economy 
would not move to a recovery track before 2010. 
 
SCHIEFFER