VZCZCXRO5564
PP RUEHFK RUEHKSO RUEHNAG RUEHNH
DE RUEHKO #2576/01 2620759
ZNR UUUUU ZZH
P 180759Z SEP 08
FM AMEMBASSY TOKYO
TO RUEHC/SECSTATE WASHDC PRIORITY 7327
INFO RUEKJCS/SECDEF WASHDC PRIORITY
RHEHAAA/THE WHITE HOUSE WASHINGTON DC PRIORITY
RUEAWJA/USDOJ WASHDC PRIORITY
RULSDMK/USDOT WASHDC PRIORITY
RUCPDOC/USDOC WASHDC PRIORITY
RUEAIIA/CIA WASHDC PRIORITY
RUEKJCS/JOINT STAFF WASHDC//J5//
RHHMUNA/HQ USPACOM HONOLULU HI
RHHMHBA/COMPACFLT PEARL HARBOR HI
RHMFIUU/HQ PACAF HICKAM AFB HI//CC/PA//
RHMFIUU/USFJ //J5/JO21//
RUYNAAC/COMNAVFORJAPAN YOKOSUKA JA
RUAYJAA/CTF 72
RUEHNH/AMCONSUL NAHA 2273
RUEHFK/AMCONSUL FUKUOKA 9913
RUEHOK/AMCONSUL OSAKA KOBE 3654
RUEHNAG/AMCONSUL NAGOYA 8021
RUEHKSO/AMCONSUL SAPPORO 0489
RUEHBJ/AMEMBASSY BEIJING 5386
RUEHUL/AMEMBASSY SEOUL 1385
RUCNDT/USMISSION USUN NEW YORK 1686

UNCLAS SECTION 01 OF 07 TOKYO 002576 
 
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 09/18/08 
 
INDEX: 
 
(1) LDP eyes Lower House election on Oct. 26, based on need for 
early economic package after shock of Lehman Bros. collapse (Sankei) 
 
 
(2) Global warming gas emissions rights trading: Trading houses to 
be allowed to serve as brokers; Each company to set its own 
reduction goal, according to outline of domestic experiment (Nikkei) 
 
 
(3) Government, industry circles split on application of rules on 
carbon emissions rights trading system; Plan to launch system next 
spring will likely face complications (Yomiuri) 
 
(4) Former LDP Secretary General Nonaka has doubts about Aso's 
qualifications to be LDP president and prime minister (Mainichi) 
 
(5) Interview with former Finance Minister Masajuro Shiokawa on LDP 
presidential race: I can sense a psychological distance from the 
general public (Mainichi) 
 
(6) Bargaining underway between DPJ and LDP over handling of 
supplementary budget, with former demanding settlement through talks 
and latter dismissive of talks (Tokyo Shimbun) 
 
ARTICLES: 
 
(1) LDP eyes Lower House election on Oct. 26, based on need for 
early economic package after shock of Lehman Bros. collapse 
 
SANKEI (Page 35) (Full) 
September 18, 2008 
 
The Liberal Democratic Party started coordination yesterday to set 
the day of official announcement at Oct. 14 and the voting day at 
Oct. 26 for the next House of Representatives election. It is now 
necessary to dispel growing fears of a global financial crisis 
triggered by the demise of the leading U.S. securities house Lehman 
Brothers Holdings Inc. To this end, the LDP judged it necessary to 
"dissolve the Lower House at an early date and for the new prime 
minister, having obtained the public's vote of confidence in the 
general election, to swiftly come up with an economic package," as a 
party executive said. It is now highly likely that the Lower House 
will be dissolved on Oct. 3. 
 
According to several ruling party sources, the new LDP president 
will be elected in a joint plenary meeting of party members of both 
Houses of the Diet on Sept. 22. An extraordinary Diet session will 
be convened on the 24th, when an election will be carried out to 
designate the new prime minister and the selection of a new cabinet 
will be made. The new prime minister will leave for the U.S. on the 
25th and deliver a speech at the United Nations' annual assembly on 
the evening of Sept. 25, local time. After returning to Japan on the 
28th, the prime minister will deliver speeches at plenary sessions 
of both Lower and Upper House on the 29th. On Oct. 1-3, a 
representative interpellation session will take place at both 
chambers of the Diet. 
 
Over the timing of the next Lower House election, the following two 
options had been viewed as likely as a result of consideration given 
to the state of preparations by local electoral management 
 
TOKYO 00002576  002 OF 007 
 
 
committees: (1) announcement on October 14 and election on Oct. 26; 
and (2) announcement on Oct. 28 and election on Nov. 9. But 
objections to the second option erupted in the LDP. The members 
feared that if the LDP presidential election came after the U.S. 
presidential election on Nov. 4 and if Democrat Barack Obama were 
elected, calls would grow for a change of government in Japan. 
 
The plan for official announcement on Oct. 14 and election on the 
26th is now the most likely option. But this plan also contains 
problems. The 2008 Asia-Europe Meeting (ASEM) Summit will take place 
in Beijing on Oct. 24-25, so the new prime minister will have to 
leave Japan just before the election. It will also become necessary 
to dissolve the Lower House on Oct. 3, the final day of the 
representative interpellation session, when considering the 
preparatory period needed until the official announcement. In this 
case, therefore, it will become impossible to start deliberations on 
the supplementary budget bill before the election. 
 
In the LDP presidential race, Secretary General Taro Aso is the 
frontrunner, as surveys show.  Aso enjoys a majority of supporters 
among lawmakers and local chapter heads. Aso has declined to say 
when the Lower House should be dissolved, but a senior member of the 
Aso camp said: "Mr. Aso is determined to dissolve the Lower House at 
an early date in order to break the impasse in the Diet in the 
politically divided Diet situation." Many think that if Aso assumes 
the party presidency, he will dissolve the Lower House at an early 
date to seek the judgment of the public. 
 
However, if the Lower House is dissolved before deliberations start 
on the supplemental budget bill, objections will certainly come from 
the Democratic Party of Japan (DPJ) and other opposition parties. 
The new administration is expected to make a final judgment, taking 
into consideration the results of various opinion polls to be 
conducted just after it is launched. 
 
(2) Global warming gas emissions rights trading: Trading houses to 
be allowed to serve as brokers; Each company to set its own 
reduction goal, according to outline of domestic experiment 
 
NIKKEI (Page 1) (Full) 
September 17, 2008 
 
The outline of an experiment on the global warming gas emissions 
trading system, which the government will launch in October, has 
been firmed up. Under the plan, the government will allow trading 
houses and banks to act as brokers for carbon emissions-rights so as 
to smoothen trade in CO2 emission credits by companies. Companies 
will voluntarily decide whether to take part in the experiment and 
set a reduction goal. Companies that have reduced carbon emissions 
more than the set goal can sell the surplus. Companies that have 
missed their goals can purchase emissions credits to make up for the 
shortage. 
 
The report will be presented to a meeting of the subcommittee of the 
Round Table on the Global Warming Issue reporting to Prime Minister 
Fukuda to be held on the 17th. The government plans to start 
recruiting participating companies before the end of October after 
the coordination of details. The government will aim to have as many 
companies as possible take part in the project in order to make the 
system effective. Companies will be urged to take part on an 
individual basis. Participation by industry will not be approved. 
 
 
TOKYO 00002576  003 OF 007 
 
 
(3) Government, industry circles split on application of rules on 
carbon emissions rights trading system; Plan to launch system next 
spring will likely face complications 
 
YOMIURI (Page 9) (Full) 
September 18, 2008 
 
The government on September 17 revealed the outline of a domestic 
carbon emissions credits trading system to be tested from October. 
Under the system, companies will set a carbon emissions reduction 
goal on their own, the government apparently having given 
consideration to industry circles, which have been cautious about 
introducing such a system. However, the government and industry 
circles remained split on the application of the rules. The 
government will recruit companies taking part in the system starting 
October, and actual emissions trading will start next spring. 
However, coordination of views before launching the system will 
likely be difficult. 
 
Under the adopted system, companies that have reduced global warming 
gas emissions more than the set goal can sell emissions credits. 
Companies that have missed their targets must make up for the 
shortages, by purchasing emissions credits. As such, the system has 
the effect of urging companies to make energy-saving efforts. 
Emissions reduction goals will be set, based on the voluntary action 
program, which each industry set on a voluntarily basis. Japan 
adopted this system, giving consideration to the fact that there is 
strong opposition in Japan to the European Union (EU) system of the 
government imposing reduction targets. 
 
A method of determining whether reduction goals set by companies are 
appropriate or not and verifying the implementation process has yet 
to be adopted. A point has been made that since the setting of goals 
will determine the efficacy of the system, it is necessary to have a 
third organ check goals set by each company. There is concern that 
too high barriers would bar companies from taking part in the 
system. The future challenge will likely be to keep the balance of 
the system. 
 
Whether to allow participation by industry has yet to be decided. In 
principle, the government calls for corporate participation on an 
individual basis. However, industry circles' stance is that 
corporate participation as proposed by the government would make it 
difficult for each industry segment to promote its own measures to 
combat greenhouse gas emissions, as the Japan Iron and Steel 
Federation noted. 
 
Another point in question is whether to allow emissions credits to 
be traded as future goods, assuming that there would occur surpluses 
or shortages in emissions credits. Some government officials take 
the stand of allowing such a trading system, saying, "Allowing such 
a trading system would activate carbon emissions trade." However, 
some industry sectors are alarmed about the idea with the Federation 
of Electric Power Companies of Japan noting that the introduction of 
such a system could usher in a money game. 
 
Since it was Prime Minister Fukuda that has strongly advocated the 
introduction of the domestic carbon emissions credit trading, some 
take the view that the mood for introducing the system would ebb 
because he has announced his decision to step down, as one 
government source said. 
 
 
TOKYO 00002576  004 OF 007 
 
 
(4) Former LDP Secretary General Nonaka has doubts about Aso's 
qualifications to be LDP president and prime minister 
 
MAINICHI (Page 5) (Full) 
September 17, 2008 
 
Question: Secretary General Taro Aso is now leading other candidates 
in the Liberal Democratic Party's presidential race. 
 
Hiromu Nonaka: Since as many as five candidates are running in the 
election, there is a general lack of tense atmosphere. Although the 
way Mr. Aso speaks may appeal to some people, I wonder how rank and 
file LDP members think. The way the media reports the presidential 
campaigns is also a problem. 
 
Question: You have been harsh on Mr. Aso since you were an LDP 
lawmaker. 
 
Nonaka: From the viewpoint of human rights, he lacks awareness of 
treating everybody equally, even though he comes from a high 
respectable family. I have doubts about his qualifications to be the 
nation's top leader. 
 
Although he was previously told by former Prime Minister Shinzo Abe 
and former Prime Minister Yasuo Fukuda that they wanted to step 
down, he did not consider how to deal with these situations. 
Instead, he announced his candidacy for the races to elect a 
successor to Abe and now Fukuda. He does not know how to carry out 
the duties of secretary general. 
 
Question: How about his policy? 
 
Nonaka: I wonder how a person who used to advocate a structural 
reform policy will come up with a specific package of economic 
stimulus measures. It is not enough for him to just say that he will 
implement economic stimulus measures. A supplementary budget for 
fiscal 2008 must be adopted by the end of the year so that local 
governments will be able to use it for their people. If he dissolves 
the Lower House at the outset of the extraordinary Diet session, his 
lack of capability will be revealed. As a result, he will suffer 
considerable damage. 
 
Question: Do you think the presidential election will give an 
advantage to the LDP in the Lower House election? 
 
Nonaka: If the DPJ does what it should do, such as enacting the 
supplementary budget, it will gain a majority of the Lower House 
seats. However, I think there is a chance that the LDP will hand 
over the reins of government to the Democratic Party of Japan (DPJ). 
I want to see political realignment after the Lower House election. 
Seeing the divided Diet and the LDP's situation, I think issues will 
not be resolved without political realignment. 
 
Question: Do you think it is possible for the LDP and DPJ to form a 
grand coalition? 
 
Nonaka: With both the ruling and opposition parties moving to the 
right, there is a chance now to form a pivotal group of lawmakers 
who would make sure that Japan would never wage another war. I think 
political realignment should take place. 
 
Question: Do you think there are such persons among the presidential 
 
TOKYO 00002576  005 OF 007 
 
 
candidates? 
 
Nonaka: If I may venture to say, Nobuteru Ishihara is the only 
person. 
 
Question: How about Economic and Fiscal Policy Minister Kaoru 
Yosano? 
 
Nonaka: His policy is first rate I want him to win the race. But he 
lacks punch in his voice. I'm concerned about his health. With the 
prime minister after the next prime minister in mind, I think LDP 
members should bear in mind Ishihara as a potential prime 
ministerial candidate. 
 
Question: What are your assessments of former defense ministers -- 
Yuriko Koike and Shigeru Ishiba? 
 
Nonaka: Ms. Koike must be a smart person, but I cannot entrust our 
country to a person who has followed the powers-that-be. There might 
be a scenario in which (former Prime Minister Junichiro) Koizumi 
will come forward again. 
 
Mr. Ishiba is an expert in defense policy, but I don't know what 
kind of a politician he is. 
 
(5) Interview with former Finance Minister Masajuro Shiokawa on LDP 
presidential race: I can sense a psychological distance from the 
general public 
 
MAINICHI (Page 5) (Abridged slightly) 
September 18, 2008 
 
-- What is your view of the ongoing LDP presidential race? 
 
Shiokawa: The race is centered on slogans. None of the five 
candidates has gone beneath the surface. I can sense a psychological 
distance from the general public. 
 
-- What is beneath the surface? 
 
Shiokawa: The people have come to realize that the divided Diet is 
blocking politics from moving forward. Some even think that the 
reins of government should be handed over for a time to the 
Democratic Party of Japan. I think the people have gradually come to 
understand what is wrong with politics. The LDP must present ways to 
fix the problem. I am afraid that the five candidates are unaware of 
that reality. 
 
-- Are you saying that the presidential race is going on without 
anyone having a clue about that point? 
 
Shiokawa: That's right. The election is for the LDP alone. They are 
saying things as if they are still conducting politics. They have 
not discussed specially how to bring stability to politics and what 
to do about the divided Diet. They are thinking only of themselves. 
 
-- Concretely, how should matters be discussed? 
 
Shiokawa: Being members of the party in power, they should discuss 
the issues thoroughly with others, including the opposition parties, 
and what was discussed there should be made public. If (the 
opposition parties) still do not listen, the Diet should be 
 
TOKYO 00002576  006 OF 007 
 
 
dissolved as a crucial state matter. Politics should be conducted in 
line with the popular will. I want to see the candidates face the 
election with such resolution. 
 
-- Their policies, especially economic and fiscal policies, seem 
quite distinctive. 
 
Shiokawa: There is no move to build a society that is more generous 
and forgiving. That would be effective in the next Lower House 
election, as well. Why is the Japanese economy at an impasse, and 
what is the cause of it? I want to see the candidates address such 
points rather than advocating aggressive fiscal disbursements, or 
other means, for that matter. 
 
-- Secretary General Taro Aso is way ahead of the other candidates. 
 
Shiokawa: He has been referred to as the white knight coming to save 
the day after the Abe and Fukuda administrations. Once he wins the 
LDP presidency, he is certain to become the next prime minister. But 
he has to remain in the post for some time. To do so, he needs to 
know what the public wants. 
 
-- What about other candidates? 
 
Shiokawa: (Former Defense Minister Yuriko) Koike is a female 
candidate, and that's her strength. Her campaign pledges are 
concrete, and that's good, too. (Economic and Fiscal Policy Minister 
Kaoru) Yosano is an orthodox politician. (Former Policy Research 
Council Chairman Nobuteru) Ishihara and (former Defense Minister 
Shigeru) Ishiba are vibrant and promising. 
 
-- Primary elections will be held by local party members and 
fraternity members across the country. 
 
Shiokawa: The presidential election has become open substantially, 
but I still think the local votes -- 141 in all -- are still too 
small. Local party members and fraternity members deserve better 
treatment. The party should give 6 to 10 votes to each prefectural 
chapter. Hearing the people's views requires something that is not 
superficial. The LDP's approach is still half-baked. 
 
(6) Bargaining underway between DPJ and LDP over handling of 
supplementary budget, with former demanding settlement through talks 
and latter dismissive of talks 
 
TOKYO SHIMBUN (Page 2) (Abridged slightly) 
September 18, 2008 
 
By Goto, Soka 
 
Political maneuvering began yesterday between the Liberal Democratic 
Party and the Democratic Party of Japan over the handling of the 
fiscal 2008 supplementary budget in the next extraordinary Diet 
session. In a Diet affairs chiefs' meeting, the DPJ demanded a 
settlement through talks in return for extending cooperation for the 
enactment of the supplementary budget in a bid to apply pressure on 
the LDP, which wants to swiftly implement a package of economic 
stimulus measures in the face of the financial turmoil originated in 
the Untied States. But given growing calls in the party for 
dissolving the Lower House at the outset of the next extraordinary 
Diet session, the LDP cannot easily respond to the DPJ's demand. The 
two parties' Lower House dissolution strategies are clashing with 
 
TOKYO 00002576  007 OF 007 
 
 
each other. 
 
In yesterday's meeting, DPJ Diet Affairs Committee Chairman Kenji 
Yamaoka said to his LDP counterpart Tadamori Oshima: "It is 
conceivable for us to make maximum compromises regarding the 
supplementary budget, enact it, and then dissolve the Lower House 
through talks." The proposal was based on the Budget Committee of 
each Diet chamber holding a session for at least two days. 
 
Although the proposal appears to be a compromise at a glance, it is 
actually intended to prevent the next prime minister from dissolving 
the Lower House at an early date, to severely blame the government 
regarding the tainted rice issue and other matters, and to dampen 
the next cabinet's support ratings. 
 
Aware of such intent, the LDP is dismissive of the DPJ proposal, 
with Oshima commenting, "It is not a proposal we can give 
constructive thought to." 
 
The prevailing view in the LDP is that the Lower House must be 
dissolved at an early stage of the upcoming extraordinary Diet 
session so that the political parties will be able to kick off their 
official campaigns on Oct. 28 for a general election on Nov. 9 after 
the Budget Committee in each chamber meeting possibly for one day. 
 
If the ruling bloc opts to enact the supplementary budged 
independency without the cooperation of the opposition camp, it 
would have to wait for the bill to clear the Diet automatically 
about 30 days after Lower House approval. This might end up delaying 
the Lower House dissolution until November or beyond. 
 
Economic and Fiscal Policy Minister Kaoru Yosano, an LDP 
presidential candidate, and others are still calling for the 
budget's enactment before the dissolution. But a senior New Komeito 
lawmaker said: "The Lower House should be dissolved while the next 
cabinet is enjoying high support ratings. (The enactment of the 
supplementary budget) can wait until after the Lower House 
election." 
 
Echoing this view, Secretary General Taro Aso, who is far ahead of 
other presidential candidates, predicted that in order to take 
countermeasures early, the Lower House would be dissolved (sooner 
rather than later)." 
 
SCHIEFFER