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DE RUEHKO #2745/01 2750944
ZNY CCCCC ZZH
P 010944Z OCT 08
FM AMEMBASSY TOKYO
TO RUEHC/SECSTATE WASHDC PRIORITY 7656
RUEKJCS/SECDEF WASHDC PRIORITY
RHHMUNA/HQ USPACOM HONOLULU HI PRIORITY
INFO RUEHUL/AMEMBASSY SEOUL 1624
RUEHHK/AMCONSUL HONG KONG 6594
RUYNAAC/COMNAVFORJAPAN YOKOSUKA JA
RUEKJCS/CJCS WASHINGTON DC
RHHMHBA/COMPACFLT PEARL HARBOR HI
RHOVVKG/COMSEVENTHFLT
RHMFISS/COMUSKOREA SEOUL KOR
RUEKJCS/JOINT STAFF WASHINGTON DC
RUENAAA/SECNAV WASHINGTON DC
RUEHKO/USDAO TOKYO JA
RHMFISS/USFJ

C O N F I D E N T I A L TOKYO 002745 
 
SIPDIS 
 
PACOM FOR J00/J01/J5; DOD FOR 
OSD/APSA/SHINN/SEDNEY/HILL/BASALLA; USFJ FOR J00/J01/J5 
 
E.O. 12958: DECL: 10/01/2018 
TAGS: PREL PGOV MARR JA
SUBJECT: SCENESETTER FOR PACOM COMMANDER ADM KEATING'S OCT 
8-10 VISIT TO JAPAN 
 
Classified By: Ambassador J. Thomas Schieffer; Reasons: 1.4 (b/d) 
 
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SUMMARY 
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¶1.  (C) You will arrive in Japan in the wake of a dramatic 
leadership change.  Newly-elected Prime Minister Taro Aso is 
regarded as a strong supporter of the U.S.-Japan Alliance, 
who we expect will try hard to maintain course for our 
important bilateral initiatives, including the realignment of 
U.S. Forces.  He favors a more robust Japanese contribution 
to international issues, such as Iraq and Afghanistan, but 
also has a history of making statements that strained Japan' 
relations with its Asian neighbors.  He and the ruling 
Liberal Democratic Party (LDP) will have their hands full in 
the coming weeks as they struggle to keep the opposition 
parties at bay while pushing forward important legislation, 
including the bill for renewing maritime refueling operations 
in the Indian Ocean.  Aso's immediate challenge, however, is 
addressing domestic issues and Japan's economic problems.  We 
are moving forward on realignment and other Alliance issues, 
but face uncertainties in areas that require Japanese budget 
appropriation and strong political will.  End Summary. 
 
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DOMESTIC POLITICS: ASO IS PM, LH ELECTION OUTLOOK UNCERTAIN 
--------------------------------------------- -------------- 
 
¶2.  (C) Former LDP Secretary General Taro Aso became the new 
Prime Minister of Japan on September 24, succeeding Yasuo 
Fukuda, who, like his predecessor, former Prime Minister Abe, 
had resigned unexpectedly amid considerable political 
difficulties and declining support rates.  Aso unveiled his 
new Cabinet lineup the same day, re-appointing a handful of 
ministers from the recently reshuffled Fukuda Cabinet and 
appointing the remainder primarily from among his close 
associates in the ruling Liberal Democratic Party (LDP).  The 
substantive credentials of Aso's new Cabinet appointments are 
strong and reflect the need for serious, experienced hands at 
a time when the LDP may be fighting for its political life. 
Nearly all of the new ministers are well-known to the public 
and have held ministerial portfolios in the past.  The roster 
includes a number of serious policy wonks.  Most are also 
relatively conservative and low-key. 
 
¶3.  (C) Whether Aso's team can help the LDP prevail in the 
Lower House elections against Ichiro Ozawa and his Democratic 
Party of Japan (DPJ) remains questionable.  Aso anticipated a 
"honeymoon" period of high support rates, but polls are well 
below LDP expectations, ranging from a low of 45 to a high of 
53 percent, with the average approximately 10 points lower 
than former Prime Minister Fukuda when he launched his first 
Cabinet in 2007 and 20 points lower than former Prime 
Minister Abe's ratings in 2006.  Aso's ratings are, however, 
much higher than Fukuda's ratings at the end of his 
administration, which ranged from the high 20s to the low 
30s.  Aso out-polls DPJ leader Ozawa by a wide margin in 
surveys on the public's choice for Prime Minister. 
 
¶4.  (C) Aso's Cabinet members' early problems have not helped 
him with the public.  The resignation of Minister for Land, 
Infrastructure, and Transportation Nariaki Nakayama for 
repeated verbal missteps within only five days of his 
appointment, along with allegations of political funds 
scandals involving two other new ministers, dominated the 
news during week one of Aso's administration.  Despite the 
risk of losing control of the Diet, most in the LDP believe 
that dissolving the Lower House within the next several weeks 
is the party's only hope for blunting the DPJ's ability to 
attack the ruling coalition in the Diet over the pension 
scandal, recent food safety scares, and a host of other 
issues. 
 
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ECONOMIC POLICY UNDER NEW ASO TEAM 
---------------------------------- 
 
¶5.  (C) In looking to the possibility of early Lower House 
elections, Prime Minister Aso is developing an economic 
campaign built around a central theme:  "stimulating the 
stagnating Japanese economy."  He is pushing a three-stage 
approach: use a supplemental budget to stimulate the economy 
in the short-term; repair the country's fiscal balance in the 
medium-term; and increase Japan's potential economic growth 
rate through structural reform in the long-term.  Japan's 
now-weakening economy and slowing global growth has 
restricted Japan's ability to turn to its standard policy ) 
exporting its way out of the problem ) and as a result, Aso 
is putting a priority on short-term economic stimulus. 
 
¶6.  (C) Aso has also put aside, at least for now, the 
structural reform banner that former Prime Minister Koizumi 
once held high.  The need to reform the pension and 
healthcare systems, to introduce greater competition into the 
economy, and to raise productivity have not gone away, but 
the dominant perception within the LDP is that the public is 
tired of structural reform and needs to be reassured. The 
political calculation is understandable, but it means a delay 
in the kinds of reforms necessary to strengthen Japan's 
economic power over the long-term.  This, in turn, affects 
Japan's ability to support U.S.-led initiatives such as Iraqi 
reconstruction, Operation Enduring Freedom (OEF) and other 
international aid and donors requests. 
 
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FOREIGN POLICY 
-------------- 
 
¶7.  (C) Prime Minister Aso has inherited a number of 
important foreign policy challenges from the preceding 
administration.  As host and president of the G-8 Summit this 
year, Japan has made a number of pledges to contribute to a 
range of global issues, such as climate change and the 
environment, as well as international development and 
assistance.  Responding to criticism both in and outside 
Japan, the Japanese government has been exploring ways to 
expand its contribution to Afghanistan beyond aid assistance 
and the refueling operations in support of OEF.  In the 
region, Japan must deal with its uneasy relations with China 
and South Korea, which flare periodically from history and 
territorial disputes.  North Korea's nuclear program and the 
resolution of Japanese abductees to the DPRK remain high 
among Japan's foreign policy priorities. 
 
¶8.  (C) The generally conservative, hawkish Aso is a strong 
supporter of the U.S.-Japan Alliance and is expected to 
continue the foreign policy course set by his immediate 
predecessors.  Aso has called on his ministers to build a 
"bright and strong" Japan.  Attacking DPJ leader Ozawa's 
UN-centered foreign policy, Aso asked rhetorically where 
Japan should put its trust -- on the U.S.-Japan Alliance or 
on an organization often swayed by a number of "small 
nations."  He also directed Foreign Minister Hirofumi 
Nakasone to work on strengthening U.S.-Japan ties, fighting 
terror, and dealing with the DPRK. 
 
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SECURITY POLICY 
--------------- 
 
¶9.  (C) As with foreign policy, the Aso administration is 
expected to maintain a similar position on Japan' security 
policy as its predecessors.  Defense Minister Hamada is 
well-versed on Alliance Transformation issues and is a strong 
supporter of "normalizing" Japan's defense policies.  He has 
often expressed frustration to the Embassy over the Japanese 
government's steady stream of "excuses" for not playing a 
more equal role in the Alliance, including in out-of-area 
operations.  He supports a more active Japanese presence in 
Afghanistan.  He also strongly advocates relaxing Japan's 
arms export restrictions in order to deepen cooperation 
between the U.S. and Japanese defense industrial bases.  In 
addition, senior Japanese officials have expressed their 
intention to push for continued OEF refueling operations, 
although the possibility of an election this fall has put 
Diet action in doubt.  With the successful arrival of the 
U.S.S. GEORGE WASHINGTON on September 25, the Aso 
administration appears ready to advance other important 
Alliance initiatives. 
 
¶10.  (C) The Aso administration has, nevertheless, formidable 
challenges ahead in terms of security issues.  Expanded 
Japanese contribution to Afghanistan is unlikely to occur 
until the current Diet gridlock is resolved.  The possible 
dissolution of the Lower House in coming weeks can prevent 
the timely renewal of OEF refueling legislation, which 
expires on January 15, 2009, potentially leading to many 
months of a gap in refueling operations.  Prime Minister Aso, 
who was one of the signatories of the May 1, 2006 realignment 
roadmap, is expected to push ahead with implementation of the 
bilaterally agreed plans for the realignment of U.S. Forces. 
The unsettled political situation in Tokyo, however, is 
complicating bilateral consultations on initial Japanese 
funding for the USMC Guam relocation.  The Okinawa Governor 
has also continued to insist on slight revisions to the 
Futenma Replacement Facility (FRF), even as he cooperates 
with the completion of the environmental impact survey for 
the FRF project. 
SCHIEFFER