VZCZCXRO6598
PP RUEHFK RUEHKSO RUEHNAG RUEHNH
DE RUEHKO #2747/01 2760114
ZNR UUUUU ZZH
P 020114Z OCT 08
FM AMEMBASSY TOKYO
TO RUEHC/SECSTATE WASHDC PRIORITY 7660
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 2525
RUEHFK/AMCONSUL FUKUOKA 0168
RUEHOK/AMCONSUL OSAKA KOBE 3912
RUEHNAG/AMCONSUL NAGOYA 8251
RUEHKSO/AMCONSUL SAPPORO 0745
RUEHBJ/AMEMBASSY BEIJING 5632
RUEHUL/AMEMBASSY SEOUL 1628
RUCNDT/USMISSION USUN NEW YORK 1903

UNCLAS SECTION 01 OF 10 TOKYO 002747 
 
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 10/02/08 
 
Index: 
 
Diet interpellations: 
1) Prime Minister Aso in Diet interpellations stresses intention to 
pass supplementary budget, hints at possible second extra budget 
(Tokyo Shimbun) 
2) Aso's Diet replies on Indian Ocean refueling mission, North Korea 
problem, financial unrest, and comprehensive economic package 
(Nikkei) 
3) Democratic Party of Japan (DPJ) President Ichiro Ozawa in Diet 
soliloquy calls the U.S.-Japan alliance the pivot of Japan's 
diplomacy, lays out economic plan  (Asahi) 
4) Ruling camp criticizes Ozawa's economic logic as outlined in his 
Diet statement, questioning whether the funding he claims to fund 
plan exists  (Tokyo Shimbun) 
 
Diet agenda: 
5) DPJ seeks confirmation of Diet dissolution while ruling camp 
presses for deliberations on bill to extend MSDF operations in the 
Indian Ocean  (Yomiuri) 
6) Talks among Diet steering committee chairs rupture over 
scheduling deliberations on supplementary budget bill  (Tokyo 
Shimbun) 
7) Ruling and opposition camps intensifying horse trading over 
timing of Lower House dissolution  (Mainichi) 
8) Aso is searching for a way to dissolve the Diet in Oct. but he is 
being stymied by the state of the economy  (Nikkei) 
 
9) Prime Minister Aso wants to restudy the tax system to tap more 
overseas income of companies  (Nikkei) 
 
10) Chief Cabinet Secretary Kawamura's political support groups 
reported 22 million yen in office expenses for an apartment used by 
his secretary  (Mainichi) 
 
11) Senior Foreign Ministry official on Assistant Secretary of State 
Hill's trip to Pyongyang: If progress, Six-Party Talks could resume 
this month  (Asahi) 
 
12) Japan, South Korea to continue joint surveys of waters around 
dispute Takeshima isles  (Nikkei) 
 
Articles: 
 
1) Prime minister stresses intention to pass supplementary budget 
bill: Hints at additional economic pump-priming measures during 
interpellations by party representatives 
 
TOKYO SHIMBUN (Top Play) (Full) 
October 2, 2008 
 
Following Prime Minister Taro Aso's policy speech, party 
representatives engaged in a question-and-answer session in a 
plenary session of the Lower House on the afternoon of October 1. 
The prime minister indicated his intention to pass at an early date 
the fiscal 2008 supplementary budget bill, saying, "The bill has 
specific measures that are directly connected with people's lives, 
such as measures to help small to medium-sized businesses manage 
their funds." He also told reporters on the evening of the same day 
that it is necessary to adopt additional economic stimulus measures. 
At the present stage, the prime minister is standing firm on holding 
a Lower House election on November 2. However, he took a stance of 
 
TOKYO 00002747  002 OF 010 
 
 
reaching a final decision after monitoring budget deliberations and 
economic conditions. 
 
The prime minister last evening told reporters, "The second budget 
is within the range of expectations of the public. Calls for 
additional economic stimulus measures may rise." He then said, "The 
public's opinion is that the government should take more interest in 
economic stimulus measures rather than calling for dissolution of 
the Diet once the budget bill is enacted." He indicated that he 
would carefully determine the right timing for dissolving the Lower 
House and calling a snap election. 
 
Strengthening the confrontational stance against the DPJ, the prime 
minister during the interpellations stressed in a reply his 
intention to aim for early enactment of the bill amending the New 
Antiterrorism Special Measures Law to extend Japan's refueling 
mission in the Indian Ocean by another year. He also said he 
intended to pass a set of bills that would establish a consumer 
affairs agency. He called on the DPJ to clarify whether it is for or 
against the supplementary budget bill. 
 
Aso apologized for the Abe and Fukuda cabinets having both been 
replaced in less than one year. Regarding the resignation of former 
Transport Minister Nariaki Nakayama, Aso admitted to his 
responsibility for appointing him and said, "I would like to fulfill 
my responsibility by achieving results in my job." 
 
2) Main points from Oct. 1 Diet interpellations 
 
NIKKEI (Page 6) (Abridged) 
October 2, 2008 
 
Indian Ocean refueling 
 
Liberal Democratic Party Secretary General Hiroyuki Hosoda: Mr. 
Ozawa hardly answered the prime minister's questions from the day 
before yesterday. It's very regrettable. I wonder if it's really all 
right to hand over the reins of government to the Democratic Party 
of Japan (Minshuto). Are you determined to pass the bill extending 
the refueling activities in the Indian Ocean? 
 
Prime Minister Taro Aso: The war on terror is still going on. Many 
countries are stepping up their efforts in Afghanistan and are 
willing to sacrifice valuable lives. Our withdrawing from the 
activities of the international community is not an option. 
 
North Korea 
 
Hosoda: How will Japan face the six-party talks? 
 
Aso: There's no change in our basic course of action to push for a 
comprehensive solution to the pending issues of the abductions, 
nuclear weapons, and missiles. I will go all out to repatriate all 
the abductees. In conformity with the agreement reached between 
Japan and North Korea in August, we will call on North Korea to 
reinvestigate the issue as soon as possible. 
 
Financial crisis 
 
Hosoda: There has been instability in financial and capital markets 
for over a year. 
 
 
TOKYO 00002747  003 OF 010 
 
 
Aso: We will make efforts to stabilize international markets while 
cooperating closely with the United States and other countries. In 
international conferences, we will show Japan's experience and will 
contribute to the stabilization of international financial markets. 
 
Economic stimulus package 
 
Hosoda: You've advocated tax cuts to reinvigorate the economy. 
 
Aso: The government will implement a fixed-amount tax break within 
the current fiscal year as an emergency relief measure for the 
people's livelihood. In order for Japan to utilize its potential, 
the government will consider new tax plans late this year to promote 
investments in energy-saving facilities and reflux overseas 
subsidiary profits to Japan. 
 
3) DPJ's Ozawa to base Japan's security on its alliance with U.S., 
go with U.N.-centered diplomacy 
 
ASAHI (Page 4) (Full) 
October 2, 2008 
 
Democratic Party of Japan (Minshuto) President Ozawa clarified a set 
of three principles for his party's foreign and security policies in 
his Diet interpellation yesterday. His advocacy of U.N.-centered 
diplomacy tends to be taken as overemphasizing the United Nations, 
so Ozawa is believed to have aimed to explain his standpoint again 
of balancing the Japan-U.S. alliance with U.N.-centered diplomacy. 
 
The three principles for the DPJ's foreign and security policies are 
to maintain and develop Japan's alliance with the United States, 
strengthen Japan's relations with China, and develop a diplomacy 
centering on the United Nations. This advocacy, in a way, can be 
called an answer to the 'counter-interpellation' that Prime Minister 
Aso made in his Oct. 29 policy speech, when he had urged the DPJ to 
answer how it would balance the Japan-U.S. alliance and United 
Nations' centered diplomacy. "I showed our basic principles again 
and explained the principles plainly so he can fathom our thinking," 
Ozawa said in a press conference after his Diet interpellation. 
 
In his essay released in October last year, Ozawa set forth his 
views over Japan's overseas dispatch of the Self-Defense Forces, 
writing that he would like to have the SDF participate in the 
International Security Assistance Force (ISAF) in Afghanistan if his 
party took office. In that essay, Ozawa also developed his criticism 
of the United States, saying: "They are not aware that their 
isolationism and excessive pride always disturb the international 
community's harmony." This view, however, faced criticism not only 
from government leaders but also from some DPJ lawmakers. "It 
inevitably gives the impression that he places U.N. resolutions 
above anything else," former Chief Cabinet Secretary Nobutaka 
Machimura said. 
 
This time around, with a snap election ahead for a change of 
government, Ozawa apparently tried to clear up misunderstandings 
about his thinking. 
 
"Japan will base its security on its alliance with the United 
States," Ozawa stated, referring to his party's security policy. The 
point is his use of the word "base" (TN: kijuku also translated as 
"cornerstone"). This phrase has been used by the successive prime 
minister in their Diet replies. By using this wording, Ozawa 
 
TOKYO 00002747  004 OF 010 
 
 
indicated that he would maintain the government's policy of 
positioning the United States, the party of Japan's security pact, 
as an exception. Based on this standpoint, Ozawa took the position 
that Japan will establish an equal partnership with the United 
States. With this, he denied that Japan would follow in the 
footsteps of the United States. He concluded, "The Japan-U.S. 
Security Treaty has been established on the basis of the ideal and 
framework of the Charter of the United Nations, and the Japan-U.S. 
alliance and U.N.-centered diplomacy are not contradictory to each 
other at all." 
 
Ozawa will be called on to shape the three principles, such as how 
Japan will take part in the war on terror. The DPJ, if it takes the 
reins of government, will face the question of whether Japan should 
send SDF troops to Afghanistan. Ozawa says, "There can be a 
political judgment for SDF dispatch only if there is a clear-cut 
U.N. resolution." In his party, however, there are also objections. 
 
In the end, a fundamental law is deemed imperative. For now, 
however, Ozawa has yet to show what to do about it after his party 
takes office. He came up with a time schedule for his party's 
roadmap to implement policies and to secure the ways and means. It 
did not include foreign and security policies. 
 
"Diplomacy and security are on the top of the agenda because they 
are very important matters," Ozawa said in a press conference 
yesterday. "But," he went on, "public life is in a crisis." He 
added, "In our campaign at this point, we will make an appeal on 
what the people really need now." With this, Ozawa indicated that 
the DPJ would not step into specifics. 
 
4) DPJ Ozawa clarifies necessary amounts, specifics on revenues for 
policies, in effort to wipe out criticism of lacking fiscal 
resources 
 
TOKYO SHIMBUN (Page 2) (Full) 
October 2, 2008 
 
Democratic Party of Japan (DPJ) President Ichiro Ozawa spelled out 
policy pledges for the next House of Representatives election in a 
representatives' interpellation session at the Lower House 
yesterday. He clarified how much money would be needed to carry out 
these policies and from where the fiscal resources would come. He 
apparently aimed at quickly warding off criticism in the government 
and the ruling camp of the DPJ as being unable to come up with 
fiscal resources to implement its policies, not to mention similar 
objections in his own party. The main opposition party will draw up 
a manifesto that adds more substance to the contents of Ozawa's 
"policy speech" and announce it at the time of Lower House 
dissolution. 
 
In the interpellation session, Ozawa presented a timeframe in three 
stages after assuming political power for carrying out such priority 
measures as waiving highway tolls and providing child-rearing 
support. He also for the first time clarified the amounts of 
revenues necessary to fund these measures. 
 
He said that he would come up with 8.4 trillion yen for fiscal 2009 
and 20.5 trillion yen for fiscal 2012 in the third stage to finance 
the measures. 
 
His major tactic for squeezing out huge amounts of fiscal resources 
 
TOKYO 00002747  005 OF 010 
 
 
is to overhaul the national budget. Ozawa categorically said: "We 
will determine the order of priorities, based on the standard of 
what is needed to create new people's lives. By doing so, it will 
become fully possible to secure necessary fiscal resources to fund 
our policy measures." 
 
In order to constantly revise the fiscal system, in line with the 
budget overhaul, Ozawa proposed measures to: (1) stop amakudari (the 
practice of former government officials finding jobs in the private 
sector) and wasteful spending; (2) abolish the providing of state 
subsidies as tied aid, and provide local governments instead with 
aid in a package as fiscal resources they can use as they wish; and 
(3) scrap the special account system and independent administrative 
corporations in principle. 
 
He also proposed making use of the so-called "hidden funds" 
(maizoukin), such as reserves in special accounts and the sales of 
government assets as immediate measures. 
 
A number of DPJ lawmakers, including even those who have kept their 
distance from Ozawa, praised his speech, with Vice President Katsuya 
Okada saying: "It was pretty much a policy speech and a good one at 
that. He explained where the fiscal resources would come from in a 
straightforward manner." Discord in the party in the run-up to the 
House of Representatives election seems to be dissolving. 
 
Finance Minister Shoichi Nakagawa, however, criticized Ozawa's 
speech in response to a question by Liberal Democratic Party's 
Secretary General Hiroyuki Hosoda: "Fiscal resources will be 
permanently necessary to implement the policy measures proposed by 
the DPJ. The DPJ relies on temporary fiscal resources, such as 
reserves in special accounts, so it is hard to say that necessary 
fiscal resources will be secured." The government and the ruling 
camp are likely to intensify their attacks against the DPJ. 
 
5) DPJ seeks assurance of Lower House dissolution; Ruling camp to 
call for deliberations on new antiterrorism legislation 
 
YOMIURI (Page 2) (Full) 
October 2, 2008 
 
Prime Minister Taro Aso is considering postponing Lower House 
dissolution for a snap general election. Given the situation, the 
major opposition Democratic Party of Japan indicated yesterday that 
it would not cooperate for the early enactment of a fiscal 2008 
supplementary budget bill unless the prime minister gives its 
assurance of Lower House dissolution. After the extra budget clears 
the Lower House, the ruling camp intends to call on the opposition 
parties to begin deliberations on a bill amending the New 
Antiterrorism Special Measures Law to extend the Maritime 
Self-Defense Force's refueling mission in the Indian Ocean, as well 
as bills establishing a consumer affairs agency. 
 
The Diet affairs chiefs of the LDP and New Komeito held a meeting in 
the Diet building yesterday evening with their counterparts of the 
DPJ, Social Democratic Party and People's New Party. In the session, 
the coalition Diet affairs chiefs indicated that they would accept 
the three opposition parties' proposal to conduct two days of 
deliberations in each Diet chamber. At the same time, they refused 
to give assurance of Lower House dissolution, saying that only the 
prime minister could decide that. DPJ Diet affairs chief Kenji 
Yamaoka rebutted, saying: "No assurance, no plan. Let's deliberate 
 
TOKYO 00002747  006 OF 010 
 
 
on matters thoroughly. A Lower House Budget Committee director 
thinks five days (are necessary), and the Upper House has its own 
opinion." The meeting broke off. 
 
Meanwhile, the prime minister last night revealed to reporters at 
his official residence his intention to consider an additional 
economic stimulus package, saying: "The general public think that 
the government should have more interest in economic stimulus 
measures rather than Lower House dissolution once the supplementary 
budget is enacted." He also expressed strong enthusiasm for the 
enactment of the bill amending the New Antiterrorism Special 
Measures Law, saying: "It is unthinkable for Japan alone to 
withdraw." He further underlined the need to enact the consumer 
affairs agency-related bills. 
 
The DPJ is set to apply greater pressure on the ruling camp through 
Budget Committee deliberations with the aim of forcing it into early 
Lower House dissolution. A senior DPJ lawmaker said: "We will take a 
severe approach in the DIet. We are planning to take up the issue of 
former Komeito Chairman Junya Yano (who has filed a lawsuit against 
Soka Gakkai), as well." 
 
6) Diet Affairs Committee chairs' talks on supplementary budget 
deliberations timetable rupture: Ruling parties reject call for 
making Lower House dissolution precondition 
 
TOKYO SHIMBUN (Page 2) (Excerpts) 
October 2, 2008 
 
The LDP, the New Komeito, the DPJ, the Social Democratic Party (SDP) 
and the People's New Party (PNP) on the afternoon of Oct. 1 held a 
meeting of the chairman of the Diet Affairs Committees of both the 
ruling and opposition parties in the Diet building and conferred on 
a deliberation timetable for a fiscal 2008 supplementary budget 
bill. In response to a proposed time schedule of holding two-day 
deliberations both in the Lower and Upper Houses, the opposition 
side insisted, "We cannot accept the proposal unless it is premised 
on dissolution of the Lower House for a snap election." The talks 
ended in rupture. 
 
The ruling parties took a stance of accepting a timetable of holding 
two days of deliberations in the Lower and Upper Houses, 
respectively, which the opposition camp's side had proposed in the 
previous talks. However, it rejected the opposition camp's call for 
setting the schedule based on the precondition that a national 
election would be held on November 9. The representatives cited that 
it is the prime minister's prerogative to dissolve the Lower House. 
 
As a result, no agreement was reached in the talks on starting 
deliberations in the Lower House Budget Committee on the 6th because 
of the opposition's insistence that a deliberation timetable not 
premised on dissolution of the Diet was unacceptable. 
 
7) Political maneuvering between ruling and opposition camps 
intensifying over timing of Lower House dissolution 
 
MAINICHI (Page 5) (Full) 
October 2, 2008 
 
The ruling Liberal Democratic Party and its coalition partner New 
Komeito confirmed yesterday that they would start, even 
independently, deliberations on the supplementary budget for fiscal 
 
TOKYO 00002747  007 OF 010 
 
 
2008 at the Lower House Budget Committee. The ruling camp has not 
changed its basic policy of dissolving the House of Representatives 
soon after the supplementary budget clears the House of Councillors. 
However, a cautious view about early Lower House dissolution is 
spreading in the ruling party due to the need for measures to meet 
the financial crisis that started in the United States. Prime 
Minister Taro Aso also hinted at the need for additional economic 
stimulus measures. The political maneuvering between the ruling and 
opposition camps is intensifying over the timing of Lower House 
dissolution, even though both sides are unable to gauge Aso's real 
intention. 
 
Democratic Party of Japan (DPJ) Diet Affairs Committee Chairman 
Kenji Yamaoka said yesterday in a meeting of the Diet affairs 
committee chairmen from the ruling and opposition parties: 
 
"The Lower House will be dissolved immediately after the end of 
deliberations on the budget for two days each in the two chambers of 
the Diet. This is our precondition. If you can't promise 
dissolution, let's deliberate on it thoroughly (for a long time)." 
 
LDP Diet Affairs Committee Chairman Tadamori Oshima, however, 
responded, saying: 
 
"I accept the timetable for deliberations on the budget, but I can't 
promise dissolution because the prime minister alone has the right 
to dissolve the Lower House." 
 
The talks, therefore, ended in failure. 
 
The ruling coalition and the DPJ have reached an agreement on the 
timetable for deliberations on the supplementary budget. The ruling 
camp intends to accept the DPJ's request of an early Lower House 
dissolution. Even so, the reason for the ruling camp unable to 
accept the DPJ's plan is because consensus has yet to be reached in 
the DPJ, namely, a senior DPJ Upper House member said: "One week 
each in the Lower and Upper Houses is needed for deliberations on 
the budget." 
 
The ruling coalition is wary especially about deliberations on the 
budget in the opposition-controlled House of Councillors, with a 
senior New Komeito member saying: "It is the same as a black hole. 
Even if we promise the deliberation schedule, they could extend the 
schedule indefinitely." There is the ruling camp's distrust of the 
DPJ in the background of its decision to "start deliberations 
independently." 
 
LDP Lower House member Yamato Inaba met yesterday with Chief Cabinet 
Secretary Takeo Kawamura at the Prime Minister's Official Residence 
to hand in a letter addressed to the prime minister opposing Lower 
House election before enacting the supplementary budget. He told 
Kawamura: "It is stupid to dissolve the Lower House without coming 
up with fiscal measures." The letter was signed by 32 junior LDP 
lawmakers. A person close to Aso said: "It is uncertain whether the 
opposition keeps its promise on the supplementary budget. The 
situation is changing from moment to moment." 
 
8) Prime Minister Aso seeking opportunity for Lower House 
dissolution in October 
 
NIKKEI (Page 2) (Abridged slightly) 
October 2, 2008 
 
TOKYO 00002747  008 OF 010 
 
 
 
Prime Minister Taro Aso yesterday took a positive stance toward an 
additional package of economic stimulus measures, reiterating the 
need for helping the economy rather than calling for a House of 
Representatives election. His aim is to create an environment that 
would favor the ruling coalition going into a Lower House election. 
However, if the Aso government prioritizes the enactment of the 
supplementary budget for fiscal 2008, it might be trapped by the 
opposition's strategy (to set the timeframe for Diet dissolution). 
Although calls for forgoing an early general election are becoming 
stronger in the ruling Liberal Democratic Party, the New Komeito, 
the LDP's junior coalition partner, has not budged from its position 
of insisting on Lower House dissolution soon. Under such 
circumstances, Aso is now looking into the possibility of dissolving 
the Lower House in October. 
 
Aso and Ichiro Ozawa, president of the main opposition Democratic 
Party of Japan (DPJ), faced off in Diet debate yesterday. 
 
Ozawa: "After making clear each party's assertion through sufficient 
debate, it is the usual formula then to go to the people to ask for 
their vote of confidence." 
 
Aso: "I will decide that on my own." 
 
DPJ Secretary General Yukio Hatoyama also urged Aso to dissolve the 
Lower House immediately after enacting the supplementary budget, 
instead of delaying deliberations to Oct. 6. Aso would not listen, 
however. A person close to Aso said: "The prime minister will never 
give the political initiative to other side." 
 
Aso trying to put forward his own political identity 
 
The ruling coalition is making preparations for Lower House 
dissolution in October and general election in early November, after 
the supplementary budget is enacted. 
 
Before going into the general election, Aso without doubt aims to 
impress on the public the image that he is adept at dealing with the 
economy. He appears to be saying that he favors dissolving the Lower 
House while criticizing the opposition if it tries to delay the Diet 
debate. He also expects the LDP to include a new economic stimulus 
package in its set of campaign pledges for the Lower House 
election. 
 
Concerns about falls in stock prices 
 
Many in the LDP are worried about the adverse economic impact on the 
regions of plunging stock prices. As a result, there is a growing 
view for putting off Lower House dissolution. The LDP also is 
concerned about the results of a private survey it took of the Lower 
House election situation. The LDP survey found that the ruling camp 
would fail to secure 241 seats, a majority of the Lower House, in a 
general election. The New Komeito has envisaged Lower House 
dissolution in early October, since its support organization has 
focused on a general election in early November.  Therefore, the 
possibility is strong that the New Komeito will frown on a lengthy 
delay in a decision to dissolve the Lower House. 
 
9) Policy to recycle corporate profits made overseas: Prime minister 
positive toward amending tax code as additional economic stimulus 
measure 
 
TOKYO 00002747  009 OF 010 
 
 
 
NIKKEI (Page 1) (Excerpts) 
October 2, 2008 
 
Prime Minister Taro Aso during a plenary session of the Lower Housed 
announced his plan to consider in the annual tax code revision for 
fiscal 2009 establishing a system designed to bring profits Japanese 
companies made abroad back home. The idea is to make it easier for 
overseas profits to be used for domestic investment so as to bring 
about the revitalization of the economy. He stressed the need to 
pass a fiscal 2008 supplementary budget at an early date. He also 
indicated a proactive stance toward additional pump-priming 
measures. Those statements were made in response to questions asked 
by LDP Secretary General Hiroyuki Hosoda and other lawmakers. 
 
The prime minister said, "There is a wide range of challenges 
concerning the tax code, including the consolidation of conditions 
for bringing profits made by overseas subsidiaries of Japanese 
companies back home. We will consider this issue toward the end of 
the year." Contrary to the progress in the internationalization of 
corporate management, Japanese companies are increasingly showing a 
tendency to retain the profits they made abroad, where tax rates are 
lower than in Japan. The Ministry of Economy, Trade and Industry is 
calling for tax exemption for dividends companies received from 
their in which they have a more than 25 PERCENT  stake. 
 
10) Chief Cabinet Secretary Kawamura's political groups reported 22 
million yen in office expenses for apartment used by former 
secretary 
 
MAINICHI (Page 27) (Excerpts) 
October 2, 2008 
 
Three political groups of Chief Cabinet Secretary Takeo Kawamura 
reported the condominium (Chiyoda Ward, Tokyo) where his former 
official secretary was living as their office and declared a total 
of about 22 million yen in office and other expenses over a 
three-year period until 2007. The three groups were disbanded in 
March 2008. A member of the Kawamura office explained: "The 
condominium was being used as office of the three groups, but we 
decided to dismantle them because the report might be subject to 
misunderstanding." 
 
According to political funds reports submitted to the Tokyo 
Metropolitan Electoral Management Committee, the three political 
groups are Kenseikai, Kenryukai, and Kokuminseikei Doyukai (People's 
Politics and Economics Executives Association). As the combined 
amount of their office expenses, they listed 1.1 million yen for 
2005, 1.08 million yen for 2006 and 0.96 million yen for 2007. As 
the amount of personnel expenses, they declared 5.05 million yen for 
2005, 4.38 million yen for 2006 and 2.32 million yen for 2007. 
 
The condominium is owned by a relative of the late former House of 
Representatives member who was elected from Yamaguchi, which 
Kawamura also represents, and designated him as his successor. The 
relative was renting it free to Kawamura, and his former secretary 
whose residence is located in Kanagawa Prefecture was living there. 
No rent for the about 200 square-meter condo was being paid. The 
former official secretary was paying half of the office operating 
expenses for the three-year period and the three groups were paying 
the remaining half. The reported personnel expenses were for a 
female part-timer, according to the office member. 
 
TOKYO 00002747  010 OF 010 
 
 
 
11) Foreign Ministry official: Six-party talks may take place before 
end of month if there is progress 
 
ASAHI (Page 9) (Full) 
October 2, 2008 
 
Regarding a visit to North Korea by U.S. Assistant Secretary of 
State Christopher Hill, the chief U.S. delegate to the six-party 
talks, a senior Foreign Ministry official indicated yesterday that 
if there was any progress between the United States and North Korea, 
six-party talks might be restarted later this month. The U.S. 
government intends to delist the North as a state sponsor of 
terrorism once an agreement is reached on the methods of verifying 
the North's nuclear programs. The official also said: "We have 
reminded the United States about the need for solid contents based 
on international standards." 
 
12) Japan, South Korea to continue joint Takeshima survey possibly 
later this month; Eager to use occasion to mend relations 
 
NIKKEI (Page 2) (Full) 
October 2, 2008 
 
Japan and South Korea have launched an effort to conduct possibly 
before the end of the month a joint radiation-contamination survey 
in waters near Takeshima, a group of disputed islets in the Sea of 
Japan, known as Dokdo in South Korea. Japan had temporarily looked 
for the possibility of an independent survey but has decided to 
maintain the joint survey framework for three years in a row in 
consideration of an outcry from South Korea over the reference to 
the Takeshima issue in the new curriculum guidelines for middle 
schools. 
 
The two countries conducted their joint surveys in 1994 and 1995 to 
examine the impact of radioactive materials dumped in the waters by 
the former Soviet Union. Since 1996, surveys were conducted 
independently by Japan. Joint surveys began in 2006 when the two 
countries resumed the exclusive economic zone (EEZ) demarcation 
talks after a six-year hiatus. 
 
The government had wanted to conduct the survey independently based 
on Tokyo's claim that sovereignty over Takeshima rests with Japan. 
But given South Korea's strong reaction to the reference to the 
sovereignty issue in the textbook guidelines, the government has 
concluded that an independent survey would deteriorate bilateral 
relations. Tokyo also wants to use the joint survey to mend 
relations with Seoul. 
 
Coordination is underway to conduct the survey before the end of the 
month. Several spots, including those in waters claimed by the two 
countries as their respective EEZs, will be selected. Under 
consideration is an approach allowing experts from the two countries 
to board each other's survey boat and exchange analytical data. The 
method will be finalized in the days ahead. Apart from the survey, 
the government intends to aim at progress on the EEZ demarcation 
talks. The talks that have been held a total of nine rounds since 
May 1996 have faced difficulties. 
 
SCHIEFFER