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UNCLAS SECTION 01 OF 09 TOKYO 002771 
 
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 10/03/08 
 
INDEX: 
 
(1) DPJ in dilemma over deliberations on extra budget bill; Strategy 
of protraction could evoke public criticism (Yomiuri) 
 
(2) How will the 81 "Koizumi children" fare in next Lower House 
election? (Yomiuri) 
 
(3) Editorial: Prime minister must make decision on Lower House 
dissolution (Asahi) 
 
(4) With inauguration of Aso cabinet, Image of Japan being police 
state growing (Sentaku) 
 
(5) What is the scandal involving the DPJ that LDP has wind of? 
(Sentaku) 
 
(6) Okinawa governor to visit U.S., call for nuke sub safety (Ryukyu 
Shimpo) 
 
(7) SDF should be dispatched for monitoring ceasefire in Georgia 
(Asahi) 
 
(8) Business confidence drops to five-year low: Total decline in 
demand in both domestic and external areas; Manufacturers cutting 
back on output in succession (Asahi) 
 
ARTICLES: 
 
(1) DPJ in dilemma over deliberations on extra budget bill; Strategy 
of protraction could evoke public criticism 
 
YOMIURI (Page 4) (Full) 
October 3, 2008 
 
In deliberations on the budget bill to start on Oct. 6, the 
Democratic Party of Japan (DPJ) plans to take a confrontational 
stance against Prime Minister Aso, who is eager to enact the fiscal 
2008 supplementary budget bill. The DPJ will try to press Aso to 
dissolve the House of Representatives at an early date for a snap 
election. If the main opposition prolongs deliberations, however, 
the party could be hit with public criticism for that tactic and 
find itself eventually placed at a disadvantage in the election 
campaign when it comes. The DPJ is trying to undermine the unity of 
the ruling coalition by hinting at the possibility of summoning a 
former New Komeito chairman (who has challenged his party's 
connection to the religious sect Soka Gakkai) to the Diet as an 
unsworn witness, which that party really wants to avoid, the. 
 
DPJ President Ozawa in a meeting last night of the Isshinkai, a 
group of junior party members supporting him, said in frustration: 
 
"I think the government will dissolve the Lower House by the end of 
this year. The public will not tolerate the current situation. It is 
irrational for the government to even talk about a second 
supplementary budget. ... Our side is distressed, but the other side 
must also be distressed. Interpret this as meaning the campaign 
period will be prolonged and campaign in your electoral districts." 
 
On the condition that the Lower House would be dissolved early, the 
DPJ planned to agree to a ruling camp request to vote on the extra 
budget bill after deliberations are held for two days in both 
 
TOKYO 00002771  002 OF 009 
 
 
Houses. But Prime Minister Aso, taking seriously the financial 
crisis triggered by the U.S., has begun to stress the need to buoy 
up the economy in earnest. Given this, the DPJ is being pressed to 
rewrite its strategy. 
 
The DPJ is poised to pursue the government in deliberations on the 
budget bill over its response to the financial crisis and its 
handling of the tainted rice scandal. But a mid-ranking DPJ official 
said: "If we try to prolong or boycott deliberations, we may be 
criticized as turning our backs on the economy. If public support 
for the cabinet drops as a result of the prime minister having been 
driven into a corner, the government may find it difficult to 
dissolve the Lower House." 
 
Some DPJ members are suggesting that the party should mention the 
possibility of summoning of former New Komeito official Yano, who 
has filed a lawsuit against the Soka Gakkai, to the Diet as an 
unsworn witness as another means to force the government into early 
dissolution. They expect that the New Komeito, which wants to avoid 
such a summoning, would press the prime minister to dissolve the 
Lower House. 
 
Appearing on a TBS program yesterday, Ozawa emphasized this 
regarding the issue of Yano: "That is an issue involving politics 
and religion. It is a constitutional issue and is a serious theme in 
the House of Councillors (controlled by the opposition camp)." 
 
In the representatives interpellation session in the Upper House 
plenary session yesterday, Azuma Koshiishi, leader of the DPJ's 
Upper House caucus, stated: "A religious group being given favorable 
tax treatment reportedly has played more of a major role than the 
party itself as the base for the election campaign." The DPJ is 
preparing to gradually apply pressure on the ruling bloc, as seen 
from an agreement reached ahead of the Diet interpellations among 
Koshiishi, Secretary General, Diet Affairs Committee Chairman Kenji 
Yamaoka, and others to take up the issue as a general argument, 
without citing the name of the Soka Gakkai. 
 
DPJ Vice President Hajime Ishii, People's New Party Vice President 
Shozaburo JImi, and others met in the Diet Building yesterday and 
agreed to pursue the government and the ruling camp over the Yano 
issue. New Komeito President Ota criticized the DPJ's stance, 
claiming: "The issue that is pending in court should not be taken up 
in the Diet." 
 
(2) How will the 81 "Koizumi children" fare in next Lower House 
election? 
 
YOMIURI (Page 4) (Abridged slightly) 
October 2, 2008 
 
All eyes are now focused on how the so-called "Koizumi children," 
Liberal Democratic Party (LDP) first-term lawmakers who were elected 
in the 2005 House of Representatives election, will fight to hold 
their seats in the next Lower House election. The number of such 
lawmakers has decreased from the 83 to 81 because two have already 
resigned, although the 83 contributed to the LDP holding a 
two-thirds majority with its coalition partner, New Komeito, in the 
Lower House. How many of those freshman lawmakers can be reelected 
could determine the results of the battle between the LDP led by 
Taro Aso and the Democratic Party of Japan (DPJ) headed by Ichiro 
Ozawa. 
 
TOKYO 00002771  003 OF 009 
 
 
 
The 81 lawmakers include: 34 who were elected in single-seat 
constituencies; 33, elected under the proportional representation 
segment after being defeated in the single-seat district contest; 
and 14 who ran only in the proportional representation race and won 
seats. The possibility is strong that those 14 lawmakers will face 
uphill battles. 
 
Of those 14 lawmakers, only two -- Taku Otsuka (representing the 
Tokyo proportional representation bloc) and Keisuke Suzuki 
(South-Kanto proportional representation bloc) -- have been endorsed 
by the LDP to run respectively in the Saitama-9 district and 
Kanagawa-7 district. Otsuka is taking over the home turf of 
Matsushige Ono, a Machimura faction member and former deputy chief 
cabinet secretary, who will retire from politics. Although Otsuka 
wanted to run in the Tokyo-5 district, the LDP picked Yukari Sato, 
who once competed with Consumer Administration Minister Seiko Noda 
in the Gifu-1 district, as its candidate for the Tokyo-5 district. 
 
Taizo Sugiura, who was elected in the Hokkaido-1 district, intends 
to run in the next Lower House election as an independent candidate, 
because he failed to obtain the party's endorsement. 
 
Kuniko Inoguchi (representing the proportional representation Tokyo 
bloc) and Mitsue Kondo (proportional representation Kinki bloc) ran 
in the 2005 Lower House at the request of then Prime Minister 
Junichiro Koizumi. However, since Koizumi has announced his 
retirement, they appear to have lost his support. 
 
Of the Koizumi children who won single-seat contests, Yasuhiro 
Nakagawa (Kyoto-4 district) and Satsuki Katayama (Shizuoka-7 
district) will have to compete head on with DPJ candidates. Some 
other freshman lawmakers will be forced to go up against LDP 
candidates who were against postal privatization. In Osaka and Kyoto 
prefectures, there are moves opposing the party's endorsement of the 
Koizumi children. 
 
Coordination between Koizumi children who secured their seats under 
the proportional representation segment after being defeated in 
single-seat constituency elections, and "postal rebels" has become a 
major internal issue. Kotaro Nagasaki (representing the proportional 
representation South-Kanto bloc) plans to run in the election as an 
independent, since former General Council Chairman Mitsuo Horiuchi, 
a postal rebel, has been endorsed as LDP candidate for the 
Yamanashi-2 district. Jiro Ono (proportional representation 
South-Kanto) will likely secure the party's official support in the 
Yamanashi-3 district, since Takeshi Hosaka has decided to run for 
the Kai mayoral election. However, Hosaka has yet to clarify whether 
he supports Ono. 
 
(3) Editorial: Prime minister must make decision on Lower House 
dissolution 
 
ASAHI (Page 3) (Full) 
October 3, 2008 
 
Prime Minister Taro Aso has repeatedly made statements dismissive of 
early Lower House dissolution for a snap general election. 
 
On Oct. 1, the prime minister underlined the need for additional 
fiscal disbursements by citing the U.S. financial crisis, saying: 
"There are mounting challenges, such as bills to establish a 
 
TOKYO 00002771  004 OF 009 
 
 
consumer affairs agency, Indian Ocean refueling legislation, in 
addition to a supplementary budget bill. I would like to prioritize 
implementing policies over Lower House dissolution. The extra budget 
is within the range of expectations. There might be calls for 
additional steps." 
 
A tug-of-war is underway between the ruling and opposition camps 
over the timing for the next general election. The prime minister's 
true intention remains unclear. But as far as his comments are 
concerned, he seems to be willing to dissolve the Lower House after 
the bills to establish the consumer affairs agency and to extend the 
refueling mission, possibly a second supplementary budget as well, 
are all enacted. 
 
The Democratic Party of Japan is opposed to the plans to establish 
the consumer affairs agency and to extend the refueling mission. If 
the ruling bloc aims to readopt them by using its two-thirds 
overriding vote in the Lower House, chances are high that Lower 
House dissolution will not occur until the end of this year, or 
possibly not until early next year. 
 
We cannot support such a scenario. In order to deal with the 
financial crisis properly, the next general election must be held 
much earlier. 
 
The prime minister might say that there is no guarantee that the 
divided Diet will end with the general election and that a political 
vacuum must not be created as a result of the election. 
 
The perception that a political vacuum does not exist now is not 
correct. Since last summer's Upper House election, the nation's 
politics was repeatedly thrown into turmoil and forced to stall 
under prime ministers Shinzo Abe and Yasuo Fukuda. This very 
situation constitutes a political vacuum. One must not forget that 
the nation's politics has been like this for over one year now. 
 
The ruling camp is to blame for that. But the DPJ is no less 
responsible. In order to break the gridlock in this situation and 
put an end to this vacuum, there is no other option but to carry out 
a general election to seek the people's judgment. 
 
As a result of the election, the Ozawa-led DPJ might take over the 
reins of government. Conversely, if the ruling camp wins, it would 
be difficult for the DPJ to put up resistance on the strength of 
popular will. The stage might be finally set for positive political 
compromises. 
 
The environment surrounding the prime minister is gloomy. 
 
His cabinet's support ratings have been lower than those of the 
former Abe and Fukuda cabinets. The resignation of Land and 
Transport Minister Nariaki Nakayama over his controversial remarks 
has also dealt a blow to his cabinet. The LDP is leaning toward 
postponing the election in the judgment that if the nation goes to 
the polls now, the party would suffer a devastating setback. 
 
The country cannot afford to delay the election endlessly and allow 
the economy to slip into recession. Once the Diet ends deliberating 
on the supplementary budget, a solid administration backed by 
popular will must be installed to implement powerful and flexible 
economic stimulus measures. 
 
 
TOKYO 00002771  005 OF 009 
 
 
In his policy speech, the prime minister said: "I will never flinch 
from the challenges before me." If he takes political responsibility 
seriously, he can no longer flinch from calling a general election. 
 
(4) With inauguration of Aso cabinet, Image of Japan being police 
state growing 
 
SENTAKU (Page 45) (Full) 
October 2008 
 
With the appointment of former National Police Agency Director 
General Iwao Urushibara as deputy chief cabinet secretary, the 
highest post in the bureaucracy, the image of Japan being a police 
state is growing. Under the situation that former NPA's Foreign 
Affairs and Intelligence Department chief Hideshi Mitani and former 
Tokyo Metropolitan Police Commissioner Tetsuro Ito have been serving 
respectively as cabinet intelligence director and deputy chief 
cabinet secretary for crisis management, a former NPA officer was 
named deputy chief cabinet secretary for the first time in 32 years. 
While Shinzo Abe was prime minister, there was a rumor that 
Urushibara would be named as deputy chief cabinet secretary, but 
such was not realized due to Abe's sudden resignation. Some 
political observers predict that persons close to Abe, who is a 
friend of Aso, might have suggested the appointment. Aso also picked 
such conservative politicians as Hirofumi Nakasone, Yasukazu Hamada 
and Shoichi Nakagawa respectively as foreign, defense and finance 
ministers. 
 
Regarding the important posts given to former senior officials, 
there appear mixed motives in the NPA. Since other ministries and 
agencies are unhappy with the situation, the possibility is strong 
that there will be a strong backlash from other agencies. Some in 
the NPA are concerned about the closeness of the police and 
politics. With an eye on the forthcoming House of Representatives 
election, in which a fierce battle for taking the reins of 
government is expected to take place, police authorities that 
strictly monitor election irregularities, have said: "It will be 
troublesome if the opposition throws doubt on us." 
 
(5) What is the scandal involving the DPJ that LDP has wind of? 
 
SENTAKU (Page 45) (Full) 
October 2008 
 
It seems that the ruling Liberal Democratic Party (LDP) has got hold 
of a scandal involving the main opposition Democratic Party (DPJ). 
Senior LDP Election Strategy Council members reportedly are filled 
with confidence that even if a DPJ-controlled government is 
inaugurated, the LDP will be able to topple it. According to sources 
familiar with the LDP, the scandal is that the DPJ received support 
from a gangster organization in a Lower House by-election for the 
Fukuoka No. 2 district in April 2005. 
 
The by-election was held to fill a Lower House seat that had fallen 
vacant after DPJ member Junichiro Koga quit his seat to take 
responsibility for his fake college degree. The DPJ filed as a 
candidate in the by-election lawyer Masanori Hirata, who was a 
student in the political training seminar held by (then DPJ Vice 
President) Ichiro Ozawa, but the DPJ candidate was defeated by 
former LDP Vice President Taku Yamasaki. 
 
A source familiar with the LDP said: 
 
TOKYO 00002771  006 OF 009 
 
 
 
"At that time, it was revealed that the Hirata camp had not paid a 
rent for three months of the campaign office in Fukuoka City. The 
building was owned by a gangster-related company. Public security 
authorities are aware of it." 
 
A senior LDP Election Strategy Council member as if sharpened his 
claws said: "If we reveal the cozy ties between the DPJ and a 
gangster organization, the DPJ will collapse before taking the 
political helm." However, no one knows how the situation will turn 
out. 
 
(6) Okinawa governor to visit U.S., call for nuke sub safety 
 
RYUKYU SHIMPO (Page 2) (Abridged) 
October 3, 2008 
 
The Okinawa prefectural assembly met yesterday for the last day of 
question-and-answer sessions, with Zenshin Takamine presiding as 
speaker. Representing the ruling parties, eight assembly members 
took the floor to ask questions. Concerning the recent discovery of 
U.S. nuclear-powered submarines' leakage of cooling water containing 
radiation, Akira Uehara, chief of the governor's office, revealed 
the governor's plan to visit the United States to make a direct 
appeal to the U.S. government for a solution to Okinawa's base 
issues. Uehara stated that the governor would call on the U.S. 
government to prevent U.S. military incidents and accidents. He 
added, "We want to make a strong request to the U.S. government for 
the U.S. military to take thorough safeguards." He was replying to a 
question asked by Moriyuki Teruya. 
 
(7) SDF should be dispatched for monitoring ceasefire in Georgia 
 
ASAHI (Page 16) (Abridged slightly) 
October 3, 2008 
 
By Kazuhiko Togo, former Foreign Ministry European Affairs Bureau 
director general and Temple University Japan visiting professor 
 
The conflict between Russia and Western countries over Georgia, 
which is often referred to as the "new Cold War," is a pressing 
international issue. Immersed in its own affairs, Japan, the host of 
this year's G-8 summit, has not made any contributions to the 
Georgia conflict. Such is truly regrettable. 
 
It is important for the government to make it clear that Japan is 
ready to send Self-Defense Force troops to Georgia to monitor the 
ceasefire there and to make every effort for the UN Security Council 
to adopt a resolution for that. 
 
The European Union (EU) is already monitoring the ceasefire in 
Georgia. The EU has been calling for the adoption of the UNSC 
resolution. With the resolution, the SDF can join the UN 
peacekeeping operations (PKO), thereby allowing Japan to play a role 
in the ceasefire monitoring effort along with the EU. 
 
Why does Japan have to go such lengths? 
 
The answer to this question is closely associated with how to define 
Russia in international politics. Russia is an important neighbor 
that shares a territorial issue with Japan. Joining this crucial 
effort serves Japan's national interests. 
 
TOKYO 00002771  007 OF 009 
 
 
 
After experiencing humiliation and defeat over the last 20 years or 
so, Russia has now restored its influence, owing to soaring oil 
prices and the strong leadership of former President Vladimir Putin. 
Behind Russia's conflict with Georgia lies Moscow's defiant message 
not to ignore it, amid the declining international position of the 
United States. 
 
Russia no longer hesitates to raise tensions with European countries 
and the United States. At the same time, it is aiming to grow into a 
value-added economy by reducing its dependence on oil. In that 
respect, keeping harmony with Western countries is essential for 
Russia. Japan should join the ceasefire monitoring operation so as 
not to let Russia slip into deep international isolation. Such a 
step may be thanked by Russia, but it cannot oppose it. 
 
Georgia is also expected to welcome the Japanese troops' hard work 
for the maintenance of peace. During my service for the Foreign 
Ministry, I was assigned to the embassy in Moscow three times, and I 
visited Georgia on each tour. Georgia is a country that truly loves 
Japan's martial arts, culture, and language. 
 
Georgia and its surrounding region called the Caucasus are a 
geopolitical pivot bordering on Russia, Western Europe, the Middle 
East, and Central Asia. The repercussion of any even that occurs 
there always reaches Japan via Russia, China, and Central Asia. 
Further, the region is important as a route to convey Caspian Sea 
oil and natural gas. 
 
Japan can still act. The SDF dispatch to Georgia seems good for 
Prime Minister Taro Aso, who paid attention to this region's 
strategic importance as seen in his advocate of the "Arc of Freedom 
and Prosperity" during his tenure as foreign minister, as well as 
for Democratic Party of Japan President Ichiro Ozawa, who puts UN 
cooperation at the center of his diplomacy. 
 
(8) Business confidence drops to five-year low: Total decline in 
demand in both domestic and external areas; Manufacturers cutting 
back on output in succession 
 
ASAHI (Page 11) (Excerpts) 
October 2, 2008 
 
The BOJ's "Tankan," a survey of business confidence for September, 
released on October 1, showed that business confidence among the 
nation's leading companies and major manufacturers fell into 
negative territory for the first time in five years, confirming that 
the economy has taken a downward turn. There are no signs of the 
global financial crisis abating. A number of Japanese companies have 
drastically cut production. With the termination of the expansionary 
economic trend driven by exports, which has lasted for six years, 
there is a growing worried view that the business slump could be 
protracted. 
 
Both the domestic and overseas supply and demand conditions for 
products and services indexes have significantly deteriorated. Those 
indexes remained unchanged in the previous survey carried out in 
June. However, the slowdown in the global economy has clearly 
affected both domestic and overseas supply and demand conditions. 
 
Outline of BOJ Tankan survey 
 
 
TOKYO 00002771  008 OF 009 
 
 
? The diffusion index (DI) of business sentiment among leading 
companies and manufacturers stood at minus 3, down 8 points from the 
previous survey. The fall of the business sentiment into negative 
territory is the first since June 2003. 
? The DI of leading companies and non-manufacturing companies marked 
plus 1, down 9 points. Deterioration was marked for five quarters in 
a row. 
? Regarding the DI of small- and medium-size companies, that of the 
manufacturing companies stood at minus 17, down 7 points. That of 
nonmanufacturers marked minus 24, down 4 points. 
? Capital investment plans of leading companies in all industries, a 
leading economic indicator, increased 1.7 PERCENT , compared with 
the previous year. However, the outcome was revised down by 0.7 
PERCENT . 
? The expected exchange rate for the second half of fiscal 2008 is 
102.48 against the dollar. 
 
Economic downturn likely to become drawn out 
 
Several economists were asked for comments about the BOJ's Tankan. 
Nissei Research Institute Economic Research Department Manager 
Koichi Haji said, "It has been thought that unlike the 1990s, the 
economic downturn this time would not last long. However, the 
situation does not allow such an optimistic view." Totan Research's 
chief economist Izuru Kato pointed out, "If the U.S. fails to deal 
with its financial crisis, the risk of a delay in the recovery of 
the Japanese economy would increase." 
 
The BOJ, which is responsible for steering monetary policy, has 
envisaged a scenario of the economy remaining stagnant for the time 
being, but the Bank predicts it will gradually return to a modest 
growth track. The major reason for the projection is the extent of 
three excessivenesses -- facilities, employment and debts -- is 
small this time. 
 
However, a slight derailment of this scenario can be envisioned. In 
the Tankan survey, the index determined by subtracting the capacity 
index, which indicates a sense of surplus in facilities, from 
shortages in such and equipment was plus 2 for leading companies and 
manufacturers, up 2 points from the previous survey. Leading 
companies' and all industries' capital spending plans for fiscal 
2008 have also been revised down 0.7 points from the figure as of 
June. Mitsubishi UFJ Securities Research Center senior economist 
Tatsushi said, "The downward revision of capital investment plans 
reflects that companies are becoming cautious about the future of 
the economy." 
 
The employment conditions DI came to minus 2, up 3 points for 
leading companies and manufacturing companies. That of small- and 
medium-sized companies stood at plus 6, up 3 points. There is a 
gradual feeling that surplus labor is building up. 
 
The future of the economy does not allow optimism. Some BOJ 
officials take the view that the protraction of the financial crisis 
could accelerate a drop in exports. The situation concerning 
domestic demand is that it had never been expected that domestic 
demand for the nonmanufacturing sector would drop to this degree, as 
Hideo Kumano, an economist at the Daiichi Life Research Institute 
said. 
 
The government and the ruling camp intend to pass before the Lower 
House is dissolved a supplementary budget, which includes a package 
 
TOKYO 00002771  009 OF 009 
 
 
of comprehensive economic stimulus measures. However, some have 
raised doubts about the efficacy of such an economic stimulus 
package with one analyst at a leading securities house noting, 
"Foreign factors have triggered Japan's economic slump. Economic 
stimulus measures will not settle the problem fundamentally." 
 
There has been a growing speculation in the market since September 
29, when U.S. stock prices plunged, that the central banks of 
various countries would lower interest rates in concert. Many 
economists take the view that it is important to maintain the 
liquidity of funds, by such means as dollar supplying and that it is 
impossible to adopt a policy interest rate, noted Akiyoshi Takumori, 
a chief economist at Sumitomo Mitsui Asset Management. Others hope 
to see the monetary supply eased, because it is difficult for small- 
and medium-sized businesses to manage their capital. 
 
The BOJ stands firm on its policy stance that there are downward 
risks about the economy and upward risks about prices, and the 
situation now requires attention on both risks, as BOJ Governor 
Masaaki Shirakawa said. 
 
SCHIEFFER