VZCZCXRO0372
PP RUEHFK RUEHKSO RUEHNAG RUEHNH
DE RUEHKO #2810/01 2820803
ZNR UUUUU ZZH
P 080803Z OCT 08
FM AMEMBASSY TOKYO
TO RUEHC/SECSTATE WASHDC PRIORITY 7798
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 2628
RUEHFK/AMCONSUL FUKUOKA 0273
RUEHOK/AMCONSUL OSAKA KOBE 4018
RUEHNAG/AMCONSUL NAGOYA 8348
RUEHKSO/AMCONSUL SAPPORO 0848
RUEHBJ/AMEMBASSY BEIJING 5736
RUEHUL/AMEMBASSY SEOUL 1731
RUCNDT/USMISSION USUN NEW YORK 2002

UNCLAS SECTION 01 OF 07 TOKYO 002810 
 
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 10/08/08 
 
INDEX: 
 
(1) DPJ goes along with having new antiterrorism revision bill 
adopted by Lower House this week (Mainichi) 
 
(2) Ruling parties eye election in November (Asahi) 
 
(3) DPJ, PNP set to grill New Komeito on separation of politics and 
religion (Asahi) 
 
(4) Japan to seek at G-7 U.S. commitment to inject public funds into 
ailing banks (Sankei) 
 
(5) Inpex to build offshore LNG terminal in Indonesia: Over 1 
trillion yen to be invested; Exports likely to begin in 2015 
(Nikkei) 
 
(6) Prime Minister's schedule, October 7 
 
ARTICLES: 
 
(1) DPJ goes along with having new antiterrorism revision bill 
adopted by Lower House this week 
 
MAINICHI ONLINE (Full) 
1:48 pm, October 8, 2008 
 
In a directors meeting this morning of the Lower House Steering 
Committee, the main opposition Democratic Party (DPJ) took a stance 
of going along with having the House of Representatives approve 
before the end of the week a bill amending the new Antiterrorism 
Special Measures Law that allows the Maritime Self-Defense Force to 
continue its refueling mission in the Indian Ocean. The DPJ demanded 
that a Lower House plenary session tomorrow be skipped and that the 
government explain the purpose of the legislation and a 
question-and-answer session be held at the Lower House Special 
Committee on Antiterrorism and Iraq Assistance. The DPJ's demand 
seems to be aimed at an early Lower House dissolution. 
 
The ruling camp, however, proposed launching deliberations on the 
bill after government explains the purpose of the legislation. 
Therefore, the ruling coalition and the DPJ in the end failed to 
reach agreement on the procedures. 
 
(2) Ruling parties eye election in November 
 
ASAHI (Page 4) (Abridged slightly) 
October 8, 2008 
 
By Tsuyoshi Yamashita and Hiroshi Samejima 
 
The ruling coalition is hoping to carry out the next general 
election in November, despite the turbulence in financial markets 
and low support rates for the Aso Cabinet. An election at the end of 
the year might expose the growing rift between the Liberal 
Democratic Party and the New Komeito over how to finance basic 
pensions and the flat-sum tax cut expected to be implemented in 
fiscal 2008, thereby taking a toll on campaign cooperation. Prime 
Minister Taro Aso's grip on power is likely to weaken if he delays a 
decision to carry out the election in November. 
 
The flat-sum tax cut, which is supposed to be implemented in the 
 
TOKYO 00002810  002 OF 007 
 
 
current fiscal year in compliance with the New Komeito's request, is 
the toughest challenge for the government as the end of the year 
approaches. The government and the ruling coalition agreed in August 
to decide on the scale of the tax cut and fiscal resources for it 
when discussing tax reform in December. 
 
The New Komeito defines the flat-sum tax cut as its greatest 
achievement, and its powerful supporter, Soka Gakkai, also pins 
hopes on it. New Komeito Representative Akihiro Ota indicated that 
the tax must be reduced by a minimum of 65,000 yen (for a family of 
four), as is the case with the special tax cuts 10 years ago. But a 
former LDP cabinet minister predicted that the amount would be no 
more than 10,000 yen per household under the tight fiscal 
situation. 
 
Aware of the large gap between the two ruling parties, Liberal 
Democratic Party of Japan Deputy President Naoto Kan applied 
pressure on Environment Minister Tetsuo Saito of the New Komeito in 
yesterday's Lower House Budget Committee meeting. 
 
Kan: "The scale of and fiscal resources for the flat-sum tax cut 
will be unknown until late December. The New Komeito is calling for 
the general election in November. Isn't your party going to include 
(the tax cut) in the manifesto?" 
 
Saito: "The timing of the election will be determined by the prime 
minister. I cannot say for certain that we will incorporate (the tax 
cut) in our manifesto." 
 
Is the government going to increase the size of the tax cut in 
deference to the New Komeito or curb it by placing high priority on 
fiscal discipline? The prime minister will be pressed for a decision 
toward the end of the year. The popular view in the LDP is that the 
general election should be held before the contents of the tax cut 
are nailed down, with one lawmaker saying: "Discussion of tax reform 
is scheduled for year's end. If the election is postponed until 
then, it would create too much trouble for us." 
 
The handling of the bill extending the special measures law 
authorizing the Maritime Self-Defense Force's refueling mission is 
also a thorny issue. The New Komeito gave a nod to the Lower House's 
re-adoption of the legislation in January, but this time around, the 
party is cautious about using the same method. If the LDP attempts 
to readopt it before the general election, the New Komeito might 
exert heavy pressure on the administration, just as it did in the 
closing days of the former Fukuda administration. 
 
The prime minister wants to begin Diet deliberations on the 
refueling legislation and make it a point at issue in the next 
election, while the New Komeito wants to avoid readopting the 
legislation before the election. To save the faces of the two sides, 
the prevailing view in the LDP is that the Lower House should be 
dissolved soon after the Diet begins deliberating on the 
legislation. 
 
In compiling the fiscal 2009 budget, the government must secure 
funds for an increase in the government's contribution to the basic 
pension scheme and take steps to free up road-related revenues for 
general spending. About the prime minister's strong desire to 
compile a second supplementary budget, an LDP executive said: 
"Specifics in the budget might fall short of expectations. The Lower 
House should be dissolved soon after an overall picture is 
 
TOKYO 00002810  003 OF 007 
 
 
presented." 
 
There is concern in the ruling bloc that the more the election is 
put off, the more the support ratings will drop. "I think the 
election is near, very near," LDP Secretary General Hiroyuki Hosoda 
said at a fund-raising party held yesterday by an LDP Lower House 
member. 
 
(3) DPJ, PNP set to grill New Komeito on separation of politics and 
religion 
 
ASAHI (Page 4) (Full) 
October 8, 2008 
 
Naoto Kan, deputy president of the Democratic Party of Japan (DPJ), 
and Shizuka Kamei, deputy head of the People's New Party (PNP), took 
up the issue of separation of politics and religion at a Budget 
Committee session yesterday of the House of Representatives. The two 
opposition parties have a plan that if Lower House dissolution is 
pushed back, they will shake up the New Komeito by demanding that 
Junya Yano, former chairman of the New Komeito, be called to testify 
as a Diet witness. Yano has said that the facilities of the 
religious sect Soka Gakkai, which is the support body of the New 
Komeito, are the bases for the party's election activities. 
 
At yesterday's committee session, Kan posed a question: 
 
"The Aum Shinrikyo cult headed by Shoko Asahara (death-row inmate 
whose real name is Chizuo Matsumoto) was formed in 1990. Twenty-five 
Aum members ran for seats in a national election. The Aum cult tried 
to spread its beliefs by taking advantage of political power. Does 
this activity violate the principle of the separation of politics 
and religion?" 
 
Kan succeeded in eliciting an answer from the Cabinet Legislation 
Bureau director general that such activity was "unconstitutional." 
Prime Minister Taro Aso also said: "I think so, too." 
 
Moreover, Kamei questioned: "The largest supporter of the Liberal 
Democratic Party (LDP) is Soka Gakkai. Is it permissible for 
religious facilities that receive tax benefits to be used in such a 
way?" There was a tense atmosphere. Aso evaded the question, saying: 
"You must have read too many tabloid weeklies." Environment Minister 
Saito, former New Komeito policy chief, refuted him by saying: "You 
are trying to make it a political issue." 
 
The questions by Kan and Kamei appear to be strategic moves in an 
effort to realize Diet testimony by Yano. When the House of 
Councillors called then Soka Gakkai Chairman Einosuke Akiya to 
testify in 1995, Kamei was one of the senior LDP members, who 
demanded testimony. 
 
After the end of the Lower House Budget Committee session, Kamei 
told reporters: "It is not good to for Yano to testify alone. It is 
necessary to do it fairly by hearing from Soka Gakkai, too." He 
indicated that if Yano's testimony was realized, the opposition 
would call Soka Gakkai representatives to testify as Diet 
witnesses. 
 
(4) Japan to seek at G-7 U.S. commitment to inject public funds into 
ailing banks 
 
 
TOKYO 00002810  004.2 OF 007 
 
 
SANKEI (Page 7) (Full) 
October 8, 2008 
 
In a meeting of finance ministers and central bank governors from 
the Group of Seven (G-7) countries in Washington on Oct. 10, Finance 
Minister and State Minister in Charge of Financial Services Shoichi 
Nakagawa will propose that the U.S. government decide to use public 
funds to shore up the capital base of ailing financial institutions. 
The U.S. enacted a bailout bill into law designed for the government 
to purchase nonperforming loans with public funds on Oct. 3, but 
since the legislation was regarded as just a stopgap measure, global 
stock markets have continued to tumble. The focus of attention in 
the coming G-7 meeting is on how the U.S., which triggered the 
global financial crisis, will respond to Japan's request based on 
its experience. 
 
Good opportunity for Japan to play up presence 
 
Prime Minister Taro Aso urgently called in Finance Minister 
Nakagawa, Bank of Japan Governor Masaaki Shirakawa, and other 
responsible officers last night to discuss what approach Japan 
should take in the G-7 meeting. They agreed that Japan should 
propose that the U.S. inject public funds into ailing banks. 
 
Nakagawa told reporters: "It will provide a change for Japan to let 
the other G-7 members know that Japan had suffered a bitter 
experience for several years," indicating that he would explain 
about the government's injection of approximately 13 trillion yen in 
public funds into ailing financial institutions following a credit 
crunch in 1997. 
 
The U.S. bailout legislation has had no immediate effect, as 
admitted by President Bush saying: "It will be some time before the 
effect becomes apparent." 
 
The round-the-world panic sell-offs that started in Tokyo on Oct. 6 
returned to New York on the 7th. Market players will pay close 
attention to the upcoming the G-7 meeting. Depending on the outcome 
the meeting, the economy might fall into a global depression. 
 
It is uncertain, however, whether the monetary authorities from 
Japan, the U.S., and Europe would be able to jointly come up with 
effective measures. 
 
U.S. authorities also do not think the measures to purchase 
nonperforming bank loans under the bailout legislation are 
sufficient. A senior Federal Reserve Board member said: "The 
Department of the Treasury recognizes that it is unavoidable to 
increase funds to cover the losses accrued from the sales." 
 
Some have begun to think injecting funds would be possible under the 
framework of the bailout legislation. A provision notes that it is 
possible to purchase any kind of financial instrument. It means that 
"it is possible to buy shares issued by financial institutions to 
increase capital," according to an international finance source. 
 
But there are no moves to send a message to the markets regarding 
capital injection at the present stage. 
 
European financial authorities are divided over whether taxpayers' 
money should be used. The European Central Bank (ECB) supervises 
monetary policies in Europe, but there are administrative 
 
TOKYO 00002810  005 OF 007 
 
 
authorities in countries who oversee their individual financial 
institutions. "The administrative office of the European Union (EU) 
does not have enough funds to set up a joint fund for that purpose," 
according to an ECB official. 
 
For Japan, which has been suffering only slightly from the ongoing 
financial crisis, it is a good opportunity to demonstrate its 
presence by explaining its experience in handling its own 
post-economic bubble financial crisis. Japan's injection of public 
funds came too late, and the people's burden eventually increased. 
To what extent will Western countries listen to Japan's advice? 
 
Seeing global stock markets reeling, World Bank President Zoellick 
said: "(The G-7) is not working." The significance of the G-7 will 
now be severely tested. 
 
(5) Inpex to build offshore LNG terminal in Indonesia: Over 1 
trillion yen to be invested; Exports likely to begin in 2015 
 
NIKKEI (Top Play) (Full) 
October 5, 2008 
 
The Inpex Corp. will likely construct a liquefied natural gas 
terminal off the coast of Indonesia -- the first such terminal in 
the world. It will invest over 1 trillion yen in hopes of LNG 
delivery to Japan as early as 2015. Amid growing economic 
nationalism focusing on natural resources, it has been of urgent 
concern for Japan to secure an LNG supplier, because Japan is the 
largest importer of the product. The construction of a huge terminal 
will secure up to 7 PERCENT  of Japan's annual LNG imports. 
 
The company will likely reach an agreement with the Indonesian 
government before year's end. Inpex owns a 100 PERCENT  stake in the 
Marcela gas field, a major gas field in the Timor Sea. It is now 
pressing ahead with a plan to produce 4.5 million tons starting in 
2015 and exports the total amount to Japan. The gas field is now 
being developed. A plan to build an LNG terminal to ship liquefied 
gas has remained undecided. 
 
The company had two construction options for the terminal. One 
option was to build on solid ground in Australia, transporting the 
gas from Indonesia through undersea pipelines. The other was to 
build an offshore terminal inside Indonesian territorial waters, an 
option which would be significantly more expensive, because it 
requires measures against welters caused by waves. However, 
President Kuroda told Nihon Keizai Shimbun, "We are now making our 
final consideration with the possibility of opting for an offshore 
terminal." He added, "We will reach a decision within a couple of 
months. 
 
Inpex will build the offshore terminal, meeting the Indonesian 
government's request, giving priority to the launching of production 
at an early date. The estimated construction cost will reach more 
than 1 trillion yen. However, the company believes that the project 
will be worthwhile, because of prospects for growing LNG demand and 
high LNG prices. 
 
Construction will be financed by bank loans and Inpex cash reserves. 
The company will also consider selling part of its stake in the 
Timor Sea gas field to foreign energy companies. 
 
Inpex is also developing the Ixis gas field in Australia. The plan 
 
TOKYO 00002810  006 OF 007 
 
 
is to start producing 8 million tons from around 2014-2015 and 
export the total amount to Japan. 
 
The output of the "Hinomaru (Rising Sun)" gas fields in Indonesia 
and Australia will total 12.5 million tons, approximately 20 PERCENT 
 of annual imports by Japan. The company has already decided to 
construct a terminal on solid ground in Australia. It now has paved 
the way for a system allowing the supply of large quantities of LNG 
to Japan. 
 
Demand for LNG is growing throughout the world, indicating signs of 
a scrambling for the material occurring. Against a backdrop of 
rising prices of natural resources, energy nationalism is rising. 
Indonesia plans to cut the exports of LNG to Japan from the current 
12 million tons a year to 2-3 million tons a year in 10 year's 
time. 
 
It is believed that the gas field will be exempt from Indonesia's 
export reduction policy. It is expected that shipments from the two 
gas fields will make up for portions of exports slashed by 
Indonesia. 
 
(6) Prime Minister's schedule, October 7 
 
NIKKEI (Page 2) (Full) 
October 8, 2008 
 
07:09 
Met at Kantei with Deputy Chief Cabinet Secretary Matsumoto. 
 
08:31 
Attended cabinet meeting in the Diet building. 
 
09:00 
Attended Lower House Budget Committee session. 
 
12:08 
Arrived at Kantei. 
 
13:00 
Attended Lower House Budget Committee session. 
 
17:15 
Signed in at the Imperial Palace to express appreciation for dinner 
party. 
 
17:55 
Met Brazil-Japan immigration 100th anniversary association chairman 
Uehara at Kantei and others 
 
18:30 
Met with Finance Minister Nakagawa, Economic and Fiscal Policy 
Minister Yosano, BOJ Gov. Shirakawa, Financial Services Agency 
Director General Sato, Vice Finance Minister Sugimoto, Budget Bureau 
chief Tango, Vice Finance Minister for International Affairs 
Shinohara, and Deputy Vice Minister Katsu. Nakagawa and Sugimoto 
remained. 
 
20:08 
Telephoned Makoto Kobayashi and Toshihide Masukawa, awarded the 2008 
Nobel Prize in Physics. 
 
 
TOKYO 00002810  007 OF 007 
 
 
20:39 
Dined with LDP Diet Affairs Committee Chairman Oshima, New Komeito 
Diet Affairs Committee Chairman Urushibara and ruling coalition Diet 
affairs members, at Chinese restaurant in Kiyoi-cho, joined by Chief 
Cabinet Secretary Kawamura and Deputy Chief Cabinet Secretary 
Matsumoto. 
 
21:00 
Met with Matsumoto at a Japanese restaurant in New Otani Hotel. Met 
afterwards with secretaries at Kato's Dinning and Bar at the hotel. 
 
23:04 
Returned to his private residence in Kamiyama-cho. 
 
SCHIEFFER