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UNCLAS SECTION 01 OF 02 TOKYO 002845 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: PREL MOPS PARM OVIP JA PINR
SUBJECT: SCENESETTER FOR SENATOR HAGEL'S OCT 15-17 VISIT TO 
JAPAN 
 
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SUMMARY 
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¶1.  (SBU) The situation you will find in Japan is one of 
continued political uncertainty, despite the recent election 
of a new government.  Newly-elected Prime Minister Taro Aso 
is a strong supporter of the U.S.-Japan Alliance and appears 
to favor a more robust Japanese contribution to international 
issues.  However, he and the ruling Liberal Democratic Party 
(LDP) have their hands full as they balance the opposition's 
calls to dissolve the Diet and hold early elections with the 
need to address domestic economic problems and the growing 
global financial crisis, as well as to gain passage of the 
bill reauthorizing Japan's maritime refueling operations in 
the Indian Ocean in support of Operation Enduring Freedom. 
End Summary. 
 
DOMESTIC POLITICS: ASO IS PM, ELECTIONS UNCERTAIN 
--------------------------------------------- ---- 
 
¶2.  (SBU) Former LDP Secretary General Taro Aso became the 
Prime Minister of Japan on September 24, succeeding Yasuo 
Fukuda, who, like his predecessor, former Prime Minister Abe, 
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). 
Nearly all of the new ministers are well-known to the public 
and have held ministerial portfolios in the past.  However, 
Aso's Cabinet encountered problems almost immediately.  The 
resignation of the Minister for Land, Infrastructure, and 
Transportation only five days after his appointment for 
repeated verbal missteps, along with allegations of political 
funds scandals involving two other new ministers, dominated 
the news during the initial weeks of Aso's administration. 
 
¶3.  (SBU) The main question being debated in Japan is whether 
Aso's team can help the LDP prevail in potential Lower House 
elections against the Democratic Party of Japan (DPJ), led by 
Ichiro Ozawa.  Support for Aso and his cabinet currently 
ranges 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 out-polls DPJ leader Ozawa by a wide margin in 
surveys on the public's choice for Prime Minister, but polls 
also show the public would favor the DPJ over the LDP if 
elections were held today. 
 
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ECONOMIC POLICY UNDER NEW ASO TEAM 
---------------------------------- 
 
¶4.  (SBU) The country's economic situation is foremost in the 
minds of Japanese voters and businesses.  Accordingly, in 
planning for 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 (the Lower House passed a 1.808 trillion yen 
supplementary budget on October 8); 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 weakening economy (-3.0% growth in 
the second quarter annualized), slowing global growth, and 
world-wide financial turmoil has restricted Japan's ability 
to turn to its standard policy ) exporting its way out of 
 
TOKYO 00002845  002 OF 002 
 
 
the problem ) and as a result, Aso is putting a priority on 
short-term economic stimulus. 
 
¶5.  (SBU) 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. 
However, the public is seen as being tired of structural 
reform and needs to be reassured. 
 
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FOREIGN POLICY 
-------------- 
 
¶6.  (SBU) 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.  Cabinet 
officials have expressed their intention to push for 
continued OEF refueling operations and reports indicate that 
the DPJ will not drag out debate, as they did last year, to 
reauthorize and continue this mission.  In the region closer 
to home, relations with China and South Korea continue to 
flare up periodically due to unresolved historical and 
territorial disputes.  North Korea's nuclear program and 
achieving a resolution to the issue of Japanese citizens 
kidnapped by the North remain at the top of Japan's foreign 
policy priorities. 
 
¶7.  (SBU) Aso has called on his ministers to build a "bright 
and strong" Japan.  In response to DPJ leader Ozawa's 
oft-repeated assertions that Japanese foreign policy should 
be based on supporting UN sanctioned operations, Aso 
pointedly asked the DPJ during his opening presentation to 
the Diet where they believe Japan should put its trust -- on 
the U.S.-Japan Alliance or on an organization often swayed by 
a number of "small nations."   His position is clear: 
Japanese foreign policy should be based on the Alliance first 
and foremost. 
 
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SECURITY POLICY 
--------------- 
 
¶8.  (SBU) As with foreign policy, the Aso administration is 
expected to maintain a similar position on Japan' security 
policy and the U.S.-Japan Alliance as did its predecessors. 
The successful September 25 arrival of the U.S.S. George 
Washington, the first and only nuclear-powered aircraft 
carrier to be deployed outside the United States, is a 
milestone in strengthening the Alliance.  Prime Minister Aso 
was one of the signatories of the May 1, 2006 roadmap for the 
realignment of U.S. Forces in Japan. 
SCHIEFFER