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RUCNDT/USMISSION USUN NEW YORK 2789

UNCLAS SECTION 01 OF 07 TOKYO 003318 
 
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 12/05/08 
 
TOKYO 00003318  001.2 OF 007 
 
 
Index: 
 
1) Foreign Ministry to halt yen loans to Vietnam following scandal 
(Yomiuri) 
 
2) Government, responding to criticism, decides to open the 
"secretive" process of screening school textbooks to public scrutiny 
 (Asahi) 
 
Aso on the move: 
3) Prime Minister Aso suddenly changes demeanor and is all smiles 
toward the press  (Asahi) 
4) Again the prime minister takes back previous words and delays 
moves on pension issue  (Mainichi) 
 
Job crisis: 
5) Manufacturers hurt by slowdown: Survey of 30 companies finds 
21,000 workers already dropped from payrolls  (Nikkei) 
6) Aso meets the Rengo chief, who strongly urges government to set 
emergency employment measures  (Nikkei) 
7) Ruling parties agree to 2-trillion yen labor package over three 
years  (Nikkei) 
 
Economy in trouble: 
8) Tax revenues shortfall of 6.5 trillion yen expected, requiring 
government to go over the 30 trillion yen limit of issuing deficit 
bonds  (Nikkei) 
9) Ruling camp agrees to 1-trillion yen grant transfer to local 
governments but in a watered-down version  (Nikkei) 
 
Political rumblings: 
10) Former Foreign Minister Komura seems to be setting self up as a 
candidate to replace Aso as LDP president and prime minister 
(Sankei) 
11) Former LDP Secretary General Hidenao Nakagawa blasts new 
nationality law, but comes out strong for MSDF dispatch to 
pirate-infested waters off Somalia  (Sankei) 
12) DPJ head Ozawa cancels gala New Year's party in order to keep 
preparation momentum going for possible Lower House election 
(Yomiuri) 
 
Articles: 
 
1) Gov't stops yen loans to Vietnam 
 
YOMIURI (Page 4) (Full) 
December 5, 2008 
 
The Foreign Ministry has completely halted yen loans for Vietnam in 
the wake of official corruption over Japan's official development 
assistance (ODA) project in Vietnam, sources said yesterday. The 
ministry will suspend the yen loans until the Vietnamese government 
works out a recurrence prevention plan and punishes officeholders 
alleged to have been bribed. 
 
2) Ministry to screen school textbooks with open doors 
 
ASAHI (Top play) (Abridged) 
Eve., December 4, 2008 
 
The Ministry of Education, Culture, Sports, Science and Technology 
(MEXT), which has been strongly criticized for its closed-door and 
 
TOKYO 00003318  002.2 OF 007 
 
 
pre-authorization process of screening and examining textbooks for 
school use, released an improvement plan today for transparency. 
MEXT's textbook examiners are in a position to affect its textbook 
authorization but have not been out in public. MEXT will disclose 
their statements after screening. In addition, MEXT will also 
disclose their names and professional experiences as well as 
subjects they examined. The Textbook Commission, an advisory panel 
for MEXT, will also release its members' coverage of subjects and 
outline their discussions in their textbook screening so that MEXT 
can check to see if there was something unfair in the process of 
producing textbooks. 
 
In the fiscal 2006 screening of high school textbooks on the history 
of Japan, MEXT modified all those textbooks for they described that 
Okinawa residents "were forced by the military into committing mass 
suicide" during the Battle of Okinawa. MEXT struck out this wording, 
and this later became a problem. The nontransparent textbook 
screening system was under fire. Last year, then MEXT Minister Tokai 
announced a reform plan. 
 
In the process of screening textbooks for school use, companies 
publishing school textbooks come up with their textbooks for 
authorization. MEXT textbook examiners, who are appointed from among 
college associate professors and high school teachers, screen and 
examine the textbooks and make their statements on them. Based on 
their statements, the Textbook Commission will reach a conclusion. 
However, the commission has to check a colossal amount of examined 
textbooks. MEXT textbook examiners therefore have a substantial role 
for authorization. The commission was therefore said to be a rubber 
stamp that signs off on their statements. 
 
MEXT's textbook examiners can be called "leading players behind the 
scenes." However, their guidelines and roles have been intangible 
and ambiguous. Meanwhile, their statements have not been unveiled, 
either. As it stands, they have been believed to be amenable to the 
government. MEXT also plans to disclose its textbook examiners' 
names and professional experiences. Their existence has been dubbed 
a "black box." MEXT explains that the planned disclosure of 
information about them is intended to answer that criticism. 
 
3) Why is Prime Minister Aso approaching reporters all smiles? 
 
ASAHI (Page 4) (Abridged) 
December 5, 2008 
 
Prime Minister Taro Aso has begun to behave in a friendly manner 
toward reporters covering him at the Prime Minister's Official 
Residence (Kantei). Altering the firm expression he had usually kept 
since he made a series of slips of the tongue, Aso now has turned 
his friendly side toward reporters he meets. 
 
Taking a reporter's cell-phone in his hand, Aso noted: "It's red." 
When a reporter called out to him, "The prime minister, what about 
cluster bombs?" Aso looked back, although he was about to return to 
his office after the press briefing, and closely watching the 
reporter's face, he said with a smile: "I wish you had asked that 
question at first." 
 
Immediately after taking office, Aso fired back questions toward 
reporters with a firm expression. He once aggressively told one, 
"Answer my question!" Even after that, he kept a firmer expression 
as he often made changes in his remarks and committed gaffes. He 
 
TOKYO 00003318  003.2 OF 007 
 
 
then replied to questions from reporters, reading from memos 
prepared by his secretaries. The reporters are now befuddled by the 
sudden change in the prime minister's attitude. 
 
Some observers think that the change in the prime minister's 
behavior was triggered by his having lunch with reporters on Dec. 1 
at the Kantei. An acquaintance of Aso made this comment: 
 
"The prime minister is actually shy of people. He gets nervous when 
he meets someone for the first time. In order to hide the tension, 
he usually takes a coercive attitude. I think he has begun taking a 
friendly attitude after he had lunch with the reporters." 
 
However, Aso's aide said: "I want the prime minister to be aware of 
the public when he stands before cameras rather than catering to the 
reporters before him." 
 
4) Prime minister again retracts a policy statement 
 
MAINICHI (Page 2) (Abridged slightly) 
December 5, 2008 
 
Tamotsu Takatsuka 
 
Prime Minister Taro Aso has decided to delay the timeframe for 
raising the government's contribution to the basic pension scheme 
from "next April" to "within next fiscal year." The reason is to 
allow time to secure sufficient fiscal resources to implement 
large-scale economic and employment measures in the fiscal 2009 
budget. The latest retraction has come after repeated flip-flops by 
the premier on the flat-sum cash handout plan and the allocation of 
1 trillion yen to local governments. The decision is certain to 
raise questions about Aso's  qualifications as prime minister. 
 
In a press conference on Oct. 30, the prime minister indicated that 
the timing of the government/ruling coalition's plan to raise the 
consumption tax to finance the government's greater contribution to 
the pension scheme would be three years, conditioned on a full 
economic recovery. This caused the view to spread that it thus would 
be difficult to raise the government's contribution to the basic 
pension scheme starting in April 2009. 
 
It has generally been decided to fund the government's greater 
contribution to the pension scheme with surplus funds generally 
dubbed "buried treasure." Given this, the prime minister seems to 
intend to raise the government's contribution late in fiscal 2009. 
The prime minister is expected to seek understanding by playing up 
his policy to boost the economy. Nevertheless, he has given the 
opposition camp new ammunition to grill him in today's intensive 
deliberations at the Lower House Budget Committee and other venues. 
 
5) Employment adjustment accelerates: 38 major companies to slash 
21,000 nonpermanent workers in total 
 
NIKKEI (Page 1) (Abridged slightly) 
December 5, 2008 
 
Employment adjustment in the manufacturing industry has begun 
spreading from the auto sector to other sectors. Komatsu will slash 
about 400 contract employees at its Oyama plant in Oyama City, 
Tochigi Prefecture by the end of March next year. It will also 
reduce operating days by two to four days a month at all plants 
 
TOKYO 00003318  004.2 OF 007 
 
 
throughout the nation, starting in December. Toshiba and Fujitsu 
will slash nonpermanent workers in the semi-conductor sector. The 
number of reductions in dispatched and contract workers by 38 major 
manufacturing firms reached approximately 21,000, according to a 
tally made by the Nihon Keizai Shimbun by December 4. 
 
Komatsu will terminate all contracts with 400 nonpermanent workers 
at its Oyama plant, where engines for construction machinery are 
being manufactured. The company employs approximately 2,000 contract 
workers. It plans to gradually reduce such workers at other plants 
as well. A total of 500 to 1,000 such workers will likely be 
eliminated. It will also reduce the operating days of assembly lines 
by about 2-4 days a month at all of its 10 plants throughout the 
nation. Stopping production lines at domestic plants is the first in 
about six years. Employees will receive training when production 
lines are not operating. 
 
Following the declined market condition, Toshiba plans to reduce 
about 800 workers, including dispatched and contract workers, at its 
plants in Kitakyushu City and Oita City, which manufacture 
semi-conductors, and subsidiary in Kitayama City in Iwate 
Prefecture. Fujitsu will also terminate contracts with more than 100 
workers at its semi-conductor subsidiary around the same time. 
 
According to a tally by this newspaper, 38 major manufacturing 
companies will cut the number of dispatched and contract workers by 
about 21,000 between April 2008 and the end of March 2009. The 
largest number of 17,000 such workers will be dismissed in the auto 
parts manufacturing sector. Reduction in force is accelerating among 
machinery and precision instrument manufacturers (1,800) and 
electronic manufacturers (1,300). Major manufacturing companies are 
trying to tide over the global recession, by slashing the number of 
nonpermanent workers, who have come to account for one third of all 
employees in that sector due to the widespread practice of employing 
dispatched workers. 
 
6) Employment situation suddenly becoming worse; Rengo urges Aso to 
compile emergency measures 
 
NIKKEI (Page 2) (Full) 
December 5, 2008 
 
Prime Minister Taro Aso and Rengo (Japanese Trade Union 
Confederation) Chairman Tsuyoshi Takagi held a meeting yesterday to 
exchange views of the government and labor side at the Prime 
Minister's Office. In consideration of the employment situation of 
non-permanent workers and the cancellation of informal appointments 
of new graduates, Takagi urged Aso to come up with emergency 
employment measures. Aso then took a stance of working out emergency 
measures as early as possible, saying: "I want to give considerable 
thought as much as possible." 
 
This government-labor meeting was held for the first time in seven 
months since the one was held in May under the cabinet of Prime 
Minister Yasuo Fukuda. Takagi emphasized that the names of companies 
that cancelled their informal employment offers should be make 
public, while calling for an early passage of a fiscal 2008 second 
supplementary budget, which includes employment measures. Regarding 
the withdrawal of employment offers, Aso said: "That's outrageous." 
 
Takagi commented on the government's 2 trillion yen flat-sum cash 
payout plan: "The economic slump this time around is serious so that 
 
TOKYO 00003318  005.2 OF 007 
 
 
the economy will not recover by the one-time only (flat-sum 
payouts). How about large-scale tax cuts?" Aso, however, just 
replied: "I want you to tell me if you have good ideas." 
 
7) Two trillion yen over three years to be spent for employment 
measures 
 
NIKKEI (Page 1) (Full) 
December 5, 2008 
 
The ruling parties will compile a package of new employment 
measures, which will incorporate easing a condition for nonpermanent 
workers to become eligible to receive unemployment benefits under 
the employment insurance. The package will cover three years and 
cost 2 trillion yen. The aim is to create 1.4 million jobs. The 
ruling parties will present the package to Prime Minister Aso later 
in the day. 
 
It is already set based on coordination with the government that the 
size of the new package will be 1 trillion yen. However, the ruling 
parties will seek another 1 trillion yen. However, since funding 
sources have yet to be tapped, except for 1 trillion yen to be drawn 
from the special labor insurance account for reserved employment 
premiums, the ruling parties will continue talks with the 
government. 
 
Nonpermanent workers are not entitled to unemployment benefits 
unless they contributed to the employment insurance scheme for 12 
months in the two-year period right before they lost a job. 
Employees must be supposed to work for a year or longer, when they 
take out the employment insurance. The ruling parties will also 
shorten this 12-month condition. Other measures include: (1) 
establishing an emergency job creation project (tentative name) 
aimed for temporary employment of nonpermanent workers and 
middle-aged and older people; and (2) release the names of 
unscrupulous companies that withdrew job offers. 
 
8) Tax revenue shortfall an estimated 6.5 trillion yen, requiring 
government deficit bond issuance to top 30 trillion yen 
 
NIKKEI (Page 1) (Full) 
December 5, 2008 
 
Prospects have now become strong that the government will lower its 
outlook for fiscal 2008 tax revenues flowing into the general 
account by approximately 6.5 trillion yen, compared with the initial 
prediction. This was learned from a government source on December 4. 
The reason for the shortfall is a significant drop in corporate tax 
revenues due to the slowdown in the global economy. This will be the 
second consecutive downward revision. The issuance of government 
deficit bonds in the current fiscal year will have to top 30 
trillion yen, until now the goal for the government efforts to cut 
such issuances. 
 
Tax revenues for the general account in the fiscal 2008 initial 
budget were estimated at approximately 53.6 trillion yen. However, 
tax revenues in fiscal 2007, the basis of that estimate, fell short 
of the supplementary budget by about 1.5 trillion in the 
account-closing stage. 
 
In addition, the soaring raw material prices, the strong yen-weak 
dollar trend and the global economic recession put a dent in 
 
TOKYO 00003318  006.2 OF 007 
 
 
export-oriented companies' profits. As such, corporate tax revenues 
will likely fall significantly. A significant increase in revenues 
from the income tax revenues, a major tax revenue source along with 
the corporate tax, cannot be expected. The Finance Ministry will 
reach a final decision on the amount of a revision to its estimate 
for tax revenues, after determining the government's economic 
outlook, which will become the basis for fiscal management. 
 
9) Ruling parties agree on 1 trillion yen in subsidies to local 
governments; General account plan might be watered down 
 
SANKEI (Page 5) (Abridged slightly) 
December 5, 2008 
 
Based on the plan to free up road-related revenues for general 
spending starting in fiscal 2009, the Liberal Democratic Party and 
New Komeito agreed yesterday to establish a subsidy fund worth 1 
trillion yen or so for revitalizing local economies that must be 
used strictly for public works projects, including road-improvement 
projects. The ruling bloc eyes a final decision after discussing the 
matter with the government on Dec. 8. Receiving a report from the 
ruling camp, Prime Minister Taro Aso simply said: "I just received a 
progress report." 
 
The new subsidy system, which is an expanded version of the existing 
regional road-improvement special subsidy fund, is designed to cover 
public works projects such as improving roads. Given certain 
restrictions, some are concerned that the general account plan might 
become toothless. 
 
The two parties agreed to consider the automobile-related taxes, 
including the prevocational tax rates, at the time of comprehensive 
tax reform and to maintain the current tax levels up until that 
time. They also decided to reduce the burden of automobile-related 
taxes for a limited period of time. The New Komeito, though, is 
calling for a bold review, such as simplifying the automobile weight 
tax and the automobile acquisition tax. 
 
10) Koumura most fit to replace Aso 
 
SANKEI (Page 5) (Full) 
December 5, 2008 
 
LDP Secretary General Hiroyuki Hosoda attended a fund-raising party 
held yesterday in Tokyo by former Foreign Minister Masahiko Koumura. 
In it, touching on the subject of who should become Prime Minister 
Aso's successor, Hosoda said: "Mr. Koumura is the best candidate." 
This came after the preface: "Prime Minister Taro Aso is most fit to 
guide the country climb out of this recession." 
 
11) Nakagawa expresses view critical of Nationality Law but positive 
about sending MSDF to waters off Somalia 
 
SANKEI (Page 5) (Abridged slightly) 
December 5, 2008 
 
Former LDP Secretary General Hidenao Nakagawa in yesterday's 
Machimura faction meeting expressed a positive view about sending 
Maritime Self-Defense Force vessels to waters off Somalia to deal 
with piracy there. However, he took a critical view about amending 
the Nationality Law. 
 
 
TOKYO 00003318  007.2 OF 007 
 
 
Regarding a bill amending the Nationality Law, Nakagawa said: 
"Consideration of DNA analysis would be an additional resolution. 
Confirmation (under a resolution) would not be enough." Nakagawa 
also said: "The UN Security Council has adopted a resolution urging 
each country to dispatch vessels to deal with piracy in waters off 
Somalia. Maritime security operations are specified in the SDF Law." 
Nakagawa thus expressed a positive view about MSDF dispatch under 
existing legislation. 
 
Nakagawa was planning to launch on Dec. 5 a parliamentary league 
connected with social security. There is speculation that it could 
be an anti-Aso group. Nakagawa, as a result, has postponed the 
establishment until mid-next week so as not to cause any 
misunderstanding, according to a source connected with the league. 
Nakagawa has been regarded as a leading liberal. His comments 
yesterday have resulted in speculation that he is trying to increase 
his influence over conservatives. 
 
12) Ozawa calls off New Year party, preparing for possible Diet 
dissolution 
 
YOMIURI (Page 4) (Full) 
December 5, 2008 
 
Democratic Party of Japan (Minshuto) President Ozawa yesterday met a 
group of former lawmakers who support him and new candidates who are 
expected to run in the next election for the House of 
Representatives. In the meeting, Ozawa told them that he would not 
hold the gala party he annually hosts at his private residence in 
Tokyo on New Year's Day. This is because Ozawa presumes that the 
House of Representatives might be dissolved at the beginning of the 
ordinary Diet session to be convened in January next year. One of 
those at the meeting quoted Ozawa as saying, "Prime Minister Aso can 
no longer hold out, so let me tell you to be on your toes around the 
turn of the year." 
 
SCHIEFFER