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UNCLAS SECTION 01 OF 13 TOKYO 003361 
 
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 12/11/08 
 
Index: 
 
1) Top headlines 
2) Editorials 
3) Prime Minister's daily schedule (Nikkei) 
 
4) Visit to Yokota's abduction site most memorable: U.S. envoy 
Schieffer  (Kyodo) 
 
Defense and security affairs: 
5) Refueling bill to allow continued MSDF service in the Indian 
Ocean will finally pass the Diet tomorrow by a Lower-House override 
vote  (Asahi) 
6) U.S. sailor please innocent in Yokosuka taxi-driver trial, 
claiming he "heard voices"  (Tokyo Shimbun) 
7) U.S. sailor after taxi slaying returned to Yokosuka base using 
friend's ID card, exposing lax security at the facility  (Tokyo 
Shimbun) 
8) U.S. Navy is studying behavioral patterns of large sampling of 
personnel in order to prevent reoccurrence of vicious crimes 
(Asahi) 
9) Japan Coast Guard to send officers to countries neighboring 
Somalia but gives up plan to dispatch patrol boats to 
pirate-infested waters off that country  (Tokyo Shimbun) 
10) Liberal Democratic Party (LDP) project team studying possibility 
of submitting a permanent law to deal with piracy  (Nikkei) 
 
North Korea problem: 
11) Six-Party Talks to go into recess with no progress on the 
nuclear front  (Tokyo Shimbun 
12) Japanese government acknowledges lack of progress in Six-Party 
Talks and accepts the recess as unavoidable  (Tokyo Shimbun) 
13) Japan unable to contact North Korean ambassador in charge of 
bilateral negotiations, suspect he is under house arrest  (Tokyo 
Shimbun) 
 
Economic policy: 
14) Government to scrap in principle custom of last minute 
negotiations with Finance Ministry to restore cuts in budget 
requests  (Nikkei) 
15) Prime Minister Aso quietly shifts policy stance from fiscal 
stringency to economic stimulation, realizing that his 
administration's life is at stake  (Tokyo Shimbun) 
16) Democratic Party of Japan plans to submit six economy-related 
bills to the Diet  (Mainichi) 
 
17) New Komeito feels that politics have reached an impasse, with no 
Diet dissolution in sight and public reaction negative to 
cash-handout scheme  (Yomiuri) 
 
18) Japan's proposals for COP-14 climate talks rejected  (Mainichi) 
 
 
Articles: 
 
1) TOP HEADLINES 
 
Asahi: 
Plan for raising cigarette tax abandoned 
 
Mainichi: 
Nursing care business gets paid for finding tenants on welfare for 
 
TOKYO 00003361  002 OF 013 
 
 
housing for elderly people 
 
Yomiuri: 
Capital punishment (Part 1): Bereaved families changed views 
 
Nikkei: 
Japan plans to double credit line to 2.8 trillion yen for South 
Korea to stave off currency crisis 
 
Sankei: 
MPD to file charges against three individuals, including Taisei 
project leader, over Shibuya spa explosion 
 
Tokyo Shimbun: 
Six-party talks to adjourn today due to conflict over verification 
method 
 
Akahata: 
JCP's Yamashita pressed Aso to rescue public hospitals in crisis 
 
2) EDITORIALS 
 
Asahi: 
(1) Sony's job cuts: Japanese-style management essential 
(2) Finding social welfare funding imperative 
 
Mainichi: 
(1) Ruling in murder of Hiroshima girl and lay judge system 
(2) Sony's restructuring plan: Jobs in danger 
 
Yomiuri: 
(1) Rough-and-ready court procedures under fire 
(2) False pension records: Social Insurance Agency's bad nature must 
be eliminated 
 
Nikkei: 
(1) New road subsidies run counter to freeing up road-related 
revenues for general spending 
(2) Is Japanese students' academic ability really at top level? 
 
Sankei: 
(1) Sony's restructuring plan: Employment stability takes innovative 
ideas from private sector 
(2) Hiroshima murder case leaves lessons for lay judge system 
 
Tokyo Shimbun: 
(1) Mass unemployment feared: More additional measures necessary 
(2) Hiroshima murder case offers lessons for lay judge system 
 
Akahata: 
(1) WTO agricultural talks: Chairman's plan must be rejected 
 
3) Prime Minister's Official Residence (Kantei) 
 
Prime Minister's schedule, December 10 
 
NIKKEI (Page 2) (Full) 
December 11, 2008 
 
09:04 
Met at Kantei with Deputy Chief Cabinet Secretary Konoike. 
 
 
TOKYO 00003361  003 OF 013 
 
 
10:25 
Met with New Komeito leader Ota. 
 
10:58 
Met at LDP headquarters with Tax System Research Commission Chairman 
Tsushima, later joined by Sub-Committee Chairman Yanagisawa and 
Chief Cabinet Secretary Kawamura. Kawamura remained. 
 
12:02 
Returned to Kantei. 
 
12:56 
Met with Finance Minister Nakagawa and Economic and Fiscal Policy 
Minister Yosano in the Diet building. 
 
13:00 
Attended Upper House Budget Committee session. 
 
17:07 
Returned to Kantei. 
 
17:39 
Recorded message to FM Yokohama program at LDP headquarters. 
Interviewed by LDP's organ newspaper "Jiyu-minshu (Freedom and 
Democracy)". 
 
18:33 
Met with Nakagawa. 
 
19:30 
Met with U.S. Ambassador Schieffer and his wife at his private 
residence in Kamiyama-cho. 
 
4) Visit to Yokota's abduction site most memorable: U.S. envoy 
Schieffer 
 
by Janice Tang 
 
TOKYO, Dec. 10 KYODO 
 
Diplomatic negotiations with Japan such as on the U.S. military 
realignment may have been tough tasks, but for U.S. Ambassador 
Thomas Schieffer a visit to the site where a 13-year-old Japanese 
girl was believed to be abducted in 1977 by North Korean agents beat 
all other events as the most memorable during his soon-to-end tenure 
in Tokyo. 
 
Schieffer, who was named the 2008 Person of the Year by the American 
Chamber of Commerce in Japan on Wednesday, also said that while his 
three-year term has been a ''busy time,'' it has achieved ''a lot of 
positive things'' such as fruitful negotiations on the realignment 
as well as stronger bilateral relations since the time of former 
Prime Minister Junichiro Koizumi's administration. 
 
''The most memorable had to be the time when I went up to Niigata 
and walked with the Yokotas on the path that Megumi took,'' 
Schieffer, whose ambassadorship is expected to end next month, told 
reporters. 
 
He was referring to a visit in March 2006 to the hometown of 
abductee Megumi Yokota, who is among at least a dozen missing 
Japanese believed to have been kidnapped to the North. 
 
TOKYO 00003361  004 OF 013 
 
 
 
The ambassador has played an important role in raising the abduction 
issue with U.S. President George W. Bush and facilitated a meeting 
between Bush and Yokota's mother Sakie in Washington in late April 
that year. Bush later described the meeting as ''one of the most 
moving meetings since I've been the president.'' 
 
When Washington took North Korea off its blacklist of nations 
sponsoring terrorism this October, Schieffer met in person with the 
families of the missing abductees in Tokyo and sought their 
understanding that the decision was made to keep the stalled 
six-party nuclear talks with the North alive. 
 
No progress has been made since then on the abduction issue, 
including Pyongyang's promise to reinvestigate the cases. 
 
In his acceptance speech at the ACCJ award ceremony on Wednesday, 
Schieffer warned that Japan must open its market to foreign 
investors and that especially amid current financial difficulties 
reverting to protectionism by Japan and the United States would be 
damaging to both sides. 
 
''Most Japanese would argue today, I think, that Japan's future 
prosperity is dependent upon engaging the rest of the world. Yet 
there are still a significant number of Japanese who argue that 
Japan would be better off if it erected regulatory and technical 
barriers to make it more difficult for foreigners to do business in 
Japan than it is for Japanese to do business abroad,'' the envoy 
said. 
 
''If 'Japan passing' occurs in the future, it will not be, in my 
judgment, because of this or that American was elected president. It 
will be because Japan believes that it has no role to play in the 
international community and foreigners are not welcome in the 
(Japanese) economy,'' Schieffer added. 
 
He also told an audience of business representatives at the ceremony 
that governments should act to ensure the integrity of free markets, 
saying, ''Market places, like baseball games, need good umpires and 
government should perform that function.'' 
 
The ACCJ created the Person of the Year award in 1996 in recognition 
of individuals who have made significant contributions to business 
and commerce and the U.S.-Japan relationship. 
 
Allan Smith, president of the chamber, said Schieffer was awarded 
for having been a ''resolute advocate'' for bilateral ties during 
his tenure and for his ''leadership in promoting the U.S.-Japan 
relationship at such a critical time in the development of the 
global economy.'' 
 
Schieffer, who served as ambassador to Australia in 2001-05 before 
his posting to Tokyo, has said he plans to step down together with 
the Bush administration in January as he feels he has fulfilled his 
duties. 
 
5) Lower House to take second vote on refueling, financial bills 
tomorrow 
 
ASAHI (Page 4) (Full) 
December 11, 2008 
 
 
TOKYO 00003361  005 OF 013 
 
 
The expectation is that a bill amending the new Antiterrorism 
Special Measures Law to extend by one year the Maritime Self-Defense 
Force's refueling mission in the Indian Ocean will be put to a 
two-thirds overriding vote in the House of Representatives' plenary 
session tomorrow and the bill will be enacted the same day. This is 
because the House of Councillors Committee on Foreign Affairs and 
Defense agreed yesterday to take a vote on the legislation today. 
The bill will be voted down in the Upper House's plenary session 
tomorrow but it will be readopted in the Lower House's plenary 
session the same day. 
 
In the Lower House's plenary session tomorrow, a second vote will 
likely be taken on a bill revising the Financial Functions 
Strengthening Law, as well. 
 
6) U.S. sailor pleads not guilty in murder of taxi driver 
 
TOKYO SHIMBUN (Page 27) (Full) 
December 11, 2008 
 
The Yokohama District Court yesterday held the first hearing of U.S. 
Navy Seaman Apprentice Olatunbosun Ugobogu, a 22-year-old Nigerian 
national stationed at the U.S. Navy's Yokosuka base in Kanagawa 
Prefecture, over his alleged murder in Yokosuka of Masaaki 
Takahashi, a 61-year-old taxicab driver. Ugobogu admitted to 
stabbing the taxi driver but denied any criminal intent, telling the 
court that did not intend to kill or rob Takahashi and he heard 
"voices" ordering him to stab him. 
 
His defense counsel asserted Ugobogu's innocence, maintaining that 
Ugobogu was not mentally competent at the time of the incident due 
to schizophrenia with auditory hallucinations and other symptoms. 
The counsel sought a psychiatric test for Ugobogu, citing a 
detention physician's diagnosis of his case as suspected 
schizophrenia. 
 
Prosecutors stated to the court that Ugobogu had made up his mind to 
rob the taxi driver with a kitchen knife to get money to spend on 
amusement and living expenses. Ugobogu was not suspected of having 
any mental illnesses in the U.S. Navy. Given this, the prosecutors 
stressed that he was fully capable of being held liable for the 
murder. They claimed that he lied to avoid responsibility. 
 
According to the indictment, Ugobogu caught a taxi near Shinagawa 
Station in Tokyo on the evening of March 19 and exited the taxi in 
the city of Yokosuka, where he stabbed Takahashi in the left 
shoulder with a kitchen knife and ran away without paying the fare 
of about 20,000 yen. 
 
7) Yokosuka deserter returned to base with colleague's ID card; U.S. 
Navy admits to security flaws 
 
TOKYO SHIMBUN (Page 27) (Full) 
December 11, 2008 
 
In the wake of this March's murder of a taxi driver in Yokosuka, 
Kanagawa Prefecture, the Japanese and U.S. governments have agreed 
to report on U.S. military deserters in Japan. Meanwhile, the 
incident has also revealed security flaws at the U.S. Navy's 
Yokosuka base, as seen from the fact that the U.S. sailor who 
committed the heinous crime entered the base with a colleague's ID 
card. 
 
TOKYO 00003361  006 OF 013 
 
 
 
Prosecutors, in an opening statement to the Yokohama District Court, 
noted that Olatunbosun Ugobogu, a Yokosuka-based U.S. sailor charged 
with fatally stabbing the taxi driver, returned to the base shortly 
after the crime using a colleague's ID card with its photo blacked 
out. 
 
According to the prosecutors' statement, Ugobogu got through the 
main gate of the base, which is situated about 600 meters from the 
scene of the crime, on March 19 at around 9:30 p.m., about 10 
minutes after the crime, and he withdrew 400 dollars from an on-base 
ATM. At the gate were shore patrolmen. However, Ugobogu passed 
through the gate with his colleague's ID card he had obtained before 
his desertion. 
 
"The base access control system was defective, so we improved the 
system after the incident," a base official told the Tokyo Shimbun. 
However, the official did not explain how Ugobogu got through the 
gate, citing security reasons. 
 
8) U.S. Navy begins personnel checks to prevent recurrence 
 
ASAHI (Page 38) (Full) 
December 11, 2008 
 
Fumiaki Sonoyama 
 
In the wake of this March's murder in Yokosuka of a taxicab driver 
by a Yokosuka-based U.S. Navy sailor, U.S. Naval Forces Japan 
(USNFJ) has started a program checking the backgrounds of its 
personnel numbering about 20,000. The program is intended to 
discover potential violence at an early stage for correction through 
education and training. 
 
According to USNFJ headquarters, about 10 personnel have so far been 
found questionable and are now being counseled to learn how to 
control their anger. Some may be diagnosed by a psychoanalyst. No 
one has been sent back to the United States, according to the 
headquarters. 
 
Olatunbosun Ugobogu, a Yokosuka-based U.S. Navy sailor charged with 
fatally stabbing the taxicab driver, was a deserter, and this fact 
also became a problem. Later on, Japan and the United States reached 
an intergovernmental agreement to immediately report facts about 
U.S. military deserters to the Japanese government. According to the 
Foreign Ministry, the U.S. government has so far reported six 
deserters since early July. One of them has returned to a base, the 
ministry said. Such information is transmitted to local 
governments. 
 
In September this year, the USS George Washington, a U.S. Navy 
nuclear-powered aircraft carrier, arrived at Yokosuka for 
deployment. Its crew-numbering about 2,000-has started a new life in 
Japan. The U.S. Navy sent a special team to the George Washington 
before her deployment in Japan to brief the crew on Japanese culture 
and responsible behavior. This has probably worked well, and none of 
the crew has so far caused trouble. 
 
9) Anti-piracy measures off the coast of Somalia: Japan Coast Guard 
withdraws idea of dispatching patrol boat but will send officers to 
neighboring countries Yemen and Oman 
 
 
TOKYO 00003361  007 OF 013 
 
 
TOKYO (Page 27) (Excerpts) 
December 11, 2008 
 
In response to the problem of pirates operating in the waters off 
Somalia, which has become an international issue, the Japan Coast 
Guard (JCG) will dispatch for a week starting on Dec. 12 three JCG 
officers to Yemen, which is on the opposite shore of the Sea of 
Aden, and Oman, which neighbors to the East. Approximately 80 
PERCENT  of the damage from pirate attacks this year in waters off 
Somalia occurred in the Sea of Aden and the Red Sea. Since Somalia 
is in civil war and a start of anarchy, the decision was made that 
it would be more effective to strengthen security patrols of the two 
other coastal countries. The on-site investigation by the officers 
will look into practical measures to assist. 
 
JCG has given up on dispatching a patrol boat, but it plans to 
cooperate by such means as beginning exchanges with coastal security 
forces in Yemen and Oman this year and improve their investigative 
capabilities. Coastal security forces in both countries explained to 
JCG that the multinational force is not actively working to 
eliminate piracy from the waters. For that reason, a senior U.S. 
military officer is reported to have said: "If we are attacked by 
pirates, who feel challenged by our movements, we will return fire. 
The result would be clear (the pirate ship would sink), but we would 
be criticized internationally." 
 
In actuality, the Indian Navy last month accidentally sunk a Thai 
fishing boat that had been boarded by pirates. Many crew members who 
were hostages were lost at sea. The multinational force recognizes 
the danger of excessive defense and seems to be operating 
cautiously. 
 
10) Application of general law for measures against piracy to be 
taken into consideration 
 
NIKKEI (Page 2) (Full) 
December 11, 2008 
 
The Liberal Democratic Party's (LDP) project team to look into 
measures to deal with damage caused by the rampant piracy off 
Somalia (chaired by Gen Nakatani), at a meeting on December 10 
decided to include among options the application of a general law, 
which does not limit the areas and duration of activities, as the 
law that serves as the basis for dispatching MSDF vessels. It will 
also take the establishment of a special measures law into 
consideration. 
 
11) Six-party talks to go into recession with no progress on 
nuclear-verification methods 
 
TOKYO SHIMBUN (Top Play) (Full) 
December 11, 2008 
 
Norihiro Shinkai, Beijing 
 
Chief negotiators of the six-party talks on North Korea's 
denuclearization held separate negotiations and a plenary session in 
Beijing on the afternoon of Dec. 10, the third day of the talks. 
Foreign Ministry's Asian and Oceanian Affairs Bureau Director 
General Akitaka Saiki, Japan's chief envoy, told reporters last 
night, "We will also discuss matters tomorrow," indicating that the 
talks would be extended. But U.S. Assistant Secretary of State 
 
TOKYO 00003361  008 OF 013 
 
 
Christopher Hill, U.S. chief negotiator, said: "If we fail to reach 
an agreement, the talks will probably go into recession." The gap 
remains wide between the U.S. and North Korea over ways to verify 
information North Korea has given on its nuclear programs. The 
six-party talks are now likely to be adjourned today 
 
Vice Foreign Minister Wu Dawei of China, the chair of the talks, 
presented a draft proposal serving as a basis for working out 
nuclear-verification methods to each nation on the 9th. Japan, the 
U.S., South Korea, and Russia called for revising the draft to 
ensure Pyongyang's information to be verified more strictly, while 
North Korean Vice Foreign Minister Kim Kye Gwan fiercely reacted to 
the contents of the draft. Wu continued consultations with other 
countries in an effort to put an accord on nuclear verification into 
writing yesterday, but the U.S. and North Korea remained at odds. 
According to South Korean envoy and director of Korean Peninsula 
Peace Negotiations Kim Sook, Kim Kye Gwan emphasized in the session 
that North Korea is now a nuclear power. 
 
Saiki said last night: "I feel that the gap will not be easily 
bridged." Hill categorically said: "North Korea has not made efforts 
to establish a verification method in accordance with international 
standards. There was no progress at all. ... (China) will hold talks 
with other countries and it is expected that if there is no 
progress, it will declare the end of the talks." 
 
12) Government views recess of six-party talks as unavoidable 
 
TOKYO SHIMBUN (Page 2) (Full) 
December 11, 2008 
 
The expectation is that the ongoing six-party head-of-delegation 
meeting will recess as early as today, since the meeting has yet to 
reach an agreement on ways to verify North Korea's nuclear 
declaration. The Japanese government views a recess as inevitable as 
it cannot make any easy concessions to North Korea. 
 
In the meeting, Japan's chief envoy Akitaka Saiki stated: "It is 
important to codify a verification protocol in an agreement so that 
there will be neither misunderstanding nor distortion." In 
cooperation with his U.S. and South Korean counterparts, Saiki 
strongly called for the codification of a verification protocol, 
including sampling, something Pyongyang has refused. However, Japan 
had been concerned that it could be left behind if Washington and 
Seoul made concessions. 
 
Therefore, in a Japan-U.S.-South Korea head-of-delegation meeting, 
the Japanese government repeatedly mentioned the need for 
codification of a verification protocol. The Japanese government's 
effort succeeded in creating a net encircling North Korea along with 
the United States, South Korea and Russia. This net eventually 
pressed China, host of the six-party talks, not to make any broad 
concessions. 
 
The Japanese government thinks that it has been able to keep itself 
from being isolated from the rest of the six-party member countries, 
even though the talks did not make any progress. 
 
Meanwhile, no progress was made on the issue of North Korea's 
abductions of Japanese nationals, since the Japanese and North 
Korean chief envoys failed to hold a meeting. 
 
 
TOKYO 00003361  009 OF 013 
 
 
North Korea criticized Japan in the meeting, asking under what 
status Japan was attending the meeting. The North may step up its 
attack against Japan. If so, the chance to resolve the abduction 
issue will slip away. 
 
13) Japan unable to make contact with North Korean negotiator in 
normalization talks 
 
TOKYO SHIMBUN (Page 1) (Excerpts) 
December 11, 2008 
 
Yasunobu Kiuchi, Beijing 
 
Japan has been unable to make contact with Song Il Ho, chief envoy 
of normalization talks with Japan, since October, according to 
informed sources yesterday. 
 
Rumors are afloat that since he disclosed internal information on 
Japanese nationals abducted by North Korean agents, he is taking the 
blame and exercising restraint in his activities. 
 
Song as the representative of North Korea attended the working-level 
talks between Japan and North Korea held in Shenyang, China, in 
mid-August, in which both side agreed to set up a committee on 
reinvestigating the whereabouts of the abduction victims. He 
responded to an interview with Kyodo News after North Korea informed 
the Japanese government in early September of its decision to delay 
the investigation. 
 
A Foreign Ministry source said that since then, the Japanese 
government became unable to make contact with him. 
 
According to sources familiar with Japan-North Korea relations, Song 
gave information to the Japanese government this summer indicating 
that an abduction victim is living in North Korea, so he might have 
been subject to suspension on the grounds that he had leaked 
information with no permission from the leadership. An informed 
source in Beijing said: "There are rumors that he is receiving 
reeducation on ideology and other matters." 
 
14) Budget compilation: Restoration negotiation to be abolished in 
principle; Government decides to revise established practices; Prime 
minister to allocate priority items 
 
NIKKEI (Page 2) (Full) 
December 11, 2008 
 
The government will substantively revise accepted practices 
concerning budget compilation. It will abolish, in principle, 
so-called restoration negotiations, an established practice, by 
concentrating negotiations between the finance minister and other 
cabinet ministers in a period before the informal release of the 
Finance Ministry's draft proposal. Priority items will be 
established so that the prime minister can exclusively decide on 
budget allocations. The aim is to prioritize budget items under the 
leadership of the Prime Minister's Office, by preventing government 
agencies and legislators tied to vested interests from jointly 
demanding a budget increase. The government wants to implement those 
proposals starting in the year-end period, when the compilation of 
the fiscal 2009 budget starts. 
 
Revisions to those established practices have been made based on 
 
TOKYO 00003361  010 OF 013 
 
 
Prime Minister Taro Aso's order. Funding resources for restored 
budget items as a result of negotiations after the release of the 
Finance Ministry's draft budget have been about 50 billion yen in 
the past. The practice serves to have cabinet ministers to play an 
active role, backed by various LDP divisions. However, it has 
recently taken on a strong flavor of being formality. Ministerial 
negotiations before the informal release of the Finance Ministry 
draft on December 20 will be allowed, in principle, starting with 
the compilation of the fiscal 2009 budget. 
 
No individual requests from each government agency and division will 
be accepted, in principle, after the release of the draft budget. 
Secretaries general of the LDP and New Komeito will instead put 
together requests from each division and present them to Finance 
Minister Shoichi Nakagawa. Another aim of this method is to sort out 
priority items from a cross-sectional viewpoint. 
 
The allocation of priority items, the prime minister's prerogative, 
will be decided at the final stage, based on proposals by the 
secretaries general of the ruling parties. The budget request 
guidelines set a framework for the promotion of key issues worth 330 
billion yen. The allocation of priority items by the prime minister 
will serve to absorb the ruling parties' discontent, based on that 
framework. 
 
The allocation of priority items will be decided after consultation 
with the finance minister and reflected in the government draft as 
is. If pressure for a spending boost mounts in the ruling camp, 
there is a possibility of the 330 billion yen framework being 
expanded. In that event, compatibility with the goal of maintaining 
the ceiling of budget estimates will become an issue. 
 
15) Aso shifts policy from fiscal reconstruction to economic growth; 
Declaration on policy switch might cost his job 
 
TOKYO SHIMBUN (Page 2) (Abridged slightly) 
December 11, 2008 
 
Shohei Yoshida 
 
Prime Minister Taro Aso has effectively shifted to an expansionist 
fiscal policy line by shelving the spending-cut policy course amidst 
the economic downturn. The prime minister does not admit it, 
however. The question of fiscal reconstruction or the economy has 
vexed many past prime ministers. The question cost former Prime 
Minister Hashimoto his administration. Aso, who has shifted his 
policy without offering an adequate explanation to the public, might 
end up following the fate of the Hashimoto administration. 
 
Prime Minister Aso's approach is to add social security and public 
works spending to a separate budget slot while keeping the 
spending-cut framework intact. The prime minister said with 
confidence: "Economic stimulus measures and fiscal reconstruction 
are compatible." 
 
Aso's comment brings back memories of former Prime Minister 
Hashimoto. In January 1998, in the closing days of his 
administration, Prime Minister Hashimoto remarked: "It is natural to 
take necessary steps in response to the economic and financial 
situations. I do not think this conflicts with fiscal structural 
reform." He thus announced that in order to tackle the financial 
crisis that erupted the previous year, his administration would 
 
TOKYO 00003361  011 OF 013 
 
 
pursue both economic stimulus measures and fiscal reconstruction. 
 
To shore up the economy, Hashimoto implemented 2-trillion-yen in tax 
cuts, while setting a cap on all spending under fiscal structural 
reform legislation. Hashimoto did not admit a policy turnaround, and 
his approach was called a policy shift without an announcement. 
Immediately before the Upper House election that summer, he 
announced the introduction of permanent tax cuts by reversing his 
stance. His inconsistent policy course came under fire from the 
public. The ruling camp suffered a humiliating setback in the 
election, and his cabinet resigned as a result. 
 
Hashimoto was replaced by Keizo Obuchi. At its initial cabinet 
meeting, the Obuchi cabinet adopted the prime minister's statement 
to freeze the fiscal structural reform law for the time being to 
take aggressive fiscal policy. Although this helped the cabinet's 
support ratings shoot up, it also resulted in a sharp rise in the 
nation's budget deficit. In fiscal 1999, the administration issued 
government bonds worth over 37 trillion yen, which is still a 
record. 
 
Aso's reluctance to announce the policy shift is ascribable to the 
budget deficit that has swollen since the Obuchi administration. In 
compiling the fiscal 2002 budget, then Prime Minister Junichiro 
Koizumi declared a strict spending-cut policy, saying, "We will not 
take conventional measures to turn around the economy. Despite that, 
the balance of government bonds has increased. 
 
As far as tax revenue is concerned, fiscal 2008 is better than 
fiscal 2002. The general public might find it difficult to support 
the shift to expansionary fiscal policy at this point in time. 
 
There are strong calls in the Liberal Democratic Party for upholding 
the structural reform course, and this also makes the prime 
minister's stand precarious. 
 
16) DPJ to submit six economic bills to current Diet session, review 
roadmap 
 
MAINICHI (Page 5) (Full) 
December 11, 2008 
 
The Democratic Party of Japan (DPJ) has decided to submit to the 
House of Councillors by Dec. 15 six bills containing economic and 
monetary measures as part of efforts to deal with the ongoing 
financial crisis and to buoy the flagging economy. The decision was 
made in a meeting of its shadow cabinet yesterday. With this 
decision, the DPJ has started reviewing its roadmap that specifies 
how to secure financial resources for the major policy measures 
listed in its manifesto for the next House of Representatives 
election and the target fiscal years to attain those measures. 
 
The government has decided to give up on submitting its second 
supplementary budget bill to the current Diet session. As its 
counterproposals, DPJ President Ichiro Ozawa announced a plan to 
submit the six bills to the current Diet session. The party will 
present today four bills designed to support families raising 
children, abolish the current provisional gasoline and other tax 
rates, rescue small businesses, and introduce a financial assessment 
system to obligate financial institutions to disclose loan terms for 
small businesses. On the remaining two bills intended to create 
jobs, such as job assistance for job-hopping part-timers, and to 
 
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revise the tax system, including a measure to halve the corporate 
tax for small businesses, since it is necessary to coordinate views 
with other opposition parties, the DPJ intends to submit them on the 
15th. 
 
The current roadmap estimates the amount of expenditures needed to 
implement these key measures at 20.5 trillion yen annually. It also 
specifies when the measures should be completed by during the next 
four years, how much money is needed to implement them, as well as 
where the necessary money will come from. The DPJ plans to 
completely abolish the provisional tax rates and implement some 
parts of the plans for child-bearing support and for waiving express 
tolls in fiscal 2009. To do so, the party has decided to raise 9.1 
trillion yen by taking measures to cut lavish spending, like 
introducing a system in which government agencies give subsidies to 
local governments in a package and banning amakudari (golden 
parachuting of government employees into private industry). It also 
plans to squeeze 7.2 trillion yen out of such untapped funds as 
reserves in special accounts. 
 
Tax revenues are expected to significantly decrease due to the 
economic downturn. To implement measures to create jobs and support 
small businesses, it will become necessary to explore new fiscal 
resources. Given these, the DPJ will restudy the order of priorities 
for the listed policy measures and ways to secure new fiscal 
resources. 
 
17) New Komeito feels it is reaching impasse with Lower House 
dissolution not in sight, cash payments plan unpopular 
 
YOMIURI (Page 4) (Excerpts) 
December 11, 2008 
 
With members of the ruling Liberal Democratic Party (LDP) now 
distancing themselves from Prime Minister Taro Aso, the New Komeito, 
the LDP's junior coalition partner, feels that it has reached in 
impasse. The party realizes that the House of Representatives will 
not be dissolved early, as it had once expected, and the 
party-initiated flat-sum cash payouts plan is unpopular with the 
public. 
 
New Komeito Chief Representative Akihiro Ota yesterday called on Aso 
at the Prime Minister's Official Residence to ask him to implement a 
package of stimulus measures worth 10 trillion yen by fiscal 2010. 
According to Ota, Aso said: "I share the view with you that 
companies are in a severe situation. So, we are now working on a 
package of economic measures to meet the emergency." 
 
Although the two ruling coalition leaders appear to have 
demonstrated their cooperation, many New Komeito lawmakers have 
become increasingly alarmed, with one member saying: "The New 
Komeito could go down together with the Aso cabinet and the LDP, if 
we do nothing." Another member said: "We have no intention at 
present to leave the Aso administration, and there is no candidate 
in the LDP to succeed Aso." 
 
Since the New Komeito has placed priority on next summer's Tokyo 
Metropolitan assembly election, the party wants to have the interval 
period between the next Lower House election and the Tokyo assembly 
election be as long as possible. However, one senior party member 
said: 
 
 
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"Under the present public support ratings for the Aso cabinet, it is 
difficult for the prime minister to decide on his own when to 
dissolve the Lower House. I wonder whether he may have to call a 
general election after being forced to dissolve the lower chamber; 
and as a result, the dates for the snap election and the Tokyo 
assembly race could be close." 
 
18) Japanese proposal not included in COP14 working group's draft 
report 
 
MAINICHI (Page 2) (Full) 
December 11, 2008 
 
A draft report compiled by a working group established under the 
Kyoto Protocol was revealed on December 10 at the 14th session of 
the Conference of the Parties to the Climate Change Convention 
(COP14). A sector-specific approach for industrialized countries to 
set nation-specific caps, which the Japanese government had insisted 
on, was not included in the draft. The wording "25 PERCENT -40 
PERCENT  reduction by 2020" has also been changed to more moderate 
wording. 
 
The sector-specific approach was included in the initial proposal. 
However, it was deleted along with other controversial proposals due 
to opposition from developing countries, which insisted that 
industrialized countries should set an ambitious goal. 
 
SCHIEFFER