VZCZCXRO7342
PP RUEHFK RUEHKSO RUEHNAG RUEHNH
DE RUEHKO #1420/01 1750025
ZNR UUUUU ZZH
P 240025Z JUN 09
FM AMEMBASSY TOKYO
TO RUEHC/SECSTATE WASHDC PRIORITY 3998
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 7133
RUEHFK/AMCONSUL FUKUOKA 4802
RUEHOK/AMCONSUL OSAKA KOBE 8605
RUEHNAG/AMCONSUL NAGOYA 2354
RUEHKSO/AMCONSUL SAPPORO 5328
RUEHBJ/AMEMBASSY BEIJING 0044
RUEHUL/AMEMBASSY SEOUL 6075
RUCNDT/USMISSION USUN NEW YORK 5768

UNCLAS SECTION 01 OF 13 TOKYO 001420 
 
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 06/24/09 
 
Index: 
1) Top headlines 
2) Editorials 
 
Defense and security issues: 
3) U.S. Congress in fiscal 2010 budget proposal adds provision that 
could block relocation of Futenma Air Station in Okinawa  (Yomiuri) 
 
4) Ruling parties agree to let Maritime Self-Defense Force handled 
cargo searches of North Korean ships in proposed new legislation 
(Yomiuri) 
5) Ruling camp shelves plan to provide rear support for foreign 
forces under new legislation allowing ship searches of North Korean 
vessels  (Asahi) 
6) Two destroyers are speeding to Somalian waters for antipiracy 
duty under new legislation  (Mainichi) 
7) Democratic Party of Japan (DPJ) drafts policy paper for "new age 
of Japan-U.S. alliance"  (Asahi) 
8) DPJ wants to revise Status of Forces Agreement as part of its 
foreign and security policy goals  (Asahi) 
9) Text of DPJ's foreign and security policy paper  (Asahi) 
 
10) Statement by G-8 foreign ministers' meeting to call for 
countries to impose sanctions on North Korea under new UN resolution 
 (Yomiuri) 
 
Political agenda: 
11) Prime Minister Aso might dissolve Diet early once the speeded up 
budget guidelines are set  (Nikkei) 
12) LDP asks popular Miyazaki prefecture governor to consider 
running for the Lower House, but he lays down unusual condition 
(Tokyo Shimbun) 
13) Finance Minister Yosano's political group took illegal political 
donations from a company  (Mainichi) 
14) Another bureaucrat-linked bid-rigging scandal involving the Land 
and Transport Ministry  (Asahi) 
 
Economy: 
15) Unrestrained fiscal spending marks the new FY2009 "big-boned" 
economic policy guidelines  (Asahi) 
16) Fy2009 "big-boned" policy guidelines allow additional defense 
budget and agricultural budget outlays  (Yomiuri) 
 
Articles: 
 
1) TOP HEADLINES 
 
Asahi: 
FTC finds another case of bureaucrat-led bid-rigging at Ministry of 
Land, Infrastructure, Transport, and Tourism over official vehicle 
operations 
 
Mainichi: 
Futures trading company gives donations to Yosano through dummy 
firm 
 
Yomiuri: 
Just "not guilty" unacceptable: 17.5 years lost; false charge should 
be examined 
 
Nikkei: 
Showa Shell to go into solar power generation with Saudi state-run 
 
TOKYO 00001420  002 OF 013 
 
 
oil company 
 
Sankei: 
Bureaucrat-led bid-rigging in official vehicle operations; 
improvement order slapped on Ministry of Land, Infrastructure, 
Transport, and Tourism 
 
Tokyo Shimbun: 
FTC slaps improvement order on Ministry of Land, Infrastructure, 
Transport, and Tourism for bureaucrat-led bid-rigging in official 
vehicle operations 
 
Akahata: 
Cap on social welfare to continue; 220 billion cutback not to be 
included next year 
 
2) EDITORIALS 
 
Asahi: 
(1) Retrial of Ashikaga case: Examination of mistaken verdict 
indispensable 
(2) Big-boned policies: Confusion brought about by deferring costs 
 
Mainichi: 
(1) Retrial of Ashikaga case: Speed up the restoration of honor and 
human rights 
(2) President Nishikawa keeping his job: Even more unconvincing 
 
Yomiuri: 
(1) President Nishikawa keeping his job: Unacceptable lenient 
"disciplinary action" 
(2) Big-boned policies 2009: Lifting of cap on social security 
spending a matter of course 
 
Nikkei: 
(1) Regression of both reform and fiscal discipline in "big-boned 
policies" 
(2) Iran put to test on essence of "democracy" 
 
Sankei: 
(1) Big-boned policies 2009: Tighten discipline firmly once again 
(2) Japan Post president keeping his job: Restore trust with 
transparency in management 
 
Tokyo Shimbun: 
(1) Big-boned policies: Where are the new controls? 
(2) Japan Post president keeping his job: People's distrust not 
dispelled 
 
Akahata: 
(1) "Big-boned policies": Deceptive agreement eyeing the election 
 
3) U.S. House approves bill including clause that rejects Futenma 
relocation; Dark cloud over Japan-U.S. agreement 
 
YOMIURI (Page 2) (Abridged slightly) 
June 24, 2009 
 
Satoshi Ogawa, Washington 
 
It became clear on June 22 that the U.S. House Armed Services 
Committee has added an amendment to the fiscal 2010 defense budget 
 
TOKYO 00001420  003 OF 013 
 
 
that would make it hard to realize an agreement reached between the 
Japanese and U.S. governments to relocate the U.S. Marine Corps' 
Futenma Air Station in Ginowan, Okinawa, to Camp Schwab in the 
prefecture. 
 
The amendment says the U.S. defense secretary should not give his 
approval to the alterative facility as long as the U.S. military 
fails to comply with minimum flight safety requirements. The office 
of Representative Neil Abercrombie, D-Hawaii, who proposed the 
amendment, told the Yomiuri Shimbun that the alternative under the 
current plan contravenes safety standards on the following points: 
(1) The runways are too short, (2) a school, Okinawa National 
College of Technology, is located nearby, and (3) there are 
obstacles, such as utility poles, along the flight path. As a 
result, Abercrombie indicated that the U.S. military should look for 
a new site to relocate the air station. A Japanese government source 
expressed strong concern, saying, "The content of this amendment 
suggests the transfer of the alternative facility agreed by Japan 
and the United States will not be permitted." 
 
The defense budget, including the amendment, was adopted by the U.S. 
House Armed Services Committee on June 16. Discussion of the budget 
at the Senate Armed Services Committee was due to start on June 23. 
After joint committee discussions, the budget is expected to be 
adopted by the two chambers. The Defense Department is expected to 
try to persuade Congress to remove the amendment from the final 
defense budget. If Congress passes the budget intact, there is a 
possibility that President Barack Obama will veto it. 
 
U.S. Marine Corps commandant Gen. James Conway, too, expressed 
before the Senate Armed Services Committee on June 4 his discontent 
with the envisaged replacement facility under the current relocation 
plan. 
 
4) Coalition project team agrees to allow MSDF to conduct cargo 
inspections without prior Diet approval 
 
YOMIURI (Page 2) (Abridged slightly) 
June 24, 2009 
 
The project team of the Liberal Democratic Party (LDP) and the New 
Komeito that is studying a special measures law governing ship 
inspections based on UN Security Council Resolution 1874 agreed at 
its meeting yesterday to allow both the Maritime Self-Defense Force 
(MSDF) and the Japan Coast Guard (JCG) to conduct ship inspections. 
The project team also decided not to specify clearly role-sharing 
between the MSDF and JCG so that they can deal with the matter in a 
flexible manner. MSDF activities will not require prior Diet 
approval. The team also confirmed that (1) the use of weapons should 
be limited to legitimate self-defense and emergency evacuations, and 
(2) the law's term should coincide with the duration of Resolution 
¶1874. 
 
Following this, the government will begin work with the aim of 
submitting a bill to the Diet in early July. The idea of allowing 
only the JCG to carry out inspections is deep seated. As such, a 
plan to mobilize the MSDF under a maritime policing provision of the 
SDF Law as necessary has also emerged. 
 
A senior project team member explained, "The SDF is superior to the 
JCG in terms of collecting information and pursuing vessels." As 
specific cases, he cited, (1) when a destroyer is navigating near 
 
TOKYO 00001420  004 OF 013 
 
 
the ship in question, and (2) when the vessel in question is heavily 
armed. 
 
5) Ruling parties decide to forego rear support for foreign troops 
in DPRK cargo inspections 
 
ASAHI (Page 4) (Full) 
June 24, 2009 
 
The ruling parties' project team (co-chaired by Gen Nakatani, 
chairman of the Liberal Democratic Party Research Commission on 
Security, and Shigeki Sato, chairman of the New Komeito Security 
Division) drafting a special measures law for cargo inspection on 
ships entering and leaving North Korea decided on June 23 not to 
include rear support activities by the Self-Defense Forces (SDF) for 
foreign forces, which was included in an earlier draft. The Diet's 
involvement in the process will be changed from ex post facto 
approval to ex post facto reporting. The team aims to finalize the 
outline of the bill on June 25, and submit the bill to the Diet 
before the end of the month. 
 
Fuel supply, transport of personnel, and such other operations had 
at first been envisioned in terms of rear support for foreign 
troops. However, since ship inspections are concerned with the 
inspection of individual ships based on information obtained by 
satellites or aircraft, foreign ships are unlikely to stay at sea 
for extended periods of time, so such support operations were judged 
to be unnecessary. Furthermore, since cargo inspections will be 
based on the consent of the flag state and are not arbitrary, Diet 
approval was also judged to be unnecessary. 
 
Meanwhile, the project team agreed that the executors of cargo 
inspections will be both the Japan Coast Guard (JCG) and the 
Maritime Self-Defense Force (MSDF) as originally proposed. While 
certain ruling party members wanted this to be limited to the JCG, 
out of their concerns about dispatching the SDF, it was thought that 
there could be cases the JCG is not capable of handling, such as 
when cargo ships are heavily armed. The JCG will take charge of ship 
inspections, while the MSDF will be responsible for information 
gathering and tracking with its P-3C reconnaissance planes and other 
equipment. 
 
6) Two escort ships to be sent to Somalia under new Anti-Piracy Law 
 
MAINICHI (Page 2) (Full) 
June 24, 2009 
 
Yasushi Sengoku 
 
The Ministry of Defense announced on June 23 the dispatched of a new 
Maritime Self-Defense Force contingent to waters off Somalia in East 
Africa under the Anti-Piracy Law enacted on June 19. The new law has 
expanded the scope of security duties to escorting foreign ships and 
has relaxed rules on the use of weapons. The two escorts to be 
dispatched, "Harusame" and "Amagiri" have undergone training based 
on the new law. They will set sail shortly and will replace around 
late July the "Sazanami" and "Samidare," which have been on duty 
since late March. 
 
7) New Japan-U.S. alliance specified in DPJ draft policies not 
convincing; Policies follow Ozawa policy course 
 
 
TOKYO 00001420  005 OF 013 
 
 
ASAHI (Page 4) (Excerpts) 
June 24, 2009 
 
Nao Fujita 
 
The major opposition Democratic Party of Japan (DPJ) has drafted its 
foreign and security policies for 2009 that include such slogans as 
a "Japan-U.S. alliance of the new age." But the draft policies do 
not clearly show the overall picture, including the party's view of 
the international situation and its definition of national 
interests. As the party aiming to realize a change of government, 
what message is the DPJ going to send to the international community 
and Japan and how is it going to convince them? The clock is ticking 
for the DPJ. 
 
The draft, led with the aim of establishing a Japan-U.S. alliance of 
the new age, underlines the party's intention to play an active role 
in the international community while sharing roles with the United 
States. But when it comes to specifics, the policies are 
unconvincing. 
 
Since last year, scholars in the United States knowledgeable about 
Japan have been asking the DPJ not to touch on four points that are 
regarded as "anti-American": (1) the fundamental revision of the 
Japan-U.S. Status of Forces Agreement, (2) the ceaseless examination 
of the realignment of U.S. forces in Japan, (3) not dispatching the 
Self-Defense Force to Afghanistan in the war on terrorism, (4) the 
withdrawal of the Maritime Self-Defense Force from a refueling 
mission in the Indian Ocean. The draft policies effectively gave "no 
replies" to those four points. 
 
Consideration was given only to (2). The DPJ's 2008 policies laid 
out the relocation of Futenma Air Station outside Okinawa for 
reducing the burden on the prefecture in defiance of the agreement 
between the governments of Japan and the United States. But the 2009 
policies simply stipulate that the party will "study the position of 
the U.S. bases," leaving the question of whether to refer to the 
planned Futenma relocation to the leadership. 
 
In any case, the policy is a far cry from "sharing roles with the 
United States." With respect to the overseas dispatch of the SDF, 
the party has maintained the policy of "joining activities under 
Article 42 (military measures) of the UN Charter." Such a policy is 
distinct from the government's constitutional interpretation that 
does not allow the use of force overseas. If the policy is 
implemented, Constitution protectionists in the party and the Social 
Democratic Party (SDP), which is considering joining a DPJ-led 
coalition government, are likely to raise strong objections. 
 
The draft policies incorporate President Hatoyama's "East Asia 
Community" vision and Secretary General Okada's idea of 
denuclearizing Northeast Asia - ideas the Hatoyama leadership places 
importance on. But the policies are void of explanations on how to 
pursue those ideas under the Japan-U.S. alliance, the cornerstone of 
the country's security policy. 
 
Referring to North Korea's resent missile launches and nuclear test, 
the draft says, "There is no other country that is more exposed to 
the threat of North Korea than Japan." The draft also expresses 
concern over the transparency of China's military power. It also 
points out the United Nations' loss of authority, saying that it was 
not able to stop the United States from attacking Iraq. If the party 
 
TOKYO 00001420  006 OF 013 
 
 
is to aim at the denuclearization of Northeast Asia under such 
circumstances, how is the DPJ going to handle the question of North 
Korea and the Six-Party Talks and to deal with that country 
bilaterally and to discuss disarmament with China? And what are the 
timetables for U.S. force realignment and a review of Japan's 
defense power? 
 
The draft policies offer no explanations on those points. Secretary 
General Okada indicated in a monthly magazine's July issue that 
Japan should start from scratch in discussing the question of U.S. 
force realignment with the Obama administration. Asked for details 
in a press conference on June 12, Okada said: "It's too early to 
discuss it. I would like to avoid mentioning it since we have yet to 
take power." 
 
There are no signs that President Hatoyama has displayed his 
leadership in discussions. At a meeting on June 5 of the "Next 
Cabinet," the leadership called for a review of the foreign and 
security policies laid out under former President Ichiro Ozawa, but 
there were no specific instructions. Reflecting a schism in the 
party over a set of criteria on the overseas dispatch of the SDF and 
other matters, the draft policies ended up carrying on with the 
"Ozawa policy course" that includes many ambiguous points. 
 
8) DPJ includes SOFA revision in draft foreign policy paper 
 
ASAHI (Page 1) (Full) 
June 24, 2009 
 
The draft has been revealed of the Democratic Party of Japan's (DPJ) 
foreign and security policy portion of its 2009 policy statement 
that will form the basis of its manifesto (campaign pledges) in the 
House of Representatives election,. The party puts forth an 
Asia-centered policy, upholding President Yukio Hatoyama's pet 
concept of an "East Asia community." It also includes proposals that 
may give rise to friction between Japan and the United States, such 
as a drastic review of the Status of Forces Agreement (SOFA) and the 
withdrawal of the Maritime Self-Defense Force (MSDF) from its 
mission in the Indian Ocean. 
 
These proposals will form the basis for the DPJ's basic policies 
after it takes over the reins of government. However, its assessment 
of the international situation and methods for policy transition 
remain unclear. The party's perspective and strategy are likely to 
be questioned. The draft policies were formulated at a meeting of 
the party's division on foreign affairs and defense. They will be 
reviewed by Hatoyama and are expected to be finalized along with the 
manifesto before the end of June. 
 
The long-term goal of forming an East Asia community would be 
realized through cooperation in such areas as energy, commerce, and 
the environment. Like the present administration, the DPJ also 
regards the Japan-U.S. alliance as the "cornerstone of Japan's 
security." However, since the DPJ has criticized the government for 
blindly following the U.S., its policy emphasizes the formation of 
an "equal partnership." It calls for "beginning a drastic review of 
the SOFA." 
 
The MSDF refueling mission in the Indian Ocean will be terminated 
when its legal authorization expires in January 2010. With regard to 
dispatching the SDF to Afghanistan, the DPJ "will consider 
humanitarian and reconstruction assistance after an agreement to end 
 
TOKYO 00001420  007 OF 013 
 
 
hostilities is reached." 
 
9) Foreign and security policy portion of DPJ's draft policy 
platform (main points) 
 
ASAHI (Page 4) (Full) 
June 24, 2009 
 
Japan-U.S. relations: 
 
We will form an equal partnership, in which Japan will clearly state 
its views. Japan will pro-actively carry out its responsibilities in 
the international community, sharing a role with the United States. 
In order to truly make the Japan-U.S. alliance the linchpin of peace 
and security in the Asia-Pacific region, we will look into the 
positioning of U.S. forces in Japan, giving consideration to 
civilian control and the reduction of the burden of (hosting) U.S. 
bases, and will begin drastic revision of the Status of Forces 
Agreement. We will carry out a thorough probe into the realignment 
of U.S. forces in Japan, especially the way the expense burden was 
set up for moving U.S. Marines on Okinawa to Guam, and we also will 
probe unremittingly into the host-nation support budget. 
 
Asian foreign policy: 
 
Gazing fixedly at the goal of establishing an East Asian Community, 
we will set up a regional cooperative system for the Asia-Pacific in 
the fields of energy, commerce, and the environment. We will carry 
out a dialogue with China on human rights issues, such as Tibet, the 
environment, and removing concerns about the transparency of its 
military power and the gas-development projects in the E. China Sea. 
We do not support the unilateral independence of Taiwan, and oppose 
resolutely China's use of armed force (against Taiwan). We premise 
(our policy) on the 1972 joint communiqu between Japan and China. 
 
For Japan, there is no more threatening country than North Korea. 
While considering additional sanctions, we will develop an 
independent policy so that through the United Nations and Six-Party 
Talks, North Korea will scrap its nuclear program, and so that the 
abduction issue will move toward resolution. Our aim is for a 
denuclearized Northeast Asia. 
 
Overseas dispatches of the Self-Defense Forces (SDF): 
 
The activities of the United Nations differ from Japan in the use of 
the right of self-defense and in character. We will participate 
actively based on our independent decision and under democratic 
control, including areas related to UN Charter articles 41 and 42. 
 
As for Afghanistan, once there is an agreement to end hostilities, 
we will consider carrying out humanitarian and reconstruction 
assistance, including by the SDF. We will end the extension of oil 
refueling operations in the Indian Ocean carried out under current 
law. We will concur with the dispatch of the SDF for anti-piracy 
missions if it is difficult for the Japan Coast Guard to respond, 
but premised on prior approval by the Diet. 
 
10) G-8 to call on UN members to sanction North Korea; Ministerial 
meeting stresses a tough posture 
 
NIKKEI (Page 2) (Full) 
June 24, 2009 
 
TOKYO 00001420  008 OF 013 
 
 
 
The draft of the chairman's statement to be issued by the G-8 
foreign ministerial meeting opening in Trieste, Italy, on June 25 
has been revealed. In light of the recent adoption of the UN 
Security Council (UNSC) sanction resolution against North Korea's 
second nuclear test, the statement will "call on UN members to 
implement sanctions based on this resolution without fail." It will 
also touch on the protests relating to the outcome of the Iranian 
presidential election and express concern on the Iranian government 
for causing the strife. 
 
This is the first time that the G-8 will be calling on UN members to 
impose sanctions on a specific country. The G-8 wants to appeal to 
the international community for the strict enforcement of the 
sanctions and emphasize its tough stance. Regarding North Korea's 
apparent preparations to conduct a third nuclear test and another 
round of long-range ballistic missile launches, the document 
"demands that it desist from further provocative actions." It also 
expresses concern on abduction and other humanitarian issues. 
 
On Iran's nuclear issue, the statement asks Iran to comply with its 
obligation to stop uranium enrichment activities under past UNSC 
resolutions. Based on the Obama administration's dialogue policy, 
the statement also stipulates the importance of dialogue with the 
Iranian government. 
 
A separate meeting on aid to Afghanistan and Pakistan will be held 
alongside the foreign ministerial meeting. The international 
community attaches importance to stabilizing the security situation 
and economic development in the border area between the two 
countries, which has become a hotbed of terrorist activities. The 
G-8 and neighboring countries will discuss regional cooperation and 
issue a joint statement confirming the G-8's continued support. 
 
11) Possibility of moving up Lower House dissolution to early July 
 
NIKKEI (Page 2) (Abridged slightly) 
June 24, 2009 
 
It is expected that the cabinet of Prime Minister Taro Aso will 
approve a set of fiscal policy guidelines for fiscal 2010 in its 
meeting on June 30 at the earliest, since he has ordered the meeting 
to be held earlier than due. With this, there will be room for him 
to dissolve the House of Representatives to call a general election 
after July 1. Aso appears to be motivated to seek to check moves to 
remove him from office by brandishing the threat of dissolving the 
Lower House in early July. But there is a lot of skepticism about 
such among Liberal Democratic Party (LDP) lawmakers since they would 
suffer a crushing defeat in the general election if it were held 
under the leadership of Aso, whose popularity is low. 
 
"I want you to compile budget guidelines for next fiscal year by the 
end of next week," Aso last evening instructed Kaoru Yosano, finance 
minister, state minister for financial services, and state minister 
for economic and fiscal policy. 
 
The government annually sets the budget guidelines only after late 
July. Based on the government's decision, all the ministries and 
agencies present their budgetary requests to the Finance Ministry by 
the end of August. In order to avoid impacting on the Lower House 
election, the government this year had looked into deciding on July 
3, but Aso called for an even faster timetable. Aso's aide said: 
 
TOKYO 00001420  009 OF 013 
 
 
"Setting the budget guidelines for fiscal 2010 is the last job for 
the Prime Minister. If it is done, the Aso cabinet will be 
completely free." 
 
Aso has already opened his campaign office in his home constituency. 
By moving up the cabinet's adoption of the fiscal guidelines for 
fiscal 2010, the Diet will have no schedule until July 3 when the 
Emperor and the Empress leave for the United States and Canada. 
Dissolving the Lower House in early July is the only option for Aso 
if he wants to dissolve the lower chamber before he is forced to do 
so. 
 
If the LDP is defeated in the July 5 Shizuoka Gubernatorial election 
and the July 12 Tokyo Metropolitan Assembly election, Aso will be 
unable to dissolve the Lower House even if he wishes due to 
opposition by the ruling parties. Lower House dissolution in early 
July could prevent such a risk. 
 
However, the approval rate for the Aso cabinet dropped to 25 percent 
in a poll conducted in mid-June jointly by the Nihon Keizai Shimbun 
and TV Tokyo. Many in the ruling camp are calling for delaying 
dissolution. If Aso dissolves the Lower House before the enactment 
of a bill revising the Organ Transplantation Law, he might be come 
under criticism. A senior LDP member told reporters yesterday the 
perception that it would be difficult to dissolve the Lower House 
before the Tokyo assembly election because of deliberations on the 
bill. Speeding up the cabinet's decision on the fiscal policy 
guidelines may give Aso only the possibility of widening his option 
for Lower House dissolution. 
 
12) LDP's Koga asks Higashikokubaru to run in Lower House election 
 
TOKYO SHIMBUN (Page 2) (Slightly abridged) 
June 24, 2009 
 
Liberal Democratic Party (LDP) Election Strategy Council Chairman 
Makoto Koga called on Miyazaki Gov. Hideo Higashikokubaru at the 
Miyazaki prefectural government office yesterday afternoon. Koga 
asked Higashikokubaru to run in the next House of Representatives 
election as a candidate on the LDP ticket for the Tokyo metropolitan 
aria's proportional representation bloc. Since Higashikokubaru 
presented such conditions as the LDP deciding to list him as a 
candidate for party president, a conclusion was not reached. 
 
Koga apparently aims to prevent a significant drop in the seats the 
LDP will obtain by fielding the popular Miyazaki governor in the 
proportional representation segment, at a time when Prime Minister 
Taro Aso's popularity has been sagging. 
 
It is unclear whether the candidacy of Higashikokubaru can be 
realized because negative reactions are coming from senior LDP 
members. One party executive member said: "When did we start 
treating the position of LDP president so trivially." A former 
cabinet minister made this comment: "The whole LDP is treated like a 
doormat." 
 
On June 23, Koga, chairman of the Japan Association of the Bereaved 
Families of the War Dead, usually attends the annual memorial 
ceremony of the end of the Battle of Okinawa. Changing the schedule, 
He visited Miyazaki. At the outset of the meeting, Koga said: "I 
want to talk with you in a serious manner." 
 
 
TOKYO 00001420  010 OF 013 
 
 
Higashikokubaru then presented his conditions for Koga's offer that 
in addition to that the LDP will list him as a candidate for party 
president, a decentralization draft plan compiled by the National 
Governors' Association will be included in the LDP's manifesto and 
it will be implemented in four years. Koga just replied: "I have 
heard your proposals." 
 
Higashikokubaru explained the reason for his proposals: "It is 
necessary for the LDP to determine to bring about a fresh breeze and 
a change of blood." 
 
However, the LDP rules for the presidential election stipulate that 
candidates for the party's presidency are chosen from its Diet 
members. Even if Aso resigns before the Lower House election, 
Higashikokubaru won't be able to become a presidential candidate. 
What is the meaning of his running in the Lower House election as an 
LDP presidential candidate? 
 
13) Yosano, Watanabe received political donations from five 
companies through dummy group 
 
MAINICHI (Top Play) (Excerpts) 
June 24, 2009 
 
The political group registered with the Internal Affairs 
Communications Ministry by Finance Minister and Financial Services, 
Economic and Fiscal Policy Minister Kaoru Yosano and former 
administrative reform minister Yoshimi Watanabe as their support 
group was found to be a dummy group. Through this group, five group 
companies, including the commodity futures trading company Oriental 
Trading, made political donations totaling 55.3 million yen to 
Yosano's office and 35.4 million yen to Watanabe's office during a 
period between 1992 and 2005. Under the tax system, a portion of 
donations to a political support group is deducted from the income 
tax imposed on the donator. Taking advantage of this system, the 
five companies had about 250 executive members donate a total of 
approximately 40 million yen to the lawmakers' offices by deducting 
the money from their salaries in order to receive tax credits. 
 
Employees get tax credits 
 
Yosano and Watanabe have both served as financial services minister 
and been involved in the task of placing restrictions on commodity 
futures trading. The group they designated as their support 
organization is now found to have backed political donations 
suspected of being illegal. Their close relations with the political 
group are likely to raise questions. 
 
The political group in question is a group called "the study group 
on political and economic policies" established in 1981. According 
to political funding reports and other documents, Oriental Trading 
Co. Head Yukio Kato represents the group, with the presidents of its 
related companies serving as accounting managers. The office of the 
group was located in the Tokyo branch office of Oriental Trading 
until Kato retired from the business in 2006. 
 
The money deducted from the salaries of executive members of the 
five companies was donated to the politicians through the study 
group. The five companies are suspected of having made political 
donations by using the study group as a dummy, and the donations are 
considered to be in violation of the Political Funds Control Law. 
 
 
TOKYO 00001420  011 OF 013 
 
 
Yosano designated in a report to the then Ministry of Home Affairs 
the study group as his support group from 1981 through 2001. After 
he lost in the House of Representatives election in 2000, Watanabe 
registered the group as his support group until 2008. 
 
The study group in question provided Yosano's fund-management group 
with 2.5 to 6.5 million yen in political donations every year 
between 1992 and 2005. Of the money, 6.8 million yen was offered in 
the days when Yosano was responsible for supervising commodity 
futures trading as internal trade and industry minister (from 1998 
through 1999). The fund-management group's report noted that the 
study group was located "within Oriental Trading." 
 
Meanwhile, Watanabe's fund-management group also received 1 to 6 
million yen annually from 1995 through 2005. When Watanabe was 
serving as financial services minister in 2007 and 2008, he also 
designated the study group as his support group. 
 
(Comment by Yosano office member) 
 
The group offered support stemming from its desire to see (Yosano) 
become a great politician. We do not know how they collected the 
money. If we had known, we would not have received any donations. 
The group did not ask us for favors. The donations were made in a 
proper manner, so we will not return it. 
 
(Comment by Watanabe office member) 
 
We had heard the group made political donations with funds collected 
from individuals, so we did not harbor any doubts (about the 
propriety of the donations). The group decided to offer donations to 
this office, based on its relations with the late Michio Watanabe 
(Yoshimi's father), who was a Lower House member. We will make a 
proper response after holding discussions. 
 
14) FTC concludes transport ministry took initiative in bid-rigging 
again 
 
ASAHI (Top Play) (Abridged slightly) 
June 24, 2009 
 
The Fair Trade Commission (FTC) on June decided to apply the law for 
the prevention of collusive bidding at the initiative of government 
agencies after finding that the head of Hokkaido Regional 
Development Bureau of the Ministry of Land, Infrastructure, 
Transport and Tourism's (MLITT) and several others were involved in 
bid-rigging for contracts for official vehicle operations by such 
service providers. It also ordered the ministry to improve its 
practices. The officials involved have allegedly provided internal 
information, such as changes in bid-rigging methods, to bidders. 
Bid-rigging for vehicle operations contracts is also carried out at 
the ministry's local offices other than the Hokkaido office as well. 
Former MLITT officials who were hired by those companies were 
allegedly involved in most of such bid-rigging practices. 
 
According to the FTC, Hokkyo Renrakusha Kanri (Hokkyo), based in 
Sapporo City, which had hired many former MLITT officials, have been 
monopolistically winning contracts for official vehicle operations 
services in the area under the jurisdiction of the Hokkaido Regional 
Development Bureau. Other regional offices also introduced a 
designated bidding system one-by-one between 2002 and 2006. The 
senior managing director of Hokkyo, who was parachuted from the 
 
TOKYO 00001420  012 OF 013 
 
 
Hokkaido Regional Development Bureau, allegedly carried out 
bid-rigging by creating a mechanism of choosing a pre-arranged 
winner from among designated companies. 
 
The head and deputy head of the Bureau's Development Administration 
Department were found to have disclosed bid-rigging information, 
such as which office will shift its bidding system from a 
discretionary contract system to a designated bidding system and 
which companies will be designated, to former Bureau officials who 
were hired by Hokkyo as president or senior managing director. 
 
The FTC the same day also found that companies involved in the 
bid-rigging in question violated the Anti-Monopoly Law by repeatedly 
carrying out since January 2005 at the latest such practices for 
contracts for providing vehicle operations services linked to the 
national road office and the river office, MLITT's local bodies. The 
antimonopoly watchdog ordered 10 companies, including Hokkyo, which 
were deeply involved in the bid-rigging practices, to pay fines 
totaling 2.6 billion yen and ordered them to take measures to 
prevent a recurrence. 
 
15) Basic fiscal policy guidelines for fiscal 2009 shelve spending 
cuts 
 
ASAHI (Page 1) (Abridged slightly) 
June 24, 2009 
 
The government at a special cabinet meeting on June 23 adopted basic 
policy guidelines on economic and fiscal management and structural 
reforms for fiscal 2009. The guidelines included a policy of 
maintaining cutbacks on expenditures, which has been in place since 
the Koiuzmi cabinet adopted the 2006 basic policy guidelines. The 
government has, however, pledged to the ruling camp not to constrain 
social security and welfare spending by 220 billion yen a year. The 
ruling parties, which have been intensifying pressure for more 
spending, have had their own way on in the run-up before the general 
election, putting a dent in the government drive to press ahead with 
reforming expenditures. 
 
The prime minister, who wanted to make a public appeal that the 
Liberal Democratic Party (LDP) and the New Komeito are responsible 
parties, adhered to the idea of leaving intact the wording for 
maintaining the reform of expenditures in accordance with the 2006 
basic fiscal policy guidelines. However, his administration, which 
has seen a declining in its power base due to plunging support 
ratings, did not have the power to repel pressure from the LDP's 
welfare and labor policy clique, which called for the retraction of 
the government's policy of constraining social security expenditures 
by 220 billion yen. 
 
In the end, the 2009 basic fiscal policy guidelines included such 
descriptions as "necessary social security expenditures will be 
financed" and "budget estimate guidelines that are different from 
those of the previous fiscal year should be set." Finance Minister 
Yosano on the 23rd exchanged a memorandum with top four LDP 
executives, such as Secretary General Hiroyuki Hosoda and Hidehisa 
Otsuji, head of the LDP caucus in the Upper House, who is also a 
member of the welfare and labor policy clique, pledging to approve a 
natural increase in social security expenditures in the next year's 
budget as is and to make efforts to save expenditures within a 
reasonable range. 
 
 
TOKYO 00001420  013 OF 013 
 
 
The prime minister wants to reflect the 2009 basic fiscal policy 
guidelines in the party's manifesto. However, unless the LDP wins 
the next general election and the LDP-New Komeito coalition 
government continues, the guidelines will most likely be cancelled. 
 
 
16) Basic fiscal policy guidelines for fiscal 2009: Concern about 
bloating expenditures 
 
YOMIURI (Page 2) (Abridged slightly) 
June 24, 2009 
 
Following the retraction of the government's policy of constraining 
social security and welfare expenditures - the showcase of spending 
cuts since the Koizumi administration, voices calling for greater 
expenditures in such areas as public works, defense, agriculture and 
education will likely grow stronger in the ruling camp. This will 
gradually put a dent in the reform of government expenditures 
intended to reconstruct the nation's fiscal base. 
 
The policy of constraining social security and welfare expenditures 
has been retracted as a result of the Japan Medical Association 
(JMA) strongly working on lawmakers of the Liberal Democratic Party 
(LDP) with the next Lower House election close at hand. A senior 
Finance Ministry official said, "The activities of the JMA were 
powerful." The LDP apparently brushed aside the government's 
resistance with its heightening desire to hold a commanding lead in 
the election campaign. 
 
The government had been pursuing a scenario in which it would 
promote a policy of constraining social security spending, even if 
it is a policy target, and constrain pressure for expenditures in 
other areas, such as public works and agriculture, as well. 
 
However, the scenario is beginning to fall apart due to the shift 
from the policy of constraining social security spending, the symbol 
of the scenario. Calls for expanding expenditures, such as the view 
that a 3 PERCENT  cut in public works is impossible or that cutting 
the defense budget would cause serious problems because of the tense 
situation due to missile launches and nuclear tests by North Korea, 
are growing stronger. 
 
The government hopes to seek understanding from the public regarding 
the reform of revenues, including a hike in sales tax, while 
maintaining the spending cut policy. All the more for that reason, 
if its policy of cutting expenditures is watered down, it could have 
a negative impact on discussions on a hike in sales tax, which the 
government wants to implement once the economy turns around. 
 
ZUMWALT