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UNCLAS SECTION 01 OF 14 TOKYO 001427 
 
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 06/25/09 
 
Index: 
1) Top headlines 
2) Editorials 
3) Prime Minister's daily schedule  (Nikkei) 
 
North Korea problem: 
4) North Korea's latest nuclear test was observed by Iranian 
delegation  (Sankei) 
5) China will move in tandem with the U.S., Japan on enforcing UN 
resolution against DPRK nuclear test, but cautious still about ship 
searches  (Nikkei) 
6) Japan-China strategic dialogue at sub-cabinet level focuses on 
North Korea's nuclear program and how to restart the Six-Party Talks 
 (Asahi) 
7) Former U.S. envoy to peace on Korean Peninsula Pritchard in 
interview sees Six-Part Talks likely dead, cites need for U.S.-DPRK 
talks  (Yomiuri) 
 
Defense and security affairs: 
8) Conservative think-tank worried that a rising China could weaken 
the U.S.-Japan alliance  (Sankei) 
9) Lower House committee passes bill related to international ban on 
cluster munitions  (Mainichi) 
10) Interview with UNMAS director: Japan's ratification on cluster 
ban treaty sets "good precedent"  (Mainichi) 
 
11) Japan-South Korea EPA talks at working level aim for agreement 
to restart full-fledged negotiations by June 28 summit of two 
leaders  (Nikkei) 
 
Political merry-go-round: 
12) Prime Minister Aso wants to pass all key bills quickly, setting 
off LDP speculation that Diet dissolution will come after the July 
12 Tokyo assembly election  (Mainichi) 
13) Idea floating in Liberal Democratic Party (LDP) of an early 
cabinet and party executive shuffle in order to appeal to the public 
before the Lower House election  (Nikkei) 
14) Finance Minister Yosano, named in press report on political 
donation scandal, explains to the Diet there were no improprieties 
(Asahi) 
15) Impact of budding Yosano money and politics scandal could be a 
heavy blow for beleaguered Prime Minister Aso  (Tokyo Shimbun) 
16) Opposition parties attack Yosano in connection with the brewing 
money and politics scandal  (Tokyo Shimbun) 
17) Stir created in the LDP over Koga's recruitment of popular 
Miyazaki governor to run in the upcoming Lower House election 
(Tokyo Shimbun) 
18) DPJ in policy platform promised to shrink fiscal spending by 4 
trillion yen  (Asahi) 
 
19) Japan's trade surplus in May dropped 12 PERCENT  as exports 
slumped  (Asahi) 
 
Articles: 
 
1) TOP HEADLINES 
 
Asahi & Yomiuri: 
Japan Post to invite outsider for chairmanship 
 
Mainichi, Sankei & Tokyo Shimbun: 
Japan Post submits business improvement plans 
 
TOKYO 00001427  002 OF 014 
 
 
 
Nikkei: 
Uniqlo, Unicharm to expand overseas operations 
 
Akahata: 
JCP panel announces measures to support young people in Tokyo 
 
2) EDITORIALS 
 
Asahi: 
(1) Memory of Battle of Okinawa: War memories should continue to be 
recorded 
(2) Nishikawa must operate Japan Post in way that people can accept 
 
Mainichi: 
(1) Fiscal policy guidelines allow natural increase in social 
security costs, ending reforms 
(2) Bid-rigging by Transport Ministry shows hopelessness of 
bureaucrats 
 
Yomiuri: 
(1) New archive law marks start of major change 
(2) In Ashikaga case, thoroughly examine records of investigation, 
trial 
 
Nikkei: 
(1) Shareholders' meetings to question ability to implement business 
structural reform 
(2) Japan Post Nishikawa to assume heavy responsibility 
 
Sankei: 
(1) Promptly carry out reform of civil service system to eliminate 
hotbeds for bid-rigging by bureaucrats 
(2) FTC order to Seven-Eleven Japan to allow discount sales: 
Throwing out food is wasteful 
 
Tokyo Shimbun: 
(1) Transport Ministry again engaged in bid-rigging practice, going 
against slogan of bidding reform 
(2) Enactment of new archive law is first step toward reforming 
Kasumigaseki 
 
Akahata: 
(1) Government should review mid-term target for greenhouse gas 
emissions and place restrictions on industrial circles 
 
3) Prime Minister's Official Residence (Kantei) 
 
Prime Minister's schedule, June 24 
 
NIKKEI (Page 2) (Full) 
 
10:08 Met with Deputy Chief Cabinet Secretary Matsumoto, Ambassador 
to Russia Kono at Kantei 
11:31 Met Chief Cabinet Secretary Kawamura and deputies Matsumoto, 
Asano, Uruma 
13:00 House of Representatives Committee on Audit and Oversight of 
Administration 
15:16 National convention of credit unions at Keidanren Hall, 
Otemachi 
17:04 Intellectual Property Strategy Headquarters 
18:34 Campaign office of prospective candidate in Tokyo Metropolitan 
 
TOKYO 00001427  003 OF 014 
 
 
Assembly (TMA) election in Minami-Karasuyama 
19:11 Met with prospective TMA candidate at Tamagawa Medical 
Association Hall, Nakamachi 
19:43 Campaign office of prospective TMA election candidate in 
Taishido 
20:12 Dinner with Secretary General Hosoda, Diet Affairs Committee 
Chairman Oshima, New Komeito Secretary General Kitagawa, Diet 
Affairs Committee Chairman Urushibara, Policy Research Council 
Chairman Yamaguchi at Japanese restaurant "Unkai," ANA 
Intercontinental Hotel Tokyo; Chief Cabinet Secretary Kawamura also 
present 
21:51 Arrived at official quarters; met ex-PM Abe 
 
4) Iranian delegation observed DPRK nuclear test; Iranian 
Revolutionary Guard present during ROK territorial water intrusion 
 
SANKEI (Page 1) (Full 
June 25, 2009 
 
Takashi Arimoto, Washington 
 
It was learned on June 24 that a seven-member Iranian delegation was 
visiting North Korea when it conducted its nuclear test in late May. 
This was disclosed by an intelligence well-informed on the Korean 
Peninsula situation. Iranian Revolutionary Guard officers reportedly 
also observed North Korean patrol boats' intrusion into South Korean 
territorial waters in early June. An Iranian delegation had also 
visited the DPRK during the long-range missile launch in April. It 
can be said that these visits are an indication of growing military 
cooperation between North Korea and Iran. 
 
According to an intelligence source, the Iranian visitors consisted 
of officials of the Atomic Energy Agency and Revolutionary Guard. 
The Revolutionary Guard, which is the elite force of Iran, is 
believed to be deeply involved with the development of ballistic 
missiles. Colonel- class officers were in the delegation to the 
DPRK. 
 
The visit was at the invitation of the DPRK, and the Iranians stayed 
for around a week, observing the nuclear test on May 25. The 
Revolutionary Guard officers also visited the military demarcation 
line with the ROK and North Korean military facilities on the Sea of 
Japan coast, getting a tour of the DPRK military's preparations for 
emergencies. 
 
The navy of the Revolutionary Guard allegedly also observed North 
Korean patrol boats' crossing the Northern Limit Line, which is the 
military demarcation line, in the Yellow Sea to intrude into South 
Korean territorial waters on June 4. 
 
The above intelligence source suggested that the purpose of the 
intrusion "might have been to show the Iranians the ROK military's 
reaction." He pointed out that his reason for this belief is because 
five Revolutionary Guard speed boats approached a U.S. military 
vessel in the Strait of Hormuz at the mouth of the Persian Gulf in 
January 2008, and "the Iranian visitors are believed to have studied 
whether the method of small boats encroaching on enemy ships would 
apply to North Korea." 
 
This source also revealed that "the delegation met North Korean 
Foreign Minister Pak Ui Chun and other senior DPRK government 
officials." The DPRK and Iran are in conflict with the U.S. and the 
 
TOKYO 00001427  004 OF 014 
 
 
international community over their development of nuclear arms and 
ballistic missiles. It is believed that they exchanged views on 
negotiation methods and other matters. 
 
Comments from the Iranian Embassy in Japan: 
 
"We strongly deny reports about technical cooperation and exchange 
of delegations of experts between the Islamic Republic of Iran and 
North Korea in the area of nuclear technology. We also deny reports 
of cooperation between the two countries in the development of 
missiles and nuclear arms. Iran's energy policy based on nuclear 
activities is legitimate and is authorized under the Nuclear 
Non-Proliferation Treaty. Such activities are also conducted under 
the monitoring of the International Atomic Energy Agency." 
 
5) China agrees with Japan, U.S. on implementing UNSC resolution on 
North Korea, cooperating with policy to apply certain measure of 
pressure 
 
NIKKEI (Page 6) (Slightly abridged) 
June 25, 2009 
 
Ken Sato, Beijing 
 
The Chinese government held separate meetings with the Japanese and 
U.S. governments in Beijing on June 24 and agreed on implementing 
the UN Security Council (UNSC) sanction resolution against North 
Korea's second nuclear test. The PRC has thus demonstrated its 
position that North Korea's possession of nuclear arms is 
unacceptable and that it will apply a certain measure of pressure, 
although it also stressed the importance of engaging in dialogue. 
There is still a gap between China and Japan, the U.S., and the ROK 
on conducting cargo inspections of ships entering and leaving the 
DPRK, so it is not completely clear how far the "pressure" policy 
will be implemented. 
 
Japan and China held a vice ministerial level strategic dialogue. 
Vice Foreign Minister Mitoji Yabunaka headed the Japanese 
delegation, while Vice Minister Wang Guangya and other officials 
participated from the Chinese side. Both sides agreed that "North 
Korea's possession of nuclear arms is absolutely unacceptable." They 
confirmed the implementation of the UNSC resolution and agreed on 
working for a solution through the Six-Party Talks on the DPRK's 
nuclear issue. 
 
Japan appears to have asked the PRC to implement the sanctions 
without fail, in order to make the UNSC resolution effective. After 
the meeting, Yabunaka told reporters that, "The Japanese side said 
that both sides have great responsibility at this critical juncture, 
and we could sense that (China feels the same way) from their 
statements." 
 
In addition, the methodology for engaging in dialogue with the DPRK 
from now on was discussed. Japan asked: "Is the Six-Party Talks good 
enough? Is there not a need to also try new approaches?" conveying 
its belief that there is a need to consider a new response based on 
the Six-Party Talks. Wang reacted cautiously. He said: "We need to 
work on this carefully." 
 
Meanwhile, the U.S. and China held two days of vice ministerial 
level defense talks. While details of the discussions are 
unavailable, it is believed that the U.S. side asked for cooperation 
 
TOKYO 00001427  005 OF 014 
 
 
in implementing the UNSC resolution, and China consented to a 
certain extent. 
 
Japan, the U.S., and China are in agreement on blocking the transfer 
of nuclear and missile-related materials and preventing a third 
nuclear test and further long-range missile launches by North Korea 
through the UNSC resolution. This is the reason why the PRC 
government has tightened import and export control with North 
Korea. 
 
However, the situation is more complex with regard to specific 
sanction measures. According to Reuters, Ma Xiaotian, deputy chief 
of the general staff of the People's Liberation Army, stressed at a 
news conference after the U.S.-China talks the importance of 
resolving the problem through dialogue. This can be taken to mean 
that China will approach ship inspections, which the U.S. is keen 
on, cautiously. 
 
The June 24 issue of the PRC paper Huanqiu Shibao carried an 
analysis by air force colonel Dai Xu claiming that the reason why 
the U.S. is urging China to implement the sanctions is because "it 
wants to use the North Korean nuclear crisis to drive a wedge 
between China and North Korea." China is expected to steer its 
course shrewdly while maintaining its influence over the DPRK for 
the foreseeable future. 
 
6) Japan-China dialogue: Path to resuming Six-Party Talks not in 
sight; Agree not to allow North's possession of nuclear weapons 
 
ASAHI (Page 4) (Abridged) 
June 25, 2009 
 
Makoto Igarashi, Beijing, Toru Higashioka 
 
Administrative Vice-Foreign Minister Mitoji Yabunaka conducted a 
"Japan-China dialogue" with his Chinese counterpart Wang Guangya in 
Beijing on June 24. As a result, they confirmed the basic principle 
that the two countries would not allow the possession of nuclear 
weapons by North Korea and that they would implement a UN Security 
Council sanctions resolution. Although they also agreed to aim at a 
solution within the framework of the Six-Party Talks, they have yet 
to draw up a course to bring North Korea back to the negotiating 
table. 
 
At the outset of the meeting, Yabunaka said: "Japan and China are in 
a relationship to cooperate in addressing international matters. The 
issue of North Korea is at a critical phase in East Asia." Yabunaka 
thus urged China, which has strong influence over North Korea and 
serves as chair of the Six-Party Talks, to address the matter in a 
responsible manner. 
 
In applying greater pressure or searching for a dialogue, China 
always has held the key. A system that will not allow the North to 
backpedal on its nuclear abandonment pledge is necessary, according 
to a senior Foreign Ministry official. Yabunaka explained to Wang 
his stock argument that the Six-Party Talks needs a new approach. 
 
But no concrete steps are in sight. An idea is afoot in the United 
States and other countries to hold talks among the five countries 
excluding North Korea. After the talks, Yabunaka said to reporters, 
"For today, the idea was to basically place importance on the 
Six-Party Talks." A Foreign Ministry official said, "China might not 
 
TOKYO 00001427  006 OF 014 
 
 
like the idea of driving the North to a tight corner in a 
five-to-one format." 
 
The Chinese side indicated that the resumption of the Six-Party 
Talks will require substantial efforts. Wand also reportedly 
expressed concern about the argument in Japan to possess 
capabilities to attack enemy bases. 
 
7) U.S.-DPRK talks needed for a breakthrough: Jack Pritchard 
 
YOMIURI (Page 4) (Full) 
June 25, 2009 
 
The following is a recent interview covering North Korea with Jack 
Pritchard, who served as U.S. special envoy for Korean Peninsula 
peace: 
 
North Korea is now facing serious domestic problems, such as 
installing a regime to succeed Kim Jong Il, and that country 
therefore cannot make bold policy changes or concessions. For the 
time being, the United States and China and other countries will 
have to wait for North Korea to respond to the United Nations 
Security Council's resolution on sanctions. 
 
The six-party process is now already dead. North Korea has not shown 
interest in returning to the Six-Party Talks. We should now create a 
new framework involving North Korea and should make a drastic review 
of the themes. It would be better to discuss not only how to get rid 
of nuclear development that uses plutonium but should also discuss 
enrichment uranium programs, nonproliferation, and domestic economic 
reforms. In that process, the abduction issue should be separated. 
From an objective point of view, arguments over the abduction issue 
have made if further difficult to resolve the nuclear problem. I 
hope Japan will return to the time when Japan and North Korea 
addressed this problem on the occasion of the first summit of the 
two countries' leaders in 2002, and I want Japan to consider this 
point well. Of course, it is up to Japan to decide on this matter. 
 
When exploring a new framework, the United States and North Korea 
would have to hold bilateral talks. The Obama administration has 
advanced its North Korea policy as compared with when North Korea 
launched a long-range ballistic missile in April. While leaving a 
point of contact for dialogue, the Obama administration has been 
realistically responding, with containment and punishment combined 
at the United Nations. This is contrasting with the Bush 
administration that only chose between dialogue and containment. 
It's a remarkable progress. The Obama administration would focus 
mostly on nonproliferation. 
 
(This interview was held by Keiko Iizuka, deputy chief of the 
Yomiuri Shimbun's Political Section and guest researcher at the 
Brookings Institution.) 
 
8) How will China's rise affect the Japan-U.S. alliance? 
 
SANKEI (Page 5) (Full) 
June 25, 2009 
 
The conservative private think tank Japan Institute for National 
Fundamentals (JINF) (president, journalist Yoshiko Sakurai) held a 
report meeting in Tokyo on the evening of June 24 on "The Rise of 
China and the Future of the Japan-U.S. Alliance" by its delegation 
 
TOKYO 00001427  007 OF 014 
 
 
which visited Washington in April. 
 
JINF Vice President Tadae Takubo pointed out: "President Obama says 
China is 'neither an enemy nor an ally.' At present, the U.S. and 
China confront each other militarily, but are closely linked 
economically. If China ceases to be an enemy of the United States, 
the character of the Japan-U.S. alliance will either have to change 
or the alliance will become unnecessary." 
 
JINF chief research Yasushi Tomiyama warned that: "Japan is paying 
attention mostly to North Korea's missiles, but China's mid-range 
ballistic missiles and cruise missiles targeting Japan are even more 
dangerous. The Chinese military has units developing computer 
viruses. In an emergency, it is poised to attack not only military 
facilities, but also private companies." 
 
9) House panel OK's anticluster relevant bill 
 
MAINICHI (Page 1) (Full) 
Eve., June 24, 2009 
 
The House of Representatives Economy, Trade and Industry Committee 
met this morning to deliberate on a cluster bomb ban bill, which 
prohibits Japan from possessing and using cluster munitions. The 
committee approved the legislation. 
 
The Diet, in both of its lower and upper chambers, had ratified the 
cluster bomb ban treaty by June 10. The bill is a relevant 
legislative measure specifying the treaty's restrictions. This 
legislation prohibits Japan from manufacturing, storing, and using 
cluster munitions, and it also stipulates that the cluster munitions 
currently in the Self-Defense Forces' possession should be abolished 
within eight years' time after the treaty comes into effect. 
 
10) U.N. official: Japan's ratification a "good precedent" 
 
MAINICHI (Page 1) (Abridged) 
Eve., June 24, 2009 
 
Maxwell Kerley, 57, director of the United Nations Mine Action 
Service (UNMAS), overseas U.N. activities for removing unexploded 
cluster munitions and landmines that have caused civilian 
casualties. Kerley, in a Mainichi Shimbun exclusive interview with 
him yesterday, emphasized the importance of creating an 
international framework to heighten each country's capability to 
remove unexploded bombs. In addition, Kerley highly appreciated 
Japan's early ratification of the Cluster Bomb Ban Treaty (Oslo 
Treaty), saying Japan showed a good precedent. He indicated that he 
would push for the signing and ratification of the treaty and make 
efforts to create an environment where cluster munitions cannot be 
used. 
 
"It's already impossible to use such bombs without being blamed 
severely in the international community (since the treaty is now in 
place)," Kerley noted. "The treaty is working well (before it comes 
into effect)," he added. Cluster munitions are "immoral weapons that 
injure innocent citizens" and the United Nations will take every 
possible opportunity to work on every country to join the treaty," 
he said. 
 
Meanwhile, the United States, China, Russia, and other countries 
that possess a large number of cluster bombs have yet to join the 
 
TOKYO 00001427  008 OF 014 
 
 
treaty. Some sources are therefore raising questions about its 
effectiveness. In this regard, Kerley noted a challenge, saying: "It 
is necessary to prove (to these countries) that even in the case of 
alternative weapons that leave no unexploded bombs, there are no 
security concerns and similar effects are available." 
 
Kerley underscored the significance of international efforts to 
heighten each victimized country's capability to remove unexploded 
bombs with the United Nations extending a helping hand. 
 
11) Japan-South Korea working-level EPA talks to be resumed 
 
NIKKEI (Page 1) (Full) 
June 25, 2009 
 
Shimao Ojima, Seoul 
 
Tokyo and Seoul have decided to hold a first working-level meeting 
by deputy director generals on July 1 in Tokyo with the aim of 
resuming talks to sign an economic partnership agreement (EPA). The 
talks have been suspended since November 2004. Prime Minister Taro 
Aso and South Korean President Lee Myung Bak are expected to agree 
to resume the talks at their summit on June 28. They will also 
likely decide to launch bilateral nuclear power agreement in July. 
 
Japan-South Korea EPA talks came to an impasse over the abolition of 
tariffs on agricultural and industrial products. A division 
director-level preparatory meeting for resuming the talks took place 
twice last year. Although both countries at the summit meeting in 
January agreed to speed up efforts to resume the EPA talks, they are 
having difficulty coordinating agenda items. As such, the leaders of 
both countries will work to find a breakthrough in the stalemate, by 
deciding to upgrade the level of preparatory meetings. The envisaged 
meeting will be joined by the deputy director general of the Asian 
and Oceanian Affairs Bureau of the Foreign Ministry from Japan and 
the deputy director general of the Foreign Affairs and Trade 
Ministry FTA Bureau from South Korea. 
 
12) View that Diet dissolution to come after Tokyo assembly election 
gaining influence in ruling camp 
 
MAINICHI (Page 5) (Full) 
June 25, 2009 
 
Prime Minister Taro Aso yesterday instructed Liberal Democratic 
Party Secretary General Hiroyuki Hosoda, New Komeito Secretary 
General Kazuo Kitagawa and other senior ruling party members to 
enact all key bills on the Diet table during the current Diet 
session. Aso told them in Tokyo: "I want you to make utmost efforts 
to pass all remaining bills," including a bill to reform the 
Japanese public service system, deliberations on which will start in 
the House of Representatives today, and a special measures bill to 
authorize inspections of ships from and to North Korea. 
 
The senior ruling party members agreed to Aso's suggestion. There is 
a growing view in the ruling camp that the government may dissolve 
the Lower House after the Tokyo metropolitan assembly election on 
July 12 and hold a general election in late August or later. 
 
In the meeting yesterday, Aso renewed his resolve to formulate a set 
of budgetary request guidelines for the fiscal 2010 state budget in 
late June and to maintain a freehand concerning dissolution of the 
 
TOKYO 00001427  009 OF 014 
 
 
Lower House. One participant said: "Diet dissolution on the 2nd 
(August) is now inconceivable. I think the prime minister will make 
a decision after the Tokyo assembly election." Given that enacting 
the civil service reform in the ongoing Diet session is viewed as 
difficult, Aso is expected to seek the best timing for Diet 
dissolution, while carefully watching moves by the Democratic Party 
of Japan. 
 
In reference to the Tokyo assembly election campaign, Aso said: "Our 
candidates are doing well." Participants confirmed the goal of 
securing a majority by the ruling parties. By lowering the line of 
victory or defeat from their initial goal of the Liberal Democratic 
Party remaining the dominant political force, they are trying to 
hold in check moves to oust Aso that are expected after the Tokyo 
assembly election. 
 
Speaking before reporters after the ruling camp's meeting yesterday, 
Hosoda indicated that the ship inspection legislation would not be 
enacted until July 12. Given this, some lawmakers anticipate the 
Lower House election would take place on August 2, at the earliest, 
but this possibility has decreased, and the view of the election on 
Aug. 30 or later is floating. 
 
In a meeting of the Lower House's Account Settlement administrative 
Management and Inspection Committee held yesterday prior to the 
meeting of senior ruling party members, Aso said: "I will make a 
decision at the appropriate time to dissolve the Lower House," 
indicating that his judgment on Diet dissolution will not be 
affected by deliberations on the bills. 
 
13) Idea of shuffling cabinet and LDP executive lineup before Lower 
House election floated 
 
NIKKEI (Excerpts) 
June 25, 2009 
 
An idea of shuffling the cabinet and the executives of the Liberal 
Democratic Party (LDP) between late June and early July was floated 
yesterday in the ruling parties. The aim is to regain party strength 
by appointing persons that are appealing to the public before going 
into the next House of Representatives election. This information 
was revealed by several senior ruling camp members. 
 
The focus of a change in the LDP executives was on the replacement 
of Secretary General Hiroyuki Hosoda, Policy Research Council 
Chairman Kosuke Hori, and General Affairs Council Chairman Takashi 
Sasagawa. There is speculation that the LDP will appoint a person 
who can carry out policy debate against Katsuya Okada, secretary 
general of the main opposition Democratic Party of Japan (DPJ), as 
secretary general. Another aim is to boost the morale of LDP 
lawmakers who have become restless. 
 
The idea of shuffling the cabinet is that the doubling up of more 
than two cabinet posts by Kaoru Yosano and Tsutomu Sato should be 
ended and new leaders should be appointed. There is also speculation 
that the LDP would ask Miyazaki Gov. Hideo Higashikokubaru to join 
the new cabinet. 
 
Following the drop in the support rate for the cabinet of Prime 
Minister Taro Aso due to the replacement of Internal Affairs and 
Communications Minister Kunio Hatoyama, there was strong concern in 
the LDP that the party wouldn't be able to campaign the general 
 
TOKYO 00001427  010 OF 014 
 
 
election as is." There was a growing move to dump Aso. Former Prime 
Minister Shinzo Abe and LDP Election Strategy Council Deputy 
Chairman Yoshihide Suga repeatedly advised Aso to shuffle his 
cabinet. 
 
14) Yosano says at Diet that he was not aware of funneled donations 
 
ASAHI (Page 4) (Abridged slightly) 
June 25, 2009 
 
The Mainichi Shimbun's report that Finance Minister Kaoru Yosano had 
received donations from a futures trader via a political 
organization was taken up at yesterday's meeting of the House of 
Representatives Committee on Audit an Oversight of Administration. 
Before the committee, Yosano explained," I was not aware how (the 
political organization) raised funds." Prime Minister Taro Aso 
indicated to the press corps last night that Yosano has fulfilled 
his accountability. 
 
Yosano emphatically said, "There was no petition from the industry 
regarding legislation." The Prime Minister, too, argued: "(Former) 
Democratic Party of Japan President Ozawa should fulfill his 
accountability first on matters, including a 'voice from heaven' 
pointed out in a trial over a Nishimatsu Construction Co. donation 
case." 
 
Yosano later held a press conference at the Finance Ministry in 
which he indicated that he might return the donations, saying, "I 
would like to make an appropriate decision once (the legal aspect) 
becomes clear." Asked whether he would reinvestigate the case, 
Yosano said: "There there was no room to doubt the good intentions 
behind (the donations). It is presumptuous to ask how the money was 
raised, and I have no plan to ask about it." 
 
Depending on how things turn out, the issue could rock the 
administration. A Liberal Democratic Party (LDP) executive said, 
"It's not really a big issue," apparently in an attempt to quell the 
storm. Meanwhile, the New Komeito fears the repercussions of the 
matter, with one saying, "The next general election is just around 
the corner, so this is bad. We cannot sink with this scandal." 
 
DPJ President Yukio Hatoyama commented: "It's important to offer a 
clear explanation to the public after (Mr. Yosano) thoroughly 
investigates the case himself." Upper House DPJ Diet Affairs 
Committee Chairman Susumu Yanase revealed in a press meeting a plan 
to seek intensive deliberations at the Upper House Budget 
Committee. 
 
15) DPJ launch attack Finance Minister Yosano over issue of 
"political and money" 
 
TOKYO SHIMBUN (Page 2) (Full) 
June 25, 2009 
 
The main opposition Democratic Party of Japan (DPJ) and other 
opposition parties yesterday decided to thoroughly pursue at the 
Diet the allegation that Finance Minister Kaoru Yosano had received 
illegal political donations. The DPJ has been on the defense due to 
a scandal in which Deputy President Ichiro Ozawa's secretary was 
arrested for taking allegedly illegal political donations from 
Nishimatsu Construction Co. The largest opposition party, however, 
intends to launch a counterattack based on the issue of "politics 
 
TOKYO 00001427  011 OF 014 
 
 
and money." 
 
DPJ President Yukio Hatoyama told reporters at party headquarters: 
 
"It is a very serious matter. While serving as cabinet minister, he 
made that Diet replay and received the money. I wonder about his 
remark that there was nothing wrong with a relationship that has 
lasted a long time." 
 
Hatoyama also pointed out: "I don't think Mr. Yosano has fulfilled 
his accountability regarding the allegation. Since the matter 
occurred while he was serving in the minister's post, it is 
important to shed light on the issue." 
 
The Diet affairs chiefs of the DPJ, the Japanese Communist Party, 
and the Social Democratic Party in the House of Councillors 
discussed the matter in the Diet building and agreed to call on the 
ruling parties for holding intensive deliberations at the Upper 
House Budget Committee. 
 
However, there is concern that if the opposition pursues this 
problem, the Nishimatsu scandal will be rekindled. A senior DPJ 
member said: 
 
"There will be no new story about Mr. Ozawa. Since Mr. Yosano 
allegedly received illegal donations while he was serving as 
minister, it is a serious matter involving the administrative 
authority." 
 
16) Yosano's donation scandal directly hits Prime Minister Aso, 
upsetting his scenario to pursue DPJ over Nishimatsu 
 
TOKYO SHIMBUN (Page 2) (Excerpts) 
June 25, 2009 
 
Kei Sato 
 
As if to add insult to injury for embattled Prime Minister Taro Aso 
who is already suffering plummeting support ratings, allegations 
have surfaced that Finance Minister Kaoru Yosano, the number two man 
in the Aso administration, had received donations from a company via 
his political organization. Although Aso does not intend to take the 
matter seriously, his scenario to turn the tables by pursuing the 
major opposition Democratic Party of Japan (DPJ) over a Nishimatsu 
Construction Co. donation scandal is likely to be pressed for a 
revision. 
 
Before the House of Representatives Committee on Audit and Oversight 
of Administration, which was also attended by the Prime Minister, 
Yosano denied the allegations yesterday. The Prime Minister, too, 
indicated to the press corps at the Prime Minister's Official 
Residence (Kantei) that Yosano has fulfilled his accountability, 
saying, "(Mr. Yosano) has offered a thorough explanation." 
 
Yosano, who concurrently serves as finance minister, financial 
services minister, and economic and fiscal policy minister, has been 
playing a leading role in producing economic measures - the Prime 
Minister's top priority - and discussing a consumption tax hike. 
After the resignation of Kunio Hatoyama as internal affairs and 
communications minister, Yosano has been in charge both in title and 
in reality of all domestic political affairs as the number two 
cabinet minister. The Prime Minister has to defend him at all 
 
TOKYO 00001427  012 OF 014 
 
 
costs. 
 
At present, many government and ruling party members hold an 
optimistic view, with one saying, "This will not escalate into the 
question of Mr. Yosano's resignation." 
 
Nevertheless, the outbreak of the question of politics and money 
under the nose of Aso is likely to deal a serious blow to his 
administration. 
 
When the Prime Minister discussed how to respond to the matter with 
Chief Cabinet Secretary Takeo Kawamura and others in the Diet 
building, he stressed the difference with the Nishimatsu case in 
which bid-rigging by the office of DPJ Deputy President Ichiro Ozawa 
is suspected. Aso emphatically said: "This is different from the 
Nishimatsu scandal. This must not be treated in the same way as 
Nishimatsu." 
 
17) Higashikokubaru fuss: LDP's Koga under criticism for exposing 
strained circumstance 
 
TOKYO SHIMBUN (Page 2) (Full) 
June 25, 2009 
 
The request by Liberal Democratic Party (LDP) Election Strategy 
Council Chairman Makoto Koga to Miyazaki Gov. Hideo Higashikokubaru 
to run in the next House of Representatives election on the LDP 
ticket created a stir in the LDP yesterday. 
 
In a general meeting of the LDP House of Councillors members, Kazuya 
Maruyama severely criticized Koga, noting: "The party's popularity 
will not be boosted even if he tries to draw the public's attention. 
I would not mind if he resigns (as the election council chair)." The 
criticism of Koga stems from the fact that his meeting with 
Higashikokubaru exposed the LDP's distress. Maruyama then called on 
Koga at the LDP's headquarters and told him: "What you did has had a 
negative effect on the party." 
 
Meanwhile, LDP Diet Affair Committee Chairman Tadamori expressed his 
annoyance with Higashikokubaru, who had asked for the LDP 
presidential post as a condition for accepting Koga's offer. He 
said: "What he has to do first is to become a Diet member and make 
efforts to reach that goal." 
 
According to an LDP source, an LDP lawmaker consulted by 
Higashikokubaru, who has been enthusiastic about taking part in 
national politics, arranged the meeting between Koga and the popular 
Miyazaki governor. 
 
LDP Secretary General Hiroyuki Hosoda pointed out that Koga himself 
had made a decision on the meeting with Higashikokubaru. He said: "I 
think (Higashikokubaru) was making a joke" about the LDP presidency 
as a condition for his candidacy for the next general election "I 
think he tried to say that he had no intention to run in the 
election in such a way." 
 
Higashikokubaru told reporters in the Miyazaki prefectural 
government office yesterday: "It is not that I will succeed LDP 
President Taro Aso. It means that I would run in the Lower House 
election as a LDP presidential candidate." He added: "I'm very 
serious. I'm not fooling around." He expressed his willingness to 
run in the general election. 
 
TOKYO 00001427  013 OF 014 
 
 
 
18) DPJ reduces funding resources by 4 trillion yen 
 
ASAHI (Page 1) (Abridged slightly) 
June 25, 2009 
 
The Democratic Party of Japan (DPJ) on June 24 firmed up the outline 
of a fiscal resources roadmap, which sets procedures for 
implementing policies and endorses funding resources. The roadmap 
will serve as the core of the party's manifesto for the upcoming 
Lower House election. Funding resources to finance showcase pledges 
will be reduced to between 16 trillion yen and 17 trillion yen, down 
about 4 trillion yen from the original plan drafted last fall. The 
party had originally planned to unify pension systems four years 
after taking the reins of government. However, the roadmap drafted 
this time notes that such a policy will be implemented six years 
after it takes power. A proposal for immediately scrapping the 
provisional gas tax rate has been put on the backburner. A plan to 
reduce the number of municipalities to 300 is also likely to be 
deleted. 
 
The DPJ's fiscal resources argument has been the target of the 
criticism of the ruling parties. It wants to avoid criticism by 
reducing funding resources through a revision to the priority order 
of policy proposals. By doing so, the party has taken into account 
the aspect that the Aso cabinet tapped so-called hidden funds, which 
the DPJ had been relying on as part of funding resources, in 
compiling the large budget. 
 
The party plans to introduce a monthly child allowance of 26,000 yen 
to be implemented in the first year after it takes power. It has 
considered limiting the income of households eligible for the 
benefits, by reducing the amount paid to high-income households. 
Toll-free highways are also likely to be introduced in some areas in 
the initial year. 
 
The roadmap mentions that as funding resources, approximately 5 
trillion yen will be secured in the initial year, about 10 trillion 
yen in the second and third years respectively, and 16 trillion yen 
to 17 trillion yen in the fourth year. Approximately 9.1 trillion 
yen will be secured through the recombination of budgets, the 
introduction of a lump-sum subsidy system for local governments, and 
cuts in wasteful spending. 
 
As public pledges, the party will put up five pillars: (1) 
abolishing amakudari (golden parachute) practices and rooting out 
wasteful spending; (2) assistance for education, including child 
benefits and free high school education; (3) pensions and medical 
services; (4) recognizing the sovereignty of local government; and 
(5) measures to curb global warming. 
 
19) Trade surplus in May dips 12 PERCENT 
 
TOKYO SHIMBUN (Page 2) (Full) 
Evening, June 24, 2009 
 
Preliminary trade statistics (customs clearance basis) for May, 
released on June 24 by the Finance Ministry, found that trade 
surplus determined by deducting imports from exports, marked 299.8 
billion yen, down 12.1 PERCENT  from the same month year before. The 
balance in trade and services came to a surplus for four consecutive 
month, substantively exceeding the previous month's 67.7 billion 
 
TOKYO 00001427  014 OF 014 
 
 
yen. 
 
The balance in trade and services achieved a surplus mainly due to a 
decline in imports as a result of the settling down of crude oil and 
food prices, which had risen sharply. The rate of the decline in 
exports expanded for the first time in three months, albeit 
slightly, due to sluggish exports of steel. Signs of the recovery of 
foreign demand coming to a standstill were seen. 
 
The total value of exports dipped 40.9 PERCENT  to 4.0209 trillion 
yen. Exports of autos, a mainstay export item, dropped 60.9 PERCENT 
, which is smaller than the fall seen in the previous month. 
However, exports of steel declined to 49.5 PERCENT , the 
largest-ever fall since 1980, when statistics that can be used for 
comparison became available. Exports of home electronics and 
products for passenger cars were sluggish, probably reflecting a 
fall in the prices of iron ore. 
 
By region, the rate of a decline in U.S.-bound exports contracted to 
45.4. Exports to Asia, including China, and the Middle East 
expanded. 
 
The total value of imports came to 3.7211 trillion yen, down 42.4 
PERCENT . Imports of crude oil fell 63.1 PERCENT  due in part to the 
appreciation of the yen. Imports of passenger cars from the EU and 
grain from the U.S. also dipped. 
 
ZUMWALT