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Tuesday, August 8, 2000


(1) Second Mori Cabinet passes the one-month mark: Prime Minister Mori unpopular even in the LDP; Kuze's resignation also dampens economy
(2) Government decides to adopt set of guidelines for administrative reform within the year; Specific measures to be worked out for eight areas
(3) Diet panel restarts debate on Japan's constitution; LDP, NCP, LP insist on amendment to Article 9; Komeito panelist also in favor of constitutional reform, JCP wary of 'groundwork'
(4) Interview with Ambassador to the U.S. Shunji Yanai on ex-POWs' reparation campaign over forced labor: Government to back up sued Japanese companies, make efforts to prevent repercussions
(5) Discussion at Nikkeiren seminar heats up over pros and cons of retaining Japanese-style business management that places priority on job security; Easy-going dismissal of employees should be avoided; Employees are deprived of opportunities to take active part
(6) Ten years after the Gulf crisis: Energy resource-deficient Japan still heavily dependent on imported oil; Nuclear plant accident adversely affects atomic power generation

(1) Second Mori Cabinet passes the one-month mark: Prime Minister Mori unpopular even in the LDP; Kuze's resignation also dampens economy
MAINICHI (Page 2) (Excerpts)

August 4, 2000

One month has passed since the second Mori Cabinet was launched on July 4. Over the last month, the Mori Administration handled the Okinawa Summit without mishap. However, the Summit's afterglow was soon clouded by Kimitaka Kuze's resignation as head of the Financial Reconstruction Commission. Figuratively speaking, the plane carrying Prime Minister Mori and his Cabinet ministers, all handpicked by Mori, has been flying dangerously low. The Nikkei Stock Average again closed below 16,000 yesterday on the Tokyo Stock Exchange. Dark clouds are hanging over Japan's economic recovery, which is Prime Minister Mori's one and only hope to survive.
Mori's successor
"I've been doing my best everyday. There have been good things and bad things," said Prime Minister Mori on August 2, looking back over the last month. With an upper house election coming up next year, the environment surrounding Prime Minister Mori is becoming even more severe.
Originally, the Prime Minister considered replacing Kuze with a junior member, such as Nobuteru Ishihara and Yasuhisa Shiozaki, according a Mori aide. But deferring to advice by Policy Research Council Chairman Shizuka Kamei and others, the Prime Minister in the end picked 81-year-old Hideyuki Aizawa.
Prime Minister Mori has been clinging to his job partly because the LDP lacks strong candidates to replace him. Former secretary general Koichi Kato, who is regarded as the prime minister-in-waiting, should also take the blame for pushing Kuze for a Cabinet post in the first place. In addition, Secretary General Hiromu Nonaka and others are collectively responsible since they, too, had a prior knowledge of the payoff scandal involving Kuze.
"The logjam in the LDP" is working favorably for Prime Minister Mori. In fact, there is the following opinion among LDP upper house members: "If we cannot change the pitcher, why don't we change the catcher? If we cannot change the prime minister, let's change the chief cabinet secretary. We can win in the upper house election if a person like (former health and welfare minister Junichiro) Koizumi is named chief cabinet secretary."
The market puts little faith in Prime Minister Mori
Economic trends are a major concern for Prime Minister Mori.
Stock prices dropped sharply in Tokyo yesterday in reaction to trends in the U.S. market. The recent stock market plunge was triggered partly by the growing pessimistic observation that the Government would let general contractors go down in the same way as the Sogo department store chain. Furthermore, the Government's slow decision to transfer the state-controlled Nippon Credit Bank (NCB) augmented the market's anxiety.
In a Lower House Budget Committee session on August 2, Prime Minister Mori announced that the Government would transfer NCB to the Softbank-led consortium as originally planned in a bid to bolster stock prices.
Nevertheless, the view prevalent among market players is: "No matter what he does, the Prime Minister cannot stop the declining stock prices because the market places little trust in him."
(2) Government decides to adopt set of guidelines for administrative reform within the year; Specific measures to be worked out for eight areas
YOMIURI (Page 3) (Excerpt)

August 4, 2000

The government decided yesterday to ready this year a set of basic principles for administrative reform that would be used as guidelines in promoting an administrative reform. The set would include 24 items in eight areas, including special corporation reform, decentralization, and deregulation. In a meeting this morning of the Government's Administrative Reform Promotion Headquarters, Prime Minister Mori will instruct all Cabinet ministers to look into specific measures to take in the eight areas. The Management and Coordination Agency, reflecting these measures, will then flesh out the draft in coordination with other government agencies concerned.
The eight areas are: (1) Smooth implementation of reform, such as reorganization of the central government; (2) promotion of regulatory reform; (3) acceleration of the decentralization process; (4) reform of special corporations; (5) reform of non-profit corporations; (6) reform of the mechanism and operation of the civil servant system; (7) introduction of an administrative evaluation system; and (8) streamlining of administrative work.
(3) Diet panel restarts debate on Japan's constitution; LDP, NCP, LP insist on amendment to Article 9; Komeito panelist also in favor of constitutional reform, JCP wary of 'groundwork'
TOKYO SHIMBUN (Page 2) (Full)

August 4, 2000

On August 3, the House of Representatives Research Commission on the Constitution (chaired by Taro Nakayama) resumed its discussion suspended since the general election. For the rest of the year, the Diet constitution panel is going to discuss "Japan in the 21st century." Along with this theme, the Liberal Democratic Party, New Conservative Party (Hoshuto), and Liberal Party (Jiyuto) insisted on their respective standpoints of reforming the constitution. A member from the New Komeito party voiced an opinion in favor of constitutional revision, a first for that that party.
Taku Yamasaki (LDP): "If we can reach a supra-party consensus on the new modality of Japan as a nation, then it's only natural to expressly stipulate it in Japan's constitution, which is the nation's fundamental law. It means constitutional revision. Sticking to constitutional protection is against the research commission's spirit."
Yamasaki thus suggested the need to lay down a new constitution for a new image of Japan in the 21st century. The point at issue is Article 9, which stipulates Japan's war renunciation.
Takeshi Noda (NCP): "What stands in our way is the problem of national security. The Self-Defense Forces defend our country. I wonder if people in other countries would go to court and claim that the existence of their countries' armed forces that defend their countries is unconstitutional. The present constitution of our country came into effect in the process of Diet deliberations that lasted three months and a half. We have now only a half year or so until the 21st century. We can't say we can make a fine constitution if only to take a lot of time for study."
The LDP also insists on hurrying to reach a conclusion on constitutional amendment.
Susumu Shiota (LP): "We should create a [new] constitution for the 21st century. As a goal of this research commission, it would be better to create a draft of constitutional amendments."
The New Komeito party has advocated upholding Article 9 of the constitution, but its member on the Diet constitutional panel came up with a "personal view" that is flexible about the idea of revising the constitution.
Masao Akamatsu (New Komeito): "Our party's position is to discuss constitutional issues with the change of the times. We should reach a conclusion after 10 years' discussion including five years' study in the research commission. However, if we don't change any part of it after discussion, there's no reason why we had to discuss it in the first place. The ultimate task is what to do about our country's national security. This is the most troublesome problem, but we must not put off our discussion on this issue."
The Democratic Party of Japan (Minshuto) is negative about discussing the constitution itself.
Michihiko Kano (DPJ): "We should discuss how to renew our country. For instance, we need to discuss what we can do for global issues—and for the sake of international peace and our country's national security. In addition, we should also hold discussions from the aspect of newly arising rights in the age of information technology revolution—such as the right to protect privacy, the right to know, and the freedom of expression."
On the other hand, the Japan Communist Party remains wary of the theme itself.
Naoaki Haruna (JCP): "If we are to discuss the modality of a nation apart from its constitution, it would mean that we might have to change our country's constitution to keep up with the way our country should be. This kind of approach would be dangerous as it would lead to laying the groundwork for constitutional revision. In the light of the constitution's spirit and the realities, we should rather look into how to utilize it in Japan's political climate in the 21st century."
The Social Democratic Party (Shaminto) also emphasizes that the present constitution will shine in the 21st century.
Yoko Hara (SDP): "I can speak here as a 25-year-old woman, and postwar Japan has never been involved in warfare—all that thanks to the constitution. In the 21st century, we'll have to create a society that everybody desired at the time the constitution was established."
The research commission will send a delegation to Europe, including Germany and France, on a 10-day schedule from September 10. After looking into facts about each country's constitution, the commission will summon experts from various circles to hear their views regarding the image of Japan in the 21st century. How strong will the trend toward constitutional revision grow?
(4) Interview with Ambassador to the U.S. Shunji Yanai on ex-POWs' reparation campaign over forced labor: Government to back up sued Japanese companies, make efforts to prevent repercussions
SANKEI (Page 3) (Full)

July 29, 2000

Shunji Yanai, Japan's Ambassador to the United States, told the Sankei Shimbun in an interview on July 28 that the Japanese government would stand behind private Japanese companies sued by former prisoners of war (POWs) seeking compensation over forced labor during World War II. Specifically, Ambassador Yanai remarked that the Japanese government would back up those Japanese companies through such measures as providing reference documentation. Concerning the ex-POWs' reparation campaign in such U.S. states as California, the ambassador also indicated that the Japanese government would work on the legislatures of various U.S. states through the Japanese consulates general in the United States to prevent the possible proliferation of such a move to other states.
Ambassador Yanai, taking up a right of claim in the interview, reiterated the Japanese government's standpoint to the effect that the issue has already been settled under the San Francisco Peace Treaty. Next year, the treaty marks its 50th anniversary of signing. Bearing this in mind, the ambassador went on: "We should emphasize the fact that the treaty brought the war to an end, and that Japan and the United States, which once fought against each other, have now built a constructive relationship as closely allied countries."
Ambassador Yanai continued, "This problem is not necessarily a matter of concern for everyone in the United States." However, the ambassador noted that California's extension of a time limit on the right of claim for reparation over wartime forced labor could spread to other U.S. states. Concerning such possible repercussions, the ambassador revealed the government's intention to give explanations to each state.
However, Ambassador Yanai, touching on the propriety of trying to find out a solution to the problem through intergovernmental negotiations, remarked that the two governments cannot discuss anything already settled under a bilateral pact.
Following are the main points of the interview with Ambassador Yanai:
-- What's your view of the present-day Japan-U.S. relationship?
Ambassador Yanai: On the whole, Japan and the United States are getting along well with each other. During last year's consecutive holidays, the late former Prime Minister Keizo Obuchi made a state visit to the United States. The two leaders agreed at that time that our two countries' relationship had never been so good. Basically, our bilateral relationship now remains so good. It's only natural to come across trade and other issues. When we just look at each of the problems, we wouldn't see the forest for the trees. When we take a look at the forest, we find it rich with fresh and evergreen trees. Indeed, there are various problems. However, we've got to solve them at an early stage, and we always should work to raise our two countries' mutual understanding of each other to the level of understanding between America and Europe.
-- Some people point to America's Japan bashing…
Yanai: There's no Japan bashing. I wonder why there's such an impression. I guess that's because there are small problems but there's no big problem (between Japan and the U.S.), and there's no uproar over Japan. I think they might take it for Japan bashing. I would rather say Japan is not in their eyes, and I take it as "no news is good news."
-- Former U.S. POWs sued Japanese companies for wartime compensation over forced labor during World War II
Yanai: In 1952, the San Francisco Peace Treaty went into effect. Under this treaty, Japan and the United States settled their respective rights of claim resulting from World War II. What's become a problem now is reparation for American people who were taken prisoner. Japan, however, has already made compensation in conformity with the San Francisco treaty. Some people in the United States often say Japan did nothing. That's wrong. At that time, Japan agreed to have its assets requisitioned for compensation. Both countries agreed to waive all other rights of claim. In the end, the problem was settled under the San Francisco treaty. This is the Japanese government's standpoint. There's no wrangling between the Japanese and U.S. governments over this matter. However, those former POWs cannot easily forget their pains. So, the problem—now left behind—is how to alleviate their pains. One of the possible approaches for Japan is to reflect on the past and educate future generations well. For instance, there's a statement released by former Prime Minister Tomiichi Murayama, and it includes the United States as well. There's another opportunity. Next year marks the 50th anniversary of the signing of the San Francisco treaty. The treaty ended the war and started a new relationship between Japan and the United States. Our two countries, once hostile to each other, are now allied so closely. The San Francisco treaty created such a positive, constructive relationship. We should lay much emphasis on this fact.
-- In the U.S., a book filled with misunderstandings, The Rape of Nanking, became a best seller. It might prevent Japan and the U.S. from building a positive relationship
Yanai: Regrettably, The Rape of Nanking had a certain impact. That's true. A considerable number of people in California and some other U.S. states have now filed class actions [against Japanese companies]. But this is not a matter of concern to all the American people. Therefore, we don't want the problem to become very big. However, the issue is now on trial. So, we will provide those sued Japanese companies with information and reference materials. If they ask for advice, we will give them advice.
-- Some of those sued Japanese companies are hoping for a settlement through negotiations between the Japanese and U.S. governments.
Yanai: We must not do so, nor should we do so. They don't sue the [Japanese] government, and they know they can't do so. The Japanese and U.S. governments' understanding is that the matter has been settled under the San Francisco treaty. The two governments can't talk about this matter, and it's not a problem of that kind.
-- Is this problem likely to spread all over the U.S.?
Yanai: It has been spreading somewhat, and could start spreading all over. We're now explaining the background of the problem to the government and legislature of each state through the consulates general.
(5) Discussion at Nikkeiren seminar heats up over pros and cons of retaining Japanese-style business management that places priority on job security; Easy-going dismissal of employees should be avoided; Employees are deprived of opportunities to take active part
YOMIURI (Page 8) (Full)

August 4, 2000

Should Japanese companies be kind-hearted or cold to their employees? A summer seminar sponsored by the Japan Federation of Employers' Associations (Nikkeiren) started yesterday in Fuji-Yoshida City, Yamanashi Prefecture. Discussion on the first day was focused on whether Japanese-style business management, which is understood to give consideration to job security over profits and stock prices, really meets employee interests.
Chairman Hiroshi Okuda (chairman of Toyota Motors), who advocates market economy with a human face, warned against easy-going massive dismissal of employees. He noted, "Top management who only think of stockholders' profits instead of the wellbeing of employees and their companies' social responsibility are quasi-corporate managers. They do not deserve to be called top-level executives."
In contrast, Seiichiro Yonekura, who attended the seminar as a lecturer, rebutted, "It is doubtful whether holding excess employees has anything to do with human respect. In many cases, if employees have to leave their companies sooner or later, they are likely to have more opportunities, if they do so at an early stage."
Keizo Yamaji, former president of Canon, (chairman of Japan Tetra Pak), remarked, "The advantage of Japanese-style management is that it has provided rewarding jobs to employees, regardless of their positions. Such an advantage might have been lost after the economic bubble years." He then argued that fostering human resources who would be appreciated in any company would benefit both companies and employees.
Most participants acknowledged the advantages of Japanese-style management. But at the same time, they appeared to be strongly dissatisfied with the present situation. Tadashi Sekizawa, chairman of Fujitsu, underscored, "It is necessary to establish a new worker-employer relationship."
(6) Ten years after the Gulf crisis: Energy resource-deficient Japan still heavily dependent on imported oil; Nuclear plant accident adversely affects atomic power generation
YOMIURI (Page 9) (Excerpts)

August 1, 2000

August 2 marks the 10th anniversary of the 1990 Gulf war crisis. Japan has learned a lesson from the crisis that excessive dependence on the Middle East is highly problematical from the viewpoint of security, and so there is an urgent need to develop other sources of energy supply. In reality, however, Japan is still heavily dependent on oil as an energy source, compared with other industrialized countries. Its reliance on the Middle East as an oil supplier also remains high. Although nuclear power generation has been regarded as a suitable alternative, an adverse wind is building up against it.
Dependent on Middle East
Since the Gulf crisis, Japan has become less dependent in procuring primary energy, including oil. However, oil as a share of all primary energy procurement still tops 50 percent (fiscal 1998). Instead, dependence on the Middle East as a source of oil supply is tending to increase, reaching 84.6 percent in fiscal 1999.
Long-running low crude oil prices following the absence of a major oil crisis after the Gulf crisis perhaps account for Japan's continuing oil-reliant energy policy.
Dependence on crude oil from the Middle East in an excessive way could hinder stable procurement of oil in case of emergencies in that region. There is also concern that if such a situation occurs, "crude oil from the Middle East shipped to Asia, which is expensive by international standard" (Japan Energy and Economy Research Center) would further shoot up.
Arabian Oil lost its oil drilling right in Saudi Arabia in late February. This is another reason why related sources are increasingly concerned about excessive dependence on the Middle East as a source of crude oil supply.
JCO accident
In order to reduce in relative terms Japan's reliance on the Middle East as its main energy supplier, it is absolutely necessary for Japan to promptly shift from oil to alternative energy.
However, a radiation accident that occurred last September at JCO, a nuclear fuel processing company operating at Tokai Village, Ibaraki Prefecture, largely undermined public confidence in nuclear energy, which had been regarded as the prospective energy supply to replace oil.
Finding sites for new nuclear power plants is becoming difficult, faced with opposition from local residents.
The Government is pressed to review its long-term energy supply-demand projection (formulated in 1998), that spells out the construction of 16 to 20 nuclear power plants by fiscal 2010.
The Energy Research Council, an advisory panel to the Minister of International Trade and Industry, is now conducting a review of long-term energy supply-demand projections. It met recently for the first time since the Gulf crisis in 1990. Stable procurement of energy amid the pressing need to construct new nuclear power plants topped the panel's agenda.
Expectations are rising about tapping new environmentally-friendly energy sources, such as solar power. However, in cost-effectiveness terms such energy sources need more development before they can be used on a full scale. It is also a drawback that the supply of such energy sources remains small. MITI has pinned its hopes on natural gas. There is a plan to pipe gas drilled off the course of Sakhalin, Russia, to Japan. Whether this pipeline plan will eventually pays off depends on a future survey.
It is not easy for an energy-poor country Japan to quickly find a breakthrough. The challenge for it would be to find a range of options that balances between conventional energy sources, such as oil, nuclear power, and natural gas, and new energy sources.

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