In this edition of TPR News: Fukuda to reshuffle the Cabinet; New Komeito calls for elections or a new majority leader; the DPJ presidential race heats up; industrial production and exports down, consumer prices up; Keirin involved in shady business; Nova’s Sahashi avoids a second indictment; and more.

Politics

The Diet is out of session, but politics continues apace.

Although the Fukuda Cabinet’s approval ratings have recovered a bit from their sub-20% nadir near the end of the ordinary Diet session, reaching 24% in the latest Asahi poll, the Prime Minister’s position is not looking much more secure, with his coalition partners and some members of his own LDP dropping hints that they don’t have confidence in Fukuda to lead them to victory in the general election that can occur no later than September of next year.

As the LDP’s traditional political machine has been losing steam, the party has depended more and more on the consistent ability of junior coalition partner New Komeito to turn out the votes, which it does with the assistance of Buddhist group Soka-Gakkai, with which it retains strong ties, despite no longer officially being merely the political and religious wings of the same group.

New Komeito has been using this to its advantage. Concerned over the Tokyo Metropolitan Assembly elections due in late June or early July of next year, in which the party stands to do well, New Komeito executives have told the press that Prime Minister Fukuda has to call a snap election this year if he wants to do so on his own terms. If he fails to do so, New Komeito wants him to step down, so the ruling coalition can campaign under the leadership of his successor.

New Komeito does not want the distraction of a general election occurring within the three month period around the Tokyo Metropolitan Assembly elections. The dependence of some LDP members on New Komeito’s vote-gathering apparatus has led them to support this stance, creating yet another rift within the ruling party.

The LDP’s leadership, on the other hand, supports Fukuda and his strategy of amassing small policy victories in the hope of winning public support gradually. LDP executives predict the dissolution of the Lower House to occur after the next budget is passed some time around March of next year.

Under pressure to make some sort of change, the Prime Minister has settled on a Cabinet reshuffle in early August. While some LDP members have said the reshuffle would have to take place Monday or Tuesday, the length of consultations with all interested parties and the subsequent selection process could push the date back past August 18th - after the Obon holidays.

Cabinet reshuffle or not, Fukuda still has to do a lot to win the public over. 60% of respondents to the Asahi poll said he did not show leadership at the G8 Summit in Hokkaido and only 32% thought the Summit’s results were favorable; 53% thought the opposite.

47% thought a consumption tax increase was unnecessary, while only 44% thought it was needed. 65% criticized Fukuda for his wavering stance on when and how to raise the consumption tax, the PM having said he was thinking two or three years in the future, thus utilizing the age-old, universal political safety net of shunting all tough decisions and their consequences into a future in which the speaker is almost certain not to be in power any more.

Support for both the Liberal Democratic Party and the Democratic Party of Japan rose slightly, with the LDP edging out the DPJ 26% to 24%, the first time since April that the ruling party has had a lead.

In international affairs, 71% of respondents opposed the US’s decision to remove North Korea from its list of state sponsors of terrorism, with only 4% thinking it would have a positive effect on relations with Kingdom of Kim.

On the DPJ side, potential candidates are lining up for the party’s presidential election on September 21st. Lawmaker Yukio Edano has expressed a desire to run, but former party Vice President Katsuya Okada has shown reluctance, referring to his failure to lead the party to victory in September 2005 and saying he wasn’t sure that the political environment had changed much since then. Current DPJ President Ichiro Ozawa is expected to run again.

And finally, a bit of scandal; for what would political news be without scandal?

An as-yet unnamed 40-year-old bureaucrat with the Economic Affairs Bureau of the Foreign Ministry left his Tokyo home in June 2006 due to “family matters” and went to a semi-suite at a Tokyo hotel at a rate of over ￥50,000 a night, where he stayed until April 2007 - a stay of about 300 days. When presented with the ￥15 million bill, the bureaucrat balked, refusing to pay.

The hotel is now threatening either a criminal or civil lawsuit. In a letter of apology, the cheeky bureaucrat asked for a discount, reducing the suite rate to the regular room rate, as he was unable to pay the bill.

Oh well, at least he didn’t take beer and candy from a taxi driver.

Business and the Economy

Things are not looking up for Japan’s industrial sector. In June, exports declined year-on-year for the first time in about four years while imports of crude oil, grains, and other products increased. This combination of factors caused the government to fear a trade deficit.

According to Tomomichi Akuta, senior economist at Mitsubishi UFJ Research and Consulting Co., Japan’s trade surplus will hit zero if crude oil prices hit $160 per barrel.

Japan’s exports to the US, it’s largest customer, fell for the tenth straight month, by 15.4%, as the subprime crisis continues to take a toll on the American economy. Japan’s trade surplus with the US was down to ￥444.4 billion in June - the lowest it’s been since May 2001. Exports to Europe also fell, for the second straight month, by 11.2%.

Exports to Asia, previously strong, grew by only 1.5% while exports to South Korea, Thailand, and the Philippines fell.

The only large growth area was exports to oil-rich Russia and Middle Eastern countries, to which exports grew by over 10%.

Japan’s trade surplus overall shrank for the fourth straight month, dropping by 88.9% year-on-year. It stood at ￥138.6 billion in June. Japan Foreign Trade Council Inc. predicted the country’s imports to continue to grow by around 10%.

With the exception of January, when there is a manufacturing hiatus, Japan has had a monthly trade surplus since 1983.

June also saw a drop in industrial production, by a seasonally-adjusted 2% - the first drop in two months. According to METI, the near future was not looking much brighter for manufacturers as exports are expected to continue to fall as the US’s economic woes continue.

The most high-profile dropoff was among car manufacturers, who had a 5.3% drop in production as the American and European markets remained sluggish and exports of subcompacts to Africa and Latin America fell off.

And that’s not all, June also saw a 1.9% year-on-year rise in the consumer price index (CPI) - the largest in 15 1/2 years. This is the ninth month in a row that Japan’s CPI has increased, heavily pushed by energy prices, which have risen by 13.7% year-on-year. (It should be noted that most other countries do not include fuel in the CPI. Japan joins other countries in not including fresh food.)

Interestingly, although the prices of wheat products have skyrocketed - spaghetti up 33.2%, instant noodles up 21.4%, and bread up 18.5% - and the size of Japan’s wheat purchase from the US increased to 84,200 metric tons last month - 13% of the US export total, the government of Japan destroyed thousands of tons of wheat last year.

In somewhat brighter news, the number of foreign tourists visiting Japan in 2007 and the first half of 2008 set a new record, with 8.35 million tourists visiting in 2007 and 4.33 million in the first half of 2008. On the other hand, the number of Japanese tourists going overseas fell by 7.2% in June, the fourth consecutive month to see a drop.

Society

As a makeshift shrine was being removed from Akihabara 49 days after Tomohiro Kato’s stabbing and vehicular homicide spree left seven dead and ten wounded, a 34-year-old woman slashed six passers-by at JR Hiratsuka station, inflicting nothing more than minor injuries, while shouting something unintelligible.

Now onto a bit of sports. Any resident of Japan has surely seen Keirin posters or TV ads. The fast-paced track cycling event has generated a pile of cash in gambling proceeds and made its way to the supposed pinnacle of athletics. As the Olympics approach and Prime Minister Fukuda says his heart is aflutter with anticipation over the Opening Ceremony, some suggestions of unsavory conduct have surfaced.

On Monday, the BBC reported that Keirin organizers paid $3 million to the UCI - the international cycling governing body to halt the removal of the event from the international cycling track championships and to promote the sport as an Olympic event, a status it achieved in late 1996, making its first appearance at the 2000 Sydney Games.

Keirin officials and the former president of UCI have denied that any such payments took place. However, other UCI officials and documents received by the BBC show that a series of payments was made starting in 1996, apparently as part of murky agreement to promote cycling.

Critics of the International Olympic Committee’s event selection process say it is seriously flawed, making it easy for promoters to get their events into the line-up if they are careful and clever enough.

There would, at the least, appear to be some inconsistency with Keirin, a sport still largely known only in one country staying in the line-up, but baseball and softball being removed for lack of international recognition and interest.

In accordance with UNHCR recommendations, and in recognition of criticism that the country keep its doors closed to those seeking shelter, Japan will be the first Asian nation to participate in a UNHCR program under which refugees living in camps can be resettled in third countries. Under the program, Japan will grant refugee status to 30 Burmese refugees currently living in Thailand no earlier than 2010.

Despite being a generous financial donor and a signatory to the U.N. Convention Relating to the Status of Refugees since 1981, Japan grants refugee status to far fewer people than other industrialized nations, accepting just 41 in 2007. Last year, 14 other nations, including the US and EU, gave refugee status to approximately 75,000 people from Iraq, Burma, and other troubled areas.

Japanese representatives will travel to Thailand to interview the potential refugees and weigh their asylum requests based on their intention and ability to settle in Japan. Some critics have said refugess should be chosen on the basis of the degree of danger they’re in at the refugee camps, rather than on how easy it is to move them through the screening process.

The UNHCR estimates that there are about 16 million refugees around the world.

In other immigration news, the number of foreign students who graduated from universities and colleges in Japan then found employment here topped 10,000 for the first time in 2007 with 10,262 students taking jobs, a 24% increase from last year and an increase of well over 300% since 2000. Nationwide, about 30% of foreign students graduating from Japanese universities and colleges stayed in the country after graduation, with students from China making up the lion’s share of those.

The Maritime Self-Defense Force may have to cancel its annual naval parade for the first time since its inauguration in 1954 due to high fuel prices.

High fuel prices have also hindered the Emperor’s exercise of his official duties and led to the government’s acession to demands of striking fishermen for relief. Under the relief plan, the government will provide ￥74.5 billion in assistance to fishermen.

Finally, although former Nova President Nozomu Sahashi remains under indictment for embezzling ￥320 million from reserve funds for corporate workers, the Osaka District Public Prosecutor’s Office has decided not to indict him for failing to pay his employees’ salaries on the grounds that they could not determine whether his failure to pay ￥105 million in salary to 400 employees in September and October was deliberate or the result of the company’s bad financial state.

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