Press Conference by the Chief Cabinet Secretary (Excerpt)

Opening Statement by Chief Cabinet Secretary Suga

CHIEF CABINET SECRETARY SUGA: I would like to give an overview of the Cabinet meeting. The meeting approved six general measures; the promulgation of a treaty; Cabinet orders; and personnel decisions. With regard to statements by ministers, Minister Inada and the Minister for Internal Affairs and Communications made a statement concerning the basic policy on the reform of independent administrative agencies, and other matters. The Minister of Finance made a statement concerning the FY2014 draft budget, and other matters. The Minister for Internal Affairs and Communications made statements concerning the outcomes of the review of government organizations and personnel numbers in FY2014, the FY2014 Tax Reform Outline, and the enhancement of policy evaluations. Prime Minister Abe and Minister Yamamoto made statements concerning measures for the promotion and development of Okinawa. The Minister of Finance made a statement concerning personnel affairs of the heads of special companies. Prime Minister Abe made a statement concerning acting Ministers while Ministers in charge are away on overseas visits, among other matters.

Prior to the Cabinet meeting, the National Security Council held a meeting. Today's meeting reviewed major issues in the build-up of defense capabilities in FY2014, and decisions were made as shown in the distributed material in front of you. Please contact the Ministry of Defense for the details of individual equipment.

Today, following the Cabinet meeting, the Ministerial Council on Monthly Economic Report and Other Relative Issues was held a meeting. This month's assessment of the current state of the Japanese economy was that "it is on the way to recovery at a moderate pace." While this remains unchanged from the previous month, with regard to prices, the Council stated that they "hold firm." In other words, the word "deflation" was dropped, and it was made clear that the economy is no longer in a deflationary situation. Although we have made steady progress towards exiting deflation, we need to continue to closely monitor whether these developments will continue. The Government will promote the path of the "three arrows" of Abenomics without wavering, and make every effort to achieve a full exit from deflation. For more information, please inquire with the Cabinet Office (Economic and Fiscal Management).

Q&As

• The issues related to the budget for the promotion and development of Okinawa
• The issues related to the national budget decided by the Cabinet
• The issues related to South Sudan

REPORTER: In your explanation moments ago, you stated that the Prime Minister mentioned the budget for the promotion and development of Okinawa during the Cabinet meeting. Could you please elaborate upon this, as much as you are able to?

CHIEF CABINET SECRETARY SUGA: Regarding the measures for the promotion and development of Okinawa, the Prime Minister stated as follows during the Cabinet meeting: "Bearing in mind that Okinawa has significant advantages and potential, including its positioning as a gateway to Asia that is growing economically, it is necessary to promote the measures for the promotion and development of Okinawa comprehensively and proactively as a national strategy, in order to ensure that Okinawa becomes a 21scentury model of growth, and plays a leading role in the vitalization of the Japanese economy as a frontrunner in Japan. Investing in Okinawa is investing in the future. To strengthen the initiatives for the promotion and development of Okinawa, a budget in the range of 300 billion yen will be secured every year for the duration of the existing Okinawa Promotion and Development Plan; that is, from FY2012 to FY2021. I ask all relevant ministers for their further efforts and cooperation for advancing the measures for the promotion and development of Okinawa."

REPORTER: When the Prime Minister said "a budget in the 300 billion yen range will be secured every year", how far out into the future was he referring to, when he said "every year"?

CHIEF CABINET SECRETARY SUGA: As I mentioned briefly just now, this will be for the duration of the Okinawa Promotion and Development Plan, from FY2012 to FY2021.

REPORTER: Regarding this same topic, I believe that the Governor of Okinawa has also made strong requests concerning the measures for the promotion and development of Okinawa. Was the latest decision designed to satisfy the requests of the Governor?

CHIEF CABINET SECRETARY SUGA: That is so. Until now, prime ministers at the time; for example, during the time of Prime Minister Hashimoto, referred to the long-term prospects during the ministerial discussions following the Cabinet meeting. However, today was the first time that a Prime Minister made such statements during the Cabinet meeting.

(Abridged)

REPORTER: Today, the budget was decided by the Cabinet. Looking at the overall budget shares for each area, I do not really see many changes in particular, except for social security. While there was integration and so forth in the general account, aside from this, it seems that there are hardly any changes. In your opinion, in which aspects of the budget is the Abe administration's　characteristics?

CHIEF CABINET SECRETARY SUGA: Firstly, with regard to the budget, this is the first full-fledged budget to be compiled since the Liberal Democratic Party (LDP) took control of the government. I believe this is a good budget which has been formulated with the government and ruling parties working as one. In light of this, we are in a situation in which we must tackle simultaneously the two weighty and difficult challenges of economic revitalization and fiscal rehabilitation. While still giving priority to investments in the future and to safe and secure living, we have steadily reduced the amount of the issuance of government bonds to minus 1.6 trillion yen compared to the previous year. For the primary balance, I believe we were able to achieve a 5.2 trillion improvement, exceeding the 4 trillion yen target. The Government hopes to pass the budget as well as the FY2013 draft supplementary budget as quickly as possible, and execute them swiftly to steadily advance the revitalization of the Japanese economy and fiscal rehabilitation.

REPORTER: I have an additional question. I think that the primary balance and the like have improved, helped by the tax increase and the economic recovery. However, in other major areas of the budget, I do not really get the impression that there was any transfer of the budget from one sector to another. What is your view on this?

CHIEF CABINET SECRETARY SUGA: FY2014 is the year in which the consumption tax will be increased by 3%, which will begin on April 1. We must thoroughly eliminate waste, but under these circumstances, to be honest, I believe it is difficult to create a stringent budget, which would be criticized as a deflation budget. Indeed, as we are in the transitional stage of exiting deflation, we must consider policies which truly bestow various incentives as necessary. In light of this, exactly as you say, the scale of the budget is similar to that of the previous year, excluding social security and the integration and reorganization of the special account. However, as I stated moments ago, the outlook in the mid-term plan - the 5.2 trillion yen improvement in the primary balance, exceeding the minus 4 trillion yen target - is the fact. This improvement exceeds the tax revenue increase from the consumption tax increase. In this sense, I believe we were able to achieve natural revenue increases from Abenomics, and at the same time, keep the budget under control without enlarging expenditures.

REPORTER: I have a question concerning Japan's provision of ammunition to the Republic of Korea (ROK)'s forces engaged in peacekeeping operations (PKO) in South Sudan. Opposition parties have raised criticisms, saying that civilian control would lose its substance, or that this is a clear violation of the Three Principles on Arms Exports. What is the Government's rebuttal to these criticisms?

CHIEF CABINET SECRETARY SUGA: I would like to respond to this clearly. First, on Sunday the 22nd, the Government of Japan received requests from the United Nations (UN) in the morning, and from the ROK in the afternoon. In the Republic of South Sudan, the situation has drastically worsened. In Bor, Jonglei State, in the central region of the country, the encampment of the ROK forces taking part in the United Nations Mission in the Republic of South Sudan (UNMISS) has taken in approximately 15,000 people who have become refugees as a result of insurgencies by anti-government forces, among other factors. In this context, the UN requested the Government of Japan to transfer the necessary ammunition in order to respond to this emergency situation and to protect the lives of the personnel of ROK forces, the refugees, and others. It was under an emergency situation that requires prompt action in order to protect the lives and assets of both the personnel in the ROK units and the refugees; and in which among the UNMISS units, the only unit possessing bullets that are interoperable with those used by ROK forces is the Japanese Self-Defense Force (SDF) unit., Given the urgent necessity and the highly humanitarian nature of the situation, the Chief Cabinet Secretary issued a statement that the Three Principles on Arms Exports do not apply to this case, with the provision of ammunition being implemented under the "contribution in kind" framework set forth in Article 25 of the Law Concerning Cooperation for United Nations Peace-keeping Operations and Other Operations.

REPORTER: I have a related question. Regarding this matter, a short while ago, the spokesperson of the Ministry of National Defense of the ROK stated that the ROK temporarily borrowed the ammunition from Japan in order to secure reserves and that it did not have a shortage of ammunition. This seems to be slightly at odds with the explanation of the Japanese Government.

CHIEF CABINET SECRETARY SUGA: As I stated moments ago, the Japanese Government received a formal request from the UN, and also a request from the ROK. That is the complete truth.

REPORTER: Related to this, you said earlier that requests were received from the UN the morning of the 22nd, and from the ROK in the afternoon. Exactly which department in the ROK made the request? Through what sort of agency did the Japanese Government receive the request?

CHIEF CABINET SECRETARY SUGA: It was through the ROK Embassy in Tokyo.

REPORTER: I see. I understand that the provision of the ammunition itself was completed within yesterday, in response to the request. What was the response of the UN and the ROK Government? Did they express appreciation?

CHIEF CABINET SECRETARY SUGA: Naturally, the UN has expressed its appreciation to Japan. As for the ROK, as of now, I understand that the head of the ROK units has expressed appreciation to the head of the SDF unit, following the completion of the handover of ammunition in South Sudan.

REPORTER: Not yet between the two governments?

CHIEF CABINET SECRETARY SUGA: At this time, I have not heard anything from the government.

REPORTER: Regarding South Sudan, as you stated, the situation has worsened drastically. It is also said that the security situation has deteriorated, and the country is falling into a state of internal strife or civil war. As of now, do you have any plans to withdraw or pull out the SDF?

CHIEF CABINET SECRETARY SUGA: First of all, we consider the situation in South Sudan to be unpredictable, and we need to remain vigilant. We have been briefed that anti-government forces have been gaining strength, especially in the rural areas, while is the situation remains calm in Juba. The Government believes that it is necessary to continue to closely monitor the local situation with a sense of tension. With regard to Japan's SDF unit currently in South Sudan, the unit is providing support, including medical services and water supplies for the local residents evacuated to a UN facility in Juba, the capital of South Sudan. We will continue to collect information and carry out operations while fully ensuring the safety of the personnel.

REPORTER: A related question. Conversely, I understand that the UN Secretary-General has been requesting countries to increase their dispatches for the PKO in South Sudan. How does Japan intend to explore this possibility?

CHIEF CABINET SECRETARY SUGA: I myself am not yet aware of those details. It seems that the situation is different, depending on the region.

REPORTER: On this occasion, a Statement by the Chief Cabinet Secretary was issued, and you have said that the contribution in kind was clearly an exceptional case. Is it possible that Japan will provide arms to the UN again, depending on the circumstances?

CHIEF CABINET SECRETARY SUGA: As I stated a short while ago, the decision was made this time based on two points: the highly humanitarian nature of the situation, and the fact that it was an emergency situation.

REPORTER: In that case, depending on the circumstances…

CHIEF CABINET SECRETARY SUGA: As I said, this time, based on these two points, the Government decided to provide a contribution in kind to the UN, under such a framework.

REPORTER: In relation to this matter, you said that this was an exception from the perspective of the Three Principles on Arms Exports, as well as that there was urgency and the situation was of a humanitarian nature. In the medium- to long-term, are you considering the development of laws or the design of system which would make these activities legally possible?

CHIEF CABINET SECRETARY SUGA: I believe that is something which will be discussed in the future. In fact, in December 2011, during the Democratic Party of Japan-led administration, a Statement by the Chief Cabinet Secretary was issued on the guidelines for overseas transfer of defense equipment, etc.; which stated that comprehensive exemption measures will be taken for cases related to contributions for peace and international cooperation. At that time, the premise was between Japan and the recipient country. As this time was the first such request by the UN to Japan, a Statement by the Chief Cabinet Secretary was issued.

(Abridged)

REPORTER: In regard to the stock market, this morning the Nikkei average has recovered to nearly 16,000 for the first time in roughly six years. Could you please share your thoughts on this? Additionally, stock prices have been increasing at quite a fast pace. What do you think is contributing to this?

CHIEF CABINET SECRETARY SUGA: I have been refraining from commenting on stock prices. However, higher is better than lower, as is the case now. But as I have been refraining from making comments, indeed, I would like to refrain now from commenting on daily movements. However, since the inauguration of the administration at the end of last year, the Abe Cabinet has been putting every effort into the "three arrows", by identifying the exit from deflation and economic revitalization as our foremost priorities. As a result, while the economy had a large negative growth last year, after the (Abe) administration took over this year, it seems that very positive growth is beginning to take hold in the Japanese economy. Business confidence varies depending on the region and the type of business that companies are engaged in; but nonetheless, on the whole, including the wide-ranging improvements of businesses, such as small- and medium-sized enterprises, our understanding is that the economic recovery is beginning to expand and be felt by more people. Furthermore, in today's Monthly Economic Report, it was reported that the Japanese economy is no longer in a deflationary situation for the first time in four years. I view that the Japanese economy has made steady strides towards exiting deflation. To ensure that economic recovery continues into next year, it is critically important that the Abe administration steadily pursues the "three arrows" of Abenomics, with the belief that this is the only path to economic recovery.