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Cablegate: Japanese Morning Press Highlights 02/22/07

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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 02/22/07


Index:

1) Top headlines
2) Editorials
3) Prime Minister's daily schedule

Visit of Vice President Cheney:
4) Vice President Cheney, Prime Minister Abe confirm close
cooperation on North Korea, Iraq issues
5) Cheney tells Abe that abduction issue is common challenge for
both governments
6) Cheney and Abe make joint appeal about the importance of the
US-Japan alliance
7) Hardliners like Cheney, Abe finding policy support base crumbling


8) US Deputy Secretary of State Negroponte coming to Japan next
month

North Korea problem:
9) Foreign Ministry negotiator Sasae on six-party agreement:
Disabling North Korean nuclear facilities was next-best step
10) Foreign Minister Aso: Japan may apply even harsher sanctions on
North Korea
11) Aso to seek correction of wording in released US document that
misstates Japan's position on returned remains of abductees from
North Korea

12) Japan wants Russia to enrich its uranium for nuclear power
plants

Defense issues:
13) Government plans to sign pact with US to protect military
secrets

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14) Defense Minister Kyuma mum when asked about leaked military
secrets, citing that case is still under investigation

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15) Environmental assessment at Futenma relocation site to start in
April

Economic agenda:
16) Bank of Japan suddenly raises interest rate, receives mixed
reviews
17) Former State Minister Takenaka critical of BOJ's interest-rate
hike

18) Ruling coalition raises doubts about Ozawa's explanation about
acquiring real estate

Articles:

1) TOP HEADLINES

Asahi: Mainichi: Nihon Keizai: Sankei: Tokyo Shimbun:
Bank of Japan's Policy Board decides to hike key interest rate to
0.5% based on rise in personal consumption; Vice Governor Iwata
opposed; "Unsecured overnight call rate of 0.5% still low," says
Governor Fukui

Yomiuri:
Carbon monoxide death toll caused by Matsushita's gas water heaters
reaches 48; 27 cases in 20 years not made public


TOKYO 00000752 002 OF 011


Akahata:
Fiscal 2007 budget: Japanese Communist Party proposes changing
expenditures to find breakthrough in poverty and social disparity
issues: General Secretary Ichita releases emergency key requests

2) EDITORIALS

Asahi:
(1) Make interest rate hike lead to sustainable economic growth
(2) US vice president: Why didn't he talk to Japanese public?

Mainichi:
(1) Bank of Japan (BOJ) raises interest rate: Steps to normalize
interest rate will continue
(2) Local governments' practice of hoarding slush funds should be
rooted out

Yomiuri:
(1) Interest rate hike: It is necessary to continue to monitor
consumption, price trends
(2) Scandals at TV stations: Effective measures to prevent
recurrence urged

Nihon Keizai:
(1) Interest rate should be normalized with eye on the real state of
the economy

Sankei:
(1) Interest rate hike: Steady step toward normalization of interest
rate needed
(2) Japan-US talks: We welcome Vice President Cheney's statement
regarding abduction issue as common agenda item

Tokyo Shimbun:
(1) Will interest rate hike keep economy on track for full
recovery?
(2) MIC excessively interfering with broadcasting

Akahata:
(1) Japanese Communist Party demands changes in fiscal 2007 budget:
Opt for finding breakthrough in poverty issue

3) Prime Minister's Official Residence (Kantei)

Prime Minister's schedule, February 21

NIHON KEIZAI (Page 2) (Full)
February 22, 2007

10:30
Met Special Advisor Nemoto at the Kantei.

11:00
Met Vice Foreign Minister Yachi.

13:20
Made a thank-you call to a 5th grader at Yamaga Elementary School in
Kumamoto for receiving rice.

13:34
Met State Minister in Charge of Administrative Reform Watanabe.
Followed by Deputy Chief Cabinet Secretary Matoba. Later, met Vice

TOKYO 00000752 003 OF 011


Health, Labor and Welfare Minister Tsuji and others.

14:59
Met Upper House member Shin Sakurai.

15:28
Attended funeral service for former Tokyu Agency President Maeno at
Aoyama funeral home.

16:23
Met Vice Internal Affairs and Communications Minister Ono.

16:34
Met Special Advisor Yamatani. Joined by Lower House member Hideo
Usui.

17:34
Met former Cabinet Security Affairs Office head Sasa, who was
awarded the Seiron Grand Prize at the Akasaka Prince Hotel, and
others.

18:03
Met US Vice President Cheney at the Kantei, with Chief Cabinet
Secretary Shiozaki, US Ambassador Schieffer and others.

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19:18
Hosted a banquet with the vice president at his official residence.

4) Cheney-Abe meeting: Japan, US to cooperate on North Korea, Iraq

ASAHI (Page 1) (Full)
February 22, 2007

Prime Minister Abe yesterday met with visiting US Vice President
Cheney at his office. The two confirmed that Japan and the United
States would continue to cooperate at the six-party talks over the
issue of North Korea's nuclear weapons programs. In addition, Cheney
also stressed that the United States would cooperate with Japan on
the issue of Japanese nationals abducted to North Korea, saying,
"It's a common challenge to resolve the tragedy of Japanese
abductees." Cheney also appreciated Japan's cooperation with the
United States in its war on terror. Abe clarified that Japan would
continue to support the United States.

"Japan and the United States are values-sharing partners," Abe told
Cheney in the meeting. Abe also noted that Japan-US relations are
"rocksolid and irreplaceable," saying, "Our bilateral alliance is
for Asia and the world." He then noted the importance of steadily
realigning US forces in Japan and accelerating bilateral cooperation
on missile defense.

Cheney stressed the importance of global fighting against terrorism
and sought Japan's understanding on the United States' policy, such
as sending US reinforcements to Iraq. Abe replied that Japan would
shore up the United States through the Air Self-Defense Force's
activities (in Iraq) and the Japanese government's official
development assistance (ODA) programs for developing countries.

Abe also explained that Japan is now coordinating to work with a
military-civilian provincial reconstruction team (PRT) that is
developing activities in Afghanistan under the initiative of North
Atlantic Treaty Organization (NATO) member nations.

TOKYO 00000752 004 OF 011

Meanwhile, referring to the issue of North Korea's nuclear arsenal,
Cheney said Japan was an "important partner" of the United States at
the six-party talks. Abe stressed the gravity of the abduction
issue, and Cheney showed "deep understanding." This can be taken as
indicating the United States' understanding on Japan's stance of not
providing energy aid to North Korea without seeing progress in the
abduction issue.

In addition, Abe and Cheney voiced concerns about China's "unclear,
sudden military expansion," and they agreed to keep tabs on China's
future improvements in its capability of carrying out space
operations, such as its recent destruction of a satellite in a
test.

Earlier in the day, Foreign Minister Aso also met with Cheney. In
the meeting, Aso asked the United States to continue its sanctions
on North Korea, suggesting the need to continue pressuring North
Korea for specific steps to denuclearize North Korea.

5) Cheney, Abe reconfirm cooperation to convince North Korea to
renounce nuclear programs; Define resolving abduction issue as
common task

YOMIURI (Page 2) (Full)
February 22, 2007

Prime Minister Abe reconfirmed with United States Vice President
Cheney at the Prime Minister's Official Residence yesterday that
Japan and the US would work together to convince North Korea to
renounce its nuclear weapons and programs. Cheney expressed his
understanding over Japan's stance over the issue of North Korea's
past abductions of Japanese citizens. Abe said, "We would like to
affirm the importance of the Japan-US alliance and boost it for the
sake of the world and Asia." The vice president replied, "I assure
you that the US commitment is staunch." Cheney and Abe then agreed
on the importance of strengthening cooperation among the US, Japan
and Australia in the Asia-Pacific region.

On the abduction issue, Vice President Cheney reiterated that the US
would cooperate to resolve the issue as "a common task of Japan and
the US." Specifying the six-party agreement over North Korea's
nuclear issue as "a step forward in the right direction," Cheney
indicated that the key lies in what response North Korea will make.

Cheney extended his thanks to Japan's contributions to the US-led
fight against terrorism. In response, Abe indicated a positive
stance about having Self-Defense Force troops participate in
provincial reconstruction teams (PRT) in Afghanistan.

6) Japan, US play up importance of bilateral alliance

YOMIURI (Page 2) (Full)
February 22, 2007

In US Vice President Dick Cheney's meetings with Prime Minister
Shinzo Abe, Foreign Minister Taro Aso and other government
officials, much time was spent on the North Korean issue, to which
the Abe government has attached high priority. Both sides were eager
to play up the importance of the Japan-US alliance, which has been
somewhat strained by Defense Minister Fumio Kyuma's remarks critical
of the US government's policy.

TOKYO 00000752 005 OF 011

Cheney pledged anew US support for Japan on the North Korea
abductions, and he refrained from referring to the Iraq issue. Ahead
of his departure this morning for Australia, the vice president will
meet the parents of Yokota Megumi, a Japanese abducted to North
Korea. Some observers see Cheney's Japan visit indirect support for
Abe, as well as a possible warning against conciliatory moves toward
Pyongyang in the United States.

It is viewed that Cheney, who has backed the Bush administration as
a key representative of the conservative group, is critical of the
agreement reached at the recent six-party talks to provide energy
aid to North Korea. The vice president's move to join hands with the
prime minister seems likely to be aiming at throwing a wet blanket
over policy moves in the State Department, which is desperate for
diplomatic results on North Korea in order to make up for the policy
failure in Iraq.

Meantime, some Japanese government officials were initially
concerned that the six-party agreement stipulated that the US would
start the process of removing North Korea from its list of
terror-sponsoring states. Tokyo was also concerned that a meeting
between the vice president and the defense minister was not carried
out. Japanese government officials are now praising the remarks in
meetings by Cheney, who also serves as president of the Senate and
is now traveling to Japan and Australia during the congressional
recess. "Relations between the US and Japan have never been better
than they are today," Cheney reiterated.

7) Meeting between prime minister, US vice president: Footings of
Japan, US hardliners crumbling, buffeted by Iraq, North Korea
issues; Seek way out by playing up honeymoon aspect of relations

ASAHI (Page 3) (Excerpts)
February 22, 2007

"The US-Japan alliance is in its best shape ever," stressed US Vice
President Cheney, a representative hardliner in the Bush
administration, while standing on the deck of the US Navy carrier
Kitty Hawk at Yokosuka Navy Base. His words sought to further
strengthen bilateral alliance ties. Prime Minister Abe, as well, in
his first meeting with Cheney in two years, played up the unshakable
aspects of the alliance relationship, and the words of the two
hardliners resounded against each other. However, the hard-line
stances on Iraq policy and the North Korea issue have begun to show
signs of faltering. The reunion of the two leaders could not mask
the uncertainty about their respective policy footing.

Vice President Cheney at the start of his meeting with Prime
Minister Abe repeated the words "alliance relationship" six times.
The meeting started with words of praise from the two leaders for
the alliance.

The vice president supported Japan's position on the abduction
issue. Prior to the meeting, the prime minister stressed to the
press corps, "I would like to explain well how important the
abduction issue is in my cabinet." The vice president backed his
thinking. He will meet this morning with Shigeru Yokota, the
representative of the family association of abducted victims, in an
effort to wipe away any remaining concerns in Japan about the US'
diplomacy toward North Korea. The vice president, who rejects the
notion of direct dialogue between the US and North Korea, seems to

TOKYO 00000752 006 OF 011


be skeptical about the six-party agreement. He found commonality
with the prime minister, who chose the option of not providing
energy aid to North Korea unless there is progress on the abduction
front.

8) US Deputy Secretary of State Negroponte to come to Japan next
month

MAINICHI (Page 2) (Full)
February 22, 2007

Hiroaki Wada, Washington

A spokesman of the United States Department announced on Feb. 21
that new Deputy Secretary of State Negroponte would tour Japan,
China, and South Korea on March 1-3 to discuss North Korea's nuclear
programs and other issues. Negroponte will make an overseas trip for
the first time after assuming the current post. It was reported that
the deputy secretary would visit North Korea, but the spokesman
strongly denied the report.

9) Sasae: Disabling North Korean nuclear facilities was next-best
step

TOKYO SHIMBUN (Page 2) (Abridged slightly)
February 22, 2007

The consensus document adopted in the latest six-party talks
obligating North Korea to disable its nuclear facilities was the
"second-best" step taken under Pyongyang's pressure for
concessions.

Foreign Ministry Asian and Oceanian Affairs Bureau chief Kenichiro
Sasae, Japan's chief negotiator in the six-party talks revealed this
before the Lower House Foreign Committee yesterday.

About the North Korean nuclear facilities, Sasae said:

"It is clear that the 'dismantlement' is the final accord in the
(September 2005) joint statement. North Korea did not agree to total
denuclearization, and we had to agree to disabling the nuclear
facilities as the next-best step, thought it is an interim
measure."

In 1994, Washington and Pyongyang adopted the Agreed Framework
obligating North Korea to freeze its nuclear facilities. Despite
that, North Korea has resumed nuclear development.

Learning bitter lessons from this, the US in the latest six-party
talks strongly opposed to "freezing" nuclear facilities, which might
be lifted. As a result, the parties adopted the joint statement
mandating the North to shut down and seal its nuclear facilities in
Yongbyon within 60 days. As the next step, the statement also
obligated the North to disable its facilities.

Sasae's statement indicated that the agreement reached in the last
six-party talks was a product of compromises by both the US, which
sought a step stricter than freezing the nuclear facilities, and
North Korea, which opposed to dismantlement.

"Disabling" has no set definition in the area of nuclear
nonproliferation. As such, Sasae said: "We will have to determine

TOKYO 00000752 007 OF 011


what 'disabling' specifically means."

North Korea regards the promised provision of 1 million tons of
heavy fuel oil as an incentive in return for temporarily disabling
its nuclear facilities. The next round of the six-party talks
planned for March is expected to run into difficulties over the
definition of "disabling."

10) Aso suggests additional sanctions on North Korea depending on
progress on abduction issue

TOKYO SHIMBUN (Page 2) (Full)
February 22, 2007

Foreign Minister Taro Aso suggested yesterday that Japan might take
additional sanction measures depending on how North Korea responds
to the abduction issue, saying, "Japan might as well take additional
sanction measures against the North if it failed to exhibit
sincerity (in dealing with the issue of Japanese abducted by that
country)." Aso was speaking before the Lower House Foreign Affairs
Committee about the establishment of a Japan-North Korea working
group, which was agreed upon in the previous six-party talks.

Aso also said: "North Korea might show sincerity. In that case, we
might soften (the sanctions)."

Meanwhile, Prime Minister Shinzo Abe told the press corps at his
official residence: "We will make efforts to bring progress to the
abduction issue through the working group. Unless there is progress,
North Korea's situation will not become better."

11) Aso to urge US to correct its report on "controversy between
Japan, North Korea over remains"

SANKEI (Page 5) (Abridged slightly)
February 22, 2007

A US State Department document on the issue of Japanese nationals
abducted by North Korea reads: "Although North Korea has returned
remains of two Japanese nationals to Japan, controversy remains."
Foreign Minister Taro Aso revealed a plan before the Lower House
Foreign Affairs Committee yesterday to urge the United States to
revise this statement. In 2004, North Korea presented Japan with
purported remains of Megumi Yokota and another abductee. However,
the Japanese government has concluded from subsequent DNA testing
that the remains were not authentic. Tokyo's position is that there
is no controversy over the remains.

The document in question is the US annual report titled "Patterns of
Global Terrorism" that came out last April. It is an official US
report identifying North Korea as a state sponsor of terrorism,
citing the abduction of Japanese nationals as a reason.

In the committee session, Minshuto (Democratic Party of Japan)
lawmaker Akihisa Nagashima criticized the report, saying, "(The
annual report) reads as if Japan and North Korea were locking horns
over the fake remains." The report also says that five abductees
returned to Japan in 2003 instead of October 2002. Nagashima
referred to this as a simple factual errir.

In response, Aso said: "I saw the document for the first time. We
will deal with the matter properly."

TOKYO 00000752 008 OF 011

12) Japanese government negotiating with Russia to consign uranium
enrichment

MAINICHI (Page 2) (Full)
February 22, 2007

The Japanese government has launched negotiations with the Russian
government to consign to Russia the enrichment of uranium that was
recovered from spent fuel rods, according to informed sources
yesterday. Enriched uranium will be used as fuel in nuclear power
plants in Japan. Since enriched uranium could be used to produce
nuclear weapons, Japan has proposed, as the condition for reaching a
deal, to sign a bilateral nonproliferation accord, including an
inspection by the International Atomic Energy Agency (IAEA). But
Russia has indicated disapproval. It is to be seen whether an
agreement can be reached in the negotiations.

To produce nuclear fuel for nuclear power plants, enriching natural
or recovered uranium is necessary. Because Japanese facilities do
not have enough capacity to enrich uranium, more than 90% of total
domestic demand has been consigned to plants overseas. Since Japan
has given priority to enriching natural uranium, about 6,500 tons of
recovered uranium has been stored in Britain.

13) Gov't eyes military info security pact with US

YOMIURI (Page 2) (Abridged)
February 22, 2007

The government decided yesterday to enter into a general security of
military information agreement (GSOMIA) with the United States. The
GSOMIA is a comprehensive arrangement intended to protect defense
secrets. This will make it possible for Japan to exchange highly

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confidential intelligence with the United States. The two countries

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are expected to reach a substantive agreement in a two-plus-two
foreign and defense ministerial meeting of their intergovernmental
security consultative committee in March and sign a GSOMIA pact
within the year.

14) Kyuma remains mum about probe into info leakage

YOMIURI (Page 2) (Full)
February 22, 2007

Defense Minister Kyuma, sitting in on the House of Representatives
Special Committee on Iraqi Reconstruction Assistance in its meeting
yesterday, stated that he could not clarify anything about the issue
of an Air Self-Defense Force colonel's alleged leakage of
information. In this case, the ASDF colonel, once posted to the
Defense Intelligence Headquarters at the Defense Ministry, is
alleged to have leaked in-house information to a Yomiuri Shimbun
reporter. The colonel is suspected of having violated the
Self-Defense Forces Law, and SDF Police Command authorities are now
looking into the case. "This matter is under investigation, so I
cannot reveal anything about the investigation," Kyuma stated before
the committee. "If the defense minister judges that something should
be classified, there may be an arbitrary manipulation of
information," a committee member asked. In response to this
question, Kyuma replied: "I'm not saying we will make a secret of
everything. The defense minister is not the only one to classify
(defense secrets). The defense minister is to classify information

TOKYO 00000752 009 OF 011


after consulting with the Self-Defense Forces and the Defense
Ministry's internal bureaus, so I'd like to ask you to trust us."
With this, Kyuma sought understanding.

15) Research on environment around Camp Schwab to start in April;
Local residents' backlash inevitable

YOMIURI (Page 4) (Full)
February 22, 2007

In order to break the impasse in negotiations on the relocation of
the US Marine Corps' Futenma Air Station to the coast of Camp
Schwab, the government has decided to begin in April research on the
present environment of the costal area even without the consent of
local municipalities. The local governments' reaction against the
central government will unavoidably become stronger. Therefore the
negotiations on the base relocation will likely be thrown into
confusion.

The main agenda in the negotiations is whether to change the
government plan to build V-shaped runways on the coast of Camp
Schwab. The government has made efforts to seek understanding for
the implementation of an environmental impact assessment through
meetings between the government, Okinawa Prefecture, and four
affected municipalities. The talks between the government and
Okinawa have encountered difficulties. A senior Okinawa Government
official commented: "We cannot accept an environmental impact
assessment that is premised on the government plan."

The central government has taken a tough position, as seen in a
remark by a senior Defense Ministry official: "There is no reason to
change the government plan, since the agreement has been made with
the United States and local governments."

Okinawa Gov. Hirokazu Nakaima, who is increasingly alarmed by the
government's tough stance, on Feb. 18 secretly came to Tokyo to meet
with Defense Minister Fumio Kyuma. However, the government and
Okinawa have yet to find common ground. Some Okinawa officials have
an optimistic view that the government plan will be changed through
a political decision eventually.

The government has, however, the bitter memory that although Futenma
relocation was agreed upon in 1996, it has yet to be implemented. A
senior Defense Ministry official quipped: "The government should not
take a lax response to Okinawa. The issue will not be resolved
unless the government takes a firm stance in dealing with the
issue."

16) Interest rate hike causes stir: BOJ heavily responsible for its
results: Price rise remains sluggish; Dialogue with market
insufficient

YOMIURI (Page 9) (Excerpts)
February 22, 2007

The Bank of Japan (BOJ) yesterday decided to raise the key interest
rate at its Policy Board meeting. What turned the interest rate hike
into a concrete deal, despite resistance from within from Deputy
Governor Kazumasa Iwata, was Governor Toshihiko Fukui's desperate
efforts to normalize the interest rate. However, given the consumer
price index and other economic indicators, it cannot be said that
the Japanese economy has climbed out from its ills. Fukui will be

TOKYO 00000752 010 OF 011


held accountable to the public and the market for his decision to
raise the interest rate at this timing. He will also be responsible
for what the hike will bring about.

A news conference was held at 3:30 p.m. in a large conference room
on the 9th floor of the BOJ head office in Nihonbashi, Tokyo. Fukui
told more than 100 reporters the reason for his decision to raise
the interest rate to a news conference held: "It is all right for
you to take that while the BOJ is using the term 'will maintain an
extremely low interest rate level,' there is still room for
normalizing the interest rate." He thus categorically indicated his
intention to raise the interest rate gradually.

Fukui is eager to raise the interest rate out of the concern that
the adoption of the ultra-low interest rate over too long a period
of time could bring about excessive capital investment.

The BOJ in its economic and price outlook report released last April
also pointed out the need for an interest rate hike, noting:
"Increased stimulus effects from the financial policy front will
lead to volatile economic activities, which could in turn cause a
risk of volatile fluctuations in the rate of price increases."

However, many market players feel that the accounts Fukui has
repeatedly given on the interest rate hike this time are
insufficient.

17) Heizo Takenaka, professor at Keio University, former internal
affairs minister: Deflation was not taken into account

YOMIURI (Page 9) (Full)
February 22, 2007

"The Bank of Japan (BOJ) is carrying out a financial policy for its
own sake. It has raised the key interest rate, saying that the low
interest rate is unreasonable. It has not taken people's life and
deflation into account at all. It is regrettable that it has made
the decision without giving sufficient accounts in the midst of a
rising concern as to whether the 2% target for nominal growth can be
achieved. Japan has begun to show high potential growth like the US
in the 1990s. The US has realized high growth through flexible
financial policy, but the BOJ has ruled out such a possibility by
hiking the interest rate this time. The government, which is
pursuing high growth, should have exercised its right to demand the
BOJ to postpone its decision."

18) Ruling coalition raises doubt about Ozawa's acquiring real
estate

YOMIURI (Page 4) (Full)
February 22, 2007

In a compliance subcommittee meeting yesterday of the party's reform
implementation headquarters, Liberal Democratic Party (LDP) Acting
Secretary General Nobuteru Ishihara criticized Minshuto (Democratic

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Party of Japan) President Ichiro Ozawa for having acquired real
estate properties and including the assets in fund management
group's office expenses. Ishihara stated: 'I have a question that
why he had to use political funds to buy real estate." He cited the
following questionable points: It is unclear where and how he got
the money that was used to purchase the real estate; and should not
he have reported the properties as his income in terms of law?

TOKYO 00000752 011 OF 011

LDP Secretary General Hidenao Nakagawa stressed in a meeting Tokyo:
"Mr. Ozawa needs to explain the reason why the purchase of real
estate does not violate the Political Funds Control Law that
regulates the use of political funds."

Meanwhile, three opposition parties Minshuto, the Social Democratic
Party (SDP) and the People's New Party yesterday reached an
agreement to call on senior ruling coalition members to disclose the
details of office expenses.

SCHIEFFER

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