Cablegate: Daily Summary of Japanese Press 02//07

DE RUEHKO #0856/01 0592259
P 282259Z FEB 07





E.O. 12958: N/A


(1) Japanese version of NSC has clear Abe stamp

(2) Staffing JNSC secretariat with able personnel essential; Role of
advisor to prime minister vague

(3) Japanese version of US National Security Council: NSC that does
not included the Finance Ministry among its members will be

(4) Bills to reform government lenders leave privatized entities'
shareholder requirements and profitability ambiguous

(5) Interview with ASDF's 1st Air Defense Missile Group Commander
Kenji Yamauchi on DPRK: We will intercept missiles in instant

(6) Advice to Abe administration by Shinichi Kitaoka, former deputy
permanent representative to UN: "Moderate, conservative" diplomacy
needed; Tough measures can't change North Korea's attitude

(7) Armitage Report 2 on getting Asia right ignores burden on


(1) Japanese version of NSC has clear Abe stamp

ASAHI (Page 3) (Almost Full)
February 28, 2007

Prime Minister Abe proudly presented a report incorporating a
proposal for establishing a Japanese version (JNSC) of the US
National Security Council, saying, "This is exactly in agreement
with my concept." The report carries a strong Abe imprint: it notes
that the government will aim for a quick response in the diplomacy
and security areas and passing secrets-protection legislation at an
early date. However, the report, compiled in a hasty manner, has
apparently failed to get to the root of bureaucratic sectionalism in
each government agency - the original agenda item.

Consideration given to US regarding secret protection

One member of the Kantei (Prime Minister's Official Residence)
Function Reinforcement Council (KFRC) yesterday complained about the
inclusion into the report the plan for early passage of secret
protection legislation.

The contents of the report were based on the draft report presented
on Jan. 15 by former Chief Cabinet Secretary Nobuo Ishihara,
chairman of the KFRC. When one participant pointed out, "It is
irrelevant for the JNSC to deal with the issue of enacting
secrets-protection legislation," Yuriko Koike, Special Assistant to

the Prime Minister and the acting chairman of the panel, insisted,
"This is the prime minister's wish." Chief Cabinet Secretary
Shiozaki also told the importance of intelligence control linking it
with the issue of reinforcing the Japan-US alliance.

What was the prime minister's aim? In the policy speech delivered
last September he said: "I would like to build a framework that will
enable the Kantei and the White House to communicate at any time."

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When North Korea launched missiles last July, Abe, who was deputy
chief cabinet secretary at the time, worked in close cooperation
with US National Security Advisor Stephen Hadley, which led him to
think that establishing a JNSC would be a means to strengthen the
bilateral alliance. He presumably thought that to that end, too, it
would be important to give consideration to the US, which is nervous
about possible leaks of intelligence on the Japanese side.

Revising the Constitution and studies on the right of collective
self-defense, policy themes advocated by the prime minister, are
directly linked to the further strengthening of the Japan-US
alliance. Commenting on reasons why the prime minister has set the
timeline for launching the JNSC as early as next April, another
panel member said, "The prime minister wanted to pave the way for
amending the Constitution during his tenure." As if to endorse this
comment, Chair Ishihara yesterday told a news conference that
studies on the right of collective self-defense might top the agenda
of the JNSC.

Prime Minister rules out participation of finance minister:
Bureaucratic sectionalism remain intact

The prime minister's insistence was also seen in the selection of
the membership of the JNSC, which will be small in number of
personnel. Former Finance Minister Masajuro Shiokawa in early
February sought the participation of the finance minister in the
JNSC, saying, "It is a problem if the finance minister does not join
the panel. Former Finance Minister Korekiyo Takahashi was
assassinated by the military because he cut military expenses."
However, the prime minister rejected the proposal, saying, "The
finance minister is not a key official on NSC issues." This stance
of the prime minister was also visible at the final panel meeting
yesterday. He underscored, "From my experience, I am strongly
determined that Kantei (Prime Minister's Official Residence)
leadership is necessary." The prime minister dealt with the 9-11
terrorist attacks on the US and the North Korea issue at the Kantei
for several years, which has made him strongly believe that it is
important to forge security and diplomatic strategies under the
leadership of the Kantei eliminating bureaucratic sectionalism. That
is the reason why he has proposed a plan to strengthen the authority
of the JNSC by appointing a lawmaker an assistant to the prime
minister and using the KFRC as the core body in dealing with
national security affairs.

However, bureaucrats, who are sensitive to their ministry's
interests, are alarmed about the prospect of politics making
stronger intervention in administrative activities with one senior
Cabinet Secretariat official noting, "There is a problem in terms of
the separation of three powers." Another senior government official
complained, "Under the parliamentary cabinet system, the areas of
responsibility of the cabinet and each government agency are

In the end, the report noted, "The JNSC is an advisory organ
reporting to the prime minister as is the case of the existing
Security Council." The panel has therefore approved bureaucratic
sectionalism will remain intact.

Some officials at Kasumigaseki, Japan's bureaucratic center, said,
"It is possible to carry out what has been proposed in the report
issued today, just by changing the application of existing

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US Deputy National Security Adviser Crouch give advice to Kyuma

Defense Minister Kyuma yesterday met with visiting Deputy National
Security Adviser Crouch at the Defense Ministry. They exchanged
views on the JNSC and the Iraq policy.

Crouch gave Kyuma this advice: "It is important for cabinet-minister
members of the JNSC to make sure their staff members coordinate
views on a constant basis. Unless the panel has a system in which
the staff members can present policy options immediately at a time
of crisis, it will be the cabinet ministers who will find themselves
in trouble."

(2) Staffing JNSC secretariat with able personnel essential; Role of
advisor to prime minister vague

NIHON KEIZAI (Page 2) (Abridged slightly)
February 28, 2007

Many challenges lie ahead for the envisaged Japanese National
Security Council (JNSC) to function as the nation's control tower of
foreign and security affairs. The definition of the post of national
security advisor to the prime minister, mentioned in the report
released by the council to strengthen the Kantei's (Prime Minister's
Official Residence) functions, is vague. Securing national security
exerts for the secretariat's office is also essential. How to
collect necessary intelligence for decision-making is unclear, as

Prime Minister Shinzo Abe last night explained the significance of
the report to reporters this way: "It proposes a system enabling the
JNSC to speedily discuss and draw up strategies to meet changes of
the times and various issues."

The prime ministerial advisor who will head the secretariat is
required to attend every JNSC meeting to offer his or her view. But
this person's lack of authority to control and issue orders to the
Foreign Ministry and the Defense Ministry has raised concern that
those offices would hesitate to provide the JNSC with intelligence.

Effective policy planning depends on how speedily and effectively
the JNSC can collect and analyze vital intelligence. The report
reads: "Government agencies concerned shall constantly provide the
JNSC with necessary and appropriate intelligence." There is
apparently a need for the system to ensure close cooperation between
government offices.

The JNSC will handle a broad range of themes from the right to
collective self-defense, to the North Korean situation, to resources
and energy. The report calls for staffing the secretariat with 10 to
20 experts, which is insufficient in the eyes of some observers. In
a press conference yesterday, council chair Nobuo Ishihara described
this number as the "minimum level" required for supporting essential

For the sake of the flexible operation of the JNSC, the experts'
council has decided not to give the finance minister a permanent
seat on the JNSC. "The finance minister's presence will be asked for
whenever budgetary measures are required," Ishihara explained.
Discontent in offices other than the Foreign and Defense Ministries
might grow depending on how the council is run.

Determining the priority order of the Abe administration's other

TOKYO 00000856 004 OF 010


important policies would also be a challenge.

In his meeting yesterday with Defense Minister Fumio Kyuma, visiting
US Deputy National Security Advisor Jack Crouch offered this advice
on running the JNSC: "It is important to thoroughly coordinate
matters with the secretariat members for issuing demands and orders.
The cabinet ministers who will be the NSC members will be in trouble
if there are no options in time of a national emergency." After his
meeting with Advisor to the Prime Minister on National Security
Yuriko Koike, Crouch also said to the press: "I hope to see close
cooperation between the NSC of the United States and Japan."

Experts' views on the JNSC

Military commentator Kensuke Ebata: I expected to see a body similar
to the US National Security Council that has the authority to decide
on policies. My impression of the report is that given the
parliamentary system, the group had to make compromises with
reality. Although the report plays up the Kantei's leadership, it is
basically designed to enhance the Security Council of Japan, which
has been a coordination body between government agencies. The report
specifies that there will be no change to the authority of the
Foreign Ministry and other government offices concerned. If the JNSC
can function effectively even with that, a certain level of results
can be achieved.

Some points remain unclear, such as how to ensure cooperation with
the intelligence department, what authority will be given to the
advisor to the prime minister, whether or not the JNSC will make
public its reports, and so on.

Former assistant to the prime minister Yukio Okamoto: I can give a
positive assessment to the report calling for a process allowing the
full-time secretariat members to present the prime minister with a
number of options for flexible decisions instead of policies
automatically coming from bureaucratic organizations. It is also
necessary to create a system allowing the government to swiftly
change policies, unfettered by traditional policies and continuity,
in order to meet changes in the international situation.

The secretariat must do more than serve the prime minister. It has
to have the ability to effectively collect intelligence and even
come up with policies out of step with the prime minister's
sentiment, as necessary. The JNSC must also send information to the
public so as not to fall into secrecy.

(3) Japanese version of US National Security Council: NSC that does
not included the Finance Ministry among its members will be

YOMIURI (Page 12) (Full)
February 16, 2007

By Tomohito Shinoda, professor of international and Japanese
politics at International University; author of books, Japanese
Diplomacy in Postwar and Diplomacy led by the Prime Minister's
Official Residence; age 46.

It has been reported that a group of experts to consider the
creation of a Japanese version of the US National Security Council
(NSC) have drafted a final plan. The Japanese-style NSC is
reportedly modeled after Britain's NSC and composed of a small
number of cabinet ministers -- the prime minister, chief cabinet

TOKYO 00000856 005 OF 010


minister, foreign minister and defense minister -- like the NSC in
America. I wonder whether the new security body will be created
based on the full recognition of differences in the political
systems of the United States and Britain.

Like Britain, Japan has a parliamentary cabinet system under which
the cabinet bears joint responsibility toward the Diet. Japan,
however, interprets joint responsibility as meaning that unanimous
approval is required for cabinet decisions. This interpretation
limits the prime minister's leadership. Since prior consultations
are actually carried out, cabinet meetings have lost significance.

The British prime minister has the right to decide agenda of cabinet
meetings as chair, the right to speak freely and the right to call
on speakers; as a result, the premier can control cabinet meetings.
The prime minister also can summarize the discussion and make
cabinet decisions without taking a vote. Since this kind of prime
minister-led cabinet management system has been established, there
have been about 30 committees set up under the British cabinet.
Committee decisions are treated as cabinet decisions.

The Japanese prime minister's right to initiate new policy at
cabinet meetings was made clear through functional enhancement by
the Hashimoto cabinet's administrative reform drive. However, the
principle of adopting cabinet decisions in a unanimous way has been
upheld. As long as this principle is maintained, there remains a
possibility that opposition from other ministries and agencies will
prevent NSC decisions. Given that situation, there would be doubt
about the effectiveness of an NSC decision.

Modeling on the US' National Security Council, the statutory members
of which are the president (chairman of the body), the vice
president, the secretary of state and the secretary of defense, the
Japanese version of the NSC is unlikely to include the finance
minister among its members. However since the US Constitution writes
that the Congress has the right to decide the state budget, the
White House negotiates with the Congress on budgetary affairs.
Therefore, the State Department and the Defense Department hope for
the involvement of the White House, which has influence over the
budget, and the NSC in major policies. Since the Office of
Management and Budget (OMB), which is equivalent to the Finance
Ministry's Budget Bureau in Japan, and the Department of the
Treasury do not have budget-drafting authority, the treasury
secretary and OMB chief do not take part in the NSC.


The Japanese prime minister exercises influence in drafting basic
policies for state budgets through the Council on Economic and
Fiscal Policy, but the prime minister cannot assign a budget
allocation to specific policies without the help of the Finance
Ministry. Although the Finance Ministry's authorities have weakened,
the Budget Bureau still controls the compilation of state budgets.

Given that, the Finance Ministry may oppose NSC decisions. If the
Finance Ministry is included in the NSC membership, it would be
difficult for the NSC to formulate foreign and security policies
that require the endorsement of budget allocations. I assume,
therefore, there will be no reasons for the Foreign Ministry and the
Defense Ministry to entrust policy-making to the NSC.

If the NSC does not include the finance ministry, it will likely be
necessary to strengthen the prime minister's authority over the
compilation of state budgets or review the principle of making
cabinet decisions in a unanimous way. However, the possibility of

TOKYO 00000856 006 OF 010


such is slim. In order to avoid negotiations on budgets with the
Finance Ministry after the NSC decides something, the finance
minister should be included as one of the NSC members.

I highly value the establishment of a deputy chief cabinet
secretary-level position above the assistant deputy chief cabinet

secretary in order to cooperate with the Cabinet Secretariat. The

question is how the NSC will gather necessary overseas intelligence.
There seems to be an idea that the NSC should get such intelligence
through the cabinet intelligence director. If so, the NSC will be
able to get only limited intelligence. The NSC should be given the
right to get information from various government offices, and should
be able to obtain intelligence from the Foreign Ministry and the
Defense Ministry.

(4) Bills to reform government lenders leave privatized entities'
shareholder requirements and profitability ambiguous

YOMIURI (Page 9) (Full)
February 28, 2007

A bill to merge four public financial institutions into a single
entity in October 2008 was adopted in a cabinet meeting yesterday.
All the planned bills related to reforming the government lenders
are now on the agenda. Although Diet deliberations will soon start
on these bills, many details about privatized entities have been
left undecided.


The four bills are designed to streamline bloated government-backed
financial institutions and to leave what can be done by the private
sector in its hands. The Development Bank of Japan, which provides
long-term funds for social infrastructure projects, and the Shoko
Chukin Bank, which offers loans to small businesses, will be
privatized. Under the plan, a 100% state-owned stock company will be
established in October 2008, and over the following five to seven
years, the government will sell all its shares in the company to
make it completely privatized.

The government will continue small-lot lending to small companies
and international financing, because private companies find it
difficult to undertake such services. Four entities, including the
National Life Finance Corporation, will be merged into Japan Policy
Finance Corporation, a 100% state-owned new stock company, in
October 2008.

The Japan Finance Corporation for Municipal Enterprises, which
provide loans for local governments' sewerage and other projects,
will be dismantled, and corporations for municipal enterprises
financed by the local governments concerned will undertake its

Future vision

Chief Cabinet Secretary Shiozaki said in a press conference
yesterday, "No decision has been made about what requirements will
be set for shareholder status in a privatized Shoko Chukin Bank."
Concerning the Development Bank of Japan, he remarked, "A business
model in the process of pushing ahead with privatization has yet to
be determined."

The related bills stipulate that the shares in the Shoko Chukin Bank

TOKYO 00000856 007 OF 010


will be transferred to organizations linked to small companies. The
government plans to sell all its shares in the bank between 2013 and
2015, but as noted in the bills, "necessary steps will be taken" in
order to continue the financing function for small businesses, such
regulations as restrictions on shareholder status might be

The Development Bank of Japan, after privatized, intends to actively
engage in the long-term financing business, in which the bank has
its own know-how. Nonetheless, once it loses its government backing,
interest rates on raising funds will inevitably rise. In this case,
its profitability will be negatively affected. Given this, the
possibility is being discussed of the bank joining hands with
another financial group or becoming a subsidiary of such a group.

Effect of integration

Taking over 30 trillion yen worth of the four lenders' outstanding
loan claims, the new Japan Policy Finance Corporation will be a huge
financial institution, on par with the nation's leading bank Resona
Group. In the new integrated company, though, an account will be set
for each different policy, so the functions of the four companies
will be left separate. One analyst commented, "It might be difficult
to try to cut personnel and improve business efficiency."

In appointing the new president of the Finance Corporation for Small
Businesses this January, the Ministry of Economy, Trade and Industry
recommended a person who retired from the ministry, but the Prime
Minister's Office rejected the idea and instead picked a person
unrelated to government agencies. In selecting the top posts in the
Development Bank of Japan, the Japan Bank for International
Cooperation, and the National Life Finance Corporation in late
September, priority is likely to be given to appointments from the
private sector.

(5) Interview with ASDF's 1st Air Defense Missile Group Commander
Kenji Yamauchi on DPRK: We will intercept missiles in instant

YOMIURI (Page 4) (Full)
February 28, 2007

Interviewer: Tatsuya Fukumoto

In order to counter ballistic missiles, a Patriot Advanced
Capability (PAC)-3 system will be installed by the end of March in
the Air Self-Defense Force's (ASDF) 1st Air Defense Missile Group
(assigned to the Iruma Base), the unit that is in charge of the
Tokyo metropolitan zone. This will be the first installation of that
system in the Self-Defense Forces (SDF).

North Korea's ballistic missiles can reach Tokyo in 10 or so
minutes. So, we must instantly make a decision to intercept them
once we gather information about missile launches. We are required
to get highly accurate information and make a quick response.

I have now stepped up my efforts to train my unit led by some 20 SDF
personnel who learned how to use the PAC-3 system at a US Army base
in Texas.

I have told them: "You must not do three things: 'not shoot,' 'be
unable to shoot,' and 'fail to shoot down.'" Unit members are
required to shoot. It is unacceptable for them not to shoot out of

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hesitation or for them to be unable to launch missiles because the
device is broken.

Computers handle the job of shooting down ballistic missiles. What
is important on our part is to create a system for the PAC-3 unit
that would always be ready to intercept missiles. I have prioritized
training for the unit so that it is prepared to depart from the base
and ready to shoot upon arrival at the location of the deployment.

When the PAC-3 unit moves from one place to another, if the five
launchers are transferred together to one location, a total of 30
vehicles will move together. In order to intercept missiles in the
Tokyo metropolitan zone, we need to study a number of simulations
about where to deploy the PAC-3 unit in the center of Tokyo.

We are confident that we can demonstrate our combat strength to the
full and shoot down missiles, once we are ordered, "Go there until
such and such a date and a time" and, "When it comes, shoot."

(6) Advice to Abe administration by Shinichi Kitaoka, former deputy
permanent representative to UN: "Moderate, conservative" diplomacy
needed; Tough measures can't change North Korea's attitude

MAINICHI (Page 5) (Slightly abridged)
February 28, 2007

Chiyako Sato

According to the recent six-party agreement on the North Korean
nuclear issue, energy aid to be offered to North Korea in exchange
for disabling its nuclear facilities will be a mere one million tons
of heavy fuel oil. Meanwhile, the United States will begin the
process of removing North Korea from its list of states that sponsor
or support terrorism. This point is a problem.

Former US Ambassador to the United Nations Bolton, who played a
leading part when the UN Security Council adopted a resolution
condemning Pyongyang's missile launches and nuclear test, criticized
the agreement. It is unavoidable that President Bush is seen as
shifting his North Korea policy. Although Japan should not be afraid
of being isolated in the international community, complete isolation
as a result of clinging to its principles must also be avoided.

Even if Japan becomes even more hard-lined toward the North, that
country will not change its attitude. The important thing is to
convince North Korea first to abandon its nuclear programs and next
to induce it to resolve the abduction issue. It should not be our
country's goal to continue attacking North with an increasingly
rigid stance. Such a tactic has not produced good results.

I appreciated Prime Minister Shinzo Abe's visits to China and South
Korea last fall. However, I do not want him to simply revert to the
old political style. Instead, I hope to see him follow a moderate,
middle-of-the-road, conservative course. So far he has performed as
I expected. It is unwise to create reasons to fight with China in
addition to the areas of discord already lying between the two
countries. It is a clever approach not to make Yasukuni Shrine an

Favorable relations between Japan and the US owed too much to the
personal ties between then Prime Minister Junichiro Koizumi and
President Bush. As a result, there were few chances for dialogue at
other levels. It is not healthy to think that everything would go

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smoothly if only the Koizumi-Bush connection was in good shape. Now
is time to do our best by employing various approaches.

Some people may feel strong nostalgia for the Koizumi era, but I do
not think everything then went along well. He would skip important
issues and focus instead solely on one issue. He might have been a
genius in playing the power game, but when it came to whether his
way of carrying out politics was good for Japan, future historians
may find faults with his style of doing things. I think Abe should
demonstrate his leadership in his own way.

In the 2005 Lower House election, the ruling Liberal Democratic
Party won a landslide victory. As a result, the prime minister
cannot easily decide to exercise his right to dissolve the Lower
House. Instead, he should make better use of the right of
appointment. What Prime Minister Abe should do is to shuffle his
cabinet before the Upper House election in July and bring in a
powerful lineup to help him achieve long-term policy goals.

(7) Armitage Report 2 on getting Asia right ignores burden on

OKINAWA TIMES (Page 2) (Full)
February 25, 2007

A group of American bipartisan Japan policy experts, led by former
Deputy Secretary of State Richard Armitage and former Assistant
Secretary of Defense Joseph Nye, has recently released a report

(Armitage Report 2) titled, "The US-Japan Alliance: Getting Asia
Right through 2020." The previous report produced in 2000 served as
key guidelines for the Bush administration's Asia policy. The new
report is attracting much attention. We asked University of the
Ryukyus Professor Masaaki Gabe for his view on the report's possible
impact on Okinawa and other areas.

The report with its set of policy proposals came out in Washington
on Feb. 16. It carries an exciting and contentious subtitle:
"Getting Asia Right," which can be translated into "how to guide
Asia in the right direction," or "for a right Asia," or "a desirable

As can easily be imagined, the title is likely to prompt readers to
ask: "Who would determine what is right and based on what?" and,
"Why should the United States be the one to get Asia right?" Some
people might even argue that Asian affairs should be left to Asia.
The Japanese media have reported on such possible reactions. But as
far as I know, the report has not created a stir in the United
States or in Asia.

A study group comprising bipartisan experts on Japan produced the
report. In October 2000, the same group of experts released the
first Armitage Report that urged Japan to exercise the right to
collective self-defense.

Richard Armitage, who served as deputy secretary of state under the
Bush administration, and Joseph Nye, who served as assistant
secretary of defense under the Clinton administration, played

central roles in producing the report.

Armitage, a former Marine officer who entered the US government
during the Reagan administration, is a major advocate in Washington
for a strong Japan-US alliance. He is the one who urged Japan to
send Self-Defense Force troops to the Indian Ocean and Iraq by using

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such expressions as "show the flag" and "boots on the ground."

Joseph Nye, currently the dean of the Kennedy School of Government
at Harvard University, is an expert on international politics. He
has indicated that the United States would be able to remain as a
world leader as long as it possesses "soft power," meaning that the
US has the technological edge that can make the US the engine of the
world. He has brushed aside the projection that the US' hegemony
would decline after the end of the Cold War. In February 1995, Nye
released a report highlighting the need to keep 100,000 US troops in
East Asia and stressing the role of US bases in Okinawa. He urged
Washington to think twice before reducing US troops in Japan.

The latest report fundamentally urges policy-makers in Washington to
keep the US-Japan alliance at the center of America's Asia policy at
least until 2020. In conclusion, the report underlines the need to
deftly manage bilateral Japan-US relations and multilateral

It puts high priority on US action for maintaining the world order,
which may change with the rise of China. The report specifically
focuses on the "quality" of relations among Japan, the United
States, and China. In other words, it seeks the management of issues
in such areas as politics, military, economics, energy, trade, and
history. In addition, paying special attention to India, the report
calls for enhanced relations among Japan, the United States, and
India, as if to constrain China.

Dividing the Asia-Pacific into two geographical areas, the report
points out the importance for the United States to forge trilateral
relations with Japan and Australia, which encompass both Pacific
relations and Pan-Asianism, apparently with the aim of checking

The direction as outlined points to a US policy shift toward Asia,
which belongs in both areas, by laying a series of bilateral
relations with individual countries, (such as South Korea, the
Philippines, Thailand, China, and Japan) on top of the US-centered
trilateral relationship.

The report expects Japan to play an active role in the international
community, including exercising the use of military power. It
specifically calls for removing trade barriers between Japan and the
United States to better enable the two countries to conduct joint
military operations. That means virtually turning Japan into a
country like the United States and integrating it into the United

The privileged US military conducts daily activities in Okinawa on
the back of Tokyo, which glorifies such "Americanization steps." Is
Washington not aware of the danger of basing the Japan-US alliance
on the burden placed on Okinawa? Or has it decided to turn a blind
eye to it?


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