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Cablegate: Daily Summary of Japanese Press 03/09/07

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P 090821Z MAR 07
FM AMEMBASSY TOKYO
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RHEHAAA/THE WHITE HOUSE WASHINGTON DC PRIORITY
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RHHMUNA/HQ USPACOM HONOLULU HI
RHHMHBA/COMPACFLT PEARL HARBOR HI
RHMFIUU/HQ PACAF HICKAM AFB HI//CC/PA//
RUALSFJ/COMUSJAPAN YOKOTA AB JA//J5/JO21//
RUYNAAC/COMNAVFORJAPAN YOKOSUKA JA
RUAYJAA/COMPATWING ONE KAMI SEYA JA
RUEHNH/AMCONSUL NAHA 2620
RUEHFK/AMCONSUL FUKUOKA 0145
RUEHOK/AMCONSUL OSAKA KOBE 3645
RUEHNAG/AMCONSUL NAGOYA 9547
RUEHKSO/AMCONSUL SAPPORO 1107
RUEHBJ/AMEMBASSY BEIJING 6066
RUEHUL/AMEMBASSY SEOUL 2156
RUCNDT/USMISSION USUN NEW YORK 3490

UNCLAS SECTION 01 OF 07 TOKYO 001026

SIPDIS

SIPDIS

DEPT FOR E, P, EB, EAP/J, EAP/P, EAP/PD, PA
WHITE HOUSE/NSC/NEC; JUSTICE FOR STU CHEMTOB IN ANTI-TRUST DIVISION;
TREASURY/OASIA/IMI/JAPAN; DEPT PASS USTR/PUBLIC AFFAIRS OFFICE;
SECDEF FOR JCS-J-5/JAPAN,
DASD/ISA/EAPR/JAPAN; DEPT PASS ELECTRONICALLY TO USDA
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: DAILY SUMMARY OF JAPANESE PRESS 03/09/07


INDEX:

(1) Interview with Prime Minister Shinzo Abe on constitutional
revision 2

(2) Civil service reform plan follows wild path; Reform Minister
Watanabe isolated in government with no assistance from Abe

(3) Bid-rigging practices - Plunge scalpel into collusive ties (Part
1): Lenient measures leaving corrupt structure deep seated

(4) US military bases-related income reaches 200.6 billion yen, 5.3%
of total income of citizens in Okinawa in FY 2004

ARTICLES:

(1) Interview with Prime Minister Shinzo Abe on constitutional
revision

TOKYO SHIMBUN (Page 2) (Excerpts)
March 8, 2007

Tokyo Shimbun: "Many Liberal Democratic Party lawmakers are calling
for enacting national referendum legislation by May 3, Constitution
Day."

Prime Minister Abe: "Under Article 96, constitutional revision
requires a set of procedures, but the Diet has failed over the last
six decades to undertake work to support those procedures with
legislation. In terms of fulfilling its original goal, there is
every reason for the LDP to desire to enact the legislation by
Constitution Day as a symbol."

TS: "What is your image of what the new Constitution should be?"

SIPDIS

Abe: "(In the fall of 2005) marking its 50th anniversary, the LDP
adopted a draft constitution. I think we will proceed with the
debate in a way that the draft constitution can win support from as
many lawmakers as possible."

TS: "Will the LDP plan serve as the base in drawing up specific

SIPDIS
plans with other parties?"

Abe: "I think so."

TS: "Are there any specific themes that you want to make a public

SIPDIS
appeal in the course of discussion?"

Abe: "As the debate proceeds, the best modality for local
governments and decentralization would be firmed up, as well. The
question of how to describe the regional bloc system in the
Constitution would be discussed in pushing ahead with the Hokkaido
regional bloc system special zone promotion legislation that was
enacted last year."

TS: "The government plans to undertake research on individual cases

SIPDIS
on the nation's exercising of its right to collective self-defense.
When are you going to produce a conclusion?"

Abe: "The international situation and the environment surrounding
national security have changed dramatically. Given the government's
responsibility for protecting people's lives and property, we must
not spend too much time on it."

TOKYO 00001026 002 OF 007

TS: "As for the comfort women issue, your view is that there was no

SIPDIS
proof that Asian women were forcibly recruited to provide sexual
services for Japanese solders during World War II. Are you planning
to review the Kono Statement that expressed the government's apology
and remorse?"

Abe: "There has been no change in my plan to honor the Kono
Statement. The (draft) resolution (by the US House of
Representatives seeking the prime minister's apology) is based on
factual errors, however. There were no documents proving that
constituted authorities had rounded up Asian women forcibly."

TS: "Do you intend to explain the matter properly to other

SIPDIS
countries?"

Abe: "I think I have offered additional explanations on the Kono
Statement. But time and again, my explanations were over-interpreted
and were not correctly carried to other countries and that drew
negative reactions as a result. That's why I called them
'unproductive.'"

Commentary

Although Prime Minister Abe has repeatedly underlined the need for
constitutional revision, he has rarely discussed specifically what
part of the Constitution must be revised.

In the interview with the Tokyo Shimbun, he revealed a plan to
revise the Constitution to specify the introduction of the regional
bloc system, which is expected to facilitate decentralization and
civil service reform - challenges bigger than what the Abe
administration has been addressing. Coming up with clear directions
for those challenges will not be easy, however.

Discussing specifics about the envisaged constitutional revision at
this point when national referendum legislation has yet to be
established involves risks.

Despite that, Abe touched on the regional bloc system apparently
based on his self-reflection of the Abe administration, which is now
in its sixth month.

Although the Abe administration has been addressing a wide range of
policy challenges, its support ratings have been plummeting. The
prime minister seems to have switched his course to addressing
larger themes for making Japan a beautiful country, regardless of
opinion polls on his short-term goals.

Constitutional revision lies at the roots of the creation of a
beautiful country.

Abe expressed his hope for an early enactment of national referendum
legislation, as well. He is likely to continue sending strong
messages on constitutional revision.

(2) Civil service reform plan follows wild path; Reform Minister
Watanabe isolated in government with no assistance from Abe

ASAHI (Page 2) (Abridged)
March 9, 2007

A plan to reform the public servant system featuring a ban on

TOKYO 00001026 003 OF 007


amakudari (senior bureaucrats retiring into key jobs in public
corporations or private firms closely linked to their government
roles) is following a wild path. Administrative Reform Minister
Yoshimi Watanabe, who is in charge of civil service reform, aims to
totally ban ministries and agencies from arranging for retiring
bureaucrats to get cushy jobs. Watanabe intends to project himself
as a "fighting minister" by modeling his approach on the style of
former Prime Minister Koizumi, who constantly fought the "forces of
resistance." But Watanabe's plan has drawn stiff objections from
bureaucrats, Liberal Democratic Party lawmakers, and other cabinet
ministers. The administrative reform minister now finds himself left
high and dry in the government with no support from Prime Minister
Shinzo Abe. The growing power of the Kasumigaseki bureaucratic
district stands out against the backdrop of work to submit related
bills to the Diet in the current session.

The LDP committee on reform of the civil servant system met at party
headquarters yesterday in which Administrative Reform Minister
Watanabe explained a plan to establish a human resource bank after
banning government offices from making arrangements for
postretirement jobs. Hearing Watanabe's explanation, Upper House
Causes Secretary General Toranosuke Katayama warned that a lack of
trust of bureaucrats would hinder the plan.

Watanabe aims to insert a surgical knife into the amakudari system,
which is regarded as the hotbed of bureaucrat-initiated bid rigging,
by eliminating the senior government officials' practice of securing
postretirement jobs for senior bureaucrats to push for early
retirements.

Watanabe's plan elicited strong objections from attendants. In the
session, 23 attendants voiced their opinions, and of them, only a
few supported Watanabe's plan. The LDP's opposition before the
meeting was so strong that Watanabe was barely able to hand out only
two-page documents to the committee members.

The LDP's gaze at Watanabe has been cold from long before. Katayama
and LDP Administrative Reform Promotion Headquarters chief Koki
Chuma, a former administrative reform minister, are skeptical that
Watanabe's plan to prohibit government offices from arranging jobs
for retiring bureaucrats will become reality.

After the meeting, headquarters secretary general Yoichi Miyazawa
told reporters: "(Documents produced by Watanabe) do not mirror the
government's view. The government must draw up bills on its own."

LDP lawmakers' strong objections come from an acute sense of alarm
in the Kasumigaseki district about the gloomy outlook for the
amakudari system. Between February 28 and March 5, Watanabe
interviewed officials responsible for personnel affairs from such
offices as the Finance Ministry and the Health, Labor, and Welfare
Ministry in an effort to find out the actual situation of amakudari.
In the interviews, all officials denied the existence of a system to
force amakudari jobs on retiring bureaucrats.

This prompted Watanabe to aim at a system allowing retiring
bureaucrats to openly exploit their experiences.

But in an informal cabinet meeting on Feb. 27, such members as
Foreign Minister Taro Aso and Finance Minister Koji Omi complained
that Watanabe's idea was void of real substance.

Abe remains elusive

TOKYO 00001026 004 OF 007

Prime Minister Abe has yet to clarify where he stands about
eliminating the amakudari system. Abe simply said at his official
residence last night: "I think Administrative Reform Minister
Watanabe has been finalizing concrete measures in line with the
government's policy to eradicate the amakudari practice."

The debate on the appropriateness of ministries and agencies making
arrangements for postretirement jobs started with the Dec. 7 meeting
of the Council on Economic and Fiscal Policy (CEFP). In the session,
private-sector members presented a proposal calling for a ban on
government bureaus from helping retiring officials land lucrative
jobs in the private sector, saying that they would eventually make
moves to obtain favors from government agencies of behalf of their
new employers. The idea was similar to Watanabe's plan.

The proposal drew objections from participating cabinet ministers,
including Finance Minister Omi and Economy, Trade, and Industry
Minister Akira Amari, who underlined the need to help senior
government officials find jobs outside the government as they near
their retirement age.

Two days before the CEFP meeting, Deputy Chief Cabinet Secretary
Junzo Matoba, a former Finance Ministry official, was briefed on the
proposal in advance. Matoba rebutted the proposal, saying, "It's
absurd to pound civil servants for the sake of elections."

Witnessing strong protests from other cabinet ministers in the CEFP
meeting, Abe did not touch on the appropriateness to prohibit
government agencies from brokering postretirement jobs.

A senior government official, who is in a position to support Prime
Minister Abe, indicated matter-of-factly yesterday that the plan
worked out by Watanabe, who was handpicked by Abe for the job, did
not reflect the government's view.

Abe is visibly enthusiastic for national referendum legislation. But
he appears less eager when it comes to the amakudari issue, just
telling Watanabe to work things out with the LDP.

(3) Bid-rigging practices - Plunge scalpel into collusive ties (Part
1): Lenient measures leaving corrupt structure deep seated

NIHON KEIZAI (Page 1) (Excerpts)
March 8, 2007

The Fair Trade Commission brought criminal charges against general
contractors for the first time on suspicion of violating the
Antimonopoly Law with collusive arrangements to rig bids for subway
construction projects in Nagoya. The presidents of leading general
contractors had pledged to abandon bid-rigging practices in 2005.

In October 2005, before an amendment of the Antimonopoly Law took
effect in January 2006 to toughen penalties for violations, the
presidents of Kajima Corp., Taisei Corp., Shimizu Corp., Obayashi
Corp., and Takenaka Komuten Co., secretly met to discuss how to bid
farewell to bid-rigging practices. The five companies repeatedly
held a meeting and agreed to reassign those engaged in tenders. But
some executives worried that their collusive practices in Nagoya and
Hiroshima would be exposed.

Among those arrested was Masahiro Shibata, former advisor to
Obayashi's Nagoya branch. In the Tokai district, he took the lead in

TOKYO 00001026 005 OF 007


determining which firm would win tenders. In the Chubu district, a
former managing director of Obayashi was playing the same role. The
indictment of this managing director on suspicion of arranging
tenders for a project offered by the Defense Facilities
Administration Agency last March has led to a weakening of the group
of major general contractors in Hiroshima. But the group in Nagoya
remained influential.

After the agreement was reached among the five construction
companies, their managers, fearing a huge surcharge, called together
their employees to bid a farewell to bid-rigging practices. Kashima
President Nakamura said determinedly, "We will not offer retirement
allowances to employees if they are engaged in bid-rigging
practices." Despite this warning, an illegal case still occurred in
Nagoya.

Sales representatives in general contractors, once assigned to the
public works section, start approaching coordinators for collusive
arrangements to rig bids for projects in an effort to win contracts.
Shibata reportedly had received cash or vouchers on his birthday or
as summer or winter gifts, 500,000 - one million yen each.

In the engineering industry, many orders take a joint venture
(JV)-type formula. Once one company is shunned in the industry, the
company finds it difficult to receive an order. That is why sales
representatives (in charge of bid-rigging practices) give priority
to a reputation for reliability in the industry over that within
their companies.

The Nagoya branches of several companies only too the measure of
reassigning or transferring those in charge of tenders to other
posts in the same branches, leaving the collusive ties intact in the
industry. An informed industrial source said, "The presidents
carried out 'propaganda activities,' but the steps actually taken
were lenient."

In subway construct projects in Nagoya, about 90 general contractors
were found in 1994 to have repeatedly carried out bid-rigging
practices.

The tenders in question (held in 1988) were for projects to extend
sections of the Sakuradori subway line in Nagoya. Since information
on the illegal practices was leaked, a cover-up was reportedly
undertaken. The recent scandal is similar to this case, showing that
the corrupt structure remains in the construction industry.

Company executives involved in the allegations revealed in 1994 were
not prosecuted in the end. Around that time, Shibata began to exert
greater influence as a coordinator. Absorbing more than five million
workers, the construction industry has supported local economies.
Due to strong resistance, it was difficult to plunge a scalpel in
the industry. Given tight financial conditions, though, the budget
for public works projects in FY2006 was reduced to 18.12 trillion
yen, almost half that in FY1995. Big-name lawmakers working for the
interests of construction industry have disappeared, and the revised
Antimonopoly Law has steadily produced positive results.

Although the tide is changing for the construction industry, the
industry itself has yet to emerge from following its conventional
system. Despite a sharp decrease in public works projects, there was
no major change in the number of construction companies across the
nation over the past decade. In local governments, governors who had
cozy relations with businesses were arrested. In the central

TOKYO 00001026 006 OF 007


government, the Law to Prevent Collusive Bidding at the Initiative
of Government Agency will be applied to the Ministry of Land,
Infrastructure and Transport for the first time.

(4) US military bases-related income reaches 200.6 billion yen, 5.3%
of total income of citizens in Okinawa in FY 2004

Ryukyu Shimpo (Page 1) (Full)
March 8, 2007

The Okinawa prefectural government's planning office announced
yesterday afternoon an estimated amount of income related to US
military bases. This estimate is more accurate than the past one,
because it was worked out based on new data provided by the US
military. The total amount of base-related income in FY2004 was
200.6 billion yen, with money spent on transactions between military
personnel or units and companies in Okinawa totaling 72.9 billion
yen. The ratio of base-related income to total prefectural earnings
(3,792.8 billion yen) was 5.3%.

For the estimate announced yesterday, a different calculation method
was used for transactions with companies in the prefecture. The
Okinawa prefectural government has announced for the first time the
more accurate total amount of US military base-related income and
the value of orders from the US military.

The total value of contracts for orders by the US military in Japan
for construction projects and goods (worth more than 25,000 dollars)
reached 80.5 billion yen. Orders placed to companies in the
prefecture were worth 15.5 billion yen, accounting for 19.3% of
total orders.

The planning office worked out estimates for FY2003 and FY2004. It
intends to ask the US military to continue to provide data and
compile a similar report every year.

Of income related to US military bases, the planning office was able
to work out accurate amounts of wages paid to Japanese employees at
US bases and payments for real estate rentals, based on budgetary
records kept by the Defense Facilities Administration Agency, but
the office worked out value transactions under the so-called
"regression formula," using records related to currency exchanges
and the like. Their accuracy therefore was questionable.

An itemized statement on transactions in the prefecture in FY2004
shows that 31.7 billion yen (43.5% of the total) was spent on
building facilities within the base complexes, which are related to
regional defense facilities administration bureaus; 13.1 billion yen
(31.7% ) as expenses related to US military units, including orders
placed on companies in the prefecture; 3.9 billion yen (5.4% ) paid
to barbershops, cleaners and other shops; and 14.1 billion yen
(19.4% ) spent as servicemen's household consumption fees.

Of contracts concluded with companies in Okinawa, the largest amount
of money - 364 million yen - was used to purchase other items,
followed by 355 million yen to purchase official non-fighter planes,
and 160 million yen for medical and dental equipment.

Under the conventional calculation method, base-related income in
FY2004 is 174.3 billion yen, which includes 46.5 billion yen in
value transactions in Okinawa. Under the new method, the figures 15%
higher than these were worked out. The rate of base-related income
to total earnings of citizens was also 0.7 percentage points higher

TOKYO 00001026 007 OF 007


than the 4.6% worked out under the conventional method.

SCHIEFFER

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