Cablegate: Daily Summary of Japanese Press 09/21/07

DE RUEHKO #4416/01 2640803
P 210803Z SEP 07





E.O. 12958: N/A



(1) Long halt to refueling operations inevitable; Russia abstains
from voting for UN resolution; Japan's UN maneuvering backfires

(2) Editorial -- UN resolution a makeshift measure

(3) Editorial: Ruling, opposition camps should compete on
antiterrorism measures

(4) US Army 1st Corps: Biggest HQ commanding 40,000 troops

(5) Interview with US Deputy Secretary of State Negroponte:
Expresses concern that Japan-US alliance will be undermined;
Delisting of DPRK from state sponsors of terrorism "is unrelated to
abduction issue in narrow sense"

(6) Direct foreign investment in Japan hit record in January-July
period, but uncertainty looming over future

(7) Banks in Saitama, Chiba used for money laundering; Westerners'
trust in Japan might have been abused


(1) Long halt to refueling operations inevitable; Russia abstains
from voting for UN resolution; Japan's UN maneuvering backfires

ASAHI (Page 2) (Abridged slightly)
September 21, 2007

The UN Security Council's adoption of a resolution including an
expression of appreciation for the Maritime Self-Defense Force's
refueling operations would rock the Democratic Party of Japan's
(Minshuto or DPJ) grounds to oppose a continuation of the refueling
mission. So Japanese government intended with Resolution 1776, which
was adopted by the UNSC on Sept. 19 (before dawn of Sept. 20, Japan
time). Nevertheless, the DPJ's stance remains unchanged, and
Russia's abstention from voting has exposed a lack of unity among
the member countries. Although former Chief Cabinet Secretary Yasuo
Fukuda and Liberal Democratic Party Secretary-General Aso Taro, who
are vying for the LDP presidency to become the next prime minister,
are eager to hold talks with the opposition parties, the
Antiterrorism Special Measures Law is certain to expire on Nov. 1,
forcing the government to suspend the refueling operations for a
long time.

The MSDF has been refueling the vessels engaged in the maritime
interdiction operation (MIO) in the Indian Ocean to prevent the
influx of weaponry and other materials. The MIO is part of the
US-led Operation Enduring Freedom (OEF) against terrorism.
Attributing the DPJ's adamant opposition to an extension of the
Indian Ocean mission to the lack of a UN resolution clearly
authorizing OEF, the Foreign Ministry began making behind-the-scenes
moves early.

A senior Foreign Ministry official said: "Starting in late August,
we informally asked some permanent UNSC member countries (United
States, Britain, and France) ways to adopt a new UN resolution
referring to OEF." As a result, they came up with an idea of adding
an expression of appreciation for the MIO to a resolution extending
the International Security Assistance Force (ISAF) in Afghanistan.

TOKYO 00004416 002 OF 010

Specifically their idea was to include the words of appreciation for
OEF in the preface to the resolution instead of its body.

Foreign Minister Nobutaka Machimura told the Kantei (Prime
Minister's Official Residence) that a new UN resolution would be a
powerful tool to persuade the DPJ. Machimura also sought the
cooperation of Secretary of State Condoleezza Rice at a Japan-US
ministerial held in Sydney on Sept. 7.

Given the fact that all UN resolutions on the ISAF had been adopted
by a unanimous vote, a senior Foreign Ministry official was
confident that China and Russia would support the new antiterrorism

Contrary to the Foreign Ministry's expectations, Russia abstained
from voting. "I don't understand why the resolution has to refer to
the MIO," Russian UN Ambassador Vitaly Chrkin complained to his US
counterpart before the vote. In response, the US ambassador
explained that each member of the coalition of willing had their own
circumstances. Hearing this, Chrkin said: "I hear that a request has
come from a certain country, which is not a UNSC member." Russia's
indirect criticism of Japan silenced the US representative.

A UN source also criticized Japan's conspicuous manipulation behind
the UN resolution.

In a press conference yesterday, DPJ Secretary General Yukio
Hatoyama blasted the government and ruling parties: "It is
deplorable that they used such a disgraceful approach in a bid to
get our party's support for a continuation of the refueling
mission." DPJ Deputy President Naoto Kan also declared: "The
resolution will have no impact on our stance whatsoever."

In their joint press conference held at the Foreign Correspondents'
Club of Japan on Sept. 19, both Fukuda and Aso stressed their plans
to hold talks with the DPJ to continue the MSDF refueling

The atmosphere in the government and ruling parties before Prime
Minister Abe abruptly announced his resignation had been different,

Following Abe's statement in Sydney that he would stake his job on
it, the government and the ruling bloc started paving the way for
limiting the MSDF activities to refueling and water-supply services.
The ruling coalition even considered extending the ongoing Diet
session substantially beyond Nov. 10 and adopting new legislation by
using its two-thirds majority in the Lower House.

Chances were that the new legislation would not clear the Diet
before the Antiterrorism Law expires on Nov. 1 and Japan would have
to halt the MSDF operations temporarily. The government and the
ruling coalition also studied ways to let the MSDF vessels stand by
at a port near the Indian Ocean to resume operations as soon as the
new legislation was enacted. The night before Abe announced his
resignation, government and ruling party executives, including Chief
Cabinet Secretary Yosano and LDP Secretary General Aso, assembled at
a Tokyo hotel to discuss Diet measures and other matters.

But Abe's resignation announcement derailed their plans. The Diet is
now stalled due to the LDP presidential race. The planned Diet
interpellations will be delayed about 20 days because the new prime

TOKYO 00004416 003 OF 010

minister will have to deliver his policy address. All this
considered, Diet deliberations on new legislation would not take
place until mid-October.

Fukuda's and Aso's repeated indications that they would avoid
confrontation with the DPJ have also spread the observation in the
government and ruling coalition that it is near impossible for the
new legislation to obtain Diet approval in the remaining session and
that the moment of truth will come in the next regular Diet session
in January.

Even if the legislation were carried over to the regular session,
the Diet would have to discuss the budget bill first. A path to
resuming the MSDF operations is not in sight at this point when
Lower House dissolution is looming over the ruling coalition.

An LDP Diet affairs officer lamented: "If this issue takes a toll on
deliberations on the state budget, people will ask, 'Which is more
important -- the Japanese economy or the Indian Ocean operations?'
And that would make the next Lower House election even more
difficult for us."

(2) Editorial -- UN resolution a makeshift measure

TOKYO SHIMBUN (Page 5) (Slightly abridged)
September 21, 2007

The United Nations adopted a resolution expressing appreciation for
Japan's refueling operations in the Indian Ocean. Because this
resolution came out abruptly as a result of Tokyo's pressure on the
UN, we are worried that other countries that are in agony over the
war on terror may regard the resolution as a makeshift measure.

The resolution adopted by the UN Security Council (UNSC) is intended
to approve an extension of the missions of the International
Security Assistance Force (ISAF), an organization formed to help the
new government of Afghanistan, which was established after the
collapse of the Taliban regime.

The main text of the resolution is brief and simply approves the
extension, but the preamble to the resolution refers to the NATO's
operations, as well as the need for Operation Enduring Freedom (OEF)
led by US forces, and gives a sense of importance to the overall

The resolution expresses appreciation this way: "We express our
appreciation for countries participating either in the ISAF or OEF,
including NATO's leadership and the maritime interdiction
component." No specific country is mentioned in the resolution, but
the passage "maritime interdiction component" is taken to mean
"expressing thanks to Japan for its contribution," US Ambassador to
the UN Khalilzad said.

When it comes to the situation in Afghanistan, NATO's secretary
general presented a situation report to the UN last month. The
report recognized a certain level of achievements in dealing with
armed insurgents in northern and central Afghanistan, but it noted
that violent acts continued in the south of the country, and that
the number of violent incidents doubled from the same period of last
year. Tragic cases of abductions of an Italian journalist, and South
Korean and German civilians are still fresh in our memories.

TOKYO 00004416 004 OF 010

Participating countries have their own circumstances in the face of
deteriorating security in Afghanistan. Germany has sent some 3,500
troops mainly to northern Afghanistan and lost 30 lives or so. The
tide of opinion in Germany is calling for a withdrawal. Britain,
Canada, and the Netherlands, which have all deployed their troops in
the dangerous southern region of Afghanistan, have begun grumbling
about other countries being unwilling to send their troops there.

Japan has not taken part directly in the ISAF and instead it has
continued the MSDF's refueling mission. In the latest Japan-US
summit days before announcing his intention to step down, Prime
Minister Shinzo Abe committed internationally to extend the
Antiterrorism Special Measures Law, the legal basis for the
refueling mission. But there is no prospect for the law to be
extended because of the main opposition Democratic Party of Japan's
(DPJ) oppositon. Given this domestic situation, it can be easily
imagined that Tokyo strongly lobbied Washington and tried to obtain
an international seal of approval for an extension of the refueling

Russian Ambassador to the UN Churkin abstained from voting on the
resolution on the grounds that the maritime interdiction component
was outside the UN operations. Churkin also blasted the resolution,
criticizing it as prioritizing a certain country's domestic

The DPJ is reacting sharply to the resolution, insisting on the need
for Japan to obtain proper approval of an extension of the refueling
mission from the UN. Even some in the ruling coalition cast doubt on
the resolution for giving the impression that it was adopted merely
for formality's sake. Domestic debate on the extension issue might
have become even more complicated all the more for the resolution.

(3) Editorial: Ruling, opposition camps should compete on
antiterrorism measures

MAINICHI (Page 5) (Full)
September 21, 2007

The United Nations Security Council (UNSC) adopted a resolution
extending the operations of the International Security Assistance
Force (ISAF) in and around Afghanistan. The resolution also
expressed the UNSC's appreciation for Operation Enduring Freedom
(OEF), including the maritime interdiction operation, in which
Japan's Maritime Self-Defense Force has participated by refueling
and supplying water to foreign vessels.

The main opposition Democratic Party of Japan (DPJ) has opposed an
extension of the MDSF refueling operation in the Indian Ocean based
on the Antiterrorism Special Measures Law. The DPJ insists that the
MSDF mission is not based on a UNSC resolution. The government had
lobbied the UNSC members to include a phrase expressing their
appreciation for the refueling services in a bid to urge the DPJ to
change its opposition to continuing the MSDF mission. Russia,
however, abstained from voting, saying that the vote represented a
decision to prioritize the domestic situation of certain countries.

The DPJ has no intention of altering its opposition to the refueling
operation since the UN resolution was adopted for the extension of
the ISAF operations. The reality is that it is extremely difficult
for the UN to authorize with a single resolution the OEF operations,
which were begun by the US-led coalition of the willing based on the

TOKYO 00004416 005 OF 010

US right of self-defense. The resolution probably meant that the
United Nations did not directly authorize the refueling operation,
but the international community hoped the operation would be

DPJ President Ichiro Ozawa's basic position that the UN did not
authorize it will be a major issue in the ongoing Diet session.
Meanwhile, Japan needs a debate on what kind of decisions it should
make when it is asked by the international community without any UN

Moreover, it is also important to know how the international
community sees Japan's services. Although Japan made financial
contributions worth 13 billion dollars for the Gulf War 1in 1991, it
was not appreciated internationally. Therefore, there is a view that
the refueling operation, which was appreciated, is a moderate
assistance measure.

There are many points of contention on the MSDF operation. However,
with no discussion conducted after the July House of Councillors
election, the public does not have any means to determine whether
they should agree or disagree.

We wonder in what area in the Indian Ocean the MSDF has carried out
its mission, what kind of activities it has conducted, and whether
its mission has helped antiterrorism operations.

Some have contended that fuel provided by the MSDF to a US aircraft
carrier was used in the Iraq war. There may be US aircraft carriers
engaging in both the Iraq and Afghan wars. Since the issue is
related to the foundation of the refueling operation, the government
should provide clear explanations to the public.

Ozawa's view is that since the ISAF operation was authorized by the
UN, Japan can participate in it. However, many politicians are
cautious about dispatching the Self-Defense Forces (SDF) to the
ISAF, whose missions carry considerable risks. Ozawa should make
clear his view on that point.

With Prime Minister Shinzo Abe's surprise announcement of his
intention to resign, the Diet was forced to suspend the session. The
outlook is that deliberations on the MSDF refueling services will be
delayed to October or later. The government and ruling coalition
have probably prepared for a suspension of the MSDF mission, which
expires on Nov. 1.

The government should under the new prime minister work on new
legislation on the refueling activities and sit down and deliberate
the legislation. The ruling and opposition camps should compete on
antiterrorism measures, including ones for stabilizing the Afghan
people's livelihoods.

(4) US Army 1st Corps: Biggest HQ commanding 40,000 troops

ASAHI (Kanagawa edition) (Page 34) (Full)
September 19, 2007

Seattle is home to the Seattle Mariners, a major league baseball
team for which Ichiro Suzuki is playing. In the suburbs of Seattle,
the US Army locates its Fort Lewis base, where its 1st Corps is

TOKYO 00004416 006 OF 010

In a forest of tall coniferous trees was the gate to Ft. Lewis. At
the gate, we boarded an official vehicle of the 1st Corps' public
affairs division. In about 10 minutes, a three-story brick building
came into view. The door had a crest reading "America's Corps." In
the entrance hall, we were greeted by the pictures of successive

The 1st Corps, also known as "I Corps," is one of the US Army's four
mainstay commands. Its establishment dates back to 1918 during World
War II. In World War II, I Corps fought the Imperial Japanese Army.
After the war, I Corps stationed troops in Japan to occupy and
govern the country. In 1981, I Corps moved its headquarters to the
current location that commands a view of Mt. Rainier, which is 4,392
meters high.

I Corps covers the Asia-Pacific region, or half of the globe. Its
scope ranges as far as India in the west, Alaska in the east, and
Australia and New Zealand in the south.

I Corps' headquarters reportedly commands about 20,000 active troops
and about 20,000 reserves in the event of emergencies. The
headquarters is currently staffed with about 500 personnel. About
300 of them are expected to be moved in time to Camp Zama in
Kanagawa Prefecture for its command headquarters.

"I Corps is a historical corps with the largest number of
decorations, and we are the largest of all battle commands in the
United States," Lt. Col. McDorman, who is the public affairs officer
at Ft. Lewis, said proudly.

On Sept. 11, 2001, terrorists attacked the United States at its
nerve centers. The attacks shocked Americans. Since then, Ft. Lewis
has been used as a base for the US Army to launch attack

I Corps also has dispatched troops to Iraq or Afghanistan, which are
outside its area. The US Army has sent out a total of approximately
64,000 soldiers-including those under the command of I Corps-from
Ft. Lewis to combat areas. US Army troops are mobilized there on
Stryker armored vehicles, and they are now beginning to return home.
However, the US Army still stations about 11,000 troops mainly in
Iraq, according to the base spokesman.

Soldiers are trained at Ft. Lewis before they are sent out. There
are 67 firing or bombing ranges on base. In addition, there was a
training site that reproduced an Iraqi street.

Among those facilities was the Battle Command Training Center (BCTC)
for computer-aided operational simulations.

Training programs there were mostly for possible battles in Iraq or
Afghanistan. "This is the Army's largest training facility for both
commanding officers and noncommissioned officers," Mike Peppers,
director of the BCTC, explained.

The BCTC is made up of seven facilities. One of them is a facility
that has an operations command training system for large
contingents. The US government built this facility two years ago
with an investment of 2.7 billion yen. The computer-aided system can
simulate operations using data, such as Iraq's geographical
features. Its data is always updated with information brought by US
soldiers with them. There was also a system looking like an auto

TOKYO 00004416 007 OF 010

race simulator that can be seen at game arcades.

There was another facility called the Mission Support Training
Facility (MSTF), which looks like a gymnasium. Inside there were
tents with a number of computers set up. A group of officers was
training there for operational command on the screen.

"Today, the US Army's command and control are all digitalized," a
training chief said.

Along with the US military's global transformation, the US Army
plans to build a new facility with the US budget on the premises of
Sagami Depot in the city of Sagamihara, Kanagawa Prefecture. The
newly planned facility is believed to have functions similar to the

"We're going to conduct joint drills with Japan at the facility to
be built in Japan," Peppers said. "I don't think we can do all the
training programs we're doing here," he went on. "But," he added,
"the facility will be at the highest level like the one we have

I Corps is currently headquartered on the US mainland to command
forward-deployed troops. In the process of realigning the US
military presence in Japan, I Corps will move its' command
functionality to Camp Zama, a US military base in the city of Zama,
Kanagawa Prefecture. The city is opposed to the planned relocation
of I Corps' command to Zama, claiming that it will lead to the US
military's permanent use of the base. However, the US military is
preparing to move the command to Zama. We visited Ft. Lewis on the
outskirts of Seattle to see I Corps as it really is.

(5) Interview with US Deputy Secretary of State Negroponte:
Expresses concern that Japan-US alliance will be undermined;
Delisting of DPRK from state sponsors of terrorism "is unrelated to
abduction issue in narrow sense"

NIKKEI (Page 3) (Full)
September 21, 2007

Tsuyoshi Sunohara


In an interview with Nikkei, US Deputy Secretary of State John
Negroponte in response to the question of whether Japan should
continue its Maritime Self-Defense Force's refueling mission in the
Indian Ocean indicated that continuing that mission is indispensable
in order to "firmly uphold the Japan-US alliance, which is the
cornerstone for America's East Asia policy." This remark may be
intended to forestall the main opposition Democratic Party of
Japan's (DPJ) President Ichiro Ozawa, who has declared his
opposition to continuing the refueling operation. Behind the remark
is concern that if the refueling issue drags on, it could affect the
Japan-US alliance.

"(Besides the United States), many other countries have
participated. It is safe to say that it is a multinational force
operation," Negroponte said. Speaking of the MSDF's refueling
mission in the Indian Ocean, he reiterated, "There is a very good
reason (for continuing the mission)," and expressed hope that a new
government of Japan would make a decision on the matter as swiftly
as possible. Negroponte stressed that the mission was based on an
"international consensus."

TOKYO 00004416 008 OF 010

In reaction to Ozawa's opposition to continuing the refueling
mission, many in the US government have taken the view that the
refueling issue "must not be turned into a political football," as
Ambassador to Japan Schieffer put it. Prime Minister Shinzo Abe's
announcement of his intention to resign has caused a political
vacuum in Japan, and as if to take advantage of that, the ruling and
opposition parties are engaged in a political tug of war over the
refueling issue. A growing concern in the US government at present
is that Ozawa's insistence on halting the refueling mission "could
lead to a worsening of Japanese sentiment toward the US."

Gaps are widening between Japan and the US over how to deal with the
North Korean issues, particularly that of Japanese nationals
abducted to North Korea. Negroponte proclaimed: "Japan and the US
share the common cause of denuclearizing the Korean Peninsula. We
have pursued policy cooperation."

When asked whether the US would remove North Korea from the list of
state sponsors of terrorism, Negroponte replied, "There is no
deadline to do so," but he indicated that the US in deciding whether
to delist that country, would take into consideration whether there
was progress on dismantling the nuclear facilities, but not link the
settlement of the abduction issue. He explained, "We don't think
that (delisting and progress on the abduction issue) are related to
each other in the narrow sense." Behind the question of delisting
seems to be the Bush administration's intention to produce "results"
in some way or other regarding the North Korean problem,

Recently, however, the North has faced the allegation that it might
have offered nuclear technology assistance to Syria. In this regard
a former high-level State Department official commented: "If such
were true, it would devastate the six-party talks process, as well
as the conciliatory line of the US and the DPRK."

Chances are strong that this assistance is "not the one for the
transfer of nuclear bombs or nuclear materials but it is limited to
the offering of information about relevant technology," as a source
familiar with US-North Korea relations put it. Referring to this
allegation, Negroponte went no further than to say, "I refrain from
making any comment on relations between Syria and North Korea," and
indicated his intention to minimize an adverse effect of the nuclear
assistance issue on the six-party talks. The US government's
conciliatory policy toward North Korea seems to be coming to a

(6) Direct foreign investment in Japan hit record in January-July
period, but uncertainty looming over future

NIKKEI (Page 5) (Full)
September 21, 2007

Foreign direct investment (FDI) in Japan, including foreign
capital's investment in or acquisitions of Japanese firms, has
skyrocketed recently. According to data released by the Finance
Ministry, FDI in the January-July period of this year surged to a
record high of 2.324 trillion yen, owing to an increase in the
number of Japanese firms that sold affiliated companies to foreign
firms as part of restructuring efforts, as well as the number of
foreign firms that purchased equity stakes in Japanese firms. But
the effect of the subprime loan problem in the US may dampen
investment in the future. In addition, the ratio of FDI to gross

TOKYO 00004416 009 OF 010

domestic product (GDP) remains low. Keeping these factors in mind,
many observers reiterate the need for more measures to promote
investment as part of efforts to revitalize the economy.

Capital inflows in the January-July period reached 4.648 trillion
yen, while capital outflows totaled 2.288 trillion yen. The net
figure of excess inflow over outflow was the largest ever for a
January-July period since the Finance Ministry introduced its
current calculation method in 1996, easily surpassing the annual net
inflow record of 1.4513 trillion yen set in 1999.

Last year, the value of outflow was 756.6 billion yen larger than
the value of inflow, but this trend lasted only briefly.

The increase in FDI reflects active moves among American and
European companies to expand their global shares by acquiring
Japanese firms. In a bid to boost their global competitiveness, more
Japanese companies have entered into strategic business or capital
tie-ups with foreign firms. This is another reason for the FDI

According to M&A intermediary Recof Corp., US giant Citigroup Inc.'s
acquisition of Nikko Cordial Corp. (for 920 billion yen) was the
biggest investment deal in the first half of the year, followed by
General Electric Co.'s buyout of Sanyo Electric Credit Co. Many
deals involve financially troubled companies.

Direct foreign investment in August was also brisk. According to
Recof Corp., the number of deals total 25, worth 105.2 billion yen,
exceeding the value set in July. This record was due to the purchase
of Yayoi Co., under the wings of Livedoor Co., by MBR Partners, an
independent investment fund operating mainly in South Korea.

The government has set the goal of doubling the ratio of the FDI
balance to GDP in 2010 to 5 PERCENT over the 2.5 PERCENT marked at
the end of 2006. Japan's FDI balance is lower than those of major
Western countries. According to the United Nations Conference on
Trade and Development (UNCTAD), the FDI balance in 2006 was 37
PERCENT in Britain, 18 PERCENT in Germany, 13 PERCENT in the US,
but only 2 PERCENT in Japan.

It is unknown whether the current trend of expansion will continue
into the future. In the aftermath of the turmoil in the monetary
market set off by the subprime problem, global financial
institutions are becoming cautious about money lending for M&A

A spokesman of Thomson Financial, an American financial information
company, said that the number of M&A cases across the world in
August decreased by 22 PERCENT below the previous month to 2,709.
Economist Makoto Tanimura of the Japan External Trade Organization
(JETRO) said: "This global trend might have some effect on
investments in Japan." Many persons are now calling for more efforts
to arrange the environment to encourage investment, such as

(7) Banks in Saitama, Chiba used for money laundering; Westerners'
trust in Japan might have been abused

ASAHI (Page 39) (Full)
September 20, 2007

TOKYO 00004416 010 OF 010

Why was Japan used as the stage for money laundering? A senior
officer of the National Police Agency replied to this question:
"Americans and Europeans tend to have no suspicion if Japan is
designated as the payee. In addition, there might have been
cooperators who opened bank accounts." In the US, when one transfers
money abroad, a stringent background check is conducted on the
sender. In this case, however, there was no investigation, because
the senders were the victims of real estate swindles.

As measures to eradicate the financial resources of terrorists and
to prevent money laundering, the Japanese government introduced a
stricter ID system for new depositors in 2003. Set off by the
exposure of cases in which different persons' accounts were misused
in bank-transfer scams, the government also prohibited the resale of
bank accounts in late 2004. Despite these efforts, 1,558 cases of
bank accounts illegally opened were unearthed in 2006. A flood of
information about transactions in bank accounts is available on the
Internet. As it stands, it is still easy to get different person's

Under such a situation, wrongdoing never ceases. The number of
allegedly crime-connected deals reported by financial institutes to
the Financial Services Agency increased from 18,000 in 2002 to
113,000 in 2006. The number of money-laundering cases prosecuted
under the Organized Crime Law in 2006 totaled 134.

Some point out the insufficiency of countermeasures in Japan,
compared with the US. In April, the government enacted the law to
prevent transferring money earned through crimes and set up a
Japanese-version FIU (financial intelligence unit) in the National
Police Agency.


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