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Cablegate: Japanese Morning Press Highlights 10/09/07

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UNCLAS SECTION 01 OF 18 TOKYO 004715

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: JAPANESE MORNING PRESS HIGHLIGHTS 10/09/07

Index:

1) Top headlines
2) Editorials
3) Prime Minister's holiday weekend schedule (Nikkei)

Politics in turmoil:
4) Fierce clash to begin today in the Lower House between ruling and
opposition camps, with LDP to stress importance of continuing
anti-terror operations (Yomiuri)
5) Democratic Party of Japan (DPJ) to pursue ruling camp today in
Diet on alleged diversion of refueled oil, new anti-terror bill
(Sankei)
6) DPJ to attack ruling camp in Diet with set of three issues: MSDF
refueling operations; political scandals; and pension program
(Mainichi)
7) Simulation of snap Lower House election next spring: DPJ has the
advantage and LDP/Komeito coalition could lose majority (Tokyo
Shimbun)
8) Ozawa's political support group bought apartment buildings with
political donations and profited from rent money a violation of the
law (Mainichi)

Anti-terror legislation row:
9) Maritime Self-Defense Force (MSDF) to be ordered to return home
from the Indian Ocean next month as prospects for extension of law
dim (Nikkei)
10) LDP in defense of continuing refueling services in the Indian
Ocean to focus on Pakistan as recipient (Yomiuri)

11) US denies allegation of diversion of MSDF-supplied oil to Iraq
war (Yomiuri)
12) US' reply to Japanese government backs denial of charge of
diversion of MSDF oil for use in Iraq war (Tokyo Shimbun)

ISAF participation issue:
13) Foreign and defense ministers see DPJ President Ozawa's proposal
for Japan to participate in ISAF in Afghanistan "unconstitutional"
(Yomiuri)
14) LDP's Hidenao Nakagawa wants ruling and opposition party heads
to debate the ISAF participation issue in the Diet (Yomiuri)
15) DPJ's Naoto Kan on TV talk show defends Ozawa's proposal for
ISAF participation, sees Japan's contribution as "humanitarian
assistance" (Sankei)

Other defense issues:
16) US, Japan coordinating two to five-year extension of special
measures agreement (SMA) for host nation support (Nikkei)
17) US seeks large increase in SMA to cover rising utility costs at
US bases (Sankei)
18) Japan negative about allowing increased budget for US base
utility costs under new SMA (Tokyo Shimbun)
19) Defense Ministry and SDF shifting F-15s to Okinawa as part of
new strategic response to China's military buildup (Nikkei)
20) Declassified documents show secret US-Japan agreement not to
measure possible nuclear emissions for US warships entering Japanese
ports (Akahata)

21) Japan considering bearing part of financial burden for North
Korea's denuclearization (Nikkei)

22) DPJ Secretary General Hatoyama says Japan needs US involvement

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if northern territories issue with Russia is ever to be resolved
(Mainichi)

Articles:

1) TOP HEADLINES

Asahi:
Policy affairs research expenses: 20 prefectures plan to require
receipts for expenditures over single yen: 15 assemblies to adopt
requirement this fall

Mainichi:
Ozawa's fund management body earns rent income from condominiums
purchased with political funds: 10 million yen between 2002 and
2006; Suspected of violation of Political Fund Control Law

Yomiuri:
Second-generation Japanese born in Philippines given Japanese
nationality without their fathers' identified family registrations;
Tokyo Family Court makes decision based on indirect evidence

Nikkei:
Toray begins production of auto parts using carbon fiber, investing
30 billion yen in 2010 for new plant: First mass production in
world

Sankei:
Sankei poll on triangular mergers: Respondents viewing them as a
threat drop from 46 PERCENT to 21 PERCENT ; Companies are steadily
adopting defense measures.

Tokyo Shimbun:
Next Lower House election: LDP, New Komeito will suffer crushing
defeat due to Japanese Communist Party (JCP) reducing candidates?
LDP could lose majority if DPJ gets JCP votes, according to Tokyo
Shimbun simulation

Akahata:
Danger of nuclear-powered aircraft carrier: 1,200 people take part
in metropolitan zone symposium to oppose deployment in Yokosuka;
Fight to move government urged

2) EDITORIALS

Asahi:
(1) Burma: Continue journalist Nagai's legacy
(2) Guardians for elderly should be increased with mutual aid among
citizens

Mainichi:
(1) Medical fees to be shouldered by the elderly: Freezing increase
as stop-gap measure not acceptable
(2) Measures on hepatitis: Speed up bipartisan efforts to relieve
patients

Yomiuri:
(1) Two corporate taxes: Make efforts to narrow gaps between
regional areas
(2) Measures to ensure product safety: System that can root out
accidents caused by old products


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Nikkei:
(1) Widen the use of funding sources for roads with focus on
environmental measures
(2) Time to remove mistrust in political funds

Sankei:
(1) Hometown tax: Might be useful in revitalizing rural areas
(2) Bidding system reform: Do not solely rely on overall judgment
system

Tokyo Shimbun:
(1) Revitalization of rural areas: What is important is not public
finance but resourcefulness
(2)Business tie-ups between Japan Post Holdings and Nippon Express:
Do not forget downsizing efforts

Akahata:
(1) Funding sources: Dig into two sacred areas

3) Prime Minister's Official Residence (Kantei)

Prime Minister's schedule, October 5

NIKKEI (Page 2) (Full)
October 6, 2007

07:02
Met former Gunma prefectural assembly member Motoji Yanagisawa at
his private residence in Nozawa.

08:00
Met at Deputy Chief Cabinet Secretary Iwaki at the Kantei.

09:04
Attended a cabinet meeting in the Diet building.

09:26
Arrived at the Kantei.

10:01
Attended an Upper House plenary session.

11:52
Arrived at the Kantei.

13:01
Attended the Upper House plenary session.

15:30
Met METI Vice Minister Kitabata at the Kantei.

16:19
Met Waseda University President Katsuhiko Shirai. Followed by
Cabinet Intelligence Director Mitani.

17:31
Met New Komeito Secretary General Kitagawa. Later, received a phone
call from South Korean President Roh Moo-hyun.

18:10
Talked on the phone with President of Sri Lanka Rajapaksa. Later,
met Resources and Energy Agency Director General Mochizuki, with

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Foreign Ministry Asian and Oceanian Affairs Director General Sasae
present.

19:37
Dined at an Italian restaurant in the Hotel New Otani with his
secretaries.

SIPDIS

22:13
Returned to his private residence in Nozawa.

Prime Minister's schedule, October 6

NIKKEI (Page 2) (Full)
October 7, 2007

Spent the day at his private residence in Nozawa.

Prime Minister's schedule, October 7

NIKKEI (Page 2) (Full)
October 8, 2007

07:13
Left JR Tokyo Station by Nozomi bullet train.

09:33
Arrived at JR Kyoto Station.

10:17
Met Science and Technology Minister Kishida, former Finance Minister
Koji Omi, Kyoto Governor Yamada, and others at the National Kyoto
International Hall. Attended an opening ceremony of the
International Forum on Science Technology and Human Future.

11:46
Left JR Kyoto Station by Nozomi bullet train.

13:47
Arrived at JR Shin-Yokohama Station.

14:18
Arrived at his private residence in Nozawa.

17:17
Met National Defense Academy President Iokibe.

20:52
Held a meeting with his secretaries.

23:21
Returned to his private residence.

Prime Minister's schedule, October 8

NIKKEI (Page 2) (Full)
October 9, 2007

Spent the day at his private residence in Nozawa.

4) Debate at Lower House Budget Committee to kick off today

YOMIURI (Page 4) (Excerpts)

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October 9, 2007

Deliberations will start at the House of Representatives Budget
Committee today. On the controversial issue of whether to extend the
Maritime Self-Defense Force's (MSDF) refueling mission in the Indian
Ocean, the Democratic Party of Japan (DPJ), which has now control of
the House of Councillors, is poised to have an all-out showdown with
the government and the ruling bloc by having three members who once
assumed party presidency take the floor as its questioners.
Meanwhile, the ruling camp is willing to underscore to the people
the necessity of the continued MSDF operation through Diet
deliberations.

The Budget Committee will hold deliberations for three days starting
today. The sessions on the first and second days will bring together
Prime Minister Fukuda and all the cabinet members. Criticizing that
the prime minister responded to Diet questions by simply reading
from prepared text, the opposition bloc intends to thoroughly attack
the ruling coalition, with Upper House Chairman Azuma Koshiishi
assuring: "We are determined not to allow one-way traffic this time.
We will bring about a heated discussion." In the meantime, chances
are expected to increase for powerful debaters from the government
side, such as Defense Minister Ishiba and Health, Labor and Welfare
Minister Masuzoe, to make replies. Verbal blows are likely to be
traded between the ruling and opposition camps.

From the DPJ, Policy Research Council Deputy Chairman Akira
Nagatsuma will be sent as its questioner today. Tomorrow, former
party presidents Naoto Kan, Seiji Maehara, and Katsuya Okada will
take the floor as questioners.

In the earlier representative interpellations at both houses, the
main opposition party clarified its opposition to the government's
new antiterrorism legislation to replace the current Antiterrorism
Special Measures Law. In a meeting held earlier in the Upper House,
Koshiishi already said in an attempt to contain the ruling
coalition: "We will be able to submit a censure resolution against
the prime minister to the Upper House and adopt it."

In Budget Committee meetings, too, the DPJ will give priority to
efforts to clear up the details of the MSDF operation over the
contents of the new legislation. In particular, the party intends to
urge the prime minister to bring out the truth of the allegation
that fuel supplied to United States' warships by the MSDF was used
in the Iraq war.

5) Skirmish expected on new antiterrorism legislation today in Lower
House Budget Committee; DPJ gearing up to pursue government over
possible diversion of fuel for Iraq war

SANKEI (Page 5) (Full)
October 9, 2007

The ruling and opposition parties will engage in a full battle of
words in a session today of the Lower House Budget Committee. Prime
Minister Yasuo Fukuda in his first attendance at the session after
taking office as prime minister intends to explain the importance of
the planned new "antiterrorism special measures law" (tentative
name) in order for Japan to continue the Maritime Self-Defense
Force's (MSDF) refueling mission in the Indian Ocean.

Meanwhile, the major opposition Democratic Party of Japan (DPJ)

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intends to send three former party presidents, including current
Deputy President Naoto Kan, to the session as interpellators and
pursue the government about allegations that the fuel provided by
Japan might have been diverted for the Iraq war. A fierce skirmish
is expected in the session ahead of the government officially
presenting an antiterrorism special measures bill to the Diet.

The Liberal Democratic Party (LDP) plans to send Policy Research
Council Chairman Sadakazu Tanigaki and former Defense Agency
Director-General Gen Nakatani, who compiled an outline of the new
bill, to the first-day session to answer questions from the
opposition parties. During the session, Fukuda will explain the
significance of the new bill. While calling on the DPJ to respond to
talks with the ruling bloc on the bill, the government intends to
forestall the DPJ's stance of opposing an extension of the refueling
mission.

Besides Kan, the DPJ plans to send former Presidents Seiji Maehara
and Katsuya Okada as interpellators. They intend to bring up the
suspicions that the MSDF might have refueled a US carrier which
later took part in the Iraq war.

On Oct. 5, the ruling bloc indicated an outline of the new bill at a
meeting of the Diet affairs chiefs from the ruling and opposition
parties and asked for discussion on the outline before the
submission of the bill to the Diet. But the opposition bloc refused
to hold talks on the outline with DPJ Secretary General Yukio
Hatoyama arguing, "We can't respond to a closed-door session." Then
the ruling bloc has regarded the "Budget Committee session as a
forum to listen to the opposition bloc's requests," LDP Diet Affairs
Committee Chairman Tadamori Oshima said. After deliberations in the
Upper House Budget Committee, the government intends to obtain
cabinet approval of the bill on Oct. 17 or later.

The ruling parties want to somehow reflect the opposition bloc's
views in the bill, but the opposition parties' stance is not to
agree to extend the refueling mission.

The DPJ's Policy Research Council Chairman Akira Nagatsuma, who is
well-versed on the pension issue, will take the floor to question
the government on the first-day session and query the prime minister
and Health Minister Yoichi Masuzoe about how to deal with the
missing records of payments of pension premiums.

6) DPJ to go on the attack in the Lower House Budget Committee over
MSDF refueling mission, politics-money scandal, pension issue

MAINICHI (Page 2) (Abridged)
October 9, 2007

The House of Representatives Budget Committee will start basic
question-and-answer sessions today in the presence of Prime Minister
Yasuo Fukuda and the cabinet ministers. Emboldened by its big win in
the July House of Councillors election, the main opposition
Democratic Party of Japan (DPJ or Minshuto) will turn up the heat on
the Fukuda government on three issues: whether to allow the Maritime
Self-Defense Force (MSDF) refueling mission in the Indian Ocean to
continue; the "politics and money" scandals, and the pension
record-keeping fiasco. The government and ruling coalition,
meanwhile, intend to increase the public's understanding of the MSDF
refueling operations and pave the way for deliberations on a new
antiterrorism bill through debate in the Budget Committee.

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The DPJ will have Deputy President Naoto Kan and former party heads
Seiji Maehara and Katsuya Okada appear in the Budget Committee
tomorrow to grill Fukuda, who will reply to Diet questions for the
first time as prime minister.

Kan and the other DPJ representatives will pursue mainly the
allegation of the diversion of fuel provided by the MSDF to the Iraq
war. Although the government and ruling camp aim to deliberate the
new antiterrorism bill at committee meetings, the DPJ plans to press
the government to disclose information on the MSDF activities, but
it will not take part in a debate on the new legislation per se.

Regarding the political money scandals, junior DPJ lawmaker Sumio
Mabuchi will grill the prime minister over his political
fund-management organization having rewritten receipts. The DPJ
plans to submit to the current Diet session a bill requiring
politicians to attach to their fund reports receipts for all
expenditures of one yen or more. The party intends to attack the
discord that exists between the ruling Liberal Democratic Party
(LDP), which has decided to entrust a conclusion on standards to
disclose receipts to future deliberations between the ruling and
opposition camps, and its coalition partner, New Komeito, which has
called for the need to attach receipts for expenditures of one yen
or more. Akira Nagatsuma, deputy policy chief, will pursue the
government over its mishandling of the pension-record keeping, as
well as systematic problems with the pension system.

7) Simulation on next Lower House election: If votes for JCP go to
DPJ under JCP's new policy, ruling coalition would suffer crushing
defeat

TOKYO SHIMBUN (Top Play) (Excerpts)
October 9, 2007

The Japanese Communist Party (JCP) has set forth a new policy of
strictly selecting candidates for single-seat constituencies in the
next House of Representatives election. Following this, Tokyo
Shimbun simulated the outcome of the election, based on data from
the July House of Councillors election. As a result, it has been
found that the Democratic Party of Japan (DPJ) would score
significant gains, decreasing the number of seats of the ruling
coalition of the Liberal Democratic Party and the New Komeito.

In its Central Committee general assembly held last month, the JCP
revealed the policy of significantly narrowing down its candidates
for single-seat constituencies "in order to pour its current party
capacities into the proportional representation segment effectively
and positively," according to Chairman Kazuo Shii. Under the new
policy, the JCP would (1) field candidates in districts in which the
party garnered more than 8 PERCENT of the total in the proportional
representation segment in the Upper House election; and (2) put up
its candidates in all prefectures.

According to a simulation worked out based on this JCP new policy,
the party would field candidates in 135 districts out of the 300
single-seat constituencies. Assuming that those who voted for the
JCP in the July Upper House election cast their ballots for the DPJ,
the main opposition party would secure 168 seats in single-seat
constituencies. With this figure added to the expected number of
seats in the proportional representation segment, the DPJ would
independently win a majority. In contrast, the ruling coalition

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would see the total number of their votes decrease to 212.

Under a scenario in which half of the votes for the JCP flow to the
DPJ, the main opposition would win 239 seats, close to the majority
of 241.

8) Ozawa's fund management body earns rent income from condominiums
purchased with political funds: 10 million yen between 2002 and
2006; Suspected of violation of Political Fund Control Law

MAINICHI (Top Play) (Almost Full)
October 9, 2007

The Mainichi Shimbun has learned that Rikuzan-kai, Democratic Party
of Japan (DPJ or Minshuto) head Ozawa's fund management body,
purchased condominiums and has been earning income from them by
renting them out to a consulting company and a legal foundation. It
already has become an issue that the body had purchased more than 10
properties with political funds. This is the first time its
management of political funds using properties has come to light.
The Political Funds Control Law bans political funds management
bodies from depositing political funds into a savings account or
managing such in a form of other than purchasing government bonds.
Prefacing his remark with "This is my view in general terms," an
official of the Internal Affairs Ministry said, "Earning rent income
could be a case of violation of law."

According to Rikuzan-kai's political funds report, the body has a
condominium at Prime Akasaka, a bloc of condos in Minato Ward,
Tokyo. S.A. Consulting rents, a consulting company, rents it. The
body also has a condominium in Grand Akusu Kojimachi, a block of
condos in Kojimachi, Chiyoda Ward. The International Grass-Roots
Exchange Center, which is under the jurisdiction of the Foreign
Ministry and the Ministry of Economy, Trade and Industry, rents it.
The nominal owner of these condominiums in the registry book is
Ozawa.

S.A. Consulting has been a tenant since Jan. 2002, and the Exchange
Center since Oct. 2004. They respectively paid 70,000 yen and
200,000 yen per months to Rikuzan-kai. The rents they paid totaled
approximately 10 million yen as of the end of 2006. S.A. moved out
around the end of September.

The Political Funds Control Law does not allow fund management by
political organizations for purposes other than depositing them into
a savings account, purchasing government bonds and
government-guaranteed bonds and leaving then in trust with financial
institutions that guarantee principals. The Internal Affairs
Ministry pointed out that renting real estate purchased with
political funds in order to earn rent income is suspected of falling
under the category of the management of assets, an act banned under
the law.

Ozawa's office rebuts, noting that renting properties without charge
is problem

Ozawa's office rebutted by saying that renting real estate free of
charge is not a problem. A person in charge maintained, "Our office
has no perception that renting our property falls under the
management of political funds. The consulting company undertakes
contracts for Ozawa's policy planning. Mr. Ozawa was involved in the
foundation of the judicial corporation. He serves as director at

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it."

Rikuzan-kai purchased condominiums and land in Tokyo, Morioka City
and Sendai City for a total of approximately 1 billion yen. Ozawa is
the nominal owner of all those properties in the registry book. It
was made an issue in January this year that these properties were
purchased with office expenses. Showing the receipts, Ozawa
explained that they are not his personal assets. He noted that when
he pulls out of politics or when he dies, he would use the assets of
Rikuzan-kai for assistance to the young and for the Japan-US and
Japan-China Grass-Roots Exchange Fund.

Following the revelation of Ozawa's acquisition of real estate, the
Political Funds Control Law was amended in June this year. Political
funds control bodies are now prohibited from possessing land and
buildings other than those they had possessed before the amendment
of the law.

9) Japan early next week to inform US, Britain, other countries of
MSDF's withdrawal from Indian Ocean

NIKKEI (Page 1) (Slightly abridged)
Eve., October 6, 2007

The government will inform the multinational force led by the United
States and Britain possibly early next week about withdrawing the
Maritime Self-Defense Force (MSDF) now engaged in the refueling
mission in the Indian Ocean on Nov. 1, when the Antiterrorism
Special Measures Law is to expire. At one point the government had
studied the possibility of keeping the MSDF in the ocean in the name
of conducting a survey even after the expiry of the law, but out of
concern of the public opinion, the government has decided to let the
MSDF return home immediately. The supply vessels are expected to
return home by late November.

Although it had already become certain that the antiterrorism law
would expire, the government has delayed informing other countries
of the MSDF's withdrawal from the Indian Ocean in part because it
has been making efforts to enact as quickly as possible a new law
intended to continue the refueling mission.

The multinational coalition naval command in Bahrain, the control
tower of the ongoing cleanup operations in the Indian Ocean, usually
determines the next operation about one month in advance. If Japan
overly delays informing the concerned countries of its MSDF's
withdrawal, it would cause trouble for them. The government
presented an outline of new legislation to the opposition parties on
Oct. 5, but they remained unwilling to holding prior talks with the
ruling parties. As a result, the government judged it was an
avoidable choice to inform the concerned countries of the MSDF's
withdrawal,

Coordination is underway for Foreign Minister Masahiko Komura to
convey this decision to withdraw the MSDF to US Ambassador J. Thomas
Schieffer and others. Chief of Staff Takashi Saito of the Joint
Staff Office will inform the commander of the US Naval Forces
Central Command/US 5th Fleet and others about this decision.

Countries participating in the maritime interdiction operations to
prevent movements of terrorists and weapons/narcotics are the US,
Britain, Japan, France, Germany, and Pakistan. If Japan's MSDF
withdraws from the Indian Ocean, the number of supply vessels

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working there will be reduced to two US vessels and one British
vessel. Reportedly, every participating country has difficulties in
newly deploying its supply ships. Given this, scaling down of the
sea area to be covered by the interdiction operations and shortening
the duration of the operations are likely to occur.

The MSDF has provided some 480,000 kiloliters of fuel to the
multinational force since December 2001. Of them, 79.5 PERCENT has
been provided to the US military.

Pakistan is the country that would suffer most if Japan stopped
refueling service because that country has relied on Japan's
refueling. Pakistan is the only Islamic nation participating in the
war on antiterrorism. Pakistan has given the impression that the
mop-up operations against terrorism are not part of a religious war.


10) Oil to Pakistan is likely to be a focal point at Diet

YOMIURI (Page 4) (Abridged slightly)
October 9, 2007

In order to prove the need for continuing the Maritime Self-Defense
Force's refueling operation in the Indian Ocean, the government has
repeatedly underlined the importance of providing Pakistani vessels
with fuel. The government's explanation has drawn objections,
however. In Lower House Budget Committee sessions scheduled to open
today, opposition parties are likely to pursue the government's
logic.

The MSDF has been providing fuel and water to vessels of a total of
11 countries in the Indian Ocean since December 2001 under the
Antiterrorism Special Measures Law. Receiving some 19,000 kiloliters
of fuel, Pakistan is the third largest oil recipient following the
United States and France.

At a press conference on Sept. 10, Vice Foreign Minister Shotaro
Yachi said: "Explained in terms of automobiles, Pakistani vessels
need high-octane gasoline, which can only be supplied by MSDF supply
ships at present." US Ambassador to Japan Thomas Schieffer as well
expressed his hope for a continued MSDF mission, saying that the US
military cannot provide the quality of fuel the Pakistani naval
vessels need.

The commitments by Japan and the US to Pakistan, the only Islamic
country participating in maritime interdiction operations (MIO),
reflect their intention to send a clear message that the war on
terrorism is not a narrow sectarian conflict.

The government's explanation has raised some questions.

In response to questions from Lower House lawmaker Kenji Eda, the
government adopted at a cabinet meeting on Oct. 5 a written reply
saying that the MSDF supply vessel equipped with a fuel purifier has
been providing refined fuel to the Pakistani vessels, which require
quality oil.

To a question asking why it has to be an MSDF supply vessel, the
written reply simply said without presenting any operational
grounds: "President Musharraf has indicated that (refueling by the
MSDF) was indispensable. It is a vital factor for the Pakistani
vessels to remain in the MIO."

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But the view that fuel from such countries as the United States and
Britain are unusable for the Pakistani vessels has drawn objections
from within the MSDF, including Chief of Staff Eiji Yoshikawa, who
said: "(A standard) supply vessel of any country is equipped with an
oil purifier." The matter is likely to become a point at issue at
the Diet.

11) US denies diversion of use of MSDF fuel

Yomiuri (Page 2) (Full)
October 7, 2007

By Aya Igarashi in Washington, D.C.

It was learned on Oct. 6 that in response to the charge that fuel
supplied by the Maritime Self-Defense Force (MSDF) in the Indian
Ocean, based on the Anti-Terrorism Special Measures Law, the US
Department of Defense was asked by the Japanese government to
prepare a reply formally denying the fuel was diverted for other
use. The Japanese government is considering using the US's formal
reply to parry accusations by the opposition camp in the Diet.

According to a source in the US government, the reply will deny any
diversion, stating, "There was no use (of the fuel) other than as
intended." To counter examples that have been cited of such
diversion of use as the refueling of the Kitty Hawk, the contents of
the reply will provide data about the actual situations.

12) US hands Japan a reply that denies MSDF fuel used for Iraq war

TOKYO SHIMBUN (Page 3) (Full)
October 9, 2007

WASHINGTON-The United States has officially denied in its answer to
the Japanese government's inquiry that US naval vessels used
Japanese fuel for the Iraq war, US Department of Defense officials
confirmed yesterday. The Maritime Self-Defense Force has been
refueling US naval vessels in the Indian Ocean under the
Antiterrorism Special Measures Law. In this regard, those US vessels
are suspected of having used MSDF-supplied fuel for the Iraq war.

On this issue, Foreign Minister Masahiko Komura, appearing on a TV
program aired Oct. 7, said: "I don't think they (US vessels refueled
by the MSDF) went on Iraq operations. We have an answer like that
from the United States."

The Japanese government has not revealed anything in detail about
the answer. However, the Defense Department apparently concluded
that Japanese-provided fuel has not been used for any other
purposes. At the same time, the Pentagon is also believed to have
provided the Japanese government with information about the
activities of those US naval vessels.

However, the USS Kitty Hawk, a US aircraft carrier that participated
in Iraq operations, was indirectly refueled by the Tokiwa, an MSDF
supply ship, according to a civic group's findings. There is no
knowing how far the US account will unveil the facts.

13) Foreign and defense ministers call Japan's ISAF participation
"unconstitutional"; deny diversion of MSDF fuel


TOKYO 00004715 012 OF 018


YOMIURI (Page 1) (Full)
October 8, 2007

In connection with the war on terror in Afghanistan, Foreign
Minister Komura and Defense Minister Ishiba on Oct. 7 expressed
their respective views (on television talk shows) that Japan's
participation in the International Security Assistance Force (ISAF)
that is bearing the burden of maintaining public security in
Afghanistan -- as advocated by Democratic Party of Japan (DPJ or
Minshuto) President Ozawa -- would not be allowed under the
Constitution. Both cabinet ministers denied the allegation that oil
being provided by the Maritime Self-Defense Force (MSDF) to US naval
vessels in the Indian Ocean was being diverted for the Iraq war.
They both laid down a clear difference in points of view between the
ruling and opposition camps in the Diet.

On the question of participation in ISAF, Ishiba, appearing on a
TV-Asahi talk show, stressed: "If Japan were to participate (in
ISAF), (Ozawa) must tell us properly what kind of use of weapons
authority will the troops be given. (I would like to say to him) not
to trifle with the lives of our servicemen. From the point of view
of the government today, Japan's participation in ISAF which
involves the use of armed force is not permissible under the
Constitution."

Komura, appearing on a Fuji TV program, took up Ozawa's assertion
that "participation in ISAF, which is based on a UN resolution, does
not violate the Constitution." He rebutted: "His thinking that as
long as there is a UN resolution, the use of armed force is all
right, but if there is no UN resolution, then even logistical
support is no good is incompatible with government interpretation of
the Constitution that has been consistent from long ago." In
response, DPJ Deputy President Naoto Kan expressed his view that
partial participation was possible."

On the other hand, responding to the allegation of diversion of fuel
supplied by the MSDF (in the Indian Ocean), Komura, appearing on an
NHK talk show, stated clearly that in his view there has been no
such misuse. He said: "I don't think that (US warships that received
MSDF refueling) were engaged then in the Iraq war. We have had such
a reply from the United States, as well." The US Department of
Defense at the request of the Japanese government has prepared a
reply denying any diversion of fuel. Komura indicated that the
Japanese government had accepted that reply.

Ishiba also stated on the TV Asahi program, "The Defense Ministry is
analyzing material ordered up from the US, but our sentiment is that
there has been no use of the fuel for another purpose." In addition,
regarding the supplying of fuel to the supply ships of other
countries, he said: "Once it is confirmed in some form that there
was no diversion of that fuel, we will be able to continue to supply
those supply ships.

14) Nakagawa calls for party-head debate on ISAF participation

YOMIURI (Page 4) (Full)
October 9, 2007

Former Liberal Democratic Party Secretary General Hidenao Nakagawa
delivered a speech yesterday at Fuchu Town, Hiroshima Prefecture. In
it, touching on Democratic Party of Japan (Minshuto or DPJ)
President Ichiro Ozawa's call for taking part in the International

TOKYO 00004715 013 OF 018


Security Assistance Force (ISAF), Nakagawa said: "The government and
ruling parties have said that such is a violation of the
Constitution. Because the matter was raised by the president of the
largest opposition party, a thorough debate must be held between
Prime Minister Fukuda and Mr. Ozawa." Thus Nakagawa indicated that
Ozawa must explain his interpretation of the Constitution at a
party-head debate.

Nakagawa also indicated that discussions among opposition parties,
including the DPJ, were insufficient, saying: "What do the Japanese
Communist Party and the Social Democratic Party think of Mr. Ozawa's
interpretation of the Constitution? I wonder if such a view can band
the DPJ members together. I would like to see thorough discussion."

15) DPJ Vice President Naoto Kan on Fuji-TV program: "Humanitarian
aid is within the scope of what Japan can do (in Afghanistan)

SANKEI (Page 4) (Full)
October 8, 2007

In the following exchanges, Democratic Party of Japan (DPJ or
Minshuto) Vice President Naoto Kan spoke about such issues as the
Maritime Self-Defense Force (MSDF) refueling activities in the
Indian Ocean.

-- Will you reject requests by the government and ruling parties for
talks between the ruling and opposition camps on the MSDF refueling
issue?

"The government has hardly provided any information about the
contents of such activities for six years. We must listen fully to
the report in the Diet. In addition, (the refueling operations) are
not activities that are based on a UN resolution, but are activities
connected to collective defense, so our basic argument is that they
are a violation of the Constitution. I would like debate in the Diet
to address these two issues. Consultations before the legislation is
presented in the Diet is something that would only be done (if the
DPJ and LDP) were coalition partners."

-- What about President Ozawa's proposal for Japan joining the
International Security Assistance Force (ISAF) in Afghanistan?

"In principle, I agree with Japan's participation in activities
centered on the United Nations. What kind of activity this would be
will be something decided by each country, including Japan."

-- Will our going along with this basic principle be in Japan's
national interest?

"Mr. Ozawa's belief lies in that, I think. The party will now debate
that. Countermeasures to stop narcotics, constructing wells and
waterworks, for example, as well as building schools, hospitals, and
sewerage are all areas we can do. These are within the scope of what
we can do."

16) Japan, US under coordination to extend special accord on
host-nation support for two to five years

NIKKEI (Page 2) (Full)
October 8, 2007

The governments of Japan and the United States plan to extend a

TOKYO 00004715 014 OF 018


special agreement on Japan's host-nation support, which is due to
expire on March 31, 2008. Coordination is underway to extend the
accord for another two to five years. Now that it is viewed certain
that the Maritime Self-Defense Force's refueling mission in the
Indian Ocean will be temporarily halted, some observers are worried
about its negative impact on the Japan-US alliance. The Japanese
government apparently aims to prevent a split in the relationship by
extending the accord.

Even so, while some officials of the US government are calling for
an increase in Japan's sympathy budget allocations, the Japanese
government hopes to constrain its share given its austere fiscal
conditions. There is still a gap in both sides' views on specifics
to be determined by the end of this November.

Then Foreign Minister Taro Aso and then Deputy Secretary of State
Zoellick signed the special accord in Tokyo in January 2006. Since
it was difficult to calculate how much it would cost to relocate US
military bases in connection with US force realignment, the validity
term of the accord was provisionally set at two years, though both
sides had so far set the term at five years. Both sides are studying
the possibility of extending it by three years, bringing the total
period to five years.

17) US calls on Japan to massively increase its financial burdens
for the costs of US military utility charges

SANKEI (Page 5) (Full)
October 9, 2007

It was learned that in Japan-US government-to-government
negotiations on a new special agreement concerning Japan's sharing
of the costs of stationing US Forces Japan (USFJ), the US side had
called on Japan to increase its share of the USFJ's utility charges,
such as electricity, gas, and water.

The costs of maintaining USFJ in Japan for fiscal 2007 has come to
217.3 billion yen. Of that amount, 25.3 billion yen has been
earmarked as utility charges. Given that some MOD and MOF officials
are calling for a cut in Japan's financial burden, the government
finds it difficult to easily accept the US side's request for an
increase in Japan's burden.

The current special agreement is to expire in next March. The
government wants to speed up government-to-government talks on
concluding a new agreement so that under a new agreement, the
government can appropriate the stationing costs in the next fiscal
year's budget, but uncertainties lie ahead in the wake of America's
request for an increase in Japan's financial burden.

Japan's financial burden for stationing USFJ consists of two part:
one for the Status of Forces Agreement (SOFA) intended to improve
facilities, such as the USFJ's barracks and family housing, and one
for the special agreement.

The budget for the special agreement for this fiscal year amounts to
140.9 billion yen. Of that amount, 115 billion yen is used to pay
the basic salaries of base employees and pay the utility charges for
USFJ. The US side has called on Japan to increase Japan's financial
burdens on the grounds that the US military has reinforced its
combat power in the Asia-Pacific region in order to counter the
military threats of North Korea and China.

TOKYO 00004715 015 OF 018

18) USFJ asks for increase in utility costs in talks on new special
agreement; Japan reluctant to meet the request

TOKYO SHIMBUN (Page 1) (Abridged slightly)
October 8, 2007

In the ongoing Japan-US talks on a new special agreement on Japan's
host-nation support, the US side has asked for a significant
increase in Japan's share of utility costs at US military bases in
Japan, citing the growing military burden on the US side. Japan is
reluctant to comply with the request.

The utility costs for fiscal 2007 are set at 25.3 billion yen. The
specific amount asked by the US side is unclear. Given the situation
that the special agreement now in force will expire next March, the
government plans to settle the talks with the US before the end of
the year and include the new utility costs in the FY2008 budget
based on a new agreement, according to a Japan-US relations source.

With the Antiterrorism Special Measures Law set to expire on Nov. 1,
it now seems inevitable for Japan to temporarily halt the Maritime
Self-Defense Force's refueling operation in the Indian Ocean. There
is concern within the government that the conflict over Japan's
host-nation support on top of the expected suspension of the Indian
Ocean mission would strain relations between Japan and the United
States. Even if an accord was reached between Tokyo and Washington
on a new special agreement, the divided Diet is expected to face
rough going about giving its approval.

The host-nation support is based on two agreements: the status of
forces agreement for the US military installations and US military
family housing, and another special agreement. The host-nation
support for FY2007 totals 217.3 billion yen, including 140.9 billion
yen under the special agreement. Included in it are 115 billion yen
in the base pay for people working at the US bases and the utility
costs for US forces in Japan.

Since this spring, the governments of Japan and the US have been in
talks on the new special agreement. The US side has asked Japan to
increase its host-nation support to bear its fare share of the
costs, saying that the US forces have beefed up their military
strength in the Asia-Pacific in order to contribute to the security
of the region and counter military threats from such countries as
North Korea and China. The US has asked for an especially large
increase in utility costs.

Meanwhile in Japan, some in the Finance and Defense Ministries and
the Liberal Democratic Party are calling for a reduction in the
host-nation support.

19) F-15 deployment to Okinawa: Defense priority shifted to
southwest against China's military buildup

NIKKEI (Page 2) (Full)
October 9, 2007

The Defense Ministry and the Self-Defense Forces are shifting
Japan's deployment of its defense capabilities to the southwest. The
Air Self-Defense Force will deploy a wing of about 20 F-15 mainstay
fighter jets to its Naha base in Japan's southernmost island
prefecture of Okinawa, with the first batch of F-15s arriving there

TOKYO 00004715 016 OF 018


in fiscal 2008. The Ground Self-Defense Force will also deploy
AH-64D Apache attack helicopters on a standing basis to its Metabaru
garrison in Saga Prefecture. These deployments are aimed to watch
out for China against its growing military spending. The SDF will
buttress its defense of the Senkaku and other Japanese islands
outlying in the East China Sea.

Japan used to regard the former Soviet Union as its hypothetical
enemy during the Cold War period, so the priority of Japan's defense
capabilities was long shifted to its northernmost main island of
Hokkaido. Meanwhile, the Defense Ministry, in its white papers, has
noted a China threat. In addition, the SDF has already carried out
counter-landing and other training exercises to provide for a
potential occupation of Japan's outliers. However, the Defense
Ministry will now review the SDF's current deployment of troops on
the front for southwest-oriented defense.

The ASDF currently deploys F-4 fighter planes to Naha. Meanwhile,
China has been modernizing its air force at a high pitch. As it
stands, the ASDF F-4s are now too old to vie with the Chinese air
force, sources say. Japan has been falling behind schedule in its
selection of the follow-on mainstay fighter jet model. For the time
being, the ASDF will deploy a squadron of about 20 F-15 fighter jets
from its Hyakuri base to Okinawa replace a Naha-based squadron of
F-4 fighters.

The deployment of F-15 fighter jets to Okinawa could rub China's
nerves, so the Defense Ministry outwardly explains that the F-15
deployment to Okinawa is only a sort of rotational redeployment. The
ASDF's Hyakuri base has two squadrons, so the Defense Ministry says
the ASDF does not have to use its superannuated F-4 fighters so
frequently. The Defense Ministry also recounts that the base will
not need additional infrastructure construction because RF-4E
reconnaissance planes, which are of the same model as the F-4, have
already been based there.

However, one ASDF brass officer underscored the China threat. The
ASDF scrambles its fighter jets against aircraft violating Japan's
territorial airspace. In fiscal 2002, there were no scrambles
against Chinese aircraft. In fiscal 2005, however, the ASDF made as
many as 107 scrambles against Chinese aircraft. In fiscal 2006, the
ASDF's scrambles against Chinese express decreased to 22. However,
there is no doubt that ASDF fighter jets will now scramble more
often, according to the ASDF officer.

The Chinese air force has 331 fourth-generation fighter planes, such
as the SU-27 and SU-30 developed by Russia and the J-10 developed by
China itself. China has now as many fighter planes as Taiwan.

The F-15 outranges the F-4, and it can be also refueled in flight.
The F-15 is therefore superior in configurational performance and
dogfight capability. In the meantime, US Forces Japan-already
employing F-15 fighters at its Kadena airbase on Okinawa
Prefecture-believes that increasing the interoperability of the US
Air Force and the ASDF will serve to raise its deterrent effect on
China.

Japan and the United States have now agreed to realign the US
military presence in Japan. In the process of realigning US forces
in Japan, the US Navy will move 59 carrier-borne fighters from its
Atsugi base in Kanagawa Prefecture to the US Marine Corps' Iwakuni
base in Yamaguchi. This redeployment will also have a "psychological

TOKYO 00004715 017 OF 018


effect" on China, according to Japanese and US defense officials.

The GSDF's Apache is a heavily armored and heavily equipped chopper
with highly efficient radar that can simultaneously pick up more
than 150 targets-and also with Japan's own air-to-air missiles on
board. "It has high combat capability equivalent to one tank
battalion (made up of about 40 tanks)," a GSDF brass officer said.
"This chopper is fit to provide for an invasion of islands from
Asia," the officer added.

"At this point, the Japanese government is unlikely to say China is
a threat," Foreign Minister Masahiko Komura said. "But," Komura
added, "we have expressed our concern." The SDF will now likely
proceed with its southwest-oriented defense posture further.

20) Secret agreement between Japanese and US governments:
Radioactivity of US warships would not be measured within fifty
meters after port arrival

AKAHATA (Page 1) (Excerpts)
October 9, 2007

It was learned from a declassified US document that international
affairs researcher Akiharu Niibara obtained that the US and Japanese
governments signed a secret agreement under which at the time of US
Navy nuclear-powered vessels arrive in Japanese ports, monitoring
for possible radiation leakage into the atmosphere would not occur
within 50 meters, for reasons of military secrecy. The US government
in a fact sheet related to the safety of US nuclear-powered vessels,
issued last year in April, stated that in over 1,200 port calls by
US nuclear-powered ships, "there has never occurred an increase in
radioactivity higher than general background radiation." It has
decided to deploy next year in August the Navy carrier USS George
Washington to the US naval base at Yokosuka in Kanagawa Prefecture.
However, with the discovery that there was an agreement exchanged
not to record unusual figures right from the start, there are doubts
about the "safety" that that US government has been repeatedly
asserting. According to the memo dated Nov. 5, 1971, written by the
Japan Desk of the State Department (Doakings (tn: phonetic) memo),
when specialists of the Japanese government approached within five
meters of the US Navy nuclear-powered submarine docked at Yokosuka
in Nov. 1969, they recorded an increase in radioactivity. This
incident led to the agreement of not monitoring within 50 meters in
order to protect the secrecy of the data of the nuclear propulsion
device.

21) Japan mulls bearing expenses for North Korea's nuclear
disablement

NIKKEI (Page 2) (Full)
October 9, 2007

The government has begun looking into a possibility of shouldering
costs for disabling North Korea's nuclear-related facilities. It
will remain in its position of offering no economic assistance to
the North unless there is any progress in the abduction issue.
However, a senior Foreign Ministry official said: "Financial
cooperation that would lead to the North's abandoning of nuclear
weapons in the future is a different issue."

The six-party agreement stipulates that the United States will pay
initial costs for the nuclear disablement. The US will send a team

TOKYO 00004715 018 OF 018


of experts today to Pyongyang to discuss concrete procedures for the
disablement and draw up a plan for it.

22) DPJ Secretary General Hatoyama in Japanese-Russia forum says,
"US involvement is necessary to resolve the territorial dispute"

MAINICHI (Page 2) (Full)
October 9, 2007

Naoya Sugio, Moscow

The "Japan-Russia Forum" was held on Oct. 8 in Moscow. Japanese and
Russian lawmakers attended the forum. In his speech there,
Democratic Party of Japan (DPJ) Secretary General Yukio Hatoyama,
who headed the delegation of Japanese lawmakers, stated: "The United
States is the country that historically complicated the territorial
issue. We should get the US involved to resolve it." Moscow Mayor
Yuri Luzhkov, head of the Russian side, however, stated: "It would
difficult to resolve the territorial issue if the way to resolve the
issue goes against Russia's national interests."

It is said when Japan and the then Soviet Union negotiated a joint
declaration in 1956, the two countries failed to conclude a peace
treaty due to Japan's refusal of resolving the territorial dispute
with the return of two islands -- the Shikotan Island and the
Habomai islet group -- having come under pressure from the United
States.

DONOVAN

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