Cablegate: Japanese Morning Press Highlights 10/25/07

DE RUEHKO #4976/01 2980104
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E.O. 12958: N/A



Ambassador Schieffer at the Japan National Press Club (JNPC):
1) Ambassador Schieffer is concerned that stoppage of MSDF refueling
in Indian Ocean will give world impression that Japan leaving war on
terror (Yomiuri)
2) Schieffer confident that US had fulfilled its responsibility by
answering questions about MSDF refueling operation in the Indian
Ocean (Asahi)
3) Schieffer criticizes Democratic Party of Japan (DPJ) during JNPC
speech (Mainichi)

Maritime Self-Defense Force (MSDF) refueling operation:
4) Ambassadors from 11 countries participating in Indian Ocean
OEF/MIO will brief Diet members on Oct. 31 (Yomiuri)
5) MSDF will receive order on Nov. 1 to withdraw from Indian Ocean
(Tokyo Shimbun)
6) DPJ counterproposal to government's MSDF refueling bill is
limited to civilian aid in Afghanistan (Sankei)
7) DPJ to postpone submitting its own bill designed to counter
government's new antiterrorism bill (Yomiuri)

Defense Ministry scandal:
8) Former Vice Defense Minister Moriya to hit the witness stand in
the Diet on Oct. 29 (Asahi)
9) How much Moriya's testimony in the Diet will clear up allegations
of collusion with defense contractor is unknown (Tokyo Shimbun)
10) Former defense contractor with close ties to Moriya skimmed off
30 million yen from the company that remains unaccounted for (Asahi)

11) Pentagon promotes Asia-specialist Shinn to assistant secretary
level; Defense Secretary's Japan visit set for Nov. 7-9 (Nikkei)

12) Futenma relocation talks involving chief cabinet secretary and
state minister meeting Okinawa officials to restart next month

13) Association of members of families of abductees to meet Prime
Minister Fukuda tomorrow to press for a continued hard-line stand
toward North Korea (Sankei)

14) Japan denies Moscow report that it had floated a new proposal on
the northern islands (Yomiuri)

15) Former postal rebel Hiranuma, who was booted out of the LDP by
then Prime Minister Koizumi, may form new conservative party
16) Former and current Health Minister square off in Diet over new
"tainted-blood" issue (Tokyo Shimbun)
17) US fund Blackstone, known as the world's largest, is heading
toward Japan (Sankei)


1) US ambassador to Japan concerned that halting MSDF refueling
operation in Indian Ocean will give impression Japan is leaving the
war on terror

YOMIURI (Page 2) (Full)
October 25, 2007

TOKYO 00004976 002 OF 010

In a speech at the Japan National Press Club yesterday, US
Ambassador to Japan Schieffer expressed strong concern about the
growing possibility that Japan would halt the Maritime Self-Defense
Force's (MSDF) refueling services in the Indian Ocean. He said: "It
would send the wrong message to the international community and to
terrorists. It would give the impression that Japan was withdrawing
from the war on terror."

He once more denied the allegation that Japan had diverted fuel
provided to US warships to the Iraq war, saying: This is an issue
connected to the credibility of the US. The US has investigated a
large amount of documents and reached the conclusion that there was
no diversion of fuel. That should be sufficient." He also leveled
criticism at the Democratic Party of Japan (DPJ) and the rest of the
opposition camp: "No matter what kind of explanation we give, there
will be those who will be dissatisfied for political reasons. There
is nothing that America can do to change the thinking of such

2) "The US government has accounted for the fuel," says US
ambassador on diversion allegation

ASAHI (Page 4) (Full)
October 25, 2007

US Ambassador to Japan J. Thomas Schieffer delivered a speech at the
Japan National Press Club yesterday. Touching on allegations that
fuel provided to a US oiler by the Maritime Self-Defense Force in
the Indian Ocean was diverted for use in the Iraq operations, the
ambassador said: "We have accounted for the oil. I believe we have
answered the questions asked." He also indicated that the statement
released last week by the US Department of Defense is a de facto
final response, saying: "The government has concluded that there was
no diversion after analyzing thousands of documents. I think that is

In the statement, the Pentagon, while denying any diversions,
admitted difficulty in tracking fuel in the event of oilers and
vessels engaged in multiple missions. As grounds for denying
diversion, the ambassador simply said: "We know the amount of fuel
from Japan. In view of that, it is clear that (Japanese oil) was
used for Operation Enduring Freedom (against terrorism)."

The ambassador strongly called for a continuation of the refueling
operation, noting: "If Japan halts the refueling operation, that
would end up sending the wrong message to the terrorists. That would
leave the impression that Japan is withdrawing from the war on

About the concern that the abduction issue would be left unattended
behind advanced US-DPRK relations, the US envoy also stated: "The
United States' stance toward the abduction issue has not changed. I
don't think this issue will divide the United States and Japan."

3) US ambassador criticizes DPJ over fuel diversion allegation

MAINICHI (Page 5) (Full)
October 25, 2007

US Ambassador to Japan J. Thomas Schieffer yesterday delivered a
speech at the Japan National Press Club in Chiyoda Ward, Tokyo. The
ambassador tacitly criticized the Democratic Party of Japan in

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connection with alleged diversion of oil provided by the Maritime
Self-Defense Force in the Indian Ocean, saying: "There is no need to
receive fuel from Japan for the war in Iraq. Those who are still not
convinced (even after information was disclosed) are probably not
satisfied for political reasons."

4) Ambassadors from various countries to express support for
continuation of Japan's refueling operations: Briefing for lawmakers
to be held on Oct. 31

YOMIURI (Page 4) (Full)
October 25, 2007

Ambassadors from countries that are participating in the Maritime
Interdiction Operations (MIO) in the Indian Ocean will hold a
briefing for lawmakers of both the ruling and opposition camps at a
facility of the Canadian Embassy in Akasaka, Tokyo. The aim is to
indirectly support passage of Japan's new antiterror special
measures bill, by seeking understanding for continuation of the
Maritime Self-Defense Force's refueling operations, part of the MIO.
US Ambassador to Japan Schieffer, Canadian Ambassador Joseph Caron,
as well as military attaches of various countries will take part in
the briefing.

5) MSDF pullout order to be issued on Nov. 1

TOKYO SHIMBUN (Page 2) (Full)
October 25, 2007

The Antiterrorism Special Measures Law, which has been the legal
basis for the Maritime Self-Defense Force's refueling operation in
the Indian Ocean, is slated to expire on Nov. 1. For this reason,
the government yesterday outlined an MSDF withdrawal timetable,
including the issuance of a pullout order by Defense Minister
Shigeru Ishiba on Nov. 1.

With the law's expiration only a week away, there is no prospect
that new antiterrorism legislation will pass the Diet. Given the
situation, the government will begin work for discontinuing the
refueling operation. The MSDF vessels are scheduled to depart for
Japan before dawn of Nov. 2 to return home in late November.

The dispatched unit is composed of the supply ship Tokiwa and the
destroyer Kirisame and some 340 personnel. The unit, which left
Japan this July, has been engaged in the refueling operation in the
Indian Ocean since August.

If the Antiterrorism Law had been extended, they were supposed to
provide services until around January. But because the government
has given up on the law's extension and submitted a new bill to the
Diet, the unit's term has been shortened to Nov. 1. The unit will
continue refueling foreign vessels until the deadline while making
preparations for the pullout.

In the event the new legislation passes the Diet early, the unit
that will be cruising toward Japan is expected to head back toward
the Indian Ocean after receiving an order from Defense Minister

The MSDF's Indian Ocean mission started in November 2001 under the
current Antiterrorism Law. As of August 31, 2007, the MSDF provided
some 480,000 kiloliters of oil on 777 occasions at a total cost of

TOKYO 00004976 004 OF 010

over 22 billion yen.

6) DPJ's antiterrorism bill to limit operations in Afghanistan to
public welfare area

SANKEI (Page 5) (Full)
October 25, 2007

The Democratic Party of Japan started a discussion in an executive
meeting of its foreign and defense affairs committees on its own
bill to counter the government's new antiterrorism special measures
bill. The draft bill that was spelled out in the meeting specifies
that assistance in Afghanistan should be limited to the public
welfare area, dismissing Japan's participation in peacekeeping
operations (PKO). On the propriety of the dispatch of Self-Defense
Force (SDF), the draft includes measures to dispatch SDF to
Afghanistan to join UN PKO, as well as to reassign SDF personnel to
other organizations, like the Japan International Cooperation Agency
(JICA), to engage in aid operations as civilians.

7) DPJ to put off finalization of counterproposals to new antiterror
legislation, prioritizing pursuit of scandal involving Moriya

YOMIURI (Page 4) (Full)
October 25, 2007

The Democratic Party of Japan (DPJ or Minshuto) yesterday put off
the finalization of proposals countering the ruling camp-sponsored
new antiterror special measures bill until next week or later. This
is because it wants to prioritize pursuit of former Administrative
Vice Defense Minister Takemasa Moriya over his improper relations
with a defense-related trading house and the correction of the
amount of fuel the Maritime Self-Defense Force supplied to a US

The DPJ at first planned to finalize counterproposals at a meeting
of the Foreign and Defense Affairs Division within this week.
However, it actually went no further than listening to explanations
on the correction to the amount of fuel provided by the Defense and
Foreign Ministries during the meetings held on Oct. 23-24. It plans
to listen to circumstances from both ministries at a meeting on the
25th as well, instead of discussing the finalization of

In the meantime, the DPJ's Project Team to Shed Light on Scandals
Involving the Defense Ministry, set up both in the Lower and Upper
Houses, held their first meetings in the Diet yesterday. The Lower
House team confirmed their determination to collect information in
the run-up to the summoning of Moriya as a sworn witness on the
29th. The Upper House team decided to call for summoning Moriya to
the Budget Committee as well as to the Foreign Relations and Defense
Affairs Committee as a witness.

The DPJ has put off the finalization of counterproposals, because it
finds it difficult to consolidate views of party members on the
dispatch of Self-Defense Force troops to Afghanistan. It has judged
that it would not be wise to create a fissure by discussing the
matter, according to a senior member. Scandals involving Moriya then
surfaced conveniently for the DPJ.

Policy Research Committee Chair Naoshima yesterday told a news
conference, "We are now discussing counterproposals in a cautious

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manner due to changes in the political situation." He thus indicated
that the DPJ will take time to compile counterproposals.

8) Moriya to be summoned to testify in Diet on Oct. 29

YOMIURI (Page 2) (Slightly abridged)
October 25, 2007

The House of Representatives Special Committee on Prevention of
Terrorism, chaired by Takashi Fukaya, decided yesterday to summon
former Administrative Vice Defense Minister Takemasa Moriya to the
Diet as a sworn witness. The session will begin at 1:00 p.m. on Oct.
29. Moriya has been criticized for his inappropriate ties with a
defense equipment trading house. The ruling and opposition parties
also agreed in a meeting of the committee's executives to hold a
question-and-answer session on the 26th on the new antiterrorism
special measures bill with the presence of Prime Minister Yasuo

Regarding the issue of the Defense Ministry having underreported the
fuel Japan supplied to US supply ships (in 2003), the ruling and
opposition parties have decided to continue deliberations on whether
to summon to the Diet the Maritime Staff Office Operations and
Plans' division director, who was serving in the post in 2003 and
whom the opposition bloc has called for a summoning along with

Although the ruling coalition aims to pass the new antiterrorism
bill through the House of Representatives in early November, it
remains to be seen if the bill will even clear the Lower House as
the ruling camp hopes.

The expectation is that in Moriya's testimony the focus will be on
whether he was involved in the ministry's purchase of defense
equipment from the defense equipment trader Yamada Yoko Corp., in
addition to his golfing and dining and wining with a former trade
house executive. It will be the first time in 19 years for a former
vice minister to be summoned to the Diet since former vice education
minister Kunio Takaishi and former vice labor minister Takashi Kato
gave testimonies in 1988.

The opposition camp had opposed the holding of deliberations on the
new legislation before summoning them, but they agreed to hold on
the 26th a question-and-answer session by representatives from the
ruling bloc and on 30th, after the summoning, a question-and-answer
session by opposition representatives.

The ruling coalition will hold question-and-answer sessions every
day after the 30th, aiming at passing the legislation through the
Lower House by the end of the current Diet session, on Nov. 10, to
send it to the Upper House. However, the opposition's position is
that the testimony by Moriya is the start of shedding light on the
Moriya scandal. Besides testimony by the former Maritime Staff
Office division director, the opposition side intends to demand that
Moriya give testimony at the Upper House Foreign Affairs and Defense
Committee. Many observers predict nothing will turn out as the
ruling coalition plans.

A senior Liberal Democratic Party (LDP) member said yesterday:
"Nobody knows what may happen tomorrow. We have no choice but to
walk ahead step by step."

TOKYO 00004976 006 OF 010

Prime Minister Fukuda told reporters last night: "I must try my best
under the given situation."

9) Moriya to be questioned in Diet over cozy ties with contractor,
error cover-up

TOKYO SHIMBUN (Page 2) (Excerpts)
October 25, 2007

Scandal-tainted former Administrative Vice Defense Minister Takemasa
Moriya will be summoned to the Diet as a sworn witness on Oct. 29.
The opposition camp is ready to question him over his cozy ties with
Yamada Yoko Corp., a trading firm specializing in defense and
aircraft equipment, and his possible involvement in the cover-up of
an error in records of refueling. The focus of attention is on to
what extend the opposition bloc will be able to unveil how Moriya
was exerting influence in the Defense Ministry from a position
responsible for defense policymaking for many years.

Democratic Party of Japan (DPJ) Diet Affairs Committee Chairman
Kenji Yamaoka said in a press conference yesterday: "In the Defense
Ministry, there is a suspicious syndicate. Former Vice Defense
Minister Moriya was at the center of it." He then stressed he would
zero in on the ministry's structural problems through questioning
Moriya in the Diet.

A number of scandals based on collusive ties between Defense
Ministry officials and contractors have been reported, such as the
bid-rigging case involving the Defense Facilities Administration
Agency in 2006. In the upcoming summons, the improper relationship
between Yamada Yoko and Moriya will also be focused on.

In current questioning, Moriya has admitted that he was treated to
free golf and to wining and dining by a former executive of the
company for many years, although he was aware that such practices
violate the Self-Defense Forces' code of ethics,.

Yamada Yoko received orders worth approximately 14.3 billion yen
from the Defense Ministry during Moriya's four-year term of office
as vice minister. It has also been revealed that Moriya had
earnestly recommended a company established by the former executive
in a tender to procure engines for CX transport aircraft. Focusing
on this fact, the opposition camp suspects that Moriya might have
received kickbacks.

Regarding the problem of uncovered data error, Moriya was in the
position of being deeply involved in Maritime Self-Defense Force's
(MSDF) refueling operation as Defense Bureau director general at
that time.

10) Prosecutors trying to clear up location of missing 30 million
yen taken by former executive director from Yamada Yoko Corp. in
order to create close ties with Defense Agency around 1989

ASAHI (Page 39) (Excerpts)
October 25, 2007

Around 1989, the then executive director of Yamada Yoko Corp., a
Tokyo-based trading firm specializing in military sales, withdrew 30
million yen from his company as a temporary advance, but later,
according to an informed source, the whereabouts of the money became
unknown. Over ten years later, the temporary advance remained

TOKYO 00004976 007 OF 010

outstanding, the result of sloppy management, and the executive
repaid the money when he retired last year. The money withdrawn by
the former executive director was around the time when business
activities toward the then Defense Agency started in earnest. The
special investigation unit of the Tokyo District Prosecutors Office,
in order to completely clear up Yamada Yoko's capital situation, is
starting to question former employees and others about what happened
to the money. Although the money was returned by the retiring
executive director, where it was used remains unknown.

11) US Defense Department appoints first assistant secretary for
Asia; High priority on Asia clear

NIKKEI (Page 2) (Full)
October 25, 2007

Hiroshi Maruya, Washington

The White House announced on Oct. 23 that the Department of Defense
has appointed Deputy Undersecretary of Defense James Shinn as the
nation's first Assistant Secretary for the Asia-Pacific Region, a
post established by President George W. Bush. The post of Assistant
Secretary for Asia was established in October 2006 by the Defense

Department as part of its reorganization effort. The position is
responsible for the region from East Asia, including Japan, to
Central Asia, including Afghanistan. The appointment clearly
reflects the US military's stance of attaching importance to Asia.

The Pentagon's Asia-oriented policy is also reflected in Secretary
of Defense Robert Gates' planned visit to Japan on Nov. 7-9. During
his stay in Japan, Gates is expected to hold talks with Prime
Minister Yasuo Fukuda and Defense Minister Shigeru Ishiba.

12) Chief cabinet secretary and state minister for Okinawa affairs
agree to restart talks on Futenma relocation next month

YOMIURI (Page 4) (Excerpt)
October 25, 2007

Chief Cabinet Secretary Machimura and State Minister for Okinawa
Kishida met on the 24th in the Prime Minister's Official Residence
(Kantei) and agreed to start coordination to restart, prior to Prime
Minister Fukuda's visit the United States in mid-November, talks
with Okinawa Prefecture officials on the issue of relocating the US
Marines' Futenma Air Station in Okinawa. Their thinking is to
convene the talks in mid-November of the Futenma Relocation Council,
which consists of representatives of the relevant ministries of the
central government, Okinawa Prefecture, and four local governments.

13) Members of families of abductees to meet prime minister tomorrow
to ask for hard-line stance toward DPRK

SANKEI (Page 3) (Full)
October 25, 2007

Members of the Association of the Families of Victims Kidnapped by
North Korea (AFVKNK) will meet Prime Minister Yasuo Fukuda tomorrow
at the Prime Minister's Official Residence (Kantei). This will be
their first meeting since the inauguration of his administration.
During the meeting they will ask the prime minister to deal with
North Korea with a hard-line approach, inheriting former Prime
Minister Shinzo Abe's policy, and settle the abduction issue by

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rescuing the abductees as soon as possible.

The prime minister during the LDP presidential election campaign
noted, "I want to settle the abduction issue myself." He also noted
in his recent policy speech, "I will do my utmost to normalize ties
between Japan and North Korea, by settling unfortunate past accounts
through the realization of the return of all abduction victims as
soon as possible." On the other hand, he is reportedly searching for
a dialogue policy toward that nation.

The AFVKNK and the National Association for the Rescue of Japanese
Kidnapped by North Korea had sought a meeting with the prime
minister to ask him to have the cabinet impose additional sanctions,
arguing that in late October sanctions against North Korea are
showing signs of producing effects.

Prior to the meeting with the prime minister, members of the AFVKNK
on Oct. 5, following the inauguration of the Fukuda cabinet, visited
the Kantei and met Chief Cabinet Secretary Nobutaka Machimura.
Machimura told them, "We would like to produce results with the
determination that we want to settle the issue along with you as
soon as possible. On that occasion, Shigeo Iizuka (69), brother of
Yaeko Taguchi (22 at the time of the abduction) and the deputy
representative of the AFVKNK, said, "I want to directly meet the
prime minister to confirm his determination to settle the abduction

14) "Japan offers new proposal on northern territorial issue," says
Russian newspaper but Japan denies report

YOMIURI (Page 2) (Full)
October 25, 2007

Kenichi Ogata, Moscow

The Russian newspaper Kommersant reported on Oct. 24 that Japan had
informally sounded out Russia to conclude a peace treaty on the
condition that the two countries would continue negotiations on the
ownership of Kunashiri and Etorofu islands -- two of the four
disputed Russia-held islands off Hokkaido.

According to the article written by the Tokyo bureau chief of the
ITAR-TASS, Japan's new proposal went: the two countries should
conclude a peace treaty; Russia would return the Shikotan Island and
Habomai islets -- the two of the four disputed islands -- to Japan;
and a peace treaty would stipulate that the attribution of Kunashiri
and Etorofu islands is in dispute. The proposal also says that in
order to conclude a peace treaty, Russia needs to agree to continue
talks on the ownership of Kunashiri and Etorofu islands. The
ITAR-TASS article reported that Japan had not offered the proposal
formally but it did so to feel the Russian side's opinion.

A Japanese Foreign Ministry official, however, yesterday rejected
the report, saying, "We haven't offered any proposal as was

15) Takeo Hiranuma implies possibility of forming new party with eye
on new Lower House election

SANKEI (Page 5) (Excerpts)
October 25, 2007

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House of Representatives member Takeo Hiranuma, a former
international trade minister who has remained an independent since
he left the ruling Liberal Democratic Party in opposition to the
government's postal-privatization plan, delivered a speech in a
Tokyo hotel yesterday. In his speech, Hiranuma stressed his view
that he would not rejoin the LDP for the time being. He stated:

"I would like to fight the next Lower House election as a
conservative independent. My mission as a senior politician is to
build a ship on which members of the Democratic Party of Japan (DPJ
or Minshuto) who hope for healthy conservatism can easily board."

Hiranuma indicated in his remarks that he would form a "Hiranuma
Party" on the occasion of the next Lower House election.

He said:

"Since I became an independent, I have realized that there are many
talented junior lawmakers in the DPJ. In order to put an end to the
divided Diet, it is necessary to win DPJ lawmakers to my side. I
predicted that the DPJ would split in the July Upper House election,
but the party won big. So I was unable to take action. "

16) Former Health Minister Kan and incumbent Masuzoe clash over
issue of drug-induced illnesses in Lower House

TOKYO SHIMBUN (Page 2) (Slightly abridged)
October 25, 2007

The Democratic Party of Japan is intensifying its attack on the
government over the problem of drug-induced hepatitis patients. In a
House of Representatives Health, Labor and Welfare Committee meeting
yesterday, DPJ Deputy President Naoto Kan, who had addressed the
HIV-tainted-blood scandal when he was health and labor minister,
took the floor as a questioner.

On the hepatitis problem, the ministry has found recently documents
listing the names of patients who contracted hepatitis C after being
administered a tainted blood product. Kan said: "The ministry has
customarily concealed unfavorable documents." He further demanded
that the government should promise the state and pharmaceutical firm
in question that it will provide the patients with treatment costs.

Comparing the stance he took as health minister and that of Health,
Labor and Welfare Minister Yoichi Masuzoe, Kan demanded that Masuzoe
should take a more confrontational approach to the bureaucracy. He
then said: "You look like a bureaucrat."

Masuzoe refuted him: "I have not been controlled by bureaucrats."
But he added: "As someone who was once health minister, I would like
you to advise me on any deficiencies," calling for a "joint
struggle" with Kan in resolving the problem.

The DPJ has placed importance on the drug-induced hepatitis problem
in the same way as its approach to the government's antiterrorism
special measures bill in the current Diet session. The main
opposition party intends to grill the government with such arguments
as: "Both the Health, Labor and Welfare Ministry and the Defense
Ministry have taken the same method of concealing information," as
said by a senior House of Councillors member.

17) Blackstone, largest US investment fund, to branch out to Japan

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SANKEI (Page 1) (Excerpts)
October 25, 2007

It was learned yesterday that the Blackstone Group of the US, the
largest investment fund in the world, will make inroads into Japan
for the first time. It will shortly set up Blackstone Group Japan in
the AIG Building in Marunouchi, Tokyo. The decision will be formally
announced in November. The group is known for the fact that the
Chinese government invests in it. The company is listed on the New
York Stock Exchange. Its advance into Japan will enable it to carry
out triangular mergers, under which it can acquire Japanese
companies using its own stocks as merger consideration. The advance
of the largest investment fund that can manage huge amounts of funds
will likely further activate M&As on the Japanese market.

Blackstone Group has decided to advance into Japan on a full scale
by establishing a Japan corporation, because it has judged that amid
the unabated commotion on the global financial market stemming from
the sub-prime loan fiasco, revitalization of businesses by Japanese
companies that have many healthy assets, and large-scale corporate
reorganization, such as M&As, in industrial circles have yet to move
into full swing. It appears to intend to expand its income and
earnings, by developing investment targets and giving advice to
funds it manages.

For a start, it will likely invest in real estate, such as hotels,
and then launch a drive to acquire Japanese companies.


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