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Cablegate: Japanese Morning Press Highlights 10/29/07

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UNCLAS SECTION 01 OF 12 TOKYO 005028

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 10/29/07


Index:

1) US Embassy in Tokyo has not paid rent on property in 10 years,
refusing to go along with rent hike (Asahi)

Opinion polls:
2) Fukuda Cabinet support rate slips 4 points to 55 PERCENT in
Nikkei poll; 44 PERCENT of public approve, 35 PERCENT disapprove
of MSDF continuing refueling operations (Nikkei)
3) Kyodo poll: 7.6 point drop to 47 PERCENT in Fukuda Cabinet
support rate; 45 PERCENT of public approve, 29.6 PERCENT
disapprove of MSDF continuing Indian Ocean operations (Tokyo
Shimbun)
4) 66 PERCENT of public support pressure policy toward North Korea
in Mainichi poll, with only 29 PERCENT favoring a dialogue line
(Mainichi)

North Korea problem:
5) Washington Post reports Ambassador Schieffer in cable to
President was concerned that removal of DPRK from terror list would
hurt alliance with Japan (Nikkei)
6) Government expects results by end of year from new dialogue
policy approach toward North Korea (Nikkei)

7) Defense Secretary Gates coming to Japan next month to press Japan
to make efforts on resolving pending defense-related issues (Sankei)


MSDF refueling mission in Indian Ocean:
8) Government and ruling parties plan three-week Diet extension to
allow time for passage of MSDF refueling bill (Asahi)
9) US officials in series of meetings with Japanese officials in
Washington call on Japan to continue MSDF refueling services in
Indian Ocean (Nikkei)
10) Prime Minister Fukuda calls on Democratic Party of Japan to have
talks with ruling camp about its idea for civilian dispatches for
Afghan assistance (Mainichi)

Defense Ministry's woes:
11) Prime Minister Fukuda, reviewing the troops, calls for tougher
discipline in SDF in wake of series of scandals and problems
(Mainichi)
12) 90 PERCENT of defense contracts awarded to Yamada Yoko Corp.,
which is now being investigated, were discretionary and not
subjected to open bidding (Tokyo Shimbun)
13) Former executive director of Yamada Corp. asked for 100 million
yen from American affiliate, of which 30 million used to form new
company (Asahi)
14) Survey reveals 15 defense contractors now employ 475 retired
Defense Ministry bureaucrats (Akahata)

China issue:
15) Chinese vessel filled with activists enter Japanese waters
around Senkaku Islands (Tokyo Shimbun)
16) Japan protests to China entry of vessel into waters near
Senkakus (Tokyo Shimbun)

17) DPJ to halve costs for convention (Mainichi)

Articles:

1) US Embassy fails to pay rent for 10 years for leased national

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property priced at 2.5 million yen annually

ASAHI (Page 1) (Full)
October 29, 2007

The United States Embassy in Japan has not paid the rent for 10
years on the 13,000 square meters of national property it occupies
in Akasaka, Tokyo. The Japanese government used to receive 2.5
million yen in annual rent until 1997. That year, the government
presented a plan to raise the rent, but the US government turned it
down and has refused to pay the annual rent since then. The statute
of limitations for the rent for 1998 expires in mid-December.
Keeping in mind the possibility of bringing a civil suit to pursue
this matter, Japan is continuing negotiations with the US.

The governments of Japan and the US in 1890 concluded a contract for
leasing the property in question. Reflecting property value rises,
Japan raised the rent twice: in 1974 and 1983.

The US has declined Japan's plan to raise the land rent to a level
equivalent to 10 times higher than the initial one in stages
starting in 1998. Under civil law, rent claims expire five years
after they are made. In this case, however, since the Japanese
government sent the US Embassy a letter in December 2002 calling for
the payment, the statute of limitations was cancelled briefly, and
the final claim runs out this December.

The government has leased national property to the embassies of four
countries, including the US and Britain. According to real estate
agents, the 2.5 million yen in annual rent for the prime land near
the areas of government ministries and the Diet is "very cheap."

Rent for property occupied by the British Embassy that has an area
of 35,000 sq. meters (Ichiban-cho, Tokyo) is 35 million yen
annually.

A Japanese government official commented: "Relations with the US are
naturally important, but we cannot easily make a compromise with the
US due to our austere fiscal conditions."

A political settlement might be reached, but if no agreement is
reached before the statute of limitations expires, this issue might
develop into an unusual civil suit between Japan and the US.

A US embassy spokesman said: "We expect to see a settlement of the
problem through talks with the Japanese government."

2) Poll: Cabinet support down to 55 PERCENT ; 47 PERCENT for, 35
PERCENT against continuing MSDF's refueling mission

NIKKEI (Page 1) (Abridged)
October 29, 2007

The approval rating for Prime Minister Yasuo Fukuda and his cabinet,
which has now been in office for a month since its inauguration, was
55 PERCENT in a public opinion survey conducted by the Nihon Keizai
Shimbun on Oct. 26-28, down 4 percentage points from the last survey
taken in late September. The disapproval rating for the Fukuda
cabinet was 31 PERCENT , up 4 points. In the survey, respondents
were also asked if they thought the Maritime Self-Defense Force's
refueling mission in the Indian Ocean should be continued beyond its
Nov. 1 time limit. In response to this question, 47 PERCENT

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answered "yes," with 35 PERCENT saying "no."

By gender, the Fukuda cabinet's support rate was 49 PERCENT among
men (down 5 points from the last survey) and 60 PERCENT among women
(down 2 points). By age, it was 63 PERCENT among those aged 70 and
over and 41 PERCENT among those in their 20s.

About continuing the MSDF's refueling activities in the Indian
Ocean, the proportion of affirmative answers leveled off from the
last survey. However, the proportion of negative answers decreased 2
points.

The survey was taken by Nikkei Research Inc. over the telephone on a
random digit dialing (RDD) basis. For the survey, samples were
chosen from among men and women aged 20 and over across the nation.
A total of 1,582 households with one or more voters were sampled,
and answers were obtained from 911 persons (57.6 PERCENT ).

3) Poll: Cabinet support falls 7.6 points to 50.2 PERCENT

TOKYO (Top play) (Abridged)
October 29, 2007

In a telephone-based Kyodo News poll conducted across the nation on
Oct. 27-28, the rate of public support for Prime Minister Yasuo
Fukuda and his cabinet, now in office for a month, was 50.2 PERCENT
, down 7.6 percentage points from a survey taken right after the
Fukuda cabinet came into office. The nonsupport rate for the Fukuda
cabinet rose 4.0 points to 29.6 PERCENT . The figures can be taken
as reflecting various problems, such as the government's correction
in the amount of fuel supplied by the Maritime Self-Defense Force in
the Indian Ocean, former Administrative Vice Defense Minister
Takemasa Moriya's collusive ties with a defense contractor, and the
Health, Labor and Welfare Ministry's cover-up of data about
hepatitis C.

In the survey, respondents were asked if they thought the MSDF's
refueling activities in the Indian Ocean should be continued. In
response to this question, 46.4 PERCENT answered "yes," down 3.2
points from the last survey. Meanwhile, the proportion of those who
answered "no" increased 3.4 points to 42.9 PERCENT . In the last
survey, the margin between the proportions of affirmative and
negative answers was about 10 points. This time, it narrowed to 3.5
points, showing a split in public opinion.

Respondents were also asked if they supported the government's new
antiterror legislative measure. To this question, 45.0 PERCENT
answered "yes," with 39.3 PERCENT saying "no." In the breakdown of
reasons among those affirmative about continuing the MSDF's
refueling activities in the Indian Ocean, 54.3 PERCENT answered
that the MSDF's refueling activities there are needed for Japan's
international contributions, with 17.6 PERCENT saying the MSDF's
activities are limited to fuel and water supply only and 11.2
PERCENT saying the MSDF's activities there are intended to prevent
and root out terrorism. Among those negative, 42.3 PERCENT answered
that Japan should make international contributions in non-military
areas, such as industrial and educational areas, with 23.8 PERCENT
saying the government-introduced bill does not ask for Diet approval
and 18.5 PERCENT saying the MSDF could come under attack. Those who
"don't know" and those who gave no answer totaled 15.7 PERCENT .

Asked about the desirable image of government, 42.4 PERCENT opted

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for a coalition government led by the Democratic Party of Japan
(Minshuto), with 39.8 PERCENT preferring a coalition government led
by the Liberal Democratic Party. As seen from these figures, those
desiring a DPJ-led coalition government outnumbered those choosing
the current LDP-led coalition government. In the last survey, the
proportion of those in favor of the LDP-led coalition was 1.2 points
higher than that of those preferring a DPJ-led coalition. This time,
however, the two figures changed places.

In the breakdown of public support for political parties, the LDP
stood at 35.5 PERCENT , down 2.9 points from the last survey, with
the DPJ at 31.1 PERCENT , up 2.9 points. New Komeito, the LDP's
coalition partner, was at 3.1 PERCENT , down 2.3 points from the
last survey. Among other political parties, the Japanese Communist
Party was at 2.4 PERCENT (down 0.5 points), the Social Democratic
Party (Shaminto) at 2.0 PERCENT (down 1.1 points), the People's New
Party (PNP or Kokumin Shinto) at 0.8 PERCENT (up 0.6 points), and
the New Party Nippon (NPN or Shinto Nippon) at 0.4 PERCENT (up 0.3
points). "None" accounted for 23.9 PERCENT (up 3.9 points).

4) Poll: 66 PERCENT want gov't to pressure N. Korea

MAINICHI (Page 2) (Abridged)
October 28, 2007

The Mainichi Shimbun conducted a nationwide public opinion survey on
Oct. 20-21, in which respondents were asked about the future course
of the government's policy toward North Korea that is based on
"dialogue and pressure." In response to this question, two-thirds of
the respondents answered that they wanted the government to pressure
North Korea. Prime Minister Yasuo Fukuda is laying emphasis on
dialogue in his North Korea policy. In the survey, however, those
who want the government to assume a dialogue-oriented attitude
toward North Korea accounted for only a little less than 30 PERCENT
. This can be taken as reflecting public frustration at the pending
issue of Japanese nationals abducted to North Korea. Such public
opinion is expected to affect the government's policy toward North
Korea.

"Prime Minister Shinzo Abe and his cabinet laid emphasis on its
stance of taking a pressure-oriented policy toward North Korea."
Following this explanation, the survey asked respondents to pick one
out of three options given about what Japan should do from now on in
its North Korea policy. To this question, 36 PERCENT answered that
Japan should increase its pressure further, topping all other
answers. Among other answers, 30 PERCENT said the government should
continue the Abe cabinet's pressure-oriented stance, with 29 PERCENT
saying the government should switch to a dialogue-oriented
attitude. Those who want the government to take a pressure-oriented
stance totaled 66 PERCENT .

Even among those who support the Fukuda cabinet, the proportion of
those who want the Fukuda cabinet to take a dialogue-oriented stance
was only 31 PERCENT . Among those who do not support the Fukuda
cabinet, those insisting on increasing pressure added up to 42
PERCENT .

5) US Ambassador Schieffer sends President Bush cable warning quick
delisting of North Korea as state sponsor of terrorism could damage
Japan-US relations

NIKKEI (Page 2) (Full)

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October 27, 2007

The Washington Post in the Oct. 26 edition reported that US
Ambassador to Japan Thomas Schieffer had sent an official cable to
President George W. Bush noting: "If the US delists North Korea
quickly, it could damage relations with Japan, the US' closest ally
in the pacific region." The ambassador has expressed his
dissatisfaction with Assistant Secretary of State Christopher Hill
for his stance of leaving the ambassador uniformed of the details of
negotiations while stressing the need for substantive progress on
the issue of North Korea's past abduction of Japanese nationals. It
is quite unusual for an ambassador to send a cable directly to a
president.

6) New policy approach to North Korea involving incremental aid
measures to be broached in bilateral working group talks early next
month, aiming at results by the end of the year

NIKKEI (Page 2) (Excerpts)
October 28, 2007

Japan and North Korea will convene in early November a meeting of
their working group on normalization on relations under the
framework of the six-party talks. The outlook is for talks to center
on Japan's new policy approach of meeting progress on such pending
issues as the return of abductees to Japan with a staged-in removal
of sanctions now imposed on the DPRK and the providing of aid. The
aim is to produce certain results by the end of the year, when other
moves will come together, such as North Korea's nuclear issue and
the removal of its name from the US list of states sponsoring
terrorism.

Coordination is underway for the working group to possibly meet in
Southeast Asia, such as in Malaysia, with several meetings to take
place as necessary until the end of the year. Prime Minister Yasuo
Fukuda has indicated his intention to quickly find a breakthrough in
the abduction issue, and when he met with the representatives of the
abductee families on the 26th, he announced: "There is now a good
environment in which to negotiate with North Korea. We will
negotiate by using every means possible, for I would like to resolve
this issue."

The focus of bilateral talks with North Korea now, including
possible secret negotiations, will be whether the North will respond
immediately by allowing all of the remaining abducted victims to
return to Japan. The Fukuda administration has taken as an important
stance the possibility of "progress" as a prior stage to "resolving"
the issue. Assuming that North Korea will respond, consideration is
apparently underway as to what the definition of "progress" should
be, and "action in response to the level of progress," according to
Foreign Minister Komura.

7) US Defense Secretary to visit Japan next month, the last stop in
a three-country tour; May urge Japan to make more efforts on pending
issues

SANKEI (Page 7) (Excerpts)
October 27, 2007

Takashi Arimoto in Washington, D.C.

The schedule for Secretary of Defense Gates' three-country tour to

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Japan, the Republic of Korea, and China, starting on Nov. 7, was
firmed up yesterday. According to a source connected to Japan-US
relations, the visit to Japan will be the last stop in the tour.
According to the same source, one might say that the trip "will be a
signal to Japan to make more efforts" to resolve what compared to
South Korea and China seems like a mountain of pending issues,
including continuing the refueling operation of the Maritime
Self-Defense Force (MSDF) in the Indian Ocean, which is about to be
halted, and the lack of progress in the realignment of US forces in
Japan.

This will be the first trip to Japan by Gates since he was appointed
defense secretary last December. A Pentagon source noted: "the
specific itinerary of the Secretary cannot be announced until after
he departs." Bilateral issues with Japan include the continuing of
MSDF refueling, the realignment of US forces in Japan, and
host-nation support (sympathy budget) of US forces in Japan, which
will run out next March.

However, Japan has an accumulation of its own issues, including the
inappropriate relation between former Vice Defense Minister Moriya
and a defense contractor. And the correction of the amount of fuel
supplied by the MSDF (in the Indian Ocean to a US vessel). Japan
will be under pressure to handle its own domestic issues.

The same source pointed out: "We should recognize that the Japan-US
alliance, which is supposed to be in the best shape ever is in a
dangerous situation."

8) Government, ruling coalition plan to extend Diet session for
three weeks

ASAHI (Page 1) (Full)
October 27, 2007

The government and ruling parties generally decided on Friday to
extend the current Diet session, which is scheduled to end on Nov.
10. They will coordinate on a plan to extend the session for three
weeks until the end of November. The aim is to allow time to enact
the new bill to continue the Maritime Self-Defense Force's (MSDF)
refueling mission in the Indian Ocean after passing it through the
House of Representatives in early November. However there is no
change in the situation that it will be difficult to enact the bill
even if the session is extended, because the main opposition
Democratic Party of Japan (DPJ or Minshuto) is unlikely to support
the legislation, and because many members in the ruling coalition
are cautious about taking a vote twice in the Lower House.

The expectation is that the opposition camp will oppose an extension
of the current extraordinary session. The ruling coalition, however,
intends to obtain understanding from the opposition camp by carrying
out deliberations on the DPJ-sponsored livelihood-related bills and
three labor-related bills the government drafted.

Due to the allegation of diversion of fuel supplied by the MSDF to a
US supply ship and a scandal involving former Administrative Vice
Defense Minister Takemasa Moriya's inappropriate relationship with a
defense contractor, there is also a strong view that the current
session should not be extended. However, the Prime Minister's
Official Residence (Kantei) and the ruling Liberal Democratic Party
(LDP) executives have determined that they should not give up their
effort to enact the refueling bill.

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Another aim in extending the session is for the ruling coalition to
show that if the bill is voted down in the House of Councillors, the
DPJ is to be held responsible for the failure. LDP Secretary General
Bunmei Ibuki stressed in a press conference on the 26th: "I want to
see what kind of decisions the Upper House, including the DPJ, will
make." A high government official commented: "It is unthinkable that
the session will be extended" since Prime Minister Yasuo Fukuda will
visit the United States in mid-November.

The outlook is that the new antiterrorism legislation will pass the
Lower House before the end of the current session at the earliest,
as a Lower House committee has already started deliberations on the
bill on the 26th. The ruling camp predicts that an extension of the
session until the end of November will be enough to conduct
deliberations on the legislation, even though the DPJ has the lead
in debate in the Upper House.

If the Upper House scraps the refueling bill, the government and
ruling camp will make a decision on whether they can enact the bill
with approval of a two-third Lower House majority by taking a second
vote, while watching public opinion. Even if the Lower House does
not take a second vote on the bill, the session will unlikely be
further extended until late December. A senior LDP member said: "We
can't carry out Diet management that will affect the compilation of
a budget for next fiscal year."

However, there still remain uncertainties about how long the session
should be extended. If the scandal involving Moriya, who will be
summoned to the Diet to testify as a sworn witness on the 29,
continues to grow, the possibility is that it will be difficult to
pass the new antiterrorism through the Lower House before the end of
the session. Closely watching public response to a possible
withdrawal of the MSDF from the Indian Ocean as the present
antiterrorism law expires on Nov. 1, the government and ruling
coalition will make a final decision in early November on the
session extension issue.

9) In working-level talks prior to prime minister's visit to US,
calls one after the other from US officials for Japan to continue
refueling mission

NIKKEI (Page 2) (Excerpt)
October 28, 2007

Hiroshi Maruya in Washington, D.C.

A series of working -level talks between Japan and the United States
prior to Prime Minister Fukuda's US visit ended on Oct. 26. Vice
Foreign Minister Yachi and the Foreign Ministry's Asia-Pacific
Bureau Director General Sasae, who were visiting the U.S.
transmitted the Japanese government's views on the removal of North
Korea from the US list of states sponsoring terrorism, as well as
the host-nation support (sympathy budget). The US side plans to have
the President during his summit meeting with Fukuda in mid-November
seek a continuance of the refueling operation in the Indian Ocean.
"Expressing the feelings of the entire international community, I
would like Japan to continue supplying oil," said Deputy Defense
Secretary Gordon England to Yachi during their meeting. He strongly

SIPDIS
urged the quick enactment of the new bill that would allow continued
refueling services. Similar expectations were voiced during meetings
with National Security Council and other White House officials.

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10) Prime Minister Fukuda at Lower House special committee: We have
to consider what civilian assistance Japan can offer in Afghanistan

MAINICHI (Page 5) (Full)
October 27, 2007

Prime Minister Yasuo Fukuda stated on Oct. 26 at a House of
Representatives Special Committee on Antiterrorism and Assistance
for Iraq: "We have to always look into the possibility as to what
civilian assistance Japan can provide (in Afghanistan) in
cooperation with other countries." He revealed that he would
consider responding to changes in the situation. He was replying to
a question by Yasutoshi Nishimura of the ruling Liberal Democratic
Party (LDP).

Fukuda called on the largest opposition Democratic Party of Japan
(DPJ or Minshuto) to hold consultations, noting, "(Regarding the
security issue) I would like to get support from as many people as
possible. I have envisioned discussions with the opposition bloc."
The prime minister apparently made the remarks with an eye on DPJ
President Ichiro Ozawa's advocacy of civilian assistance in
Afghanistan.

Masao Akamatsu of the New Komeito questioned Defense Minister
Shigeru Ishiba, who was director general of the Defense Agency,
about his responsibility for supervising former Administrative Vice
Minister Takemasa Moriya over his alleged golfing with a former
defense equipment trading house executive. Ishiba responded:

"At that time I was working even Saturdays and Sundays in dealing
with such issues as the establishing of contingency law and dispatch
of Self-Defense Force troops to Iraq. It was my mistake that I
shared a similar view with (Mr. Moriya). If the fact that I believed
in him is wrong, I will take responsibility for that."

11) Prime Minister Fukuda: Senor SDF officers must maintain
discipline

ASAHI (Page 2) (Full)
October 29, 2007

Prime Minister Yasuo Fukuda provided instruction yesterday at an
annual review at the Ground Self-Defense Force's Camp Asaka in
Tokyo. Keeping in mind cozy ties between former Administrative Vice
Defense Minister Takemasa Moriya and a defense equipment trading
house, as well as the ministry's failure to correct its underreport
of the amount of fuel the Maritime Self-Defense Force (MSDF)
supplied to a US ship in the Indian Ocean, the prime minister
stated: "It is truly deplorable that there have been problems
concerning maintaining discipline and managing intelligence in
recent years." He also demanded greater discipline, saying: "In
particular, senor officials need to be aware that the duty of
national defense cannot be fulfilled without the people's trust,
hence the need to ensure strict discipline."

12) Of Yamada Yoko's 117 contracts with Defense Ministry between
FY2002 and FY2006, 112 were discretionary

TOKYO SHIMBUN (Page 1) (Excerpts)
October 29, 2007


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It has been found through the Defense Ministry's documents that of
the 117 contracts (totaling 17.46 billion yen) on such central
equipment as engines awarded by the Defense Ministry (formerly
Defense Agency) to the Tokyo-based defense trader Yamada Yoko Corp.
between FY2002 and FY2006, 112 cases (worth 16.47 billion yen), or
over 90 PERCENT , were discretionary contracts.

In the wake of a crackdown on bid-ridding for a ridge project and a
bureaucrat-initiated bid-rigging scandal involving the Defense
Facilities Administration Agency, government agencies have
introduced a competitive bidding system. But collusive ties between
contractors and Defense Ministry officials are still very much alive
in the area of defense equipment, in which a large part is imported
from overseas military manufacturers and concluding discretionary
constricts with contractors rich in know-how is still common for
keeping defense secrets.

By year, in FY2002, of the 36 cases (3.13 billion yen), all but one
open-bidding case were discretionary contracts. In FY2003, of the 28
cases (2.5 billion yen), 27 (2.39 billion yen) were discretionary.
In FY2004 and FY2005, all cases -- 18 cases (4.14 billon yen) and 20
cases (4.34 billion yen), respectively -- were discretionary.

In FY2006, 15 cases (3.33 billion yen) were subject to competitive
bidding, but eventually 12 ended up as discretionary contracts for
such reasons as that there were no applicants or successful
bidders.

Yamada Yoko won discretionary contracts totaling 2.64 billon yen in
FY2004 for the shipment of a system for the Air Self-Defense Force's
next-generation transport aircraft (CX), such as engines, and 1.25
billion yen in FY2005.

13) Former executive of Yamada Corp. instructs former president of
subsidiary in US to send 100 million yen, suspected of using 30
million yen for new company

YOMIURI (Page 39) (Excerpts)
October 29, 2007

Former executive Motonobu Miyazaki of Yamada Corp., a trading
company specializing in defense and aircraft equipment, whose cozy
relations with former Vice Defense Minister Takemasa Moriya have
been reported, had instructed the former president of its subsidiary
in the United States to send approximately 100 million yen to Japan,
it has been learned. It has also been found that Miyazaki allegedly
used 30 million yen of the 100 million yen as capital for his new
company. The Tokyo District Public Prosecutors Office's special
investigation squad is trying to trace the money by questioning
Miyazaki and the former president.

Miyazaki quit the company in June last year and established a new
company named Nippon Miraizu, based in Tokyo, in September the same
year. It has been recorded that 30 million yen in capital for the
new company was invested by G Zero Holding, the predecessor of
Nippon Miraizu started up by Miyazaki in July the same year.
According to sources familiar with the matter, in the accounts of
Yamada International Corp., a subsidiary of Yamada Corp. in the US
based in Washington, about 100 million yen was left unaccounted for
after Miyazaki left the company. This is part of the money deposited
in a bank account under the name of the former president, and the
former president had sent the money to Miyazaki before the president

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quit in August of last year, according to the sources.

In late August, 30 million yen in capital for Nippon Miraizu was
transferred from G Zero. Around that time, Miyazaki was having
difficulty raising money. Even after establishing the new company,
he procured operating capital from several moneylenders.

14) 475 former Defense Ministry officials employed at top 15 defense
companies accounting for 70 PERCENT of defense contracts; Huge
donations to LDP

AKAHATA (Top play) (Full)
October 28, 2007

In the wake of the revelation of improper ties between former
Administrative Vice-Defense Minister Takemasa Moriya, 63, and
defense equipment trader Yamada Yoko Corp., the Akahata's
investigations have found that a total of 475 former Defense
Ministry officials have landed jobs at the ministry's top 15
contractors after retirement. It has also become clear that the 15
firms have accounted for 70 PERCENT of the total defense contract
amount that they have donated huge amounts of money to the Liberal
Democratic Party.

These firms are major defense enterprises that have received orders
from the Self-Defense Forces for equipment, ammunition, fuel and so
on. The total amount of contract won in FY2006 by the 15 firms, led
by Mitsubishi Heavy Industries, Ltd.'s 277.6 billion yen, came to
907.6 billion yen, or 70 PERCENT of the Defense Ministry's total
contract amount.

As of April 2006, 13 companies, excluding two that did not have any,
employed a total of 475 former Defense Ministry officials, including
98 at Mitsubishi Electric Corp., 62 at Mitsubishi Heavy Industries,
and 59 at Hitachi Ltd. (Fujitsu Ltd.'s figure alone was as of
October 2005).

Top three firms with over 100 billion yen in contract amount had an
average of 69.7 former officials. The average of six companies, such
as NEC Corp., with contracts over 30 billion yen and less than 100
billion yen, came to 27. Six firms with contracts less than 20
billion yen had an average 17.3 retired officials. This has also
revealed the correlation that the amount of contracts increases in
proportion to the number of former officials.

In addition, 11 companies, topped by Mitsubishi Heavy Industry's 30
million yen, donated a total of 186.9 million yen in FY2006 to the
National Political Association, the LDP's fund-management
organization.

Collusive ties between the defense industry and the Defense
Ministry, including allegations over Moriya, must be thoroughly
probed into.

15) Chinese protest vessel temporarily entered Japanese waters near
Senkaku Islands

TOKYO SHIMBUN (Page 3) (Full)
October 29, 2007

Yuji Hiraiwa, Beijing


TOKYO 00005028 011 OF 012


A civilian organization claiming China's sovereignty over the
Senkaku Islands, known as Diaoyu in China, made it clear on Oct. 28
that a protest vessel had been headed for the disputed islets.
According to the group's spokesperson, the protest boat entered
Japanese waters around the islands on the night of Oct. 28 but left
Japanese waters due to the spraying of water by a Japan Coast Guard
vessel. In an interview with the Tokyo Shimbun, the spokesperson
expressed a desire to land on the islets if conditions were
favorable.

According to the organization, the protest vessel carrying four
Chinese citizens left Amoy, Fujian Province, on Oct. 26.

"The four persons have taken the action voluntarily," the
spokesperson said. He also explained the reason for taking the
action at this point in time this way: "People would go to the
Diaoyu until they return to China. No special motive is necessary."

In March 2004, seven Chinese activists who landed on the islands
were arrested and removed by the Okinawa Prefectural Police.

16) Government files protest with China

TOKYO SHIMBUN (Page 3) (Full)
October 29, 2007

In the wake of a Chinese protest vessel's intrusion into Japanese
waters near the Senkaku Islands, known as Diaoyu in China, the
government on Oct. 28 lodged a protest with the Chinese government
through diplomatic channels, saying, "In view of history and
international law, the Senkaku Islands are undoubtedly an inherent
part of Japan's national territory. It is extremely regrettable that
such an incident occurred."

In response, China urged Japan to respond calmly from a broad
perspective of Japan-China relations, while indicating that Japan's
request was unacceptable.

The government also collected information, establishing a liaison
office in the Crisis Management Center at the Prime Minister's
Official Residence (Kantei).

17) DPJ to halve costs for convention

MAINICHI (Page 2) (Abridged)
October 28, 2007

The leading opposition Democratic Party of Japan (Minshuto) has now
decided to cut cots for its convention, which is scheduled to be
held in the city of Yokohama on Jan. 16 next year. The DPJ will
shorten the convention's period from two days to one day and will
hold no showy attractions. The DPJ used to spend 40-50 million yen
on its annual convention. Next year, however, the DPJ will halve its
convention spending to about 20 million yen. The decision reflects
DPJ President Ichiro Ozawa's view. Ozawa anticipates that the House
of Representatives will be dissolved soon for a general election, so
he wants to hold the party convention in a "modest" way to save and
pour money on campaigning.

According to the DPJ's secretariat, its annual convention gathers
about 1,000 participants. The DPJ covers transportation expenses and
hotel charges for its local delegates and guests. In December 2004,

TOKYO 00005028 012 OF 012


the DPJ held its convention in the city of Fukuoka for about 81
million yen. This time, the DPJ will not show up its convention like
dropping balloons from the ceiling.

The DPJ is also well up in the art of saving money. According to its
report of political funds for 2006, the DPJ has carried over more
than 10 billion yen to 2007, topping the ruling Liberal Democratic
Party's 6.7 billion yen.

SCHIEFFER

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