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Cablegate: Japanese Morning Press Highlights 11/26/07

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UNCLAS SECTION 01 OF 10 TOKYO 005324

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 11/26/07


Index:

Diet agenda:
1) Coordination occurring to re-extend the current Diet session
until Jan. 16 in order to pass the new antiterrorism bill and
starting next session on the 18th (Sankei)
2) Maneuvering to start Upper House deliberations on antiterrorism
bill, but DPJ's Ozawa wants session to clear up charges of collusive
defense ties first (Nikkei)
3) Despite his repeated denials, former defense chief Nukaga
continues to be pursued by Democratic Party of Japan for allegedly
being wined and dined (Tokyo Shimbun)

Defense scandals:
4) Defense Minister Ishiba intends to prosecute Yamada Corp. for
padding defense procurement bills and other violations (Asahi)
5) Former Vice Defense Minister Moriya started backing Nihon Mirise
Co. for CX engine contract even before selection process began
(Asahi)
6) Moriya told defense contractor two months before contract awarded
that he had decided who would be get it (Tokyo Shimbun)
7) Moriya may have suppressed report on CX engine procurement
process (Sankei)
8) Moriya may have offered his good services to broker components
for next generation destroyer (Nikkei)

Defense issues:
9) Yokosuka City to receive 584 million yen in subsidies for
accepting USFJ realignment plan (Mainichi)
10) Okinawa development package to be unfrozen in order to promote
compromise on Futenma relocation plan, now stalled (Tokyo Shimbun)
11) Government panel picked by former Prime Minister Abe to shelve
report on collective self-defense due to cautious stance of Prime
Minister Fukuda (Tokyo Shimbun)

12) Government to provide China with technology to combat pollution
and protect environment (Sankei)
13) Most prefectures now view blanket cattle inspections for BSE
detection as a waste of time and money (Mainichi)

Articles:

1) Government, ruling coalition coordinating plan to convene regular
Diet session on Jan. 18

SANKEI (Page 1) (Slightly abridged)
November 26, 2007

The government and ruling parties launched yesterday coordination to
extend again the current extraordinary Diets session until Jan. 16
and to convene the next regular session on the 18th. The aim is to
enact a new antiterrorism special measures bill during the extra
Diet session, as well as to pass bills related to a state budget for
next fiscal year through the Diet by the end of March so that there
will be no hindrance to processing the FY 2008 budget. The
opposition camp will likely oppose the idea, however.

According to several government and ruling camp sources, the
government and ruling coalition have determined that it would be
difficult to enact the new antiterrorism bill during the ongoing
session since Democratic Party of Japan (DPJ or Minshuto) President
Ichiro Ozawa expressed again his opposition to the legislation in a

TOKYO 00005324 002 OF 010


one-on-one meeting on Nov. 22 with Prime Minister Yasuo Fukuda.

The government and ruling parties started coordination yesterday to
readopt the bill with a two-thirds majority vote in the House of
Representatives, based on Article 59 of the Constitution, which
stipulates that the Lower House can take a second vote on a bill
rejected by the Upper House within 60 days after the Upper House
receives it.

Jan. 11 will be 60 days since the Upper House received the bill from
the Lower House. Therefore, chances are that the Lower House will
take a vote again after the current extra session is re-extended
until 16 as Jan. 14 is a national holiday. The government and ruling
camp began looking for a possibility of convening the regular Diet
session on the 18th, since the ruling Liberal Democratic Party (LDP)
is expected to hold a convention on the 17th.

The reason for the government and ruling bloc hurrying to open the
regular session is there are many state budget-related bills that
must be passed by the end of March. Most of such bills provide the
government's annual revenue. In case they are not be approved by the
Diet, the state budget for next fiscal year could not be
implemented. If they are rejected by the Upper House, they will have
to be readopted by a two-thirds majority vote in the Lower House.

Therefore, the government and ruling coalition is considering
enacting these bills at the end of March with a two-thirds majority
vote based on (Article 59 of the Constitution) the Lower House
should take a second vote on a bill rejected by the Upper House
within 60 days after it sent it to the upper chamber, even if the
opposition camp delays deliberations.

2) Fierce battle to develop over new refueling bill in Upper House

NIKKEI (Page 2) (Excerpts)
November 26, 2007

A tug-of-war between the ruling and opposition camps will intensify
starting today in the Diet over when to start deliberations on a
bill to resume the Self-Defense Force's refueling activities in the
Indian Ocean. The ruling coalition will request adopting of the bill
by the end of the current Diet session, which will run until Dec.
15, after holding speedy deliberations at the House of Councillors
Committee on Foreign Affairs and Defense. The opposition camp,
however, will first seek testimony by Finance Minister Fukushiro
Nukaga as a condition for starting deliberations on the bill,
placing priority on the shedding of light on allegations of
relations between Nukaga and the defense equipment trading house
Yamada Corp.

Ichiro Ozawa, president of the main opposition Democratic Party of
Japan (DPJ or Minshuto), when asked by reporters about how his party
would respond to the new refueling bill at a press conference
yesterday in the city of Otsu, stressed: "I think the public wants
to know first the truth about a series of scandals involving the
Defense Ministry."

The ruling and opposition camps have agreed to take a vote on a
DPJ-sponsored bill to abolish the Iraq Reconstruction Support
Special Measures Law at the Upper House committee tomorrow and to
hold on the 28th in a Upper House plenary session for the government
to explain its new refueling bill. Although the ruling bloc has

TOKYO 00005324 003 OF 010


sought the starting of deliberations on the new refueling bill on
the 29th, the opposition has insisted that a question-and-answer
session should not be held until Dec. 4 or after, since there is
another bill that takes precedence.

3) Nukaga problem to impact adversely on deliberations on new
refueling bill in Upper House

TOKYO SHIMBUN (Page 2) (Excerpts)
November 26, 2007

The Diet will hold on Wednesday a plenary meeting of the House of
Councillors, in which the government will explain the purpose of a
new antiterrorism special measures bill, and submit to a
question-and-answer session. The government and ruling parties, with
an eye on the Dec. 12 current Diet session end, hope to continue
deliberations on the bill as much as possible, but Finance Minister
Fukushiro Nukaga is now taking the brunt of the opposition camp's
pursuit over his relationship with the defense equipment trading
house Yamada Corp. The Nukaga problem is having a negative effect on
progress in deliberation on the bill.

The government and ruling coalition aim to hold a
question-and-answer on the new antiterrorism bill at the session the
Upper House Committee on Foreign Affairs and Defense immediately
after the plenary meeting.

However, the Democratic Party of Japan (DPJ or Minshuto), the
largest party in the Upper House, will unlikely agree to their plan,
with a senior DPJ Upper House member saying, "The Foreign Affairs
and Defense Committee should prioritize pursuit of Mr. Nukaga rather
than deliberations on the new bill." The DPJ has been steadily
paving the way for pursuing Nukaga in cooperation with other
committees.

The largest opposition party relentlessly pursued a series of
defense scandals at three meetings of the Upper house last week with
Nukaga present. The party tried to stress the seriousness of the
issue by pointing to the fact that the Yamada Corp. had regularly
purchased Nukaga's fund-raising party tickets.

At a Upper House Financial Affairs Committee session on Nov. 22, the
DPJ stepped up its pursuit of Nukaga, citing as the reason that it
had obtained testimony from another person who had joined a dinner
hosted by Motonobu Miyazaki, a former Yamada Corp. executive, who is
now under arrest. The allegation was that Nukaga had attended the
dinner together with former Administrative Vice Defense Minister
Takemasa Moriya, who has testified under oath that Nukaga was at the
dinner.

Nukaga, however, rebutted: "I never attended that dinner." The DPJ
then continued: "If Moriya's testimony is untrue, we want the two to
testify together." The party will call today for unsworn testimony
by Moriya. A senor Diet Affairs Committee member said: "Nukaga will
have to testify before the Diet" since the DPJ holds the chairman's
posts of the Upper House committees on the foreign affairs and
defense, as well as financial affairs.

4) Ishiba considering filing complaint against Yamada and examining
contracts with other firms as well

ASAHI (Page 1) (Full)

TOKYO 00005324 004 OF 010


November 26, 2007

Defense Minister Shigeru Ishiba on a TV-Asahi talk show yesterday
indicated that the ministry would shortly file a criminal complaint
against defense equipment trading house Yamada Corp. for padding
bills for defense equipment, saying, "If the facts are confirmed, we
must file a complaint against the company."

Ishiba said: "Written estimates have been forged. It's basically
fraud. Tax money has totally been squandered. Not only Yamada but
other matters must be examined." He thus indicated that the ministry
would closely examine equipment contracts concluded with firms other
than Yamada, as well.

Yamada has admitted that it had padded bills by 3.7 million yen for
two contracts on equipment of the Maritime Self-Defense Force, in
addition to a contract on helicopter equipment, in which the
involvement of former Administrative Vice-Defense Minister Takemasa
Moriya was pointed out.

5) Moriya defended Mirise this spring before "discretionary
contract" comment

ASAHI (Page 1) (Excerpts)
November 26, 2007

In connection with the procurement of the engines for the CX
next-generation transport aircraft for the Air Self-Defense Force,
former Administrative Vice-Defense Minister Takemasa Moriya, 63,
this past spring repeatedly made remarks defending Nihon Mirise
Corp., a defense equipment trading house founded by former Yamada
Corp. executive Motonobu Miyazaki, who is under arrest on suspicion
of corporate embezzlement and other charges, sources familiar with
the case said. It has already become clear that Moriya had made
comments in June urging the ministry to conclude a discretionary
contract with Mirise. Moriya himself explained the matter in his
sworn testimony. It has now apparent that prior to June, Moriya had
repeatedly made statements promoting the CX engine on behalf of
Miyazaki's firm.

Miyazaki left Yamada in June 2006 and founded Mirise in September
that year. Mirise and Yamada were in a fierce business battle over
becoming the Japanese agent for the CX engine.

According to the sources, the Defense Ministry this April received a
notice from General Electric Co., the CX engine's producer in the
United States, stating that it would designate Mirise as the
Japanese agent for its engines. It also became a problem in March
that a representative of Mirise, which was not then a GE agent, had
attended the ministry's engine procurement meeting in January.
According to the sources, Moriya around that time pointed out that
Yamada employees responsible for the matter had left the company
following Miyazaki's departure from it. His comments are now taken
as defending Mirise regarding the shipment of GE engines.

6) Moriya insisted on a private contract with NMC for over 2 months

TOKYO (Top play) (Abridged)
November 26, 2007

Former Administrative Vice Defense Minister Takemasa Moriya
persisted for over two months in calling for a private or

TOKYO 00005324 005 OF 010


discretionary contract (zuii-keiyaku) with Nihon Mirise Corporation
(NMC) in the bidding for the Air Self-Defense Force's follow-on
cargo aircraft (CX) engine, sources revealed. NMC was established by
Motonobu Miyazaki, 69, a former managing director of Yamada
Corporation, a trading firm dealing mainly in defense-related
hardware supplies for the Self-Defense Forces. Yamada Corp. and NMC
struggled to become an agent for the CX engine. Miyazaki has now
been arrested for embezzlement and on other charges. Moriya gave the
advantage to Miyazaki and his company in the bidding for the CX
engine, according to the sources. The Tokyo District Public
Prosecutors Office noted the fact that Moriya had long insisted on a
discretionary contract (not open to public bidding). A task force of
prosecutors from the office is believed to be investigating whether
Moriya intended to favor Miyazaki.

The task force will today reinforce its investigative setup for a
total of more than 30 prosecutors, including those from other
district public prosecutors offices. Moriya used to play golf with
Miyazaki, and he was allegedly wined and dined by Miyazaki. The task
force will investigate the allegations full scale, with an eye to
pressing charges for taking bribes.

In August last year, the Defense Ministry received a notice from the
finance minister. At that time, the Defense Ministry reviewed all of
its private contracts for its procurement of equipment and decided
basically to hold open competitive bidding for its procurement in
conformity with the finance minister's notification. However, the CX
engine's manufacturer was expected to switch its agent from Yamada
Corp. to NMC this summer. NMC was the only agent. In the Defense
Ministry's rating of contractors, however, NMC was ranked at "D,"
making it ineligible to participate in competitive bidding. The
Defense Ministry therefore held discussions in and after April this
year on what to do about NMC.

According to informed sources, Defense Ministry officials explained
to Moriya around that month that the Defense Ministry would first
hold open competitive bidding. If there were no participants in the
bidding, the Defense Ministry would then have entered into a private
contract with NMC.

7) CX engine: Screening process report banned, Moriya possibly
behind the scenes

SANKEI (Top play) (Abridged)
November 26, 2007

The Defense Agency, now the Defense Ministry, decided to select an
engine made by a US manufacturer, General Electric Co. (GE), for the
Air Self-Defense Force's follow-on cargo aircraft (CX). In that
process, CX engine screening members were prohibited from reporting
the progress of their screening to the ASDF Air Staff Office. It is
unusual for the Defense Ministry to give no explanation to the Air
Staff Office in the process of screening hardware for the ASDF.
Former Administrative Vice Defense Minister Takemasa Moriya, 63, is
suspected of having taken part in that murky process of selecting
the CX engine. A task force of the Tokyo District Public Prosecutors
Office is apparently talking to screening members in the process of
conducting an investigation.

Moriya used to play golf with Motonobu Miyazaki, 69, a former
managing director of Yamada Corporation, a defense-related trading
firm that was an agent of GE at that time. Moreover, Moriya was also

TOKYO 00005324 006 OF 010


allegedly wined and dined by Miyazaki, who has now been arrested for
embezzlement and on other charges. The task force suspects that
Moriya, in return for the treatment he received from Miyazaki,
favored Miyazaki's trading company in selecting a GE engine and in
performing several other functions. The task force seems to be about
to enter the final stage of investigations, with an eye to charging
Moriya with accepting bribes.

The Defense Agency at that time set up a CX engine screening
committee consisting of Technical Research and Development Institute
(TRDI) and ASDF division directors. This committee created a draft
plan, which was discussed in an equipment review panel chaired by
Moriya. In August 2003, the agency decided to use a GE engine. In
fact, however, the plan was created by an evaluation team that was
set up under the screening board. It was reviewed by senior
officials from the TRDI and officials from ASO divisions in charge.

8) Moriya possibly favored NMC in selecting engine for follow-on
destroyer

NIKKEI (Page 43) (Abridged)
November 26, 2007

Former Administrative Vice Defense Minister Takemasa Moriya, 63,
sought to have a US engine model selected for the Maritime
Self-Defense Force's next-generation destroyer, sources revealed
yesterday. A Defense Ministry section had informally decided to
introduce an engine model from a British manufacturer competing with
its US rival, General Electric Co. (GE). In February this year,
however, Moriya told the section through his subordinates to
reconsider the decision. GE had a consultancy agreement with Nihon
Mirise Corporation (NMC), a trading firm established by Motonobu
Miyazaki, 69, a former managing director of Yamada Corporation.
Moriya is suspected of having used his influence on behalf of NMC,
according to the sources.

A task force of the Tokyo District Public Prosecutors Office
strongly suspects that Moriya favored Miyazaki and his company.
Moriya used to play golf with Miyazaki, and he was also wined and
dined by Miyazaki for years. The task force also seems to be
investigating other procurement contracts, with an eye to
indictments for bribery.

The next-generation destroyer will be introduced as an escort for
Aegis-equipped vessels. The Defense Ministry earmarked 75 billion
yen for a new destroyer in its budget for the current fiscal year.
The ministry is expected to screen and select manufacturers within
the current fiscal year for the engine and other equipment items.

According to informed sources, the Defense Ministry's Weapons and
Warships Division, which is in charge of the engine for the
next-generation destroyer, and the MSDF's Logistics Department
decided informally by February this year to introduce a Rolls Royce
engine model for all of the four engines to be mounted on a new
destroyer. The plan was reported to Moriya, according to the
sources.

In the same month, Moriya, after receiving the report, voiced his
dissatisfaction to his subordinates and told them to urge the
Weapons and Warships Division and the Logistics Department to
reconsider the plan, the sources said.


TOKYO 00005324 007 OF 010


9) Defense Ministry to award 584 million yen in USFJ realignment
subsidy to Yokosuka

MAINICHI (Page 2) (Full)
November 23, 2007

The Defense Ministry yesterday notified the local governments
involved in plans for US force realignment of the informally
determined amounts of subsidies given as compensation for accepting
US force bases or training for this fiscal year - the initial year
of the subsidization policy. The largest amount is 584 million yen
to Yokosuka, Kanagawa Prefecture, for accepting Yokosuka US Navy
base. A total of 4.569 billion yen will be awarded to the
governments of 33 communities located near 12 US military bases
across the nation, including Machida Air Station in Tokyo.

The first designation was announced late last month. The Defense
Ministry intends to offer approximately 60 billion yen to the 33
local governments over the next 10 years or so.

Three more municipalities have been added to the subsidization list,
including Kin Town, Okinawa, which made a policy switch to accept a
plan to use Camp Hansen for Ground Self-Defense Force training. The
amounts of subsidies for these three will be announced later.

The amounts, calculated based on the area of a facility, the number
of troops, and the contents of training, will be changed every
fiscal year according to the degree of progress in realignment.

Four local governments that have declined the government's
realignment plan, including Nago City and Ginoza-son, will not be
subsidized. Zama City, Kanagawa Prefecture, and Iwakuni City,
Yamaguchi Prefecture, have also been excluded from the incentive
list.

10) Government to shortly unfreeze Okinawa economic package to find
breakthrough in deadlocked Futenma plan

TOKYO SHIMBUN (Page 1) (Excerpts)
November 25, 2007

The government decided yesterday to implement shortly the now frozen
Okinawa northern area economic package totaling nearly 10 billion
yen for FY2007, the aim being to find a breakthrough in the stalled
plan of relocating the US Marine Corps' Futenma Air Station
(Ginowan, Okinawa Prefecture) to the coastal area of Camp Schwab
(Nago in the prefecture). The government also plans to continue its
economic package for the area by appropriating another 10 billion
yen in its FY2008 budget.

The Fukuda administration wants to elicit compromises from the
affected areas by holding a second Futenma consultative council
meeting in mid-December with the northern area incentive package as
the leverage, according to sources familiar with the government.

The Okinawa prefectural government and 12 municipalities are the
enterprising bodies of the northern area economic package, which
covers a ten-year period starting in fiscal 2000 and totals 100
billion yen. Although the package is nominally for correcting
regional disparities, it is strongly tinged with an aspect of being
a reward for accepting the bases. Following a final Japan-US
agreement on US force realignment, the government had decided at a

TOKYO 00005324 008 OF 010


cabinet meeting in late May last year to abolish the package, but it
now has decided to continue it, with the aim of smooth
implementation of the base relocation plan.

Disbursement of 10 billion yen in the fiscal 2007 budget has been
frozen due to the stalled relocation talks. But now that the
consultative council has met for the first time in ten months, Tokyo
has recognized the need to dissolve the obstacles standing between
the central government and affected municipalities.

11) Government experts panel to postpone producing report on
collective defense in line with prime minister's cautious posture

TOKYO SHIMBUN (Top play) (Excerpts)
November 25, 2007

The Council for Rebuilding the Legal Foundation for National
Defense, a panel established by former Prime Minister Shinzo Abe and
chaired by Shunji Yanai to study specific collective self-defense
cases that are prohibited under the government's interpretation of
the Constitution, decided on Nov. 24 to forgo producing a report
before the end of the year, changing its original plan to complete
such by this fall. Prime Minister Yasuo Fukuda is cautious about
hastily reviewing the constitutional interpretation. The panel also
took into consideration possible effects on Diet deliberations of a
new antiterrorism legislation for resuming the Maritime Self-Defense
Force's refueling operation in the Indian Ocean.

The council met five times between May and August this year in which
a majority of members called for reviewing the government's
conventional interpretation that the four types of cases for
discussion constituted exercising the right to collective
self-defense. For this reason, the panel intended to incorporate the
call in the envisaged report.

But Prime Minister Abe abruptly resigned from the post in September.
His successor, Prime Minister Fukuda has repeatedly indicated at the
Diet that the question of reviewing of the constitutional
interpretation must be handled carefully.

In addition, an argument on establishing a permanent law governing
the overseas dispatch of the SDF has surfaced in the process of
discussing the new antiterrorism legislation. With the permanent
legislation argument partially overlapping with the four cases, such
as relaxing the weapons use regulations, a view was gaining ground
in the government that the council must not hastily reach a
conclusion.

12) Japan to provide technology for environmental protection in
China

SANKEI (Page 2) (Excerpts)
November 26, 2007

The government announced yesterday that it would implement a
co-benefits project aimed at preventing environmental destruction
and combating global warming in China. Environment Minister Ichiro
Kamoshita will reach an agreement with his Chinese counterpart on a
framework of the project and how to promote it during high-level
economic talks to be held in Beijing next month by relevant cabinet
ministers from the two countries. Japan will help China prevent
environmental destruction by providing energy-conservation and other

TOKYO 00005324 009 OF 010


technologies and know-how and also reduce greenhouse gas emissions.
This will be the first project for Japan to offer cooperation to a
developing country in the co-benefits area.

Kamoshita will visit China for the high-level economic talks on Dec.
1-2. In a meeting with his Chinese counterpart to be held on the
sidelines, Kamoshita expects to reach an agreement on a framework
for environmental cooperation. They are likely to work out measures
to deal with (1) air pollution; (2) water contamination; and (3)
waste disposal. Selecting model districts and business types subject
to the project, the Japanese and Chinese environment ministers are
expected to determine the specific time for implementation and other
details.

In generating power, China depends on coal. Given this, Japan
intends to provide technology to reduce such contaminants as
sulfuric oxide and nitrogen oxide as measures to prevent air
pollution. In addition, Japan will look into installing
desulfurization equipment and transferring technology to keep the
temperature in boilers at a proper level. Japan also plans to set up
sewage treatment facilities.

Developing countries tend to put off measures to protect the
environment as a result of giving priority to developing their
economies. According to the National Institute for Environmental
Studies, nitrogen oxide emissions from China are up more than four
times what they were 23 years ago and are expected to double from
the current level in 2020. By providing its energy-conservation
technology, Japan aims to help China protect the environment while
pursuing economic growth.

13) Dominant view in prefectural working-level meeting on BSE:
Continuing blanket testing "scientifically meaningless"

MAINICHI (Page 2) (Full)
November 23, 2007

The nationwide network conference of local governments on food
safety held a meeting in Tokyo yesterday. Asked whether Japan should
continue to mandate blanket testing to prevent BSE, most
participants said that continuing such inspections is "meaningless."
The conference confirmed the necessity to inform consumers of the
scientific meaning of blanket testing.

The meeting brought together 68 representatives from 42
municipalities and one government ordinance city. Discussion was
conducted on the necessity of the current requirement of inspecting
all cattle and the propriety of its continuation.

After the meeting, Kunihisa Ozawa, chief of the Gunma Prefecture
Food Safety Conference Secretariat, explained in a press
conference:

"All participants except for those from several prefectures pointed
out no need to continue testing cattle 20 months of age or younger,
which is meaningless from a scientific perspective. ... A wide gap
was found to exist between the scientific judgment of working-level
officials and the policy judgment of giving consideration to public
opinion."

The Ministry of Health, Labor and Welfare intends to end subsidies
at the end of July next year for BSE testing of cattle 20 months of

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age or younger. But Hokkaido and other prefectures to which large
amounts have been awarded are calling for continuing the
subsidization.

DONOVAN

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