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Cablegate: Daily Summary of Japanese Press 12/14/07

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PP RUEHFK RUEHKSO RUEHNAG RUEHNH
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RUEHNH/AMCONSUL NAHA 7375
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RUEHUL/AMEMBASSY SEOUL 6696
RUCNDT/USMISSION USUN NEW YORK 7423

UNCLAS SECTION 01 OF 14 TOKYO 005572

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: DAILY SUMMARY OF JAPANESE PRESS 12/14/07


Index:

(1) Political world likely to become unstable after general election
(Asahi)

(2) Ruling parties adopt tax code revision outlines: Tax system is
next target of battle between ruling and opposition camps: All
policies are intended to win election, says LDP; Postponement of tax
hike only temporary measure (Asahi)

(3) Shaken Japan Business Federation (Part 2-conclusion): JBF's
policy requests have been rejected (Asahi)

(4) MSDF lieutenant commander arrested over Aegis info leak; Secret
explosively spread; U.S. mistrust amplified due to sloppy data
management (Sankei)

(5) Echoes to Okamoto's essay: Get the supply ship back in the
Indian Ocean (Sankei)

(6) Sympathy budget: Are Japanese employees working at U.S. bases
sacrificial stones? (Asahi)

(7) Five Japanese companies, including Nippon Oil Corp., to
construct refinery in Libya: Joint project negotiations underway;
Project cost estimated to come to 500 billion yen (Nikkei)

ARTICLES:

(1) Political world likely to become unstable after general
election

ASAHI (Page 4) (Slightly abridged)
December 14, 2007

Politicians have begun to take maneuvers in anticipation of changes
in the political scene after the next general election. If the
Democratic Party of Japan (DPJ) wins the next election under the
current situation in which the opposition camp controls the House of
Councillors, the LDP will be thrown into chaos. Such politicians
think that the political world will surely become unstable. In the
Liberal Democratic Party, moves are emerging to form new groups.
Such efforts might develop into a move to form a suprapartisan
group.

New alliance in LDP

In a political funds-raising party held by Yamazaki faction chairman
Taku Yamasaki at a Tokyo hotel on Dec. 11, Nobuteru Ishihara was
introduced as its new member. Ishihara said in the meeting: "I
remained unaffiliated with any party, but in order to translate
policies on national affairs and security into practice, it is
necessary to raise our voices in chorus."

After belonging to the former Mitsuzuka faction, Ishihara became
independent without faction affiliation, as his father, Shintaro
Ishihara, did. Later, he joined the former Kato faction, but he left
the faction later, set off by a series of political acts (by Koichi
Kato and Yamasaki to topple the Mori administration in November
2000). Under the Koizumi administration, which encouraged
politicians to be free from factional maneuvering, Ishihara served
as administrative reform minister and land, infrastructure &

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transport minister. Under the Abe administration, he was also
appointed to head the Policy Research Council.

Some observers see his new membership in the Yamasaki faction as a
move taken in anticipation that the political world is likely to
become unstable. The chairman of another faction coolly said: "A
person who was on the side of destroying factions has now joined
one. This must mean that doing so will be to both side's mutual
advantage."

If the ruling bloc loses its current two-thirds majority in the next
general election, moves will certainly be afoot to reorganize the
political world. The above-mentioned chairman made this analysis:
"Both sides' speculations coincided, that is, Yamasaki wants to
strengthen his political ground by drawing in a promising
mid-ranking lawmaker, while Ishihara want to solidify his footing
before facing hardships.

Deputy Policy Research Council Chairman Hiroyuki Sonoda, who joined
the former New Party Sakigake (Pioneer) after leaving the former
Mitsuzuka faction but now belongs to the Tanigaki, also said on Dec.
8 in Amakusa City, Kumamoto Prefecture - his electoral district: "We
must make efforts to stabilize the political system, including the
Upper House. Many in the LDP and the DPJ are thinking about the
need. The political community will inevitably be reorganized after
the next general election.

The inauguration of the Fukuda administration has accelerated such
moves. On Dec. 5, Koga faction deputy chairman Seiichi Ota told
Tanigaki faction members at a Japanese restaurant in Akasaka: "Some
suggest merging the two factions early next year, before a storm
blows up."

The former Miyazawa faction was disbanded and split into the Koga,
Tanigaki, and Aso factions. Ota proposed a plan to bring together
the Koga and Tanigaki factions - two of the three factions - again.
Both factions remained unable to draw up a roadmap for the merger
plan, but the establishment of the Fukuda administration prompted
them to decide to put this idea on the table again.

"I hope (the two factions) will join hands and set forth the policy
of placing importance on Asia diplomacy. Under this slogan, I want
to put liberal forces together," a Koga faction member with cabinet
experience said. This lawmaker has frequently met DPJ lawmakers
recently.

The former Miyazawa faction?together with the former Takeshita
faction, had once been called "conservative mainstream," but it
gradually moved away from the post of mainstream and was finally
marginalized by the Abe administration, which advocated the slogan
of freeing Japan from the postwar Japan.

Discussion on human-rights legislation was resumed on Dec. 3 for the
first time in two years and six months. This theme was scotched by
the Abe administration. But since Makoto Koga and Toshihiro Nikai,
supportive of the legislation, assumed two of the four party
officers' posts under the Fukuda government, the yoke was thrown
off. Some New Komeito members also have begun to express hopes that
a bill to provide foreign residents with local suffrage will be
submitted to the Diet.

A senior LDP member indicated that changes are occurring in the

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course of things, saying: "I think the human-rights legislation will
be forced through the Diet. Mr. Abe, who expressed opposition, is no
longer in power."

On Dec. 4, Shoichi Nakagawa, who had stepped down the center stage
when former Prime Minister Abe stepped down, also started up a study
group calling itself "new conservatism," bringing together 30
lawmakers who supported Taro Aso in the LDP presidential election in
September.

The main player was Takeo Hiranuma, who assumed the post of supreme
advisor in the group. He has not been affiliated with any party
since leaving the LDP after opposing the postal privatization bill.
He has openly declared that he would establish a "new party
Hiranuma." In the meeting on Dec. 4, he stated: "It is desirable to
establish a sound conservative camp. I am determined to do my best
in cooperation with all of you to that end."

In the DPJ, as well, Okayama prefectural branch head Keisuke Tsumura
indicated in a press conference on Dec. 12 that the party would gave
up fielding its candidate in the Okayama No. 3 constituency, the
electoral district of Hiranuma, in the next Lower House election.
Tsumura said: "Mr. Hiranuma has set forth a plan to establish a new

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party. We had better give consideration to his intention to topple
the LDP."

Unless the DPJ runs its candidate, an LDP-endorse candidate and
Hiranuma will square off in the Okayama 3rd constituency.

(2) Ruling parties adopt tax code revision outlines: Tax system is
next target of battle between ruling and opposition camps: All
policies are intended to win election, says LDP; Postponement of tax
hike only temporary measure

ASAHI (Page 2) (Almost full)
December 14, 2007

The ruling parties yesterday compiled guidelines for tax code
revisions for fiscal 2008. The package has a strong nature of being
tentative with the next general election taken into consideration,
following their crushing defeat in the July Upper House election.
This is because though the ruling parties want to hold talks with
the opposition camp to discuss the pending issue of hiking the
consumption tax, they are not certain whether the DPJ will accept
the proposal or not. The Democratic Party of Japan (DPJ or
Minshuto), which controls the Upper House, has adopted a strategy of
pressing for a dissolution of the Lower House in exchange for
responding to a call for deliberations on budget-related bills,
including a bill on tax code revisions. The battle between the two
camps in the Diet, where the opposition camp holds a majority in the
Upper House, will continue into the regular Diet session, where
deliberations will focus on tax-related public finance.

Commenting on the guidelines not mentioning a hike in the
consumption tax, Liberal Democratic Party (LDP) Tax System Research
Committee Chairman Yuji Tsushima explained at a press conference
yesterday, "Given the present political situation, it is necessary
for the ruling and opposition parties to have a heart-to-heart talk
with focus on gaining public understanding on the issue." He thus
indicated his view that it would be meaningless unless discussions
on a tax hike are held, joined both by the ruling and opposition
camps, because the opposition camp has a majority in the Upper

TOKYO 00005572 004 OF 014


House.

The ruling parties in the guidelines issued at the end of last year
pledged to address drastic reform of the tax system, including the
consumption tax. The Fukuda administration wanted to proceed with
discussions on a tax hike with the pledged hike in the government
share in the basic part of the public pension system close at hand
in fiscal 2009. It also wanted to make the issue one of contention
with the DPJ, which has not yet revealed fiscal resources to finance
their policies.

However, Tsushima halted the move. During a meeting of senior
officials of the LDP tax panel on Oct. 25, he made this comment: "I
would like to do my best with the courage to firmly constrain what
we should not do." The party leadership, including Secretary
General Bunmei Ibuki, who hates to see a tax hike affect the next
election, checked a rising trend for tax hike discussions, noting,
"All policies must be for the sake of our victory in the next
election."

With tax hike discussions put on the back burner, the tax code
revision guidelines this time have inevitably become temporary. LDP
tax panel chairman Kaoru Yosano asked Tokyo governor Shintaro
Ishihara to transfer about 300 billion yen from its revenues from
two local corporate taxes. Ishihara on Dec. 7 at the Tokyo
Metropolitan City Hall pressed Yosano, asking, "I would like the
prime minister to pledge that this is a temporary measure."

Meeting with Ishihara, Prime Minister Fukuda pledged to set up a
consultative organ for the government to assist the Tokyo
metropolitan government's projects, such as the consolidation of
social infrastructure. He also pledged that the tax code revision
this time would be tentative. Ishihara then agreed to comply with
Fukuda's request.

New Komeito Policy Research Council Chairman Tetsuo Saito and LDP
Policy Research Chairman Sadakazu Tanigaki exchanged views on fiscal
resources to finance the basic part of the public pension system on
the evening of Dec. 12.

Saito: "There is buried treasure around, isn't there? We can use
that."

Tanigaki: "Pension financing will not become stringent so soon. We
want to use the money to reduce the issuance of government bonds."

The New Komeito pledged during the Upper House election campaign to
allocate revenues squeezed by abolishing fixed-rate tax cuts. It
secured 117 billion yen last year this way. It was unable to do so
this time. However, it secured additional funds close to 20 billion
yen, based on a temporary budget with 135.6 billion yen transferred
from the special account, or so-called buried money.

A certain senior New Komeito official noted in relief, "We would not
be able to fight the next election if we had gained nothing in the
tax revision guidelines." However, one senior LDP official said
sarcastically, "It is like expenditures having been padded just to
live up to the pledge New Komeito made to its supporters."

DPJ aims at Diet resolution with double tactics combining budget and
pension: Confrontation on provisional tax rate, to begin with


TOKYO 00005572 005 OF 014


A meeting to discuss special road-construction revenues took place
at the DPJ head office at noon on Dec. 13. President Ozawa clarified
his stance of totally confronting the ruling parties in the budget
battle centered on taxes in front of Tax System Research Committee
Chairman Hirohisa Fujii, Deputy President Naoto Kan and Secretary
General Yukio Hatoyama. He said, "The government is controlling
local governments using projects under its direct jurisdiction. Such
projects should be done away with." Participants confirmed their
view that special road funds should be used for other purposes.

Focus is the temporary national auto tax rate. The gasoline tax
expires on March 31. The ruling parties have included in the
guidelines an extension of the tax by another 10 year. The DPJ will
come up with a counterproposal for scrapping it.

There are no regulations on automatic passage of budget-related
bills. The DPJ is planning a strategy of introducing a tax code
revision bill that is diametrically opposed to the government plan
to the regular Diet session and pressing for a Lower House election,
by voting down the government-sponsored budget-related bills in the
Upper House.

The ruling camp is bullish in its determination to accept the
opposition camp's challenge. If the provisional rate of the gasoline
tax becomes zero as a result of its budget-related bills failing to
secure Diet approval by the end of March, revenue shortfalls topping
1 trillion yen would occur. As such, it sees that it would be able
to obtain public support even if it passes those bills by putting
them to a vote again in the Lower House, because those bills are
directly related to people's livelihood. A certain senior official
of the LDP's Diet Policy Committee emphatically said, "We will do it
straight and urge the DPJ to make a decision."

However, there is no promising development in sight.

The government has thus far unified various special exemption
measures, including the provisional tax rate, into one and submitted
it as a bill amending the special tax measures law in February.
However, it would be impossible to obtain Diet approval for such an
amendment bill by the end of March, even if the 60-day rule were
applied. The 60-day rule allows approval of the bill again in the
Lower House, based on the assumption that the Upper House has voted
down the bill, if it does not put it to a vote. For this reason, the
LDP has considered the possibility of frontloading the introduction
of the bill at the outset of the regular Diet session, by removing
confrontational part from it.

However, such an idea has become unrealistic, as the current
extraordinary Diet session has been extended into the next year. In
addition, there is the possibility of the DPJ taking control with
Diet deliberations continuing into the next year. If the extended
extraordinary Diet session ends while the Defense Ministry issue and
the pension record fiasco still being pursued, the regular Diet
session would open in a stormy atmosphere. How the public will
respond to the ruling parties putting budget-related bills to a vote
again in the Lower House, following the refueling operation bill, is
unclear.

A certain senior DPJ member explained their strategy: "The pension
issue is an immediate problem for people. We will drag it on until
next March at least. If the ruling parties put budget-related bills
to a vote again in the Lower House, we would adopt a censure motion

TOKYO 00005572 006 OF 014


against the prime minister with double tactics combining the budget
issue and the pension premium payment record errors and force him to
dissolve the Diet."

For this reason, voices calling for exploring ways to reach a
compromise, accepting the DPJ proposal, are beginning to be heard in
the party. LDP Policy Research Council Chairman Tanigaki told
reporters yesterday: "The DPJ is as powerful as to control one
House. This situation does not permit us to oppose its proposal at
ease. I think the DPJ feel responsibility for people's livelihood.
We must have talks with it on various issues."

LDP Secretary General Bunmei Ibuki during a meeting of secretaries
general of the ruling and opposition parties proposed setting up a
national council to discuss the pension issue. This could be a
strategic move for exploring ways to make a compromise. However, DPJ
Secretary General Hatoyama brushed aside the proposal, noting, "We

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should thoroughly discuss such an issue in the Diet. It is not
necessary to set up such a council outside the Diet."

(3) Shaken Japan Business Federation (Part 2-conclusion): JBF's
policy requests have been rejected

ASAHI (Page 12) (Full)
December 12, 2007

Japan Business Federation (JBF or Nippon Keidanren) officials in
charge of tax affairs have recently visited lawmakers of the main
opposition Democratic Party of Japan (DPJ or Minshuto) to ask them
for cooperation on an extension of special taxation measures. One
Keidanren official told a DPJ legislator: "You don't have to
approve, but we would like you to cooperate with us by the end of
March."

The special taxation measures were set up in order for the
government to support specific policies. Under the special
measures, corporate taxes are reduced. However since they are
applied to certain companies that meet certain conditions, they are
criticized as "hidden subsidies." The DPJ, therefore, has launched
an investigation of the special measures.

The DPJ's Tax Research Council has been examining carefully 137
measures, including an extension of the existing measures and
establishment of new measures, which are drafted by various
ministries and agencies. The DPJ, however, has not yet approved of
40 PERCENT of them because the agencies have not presented to the
party the contents of them for it to make its judgment. One senior
Keidanren official said: "The tax system has now become a political
issue, going beyond our control."

The tax system is a major matter of concern for Keidanren. In
September the organization announced a set of proposals for a
revision of the tax system for fiscal 2008. It presented a broad
array of requests, centering on increasing the consumption tax rate
and reducing the effective corporate-tax rate.

However, the government of Prime Minister Shinzo Abe, which had
decided to start in the fall discussion of drastic reform of the tax
system, suddenly bowed out. Since the gap in views on the handling
of the consumption tax and the tax revenues for road projects was
clear between the DPJ and ruling Liberal Democratic Party (LDP), the
mood of pushing ahead with drastic tax system reform is gradually

TOKYO 00005572 007 OF 014


weakening.

Following the change in mood, Keidanren has narrowed down its
requests for a reform of the tax system for FY2008 to such measures
as the reforming of the tax to promote research and development,
which could be accepted by the DPJ, according to a senior Keidanren
official. Although Keidanren, as the lobbying body for the business
world, considers an extension of the special taxation measures as
its minimal request, the feasibility of an extension remains
unclear.

Keidanren officials calling for political realignment

A request for a tax system reform is not the only matter that
Keidanren has reached a roadblock, without getting political
cooperation.

Keidanren aimed to introduce a white-collar worker exemption, which
would exclude company employees who meet certain qualifications,
including annual income, from labor time regulations. It planned to
do so last fiscal year, when it had close ties with the Abe
government. However, the idea came under fire from labor unions and
opposition parties. Since it was prior to the unified local
elections when Keidanren introduced the idea, a negative view about
the idea spread in the ruling parties. As a result, the ruling
coalition gave up on the submission of a bill amending the law.

The Government Tax Commission's set of recommendations last year
included Keidanren's request to cut by 10 PERCENT the corporate tax
effective rate, but it was not incorporated in the LDP's tax system
reform outline.

A former business leader, who was concerned about growing criticism
of Keidanren, suggested Chairman Fujio Mitarai: "It is difficult to
get public understanding. You should give more consideration to the
procedure."

Mitsuo Ohashi, who is in charge of tax affairs and politics in
Keidanren and chairman of Showa Denko, said: "It is important to
build public consensus." Buoyed by public support, Keidanren would
like to realize its policy requests.

But the organization has withdrawn for the time being the
introduction of the white-collar exemption, which has come under
strong fire. It excluded also the requests to raise the consumption
tax and reduce the corporate tax from its items that it wants to
realize in a revision of the tax system for FY2008.

This fall, Keidanren distributed 2,000 copies of a six-page brochure
at symposiums and other occasions. In the brochure, the business
organization explained Japan's severe fiscal condition and called
for the need for changing the tax system to a consumption
tax-centered tax system, as well as for reforming the corporate tax
system.

However, the effect of its strategy of finding a means of surviving
by public support is unclear. Keidanren has become more frustrated
day by day due to the stalled political situation.

Asked about Keidanren's request for Diet management at a press
conference on Dec. 11, Miterai indicated a sense of crisis: "Due to
the divided Diet, deliberations on policy bills are delayed and more

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time has been lost than expected." In its priority policy items for
2008 released the same day, Keidanren reinserted a request that the
political parties should proceed with constructive discussions in
order to carry out reform quickly.

However, the LDP and DPJ have assumed a stance of facing down each
other. The divided Diet, in which the LDP is the largest party in
the House of Representative and the DPJ is the largest force in the
House of Councillors, will likely continue six to nine years from
now. There is a view among senior and executive Keidanren members
that there is no other choice but political realignment.

(4) MSDF lieutenant commander arrested over Aegis info leak; Secret
explosively spread; U.S. mistrust amplified due to sloppy data
management

SANKEI (Page 21) (Abridged slightly)
December 14, 2007

The pivotal Aegis data leak incident has exposed the Maritime
Self-Defense Force's sloppy secret information management. Special
defense secrets provided by the U.S. military, such as data on the
Aegis system, were supposed to be managed strictly, allowing only
authorized and necessary individuals to have access to them,
according to a senior investigative officer. The incident in which
the top secret under the Japan-U.S. security system was easily
passed on from one MSDF member to another has amplified the sense of
distrust of U.S. authorities.

A senior police officer took this view about the MSDF's nature: "The
fact that a file containing the top defense secret, music, and
obscene pictures were all kept in the same compact disc astonished
us. What was more surprising was that many did not remember when and
where they obtained such data and how they kept them."

It was also unexpected for the Kanagawa prefectural police that
searched the home of an MSDF petty officer second class, the origin
of the incident, to discover such secrets in the confiscated items.

The operation of the missile defense system being deployed in Japan
and the United States against missiles from North Korea and other
countries requires high-level intelligence sharing. As seen in their
plan to conclude a General Security of Information Agreement
(GSOMIA) in August, the governments of Japan and the United States
have been expediting efforts to increase preparedness for making the
ground-based missile defense system fully operational in the near
future. The data leak incident that occurred under such
circumstances has tremendously increased the United States' sense of
mistrust of Japan.

The Defense Ministry was forced to offer an explanation. In April,
then Defense Minister Fumio Kyuma visited the United States for the
Japan-U.S. defense summit. During the session, Kyuma offered an
apology to his U.S. counterpart, Robert Gates, for worrying the
United States, promising to uncover the whole picture. The incident
that has escalated into the arrest of a senior MSDF officer points
to investigative authorities' intention to dispel U.S. authorities'
mistrust by urging the MSDF to increase its awareness as a force
responsible for national dense.

Investigators quizzed several hundred MSDF personnel and searched a
total of four times the MSDF's First Service School in Etajima,

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Hiroshima Prefecture, from which the data spread, destroyers, and
the homes of MSDF officers. As a result, investigative authorities
found that the data had been copied countless times and spread
explosively.

Defense Minister Shigeru Ishiba before the House of Councillors
Foreign Affairs and Defense Committee yesterday admitted that risk
management was lax, saying, "Awareness for computer disc management
was low, and follow-up measures were too late."

Having generally found out an overall picture of the incident,
police authorities decided earlier this month to arrest and indict
the MSDF officer in question. Shortly before a decision was made on
the arrest, the U.S. side notified Japan that it would not allow
investigative authorities to produce the pivotal Aegis data at an
open court.

In the end, the U.S. side reportedly agreed to allow the
presentation of the data after blacking out some parts for
information security reasons. This illustrates how much the U.S.
side cares about Aegis data, exposing once again the graveness of
the information leak incident.

(5) Echoes to Okamoto's essay: Get the supply ship back in the
Indian Ocean

SANKEI (Page 13) (Abridged)
December 11, 2007

The Sankei Shimbun's Nov. 28 edition carried an essay from Yukio
Okamoto, who was a special advisor to Prime Minister Ryutaro
Hashimoto and who is now an international affairs consultant.
Okamoto's essay received a big response. There were letters from
many readers to the editor, so the Sankei Shimbun introduces one of
those letters. Furthermore, there were reverberations from readers,
with one of them desiring many people to read the essay.

Essay shows a way for Japan to live in the world

Junichi Ozawa, 70, self-employed, Odawara, Kanagawa Prefecture

I also read Mr. Yukio Okamoto's essay. I thought many readers would
send letters to the editor to express their impressions of his
essay, so I was looking forward to seeing the letters-to-the editor
column. However, there were not so many opinions in the column. I
don't know if it was out of the publisher's consideration. But I
wonder if it's really all right to leave Japan as is. As a reader, I
am very worried.

Mr. Okamoto has close insight into the international situation. In a
sense, he pulled off a coup with his writing of this essay. I have
no deep insight into the international situation. However, when I
think of how Japan will live in the world, I really think Mr.
Okamoto is right.

There are probably many tasks for Prime Minister Fukuda and his
cabinet. However, I think the prime minister should now go on a kind
of pilgrimage throughout the country with this Okamoto essay to
earnestly implore the nation for how to resolve the current
situation. If the prime minister cannot go on such a tour, he can
use television. Otherwise, he can use the newspapers.


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Japan is at a crossroads. We should thoroughly discuss what Japan
should do. Will Japan remain a friend of the international
community? Will Japan drop out? Will Japan otherwise become a
country smiling meaninglessly only when asking for help? This is a
matter of concern about Japan's way of life.

Gist of Okamoto's essay: Japan disappears from the showdown with
terrorism

Afghanistan is for civilizations to struggle for self-defense
against terrorism: The Democratic Party of Japan (Minshuto) defines
the international community's efforts to stabilize Afghanistan at
its current government's request as a "U.S. war for its own
defense." No countries are saying such a thing. Al Qaeda, which
brought about the Sept. 11, 2001 terrorist attacks, is trying to
destroy the entire civilizations of advanced countries. I feel
something is wrong with those who call the United States' battle in
Iraq a "showdown with terrorism." However, what the international
community is doing in Afghanistan is a showdown with terrorism. This
is the international community's understanding. That is why all
advanced countries are working together to stabilize Afghanistan.
There are about 40 countries at work.

Pullout not understandable: The naval forces of more than 10
countries have been standing in the way of terrorists in the Indian
Ocean. The Maritime Self-Defense Force continued refueling their
vessels there for six years, and the MSDF's refueling mission was
highly appreciated. The opposition parties asserted that the MSDF's
refueling mission there is linked to the use of armed force, and
they dragged Japan away from the international team. However, each
country's naval vessels are on patrol there. What they are doing
there is not a battle. Furthermore, the opposition parties insisted
that the MSDF should pull out because there is no United Nations
Security Council resolution. The UNSC adopts resolutions only when
its two veto-holding UNSC members, China and Russia, agree. Are they
saying Japan should not do anything without China's approval?

China 40 times Japan: Japan has given up its joint responsibility
for the defense of freedom. Meanwhile, Japan called for a permanent
seat on the UNSC. This is also comic. In the House of
Representatives, the ruling coalition holds a majority of the seats.
In the House of Councillors, however, the opposition bench
outnumbers the ruling coalition to vote down legislative measures.
This situation will continue over the next six years. Meanwhile, the
world will undergo a sea change. For example, China will have new
leaders with sensitivity and voice to the world. Japan currently
assigns 47 persons to U.N. peacekeeping operations. China has 40
times more on PKO assignments. China's navy may deploy in the Indian
Ocean for the international community.

Refueling is 'ultra-safe': Overseas operations can be typed into
four categories according to the degree of danger. Operation
Enduring Freedom (OEF), which is intended to mop up Al Qaeda and
Taliban, falls under the most dangerous category. Japan should not
participate in OEF. The International Security Assistance Force
(ISAF), a ground-based team for the purpose of maintaining public
security, is under the second most dangerous category. ISAF is a
target of terrorists. The third category includes participating in a
risky provincial reconstruction team (PRT). PRT is made up of
government employees and civilians for economic reconstruction and
humanitarian assistance, with troops escorting and guarding them.
The safest category includes cracking down on suspicious ships at

TOKYO 00005572 011 OF 014


sea. Japan has created an 'ultra-safe' framework outside these four
categories. Japan's role is not small. However, this is safer than
any other missions. The MSDF can engage in this operation with its
equipment, technical know-how, and enthusiasm. The DPJ forced Japan
to give up this mission. What does the DPJ want Japan to do
instead?

Ozawa initiative: Mr. Ichiro Ozawa announced that Japan should stop
refueling at sea and participate in the ISAF. He insists that Japan
should join in even more dangerous activities. This assertion is
fine in itself, and we should go for it. He said, "We can't keep
saying that we will only take care of humanitarian assistance to be
loved by everybody, and that you guys go ahead with security
maintenance that is dangerous." That's a good point. Some people in
the Liberal Democratic Party opposed Mr. Ozawa's advocacy, just
because that's his own. The LDP also thinks more of the political
situation than Japan's national interests.

PRT participation, Counselor Oku's tragedy: Mr. Ozawa withdrew his
advocacy of ISAF participation, and the DPJ proposed local public
support through PRT participation. However, there is a fundamental
misunderstanding. In the case of ordinary public support for local
people, experts from JICA (Japan International Cooperation Agency)
and those from NGOs are already in action. In the case of PRT, a
civilian team is escorted and guarded by military troops, border
guards, or special police to work directly for stabilization. Is it
really possible? Japan is not prepared to protect Japanese nationals
overseas. This is not a matter of the Self-Defense Forces' members.
Japan is a thoroughly equitable society, so no one in this country
thinks that Japanese people (SDF members) should be exposed to
danger as a shield for other Japanese people (embassy staff). One
may say, "We will send experts, but other countries should ensure
their security." That's even more shameful.

Broad view: The United States came up with an enormous quantity of
materials for Japan to continue the MSDF's refueling mission in the
Indian Ocean. In the Diet, however, the opposition parties were
against that from the beginning, and they just intended to hold up
the government. Japan highhandedly pursued even how one liter of oil
was used. Other countries are fed up with Japan. They want to say
Japan should risk working together with them on the ground.

Gulf mistake: There was a similar thing at the time of the Gulf War.
It was not the Diet but the Japanese government that angered (U.S.
forces). Japan entirely turned its back on international operations
against Hussein's aggression, and only attached importance to Diet
deliberations. That is the same as this time. The Diet went back
again into those days and lost sight of the general situation. The
Diet was caught in fault-finding arguments from beginning to end
without giving thought to the enormous sacrifices of other
countries.

Terrorism must be prevented from spreading: The Moriya issue is
extremely serious, but that is a different problem. The Diet should
enact the legislation into law. First of all, Japan should get the
supply ship back in the Indian Ocean. The United Nations also wants
Japan to resume the MSDF's refueling activities. How about shifting
the MSDF's activities to the Strait of Malacca in the Indian Ocean?
Many people would support efforts to prevent the spread of terrorism
from the Middle East to Pakistan and Asia. The MSDF would be tasked
with warning and surveillance activities as well as providing
information about that sea area. This does not fall under the

TOKYO 00005572 012 OF 014


category of collective self-defense and contributes to Asia's peace.
No countries would raise an objection.

Japan at a crossroads: Civilized society is made up of countries
helping each other. Will Japan remain a friend, or will Japan
otherwise drop out? It is time to hold thoroughgoing discussions. If
the MSDF refueling bill gets low support from the public even after
it is voted down in the House of Councillors, the government should
then give straightforward explanations to the general public about
the impact of Japan's nonparticipation, instead of revoting on the
bill in the House of Representatives. The people would support the
course of action Japan should take as a civilized nation if they
understand the whole picture. With a rise of public support, the
government should present a new legislative measure to the Diet at
its ordinary session early next year in order to create a permanent
law that can meet every case. The Special Measures Law is a
time-limited law that is valid for a period of one year. The
government should now appeal to the people. Japan can be helped by
its people, not by politicians.

(6) Sympathy budget: Are Japanese employees working at U.S. bases
sacrificial stones?

ASAHI (Page 18) (Abridged slightly)
December 14, 2007

By Kenji Watanabe, member of the All Japan Garrison Forces Labor
Union Central Committee

Some 25,000 Japanese people are working at the U.S. bases in Japan.
The government has decided to reduce the salaries of the Japanese
workers. As a result, our employer, the Ministry of Defense (MOD),
has presented the All Japan Garrison Forces Labor Union (Zenchuro)
with a plan to cut the Japanese labor costs by a total of 10 billion
yen. In talks on the Japan-U.S. Special Measures Agreement scheduled
to expire at the end of next March, the government proposed cuts in
USFJ utility costs, but the talks were deadlocked due to stiff
resistance from the U.S. side. Given the situation, the government
has turned to slashing the labor costs of the Japanese workers that
will not increase the burden on the United States.

A law stipulates that the defense ministry determines the salaries
and the condition of employment of the Japanese people working at
U.S. bases in view of those of national civil servants and
private-sector employees. The salaries of base workers are revised
annually at the same rate as the National Personnel Authority's
annual recommendations with the concurrence of the U.S. military.
Playing a role in national defense, Japanese employees' work at the
U.S. bases under the U.S.-Japan Security Treaty is of a high public
nature. This can explain why the status of the base workers is
similar to that of the national civil servants.

Abolishing "differential pay" is one of the key elements in the
government's plan. "Differential pay" denotes a 10 PERCENT wage
added to base pay. The system dates back to 1947 when a 10 PERCENT
wage was added to the level of wages of the national public servants
in consideration of unique differences in language, culture, and
custom under the occupation forces.

When the current pay scale was completed in 1963, the U.S. military
reduced base pay by 8 PERCENT in lieu of maintaining differential
pay. The salaries of all Japanese base workers were annually subject

TOKYO 00005572 013 OF 014


to the U.S. military's wage reductions until the Japanese government
decided in 1978 to cover their labor expenses with the "sympathy
budget."

At present, the base pay of Japanese employees working at the U.S.
bases is lower than that of national civil servants. Even if
differential pay is counted in, our average monthly salary is 80
PERCENT of that of the national civil servants. Because
differential pay is different from base pay, it is not included in
calculating bonuses, and therefore greater differences in annual
wages. The abolition of differential pay would reduce the base
worker's average monthly salary to 73 PERCENT of the civil
servants. The government's explanation to abolish differential pay
to correct the impression of base workers' salaries being too high
is groundless and unsubstantial.

Work environments surrounding base workers are very bad. Because the
U.S. military does not agree, many Japanese laws, including the
Labor Standards Law, do not apply to Japanese people working at the
U.S. bases, where no one can enter without U.S. military
authorization under the Japan-U.S. Status of Forces Agreement. Since
9/11, U.S. bases have become targets of terrorism, and tensions run
high at times. Job security has always been poor.

Zenchuro has presented a set of counterproposals willing to respond
to calls for partial cuts in salaries and allowances and seeking
improved overall working conditions pursuant to those of the
national servants. There has been no specific reply form MOD.

The government maintains that the base workers' salaries must be cut
in order also to win public understanding of its plan to infuse
approximately 320 billion yen of taxpayer money into Guam as part of
U.S. force realignment. Are the Japanese base employees who are
working between Japan and the United States and contributing to
Japan's security sacrificial stones?

(7) Five Japanese companies, including Nippon Oil Corp., to
construct refinery in Libya: Joint project negotiations underway;
Project cost estimated to come to 500 billion yen

NIKKEI (Top Play) (Excerpts)
December 14, 2007

The Nikkei learned yesterday that a consortium of five Japanese
companies, including Nippon Oil Corporation, Inpex Holdings and
Japan Petroleum Exploration (JAPEX), is moving ahead with talks with
Libya for the construction of a refinery. The planned refinery is
estimated to have 200,000 barrel-a-day-class refining capability.
The estimated cost of the project is 500 billion yen. Sanctions
against Libya were lifted in 2003. The nation is now making efforts
to return to the international community. Nippon Oil Corp. and other
companies are aiming at securing vested interest in large-size
resources in Libya, which has the largest crude oil reserves in
Africa, by consolidating a system allowing the combined management
of oil drilling and a refinery.

Securing vested interests in oil fields as well aimed at

The project, if realized, will become the first case in which Japan
takes the initiative in the construction of a refinery abroad.
Viewing the project as leading to the diversification of crude oil
suppliers, the government intends to assist it with public loans

TOKYO 00005572 014 OF 014


with the securing of vested interest in oil fields as well as a
premise. The consortium is expected to cover a large part of the
project expenses, estimated to reach between 400-500 billion yen,
with loans by the Japan Bank for International Cooperation.

Those three companies, JGC Corporation and Nippon Yusen Kaisha are
now looking into the possibility of setting up a joint project
company with Libya's state-owned oil company. A project site up for
consideration is a coastal area in the suburb of Tripoli, the
capital. The plan is to build a state-of-the-art refinery equipped
with facilities capable of producing more gasoline, by breaking down
heavy oil with low value produced in the process of refining crude
oil.

SCHIEFFER

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