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Cablegate: Japanese Morning Press Highlights 01/15/08

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UNCLAS SECTION 01 OF 15 TOKYO 000108

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 01/15/08


Index:

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

Opinion polls:
4) Fukuda Cabinet support rate up 3 points but still remains low at
34 PERCENT in Asahi poll, with public still upset by pension fiasco
(Asahi)
5) Cabinet support rate recovers somewhat to 41 PERCENT in Kyodo
poll (Tokyo Shimbun)
6) Cabinet support rate almost unchanged at 42 PERCENT in Nikkei
poll; 43 PERCENT of public unsupportive of ruling camp's override
vote in Lower House to pass refueling bill (Nikkei)
7) Fukuda Cabinet's "way of carrying out business" does not sit well
with 47 PERCENT of Japanese in Nikkei poll (Nikkei)

Diet affairs:
8) Bill to allow MSDF refueling mission to resume in Indian Ocean is
enacted by override vote in Lower House, first time constitutional
provision used in 57 years (Tokyo Shimbun)
9) Absence of Democratic Party of Japan (DPJ) head Ozawa from the
final vote in the Lower House sets off a storm of criticism,
including in his party (Tokyo Shimbun)

10) Ruling camp plans now to kill the DPJ's bill calling for an Iraq
withdrawal of ASDF, but it is willing to talk about the other bill
for Afghan assistance (Sankei)
11) With regular Diet session about to open, LDP plans to ram
through bill maintaining provisional tax on gasoline, a measure
opposed by the DPJ (Yomiuri)

12) LDP's action plan shows alarm in party about possibly losing the
farm vote (Tokyo Shimbun)

Defense and security issues:
13) New missile-defense air defense system could be operational this
year (Nikkei)
14) Outline of new antiterrorism special measures law for Indian
Ocean refueling services (Sankei)

15) New legislation planned to further clarify rules for dealing
with intrusions by suspicious foreign ships (Nikkei)

16) Japan, China in working-level talks, search for compromise
solution on joint development of gas fields along median line in E.
China Sea (Sankei)

17) Agricultural Ministry announces another U.S. beef import
violation, with the possibility of some of the meat already having
been sold in Japan (Nikkei)

18) Japan loses part of interests in development of oil fields in
Caspian Sea: Kazakhstan state-run company increases its stock
holding (Nikkei)

Articles:

1) TOP HEADLINES

Asahi:

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Central government to allow 80 municipalities to issue
deficit-covering local bonds due to drop in tax revenues

Mainichi:
Progress toward eco-society: Toyota Motor to sell plug-in hybrid
electric vehicle in 2010

Yomiuri:
METI to establish new legislation against industrial espionage

Nikkei:
MLIT considering new legislation for controlling suspicious foreign
vessels

Sankei:
Government, ruling bloc looking for ways to avoid confusion in April
because of expiration of governmental revenue-related laws

Tokyo Shimbun:
MLIT-affiliated road foundation that accepts retired bureaucrats
found to have earned as much as 38 billion yen from sale of
facilities in expressway rest areas

Akahata:
Survey of 50 cities across the country about how many times
municipalities pay the cost of pregnant women's medical
examinations: Only 10 cities pay for five or more checks

2) EDITORIALS

Asahi:
(1) Proposals for better society: Let's destroy sectionalism in
science and technology sectors

Mainichi:
(1) Extraordinary Diet session will end today without showing
anything new
(2) U.S. presidential campaign: "Change" the buzzword

Yomiuri:
(1) New order: Japan needs to come up with global strategy against
worsening climate change

Nikkei:
(1) M&As can convert change into opportunity and bring about growth

Sankei:
(1) Recommendations for reform of the civil servant system:
Discussion starts now
(2) Handball rematch for Olympic berth: Japan should find middle
ground to avoid mud-slinging

Tokyo Shimbun:
(1) Social welfare in 2008: Government must act before raising
burden

Akahata:
(1) PhD holders facing difficulty finding jobs: Solution urgently
needed for progress in science

3) Prime Minister's Official Residence (Kantei)


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Prime Minister's schedule, January 11

NIKKEI (Page 2) (Full)
January 12, 2008

09:01
Attended a cabinet meeting. Chief Cabinet Secretary Machimura stayed
on.

09:55
Met Vice Land and Transport Minister Minehisa at the Kantei.

11:31
Met special cabinet advisers Kurokawa and Okuda and cabinet
councilor Nishimura in the presence of Machimura.

12:56
Chatted with former Prime Minister Mori in the Diet building.
Afterwards attended a Lower House plenary session.

14:17
Met at the Kantei with Deputy Chief Cabinet Secretaries Iwaki and
Futahashi, joined in by Machimura.

15:27
Met LDP constitutional council chairman Nakayama and his deputy
Funada.

16:06
Met Cabinet Intelligence Director General Mitani, followed by Deputy
Foreign Minister Yabunaka and Asian and Oceanian Affairs Bureau
chief Sasaki.

17:00
Met LDP Reform Headquarters chief Takebe, followed by former Chief
Cabinet Secretary Nakagawa and Economic and Fiscal Policy Minister
Ota.

18:38
Met Assistant Deputy Chief Cabinet Secretary Saka.

19:04
Met Machimura, Iwaki, and Futahashi.

20:08
Dined at a Grand Prince Hotel Akasaka Chinese restaurant with Kantei
officials and Machimura.

21:46
Returned to his residence in Nozawa.

Prime Minister's schedule, January 12

NIKKEI (Page 2) (Full)
January 13, 2008

10:33
Visited the Setagaya Social Insurance Office with Social Insurance
Agency Director General Sakano.

11:43
Dined at a Grand Prince Hotel Akasaka Japanese restaurant with his

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secretaries.

SIPDIS

12:38
Had a study session with Chief Cabinet Secretary Machimura and his
deputies Futahashi, Iwaki and Ono at the Prime Minister's Official
Residence.

17:34
Returned to his private residence in Nozawa.

Prime Minister's schedule, January 13

NIKKEI (Page 2) (Full)
January 14, 2008

Spent all day at his private residence.

Prime Minister's schedule, January 14

NIKKEI (Page 2) (Full)
January 15, 2008

10:42
Arrived at his official residence.

16:34
Watched the movie "Earth" with his wife, Kiyoko, at the Shinagawa
Prince Cinema in the Shinagawa Prince Hotel.

18:22
Met GAGA Communications Chairman Yoda.

18:44
Returned to his official residence.

4) Poll: Cabinet support at 34 PERCENT

ASAHI (Page 1) (Abridged)
January 13, 2008

The approval rating for Prime Minister Fukuda and his cabinet was 34
PERCENT in a telephone-based spot nationwide public opinion survey
conducted by the Asahi Shimbun on Jan. 11-12 after the House of
Representatives' overrode the House of Councillors' decision in a
second vote to enact a new antiterrorism bill. In the last survey
taken Dec. 19-20, the Fukuda cabinet's support rate was 31 PERCENT ,
hitting an all-time low. This time, it rebounded somewhat but was
still low. The public is taking a severe view of the government's
pension record-keeping flaws, a factor accounting for the low rate
of public support for the Fukuda cabinet. The ruling coalition
passed the new antiterrorism bill in a second vote in the House of
Representatives after it was voted down in the House of Councillors.
In the survey, respondents were asked if they thought it was
appropriate to have done so. In response, public opinion was split,
with "yes" and "no" even at 41 PERCENT .

The Fukuda cabinet's approval rating was over 40 PERCENT until
early December last year. In the previous survey, however, approval
plummeted due to the government's pension record-keeping mess. In
the survey this time, respondents were asked if they appreciated the
Fukuda cabinet's response to the pension issue. To this question,
"yes" accounted for only 26 PERCENT (36 PERCENT in the last

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survey), with "no" at 55 PERCENT (46 PERCENT in the last survey).
As seen from these figures, the public's view of the issue is
severer than in the last survey. Even among Fukuda cabinet
supporters, "yes" accounted for 45 PERCENT , with "no" at 31 PERCENT
.

In the last survey, which showed a sharp drop in the Fukuda
cabinet's support rate, respondents were also asked if they thought
it would be appropriate for the House of Representatives to enact
the new antiterrorism bill in a second vote. To this question, 43
PERCENT answered "no," with 37 PERCENT saying "yes." As seen from
these figures, negative answers outnumbered affirmative ones.

The Diet has now enacted the new antiterrorism special measures law,
and Japan will resume the Maritime Self-Defense Force's refueling
activities in the Indian Ocean. In the survey this time, respondents
were asked if they thought Japan should do so. To this question, 48
PERCENT answered "no," with 34 PERCENT saying "yes." As seen from
these figures, negative answers outnumbered affirmative ones. In the
last survey, "no" (48 PERCENT ) topped "yes" (37 PERCENT ). This
time, the gap widened further. When asked whether to support the new
antiterrorism special measures law itself, 40 PERCENT answered
"no," with 36 PERCENT saying "yes."

Respondents were further asked if they thought it would be
appropriate for the House of Representatives to override the House
of Councillors' decision in a second vote over other bills. To this
question, "yes" accounted for only 18 PERCENT , with "no" at 35
PERCENT and "can't say which" at 44 PERCENT . Among those who
support the ruling Liberal Democratic Party, about 70 PERCENT
supported the House of Representatives' enactment of the new
antiterrorism bill in a second vote. However, when it comes to the
advisability of enacting other bills in a second vote, "yes"
accounted for only 30 PERCENT among LDP supporters and 19 PERCENT
among those who support New Komeito, the LDP's coalition partner.
Even among those who support the ruling coalition, there are
cautious views about the House of Representatives' option of
overriding the House of Councillors' decision for other legislative
measures.

5) Poll: Cabinet support rebounds to 41 PERCENT

TOKYO SHIMBUN (Page 1) (Abridged)
January 13, 2008

Following the Diet passage of a new antiterrorism bill, Kyodo News
conducted a telephone-based spot nationwide public opinion survey on
Jan. 11-12. The rate of public support for the Fukuda cabinet was
41.4 PERCENT , up 6.1 percentage points from the last survey taken
in December last year. The bounce can be taken as reflecting Prime
Minister Yasuo Fukuda's political decision to help hepatitis C
victims. In addition, his ruling coalition enacted the new
antiterrorism law. However, the Fukuda cabinet's disapproval rating
was 42.8 PERCENT and still outstrips its approval rating. The
Fukuda administration is still facing difficulties in running its
government.

The House of Councillors voted down the new antiterror legislation.
After that, the House of Representatives overrode the upper
chamber's decision in a second vote. In the survey, respondents were
asked if they thought it was appropriate to have done so. In
response, 46.7 PERCENT answered "no," with 41.6 PERCENT saying

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"yes." Asked whether to support the now-enacted new antiterrorism
special measures law, public opinion was split, with 44.1 PERCENT
saying "yes" and 43.9 PERCENT saying "no."

In the breakdown of public support for political parties, the ruling
Liberal Democratic Party stood at 32.0 PERCENT , up 6.8 points. The
leading opposition Democratic Party of Japan (Minshuto) was 27.0
PERCENT , down 1.5 points. The LDP ranked first again, topping the
DPJ. New Komeito, the LDP's coalition partner, scored 4.4 PERCENT .
Among other political parties, the Japanese Communist Party was at
2.3 PERCENT , with the Social Democratic Party (Shaminto) at 1.5
PERCENT , the People's New Party (Kokumin Shinto) at 0.6 PERCENT ,
and the New Party Nippon (Shinto Nippon) at 0.4 PERCENT . The
proportion of those with no particular party affiliation was 30.5
PERCENT .

6) Nikkei opinion poll: Support of revote on Indian Ocean refueling
legislation registers 43 PERCENT ; Cabinet support rate almost
unchanged at 42 PERCENT , with non-support rate at 38 PERCENT
(Nikkei)

NIKKEI (Page 1) (Full)
January 13, 2008

In a spot opinion poll that Nikkei carried out Jan. 11-12, 43
PERCENT of the public supported the Lower House's passage of the
special measures law allowing resumption of the refueling mission in
the Indian Ocean by overriding the Upper House's rejection of the
bill. This was five points more than the 38 PERCENT who opposed the
revote. The Fukuda Cabinet's support rate was 42 PERCENT , almost
the same as last month's poll. The non-support rate was at 46
PERCENT , also almost unchanged from the last survey.

Although the override vote by the Lower House on the Indian Ocean
refueling bill was singled out as symbolic of the lopsided situation
in the Diet (with the opposition camp controlling the Upper House),
there seemed to be little impact on the cabinet support rate. The
non-support rate, however, was higher than the support rate for the
second month in a row. It appears that the effect as before was more
from such issues as the missing pension records and the defense
ministry scandals (than the antiterrorism bill).

In case the Lower House will be forced to override (in the upcoming
regular Diet session) the Upper House's rejection of a group of
fiscal 2008 budget-related bills, including a measure maintaining
the provisional high tax rate on special revenues designated for
road construction that determines the price of gasoline, 42 PERCENT
of the public was against the move, while only 36 PERCENT supported
it. For the ruling parties, the hurdle of a revote on the
budget-related bills directly related to the people's daily lives
will prove to be much higher than that of the Indian Ocean refueling
bill.

Respondents who did not support the cabinet were asked to pick
several reasons why they chose that answer. At the top of the list,
51 PERCENT of the public cited a "lack of leadership," followed by
30 PERCENT , who chose, "because the policies are bad." The third
most chosen answer was "because it is a Liberal Democratic Party
(LDP) Cabinet," with 27 PERCENT . The top reason for supporting the
cabinet with 39 PERCENT of the public was, "I can trust its
character."


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Support for the LDP slipped two points to 36 PERCENT . The
Democratic Party of Japan's (DPJ) support rate slid 4 points to 30
PERCENT . In the last poll, the margin between the rates of support
for the two parties was only 4 points, but this time, it widened to
6 points.


The survey was carried out nationwide among men and women by Random
Digital Dialing (RDD) by telephone. The effective response rate was
58.3 PERCENT , with 744 out of 1,277 households responding to the
digitized calls.

7) Nikkei poll: 47 PERCENT do not appreciate the "way the Fukuda
Cabinet does business," a three-point drop from the last survey,
with the top reason being its economic policy (Nikkei)

NIKKEI (Page 2) (Full)
January 14, 2008

In Nikkei's opinion poll carried out on Jan. 11-12, when respondents
were asked whether they "appreciated" the Fukuda Cabinet's way of
doing business, 47 PERCENT answered negatively. This was a 3-point
drop from the figure in the December poll, but it was far higher
than the 34 PERCENT who said they "appreciated" it. As for the
reason for the negative evaluation, 28 PERCENT cited the way it
"tackled fiscal reconstruction and economic policy," changing places
with the response, "handling of the pension issue," which topped all
others in the last poll. The apparent reason for the shift seems to
have been the effect of the falling stock market and other economic
issues.

The most chosen reason for those who positively evaluated the
cabinet's performance was is handling of the pension issue, with 25
PERCENT . Although the poll was taken right after the passage of the
Indian Ocean refueling bill, no more than 13 PERCENT of the public
picked the answer, "response to the issue of antiterrorism
assistance."

When analyzing party-specific support, 54 PERCENT of Liberal
Democratic Party (LDP) supporters gave the cabinet high marks for
the way it did business, while 60 PERCENT of the New Komeito
supporters felt the same. Both responses were a majority view.
However, 69 PERCENT of Democratic Party of Japan (DPJ) and 56
PERCENT of unaffiliated voters were unappreciative of the way the
cabinet ran the government.

Only 32 PERCENT of male respondents were appreciative of the Fukuda
cabinet's performance, while 51 PERCENT were not. Among women, 36
PERCENT gave it high marks, but 46 PERCENT did not.

8) Ruling coalition readopts new antiterrorism bill with first
two-thirds vote in Lower House in 57 years

TOKYO SHIMBUN (Top Play) (Lead paragraph)
January 12, 2008

The new antiterrorism special measures bill to allow the Maritime
Self-Defense Force (MSDF) to resume its refueling activities in the
Indian Ocean was readopted in the Lower House plenary session on the
afternoon of Jan. 11 with a two-thirds majority of the ruling
Liberal Democratic Party (LDP) and its coalition partner New Komeito
members based on Article 59 of the Constitution. With the passage of

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the new antiterrorism bill, the focus in the Diet will move to a
battle between the ruling and opposition camps over bills related to
the fiscal 2008 budget in the upcoming regular session set to
convene on the 18th. In order to pass these bills through the Diet,
the government and ruling coalition are determined not to refrain
from taking the rare step of overriding an Upper House rejection.
However, the main opposition Democratic Party of Japan (DPJ or
Minshuto) is seeking the right timing to submit a censure motion
against Prime Minister Yasuo Fukuda. As it stands, the wrangling
between the ruling and opposition blocs over budget-related bills is
certain to lead to dissolution of the House of Representatives.

9) Lower House plenary session over new antiterrorism bill lacks
tension; DPJ President Ozawa leaves session without casting ballot

TOKYO SHIMBUN (Page 1) (Full)
January 15, 2008

Despite the historical significance of the House of Representatives
overriding a House of Councillors' rejection of a bill for the first
time in 57 years to pass the new antiterrorism special measures bill
to resume Japan's refueling mission in the Indian Ocean, the
parliamentary proceedings went smoothly moved and lacked tension.

Around 2:00 p.m. when the vote-taking started, some ruling camp
lawmakers were heard voicing enthusiasm. It was the only time that
there was a stir in the session. Jeering by ruling coalition members
failed to prevent opposition legislators from delivering speeches
opposing the enactment of the antiterrorism bill. Even some ruling
camp members were smiling when casting their vote.

The opposition parties did not take any strategy of dragging out the
vote by using such tactics as a filibuster or ox-walk.

The only event of import was when ruling and opposition Diet
steering committee members gathered around the chairman's seat to
confer about the contents of a speech by DPJ lawmaker Yoshito
Sengoku. The plenary session ran about one hour as scheduled without
heated battles between the ruling and opposition camps.

For the ruling bloc, enacting the new antiterrorism bill by a
two-thirds lower chamber override vote was the predetermined policy
course, because the number of Lower House members (336) from the
ruling Liberal Democratic Party (LDP) and its coalition partner New
Komeito exceeds the 320 seats needed for an override. A senior
ruling camp member pointed out prior to the plenary session: "We
have to just cast our ballot today."

It was unexpected that DPJ President Ichiro Ozawa left the session,
abstaining from voting. At 1:39 p.m. when Ozawa left the session
during a speech by a Social Democratic Party member, a DPJ lawmaker
voiced: "Ozawa disappeared!" Another LDP member jeered: "(Ozawa)
favors the (government's bill). It's a rebellion."

10) Ruling camp to scrap DPJ Iraq bill but to continue discussion on
its counterproposal to new antiterrorism bill

SANKEI (Page 5) (Excerpts)
January 15, 2008

The government and the ruling camp decided yesterday to scrap the
bill intended to withdraw the Air Self-Defense Force (ASDF) from

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Iraq, which was submitted to the Diet by the Democratic Party of
Japan (DPJ) and adopted in the House of Councillors. But they have
decided to continue to deliberate in the ordinary Diet session to
start on Jan. 18 on the Afghanistan reconstruction special measures
bill that the DPJ submitted as a counterproposal to the government's
new antiterrorism bill. The government seems to be aiming to
underscore its willingness to discuss the Afghanistan bill with the
main opposition party, with the aim of paving the way for permanent
legislation to enable Self-Defense Force (SDF) troops to be
dispatched overseas as required.

The House of Representatives antiterrorism special committee,
chaired by Takashi Fukaya, will decide today, the last day of the
current extraordinary Diet session, to discuss the Afghanistan bill
at the ordinary Diet session.

But the Iraq bill calls for immediately withdrawing ASDF troops on
an airlift mission for multinational forces in Iraq. Since such a
call is hard for the government and the ruling parties to accept,
they will kill the bill without taking procedures for continued
debate.

The DPJ's Afghanistan bill allows the dispatch of SDF troops only
for humanitarian and reconstruction assistance, such as providing
medical services and transporting aid materials. Given this, the
government has decided to continue deliberations on the bill. A
senior member of the Liberal Democratic Party Diet Affairs Committee
said: "The bill contains measures that could lead to permanent
legislation. It may be possible for the ruling camp to reach an
agreement with the DPJ. Through deliberations, we can underline a
lack of unity in the DPJ."

11) LDP determined to put bill amending gas tax to second vote; DPJ
hints at submitting censure motion against premier

YOMIURI (Page 1) (Excerpts)
January 14, 2008

Liberal Democratic Party (LDP) Secretary General Ibuki on Jan. 13
clarified his party's decision to aim at securing Diet approval
within the current fiscal year for a bill amending the Special Tax
Measures Law, one of the most contentious issues in the upcoming
regular Diet session, and putting it to a second vote in the Lower
House if the opposition camp votes it down (in the Upper House). In
opposition, Democratic Party of Japan (DPJ) Diet Affairs Committee
Chairman Kenji Yamaoka hinted at the possibility of submitting a
censure motion against Prime Minister Fukuda. The situation is now
beginning to assume a serious aspect of the ruling and opposition
camps colliding head-on.

The legislation is aimed at maintaining the provisional tax rate
imposed on gasoline and the small- and medium-sized businesses
investment promotion tax system, which expire at the end of March.
If the bill fails to obtain Diet approval within the present fiscal
year, the provisional rate added to the gasoline tax would be
scrapped, lowering gasoline taxes starting in April. However, there
is also the possibility of a tax break for small- and medium-size
businesses that made investment being scrapped.

Referring to the amendment bill, Ibuki on a Fuji-TV talk show
indicated his perception that it would be impossible for the bill to
clear the Lower House before the end of January, noting, "It would

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be impossible in terms of time." However, he noted, "The ruling
parties will approve it again in the Lower House if the DPJ opposes
it."

12) LDP's action plan for 2008 filled with alarm about political
situation

TOKYO SHIMBUN (Page 2) (Full)
January 15, 2008

In the wake of its crushing defeat in last year's House of
Councillors election, the ruling Liberal Democratic Party (LDP) has
issued an action plan for 2008, which will be adopted in its
convention on Jan. 17. The plan contains analysis on the outcome of
the Upper House race in the beginning part. Revising completely last
year's action plan, the LDP this time expresses a sense of alarm
toward the next House of Representatives election.

The LDP will adopt the action plan at its annual convention. Over
the past several years, the party subtitled the 2006 action plan,
"Reform and Acceleration," and the 2007 one, "Japan, A Beautiful
Country" -- catch phrases used in the party leadership races.

However, the party did not use Prime Minister Yasuo Fukuda's catch
phrase "Integrity and Steadiness" for its action plan for 2008. It
subtitles the action plan as "Stand up LDP with Fresh Determination
and More Challenges," reflecting the current political situation.

Party Organization Headquarters Chief Goji Sakamoto, who chaired the
action plan panel, said: "It will take 2 to 5 years for us to
implement our measures fully. But we have to use severe expressions
for this year's action plan, with the Lower House election in
mind."

The 2008 action plan gives priority to measures to narrow the
economic disparities in society, revitalize agriculture, forestry
and fisheries and small business, as well as to provide social
capital improvement in regional areas.

Sakamoto pointed out: "As a result of pushing forward with policy
measures related to the shape of nation such as constitutional and
educational reforms, the public misunderstood, taking it that the
LDP was ignoring average people and local areas."

General Council Chairman Toshihiro Nikai stated that the party would
stress Fukuda's political identity of making efforts to dispel
public anxiety this year.

It is difficult to show the differences of the plan from that of the
main opposition Democratic Party of Japan (DPJ), which has played up
efforts to give priority to the livelihoods of average people.
Secretary General Bunmei Ibuki, however, emphasized: "The DPJ's

SIPDIS
policies are just product catalogs. No one has the products in their
hands. Since the LDP takes charge of the government, we do not make
false pledges."

13) Defense Ministry eyes making new air defense system operational
before year's end allowing it to track ballistic missiles and
increase response to state-of-the-art fighter jets

NIKKEI (Page 2) (Full)
Evening, January 12, 2008

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The Defense Ministry will introduce a new air defense system against
suspicious fighters' intrusions into Japan's airspace, possibly by
the end of the year. The new system equipped with improved detecting
and tracking functions enables Japan to acquire incoming high-speed
ballistic missiles. It is also aimed at increasing the efficiency of
the missile defense (MD) system, now being deployed. Stepping up
cooperation with regional air defense commands in the country as
well as with U.S forces in Japan, the ministry will strengthen the
country's capability to respond to the state-of-the-art fighters,
now being deployed in China, Russia and other countries.

The system that will become operational is called the Japan
Aerospace Defense Ground Environment (JADGE) system. The current
system has been improved since fiscal 2004. A total of some 51
billion yen will be invested in the system by the end of fiscal
2008. The ministry intends to make the system fully operational in
fiscal 2009.

A projectile that entered Japan's air defense identification zone
will be detected by 28 air-defense radar sites and airborne warning
and control system (AWACS) aircraft. The ASDF Air Defense Command
(in Fuchu, Tokyo) and four regional air defense commands will
formulate a strategy after determining if the projectile is a friend
or foe based on trajectory data and other information.

The system is designed to deal with the MD system with the aim of
improving the accuracy of tracking ballistic missiles that travel at
a speed of Mach 7-8. The Defense Ministry is hopeful that
participation in the JADGE system by satellites, Aegis-equipped
vessels, and the FPS-5 state-of-the-art radar system will enable the
country to project a landing spot in a short period of time thereby
allowing it to intercept an incoming ballistic missile accurately.

Allowing the country to deal with trajectories of many aircraft
simultaneously, the country's readiness against fourth-generation
high-performance fighters that are increasing in such countries as
Russia and China will also be increased. There has been concern that
in the event a suspicious plane crossing the air defense
identification zone, teamwork between the regional air defense
forces might not work smoothly. The new system is expected to
facilitate their teamwork more easily in carrying out operational
plans.

14) Gist of new antiterrorism legislation

SANKEI (Page 5) (Full)
January 12, 2008

Basic rules

Refueling support activities shall not constitute threat of force or
the exercise of force. Refueling support activities shall be limited
to Japanese territories and areas free from act of combat and the
following areas where acts of combat are not expected to occur
throughout the period Japan will be engaged in support activities:

1. On the high seas (Indian Ocean including the Persian Gulf)
2. Territories of other countries (limited to cases where there are
concurrences of countries concerned regarding Japan's refueling
support activities)


TOKYO 00000108 012 OF 015


Definitions

1. Antiterrorism maritime interdiction operations: Of the activities
carried out by foreign military forces, antiterrorism maritime
inspections mean inspections of ships cruising in the Indian Ocean
and the subsequent necessary steps with the aim of blocking the
maritime movement of terrorists and weaponry.
2. Refueling support activities mean SDF activities to provide
supplies and services (limited to providing fuel and water to
vessels and bladed aircraft mounted on vessels) to vessels of
foreign militaries that are engaged in the antiterrorism maritime
interdiction operations.

Weapons use

SDF personnel ordered to carry out refueling support activities are
allowed to use weapons in the event there is an appropriate and
rational reason to use weapons in defending themselves, other SDF
personnel, or those in their control.

In the event there is a supervisor, an SDF officer must follow his
order in using weapons. However, this rule does not apply to a case
in which one's life is in imminent danger and there is no time to
seek a supervisor's order.

15) Transport ministry eyes legislation to crack down on
unidentified foreign vessels

NIKKEI (Top Play) (Excerpts)
January 15, 2008

The Ministry of Land, Infrastructure, and Transport is considering a
law to crack down on unidentified foreign ships intruding in
Japanese territorial waters. The new legislation would ban
suspicious ships from anchoring without a proper reason. The law
would enable the Japan Coast Guard (JCG) to conduct a boarding
inspection and issue an order to leave the territorial waters or to
place such vessels under its custody. The ministry aims to submit a
bill to the ordinary Diet session to be convened on Jan. 18. The
move is part of efforts to beef up security by preparing a clear
legal basis for territorial protection by the JCG.

A nation's sovereign waters are within the 12-mile territorial
limit. The United Nations Convention on the Law of the Sea
recognizes the right of innocent passage, a regime of free
navigation in coastal waters of third states. In view of preventing
foreign vessels intruding into territorial waters from threatening
the peace and safety of the coastal countries concerned, the UN
convention allows coastal countries to take necessary measures.

Russia, China, and South Korea have enacted control laws, but Japan
has yet to prepare such comprehensive legislation. To deal with
unidentified foreign ships idling in Japanese territorial waters,
Japan has applied the Fisheries Law, the Japan Coast Guard Law, and
the Self-Defense Law. If a fishing boat is found to be engaged in
fish poaching, the JCG will conduct a boarding inspection on
suspicion of a violation of the Fisheries Law and will pursue the
ship if it speeds away.

But in the case of mooring cargo vessels or those not engaged in
fishing operations, it is difficult to judge whether they are
conducting illegal operations. In many cases, even if such ships

TOKYO 00000108 013 OF 015


refuse an on-board inspection and flee, the JCG can do nothing.

The Japan Coast Guard Law allows patrollers to use weapons against a
fleeing unidentified ship, based on the judgment that the ship may
be involved in a vicious crime. But whether weapons are actually
used hinges on a case-by-case judgment.

Under the envisioned new legislation, foreign vessels would be
allowed to anchor in Japan's territorial waters only when there are
appropriate reasons, such as cases of avoiding danger from severe
weather or an accident, as well as lifesaving. The legislation would
allow the JCG to carry out an on-board inspection and to issue an
order to leave Japanese territory.

16) Although China floated idea of joint gas-field development in
waters near median line close to Japanese territory, no agreement
reached

SANKEI (Top play) (Excerpts)
January 14, 2008

Japan and China have differing views over what waters in the East
China Sea where they could jointly develop gas fields. To resolve
this issue, the Chinese side during working-level talks held ahead
of the Japan-China summit meeting late December between Prime
Minister Yasuo Fukuda and Chinese Premier Wen Jiabao, floated for
the first time to the Japanese side a plan to jointly develop gas
fields in the East China Sea, sources revealed yesterday. This
proposal is taken as indicating a certain level of concession by the
Chinese side, which until then had insisted that the sea area
located in between the median line and the Okinawa Trough was in
dispute. But because China did not agree at all to explore gas
fields in waters near the Chinese territory close to the median
line, as called for by Japan, the negotiations eventually ruptured.

On the question of the Japan-China border line in the East China
Sea, Japan has insisted that the border be the median line that is
located at the same distance from the coastlines of the two
countries, but China has claimed that the Okinawa Trough stretching
to the western side of the Okinawa islands is the border line. The
two countries began their bureau director-level talks on the joint
gas-field development in 2004, but the negotiations failed to reach
accord because both sides stuck to their basic stances about the
border line.

In the negotiations last November, however, Japan sounded out the
possibility of jointly exploring gas fields first in some sea areas
that are part of Japanese territory starting from the median line,
if China accepted a plan to jointly develop gas fields in the areas
across the median line. China, which will not agree to use the
median line as the border line, rejected Japan's proposal. In the
latest talks, however, China offered a plan for joint gas-field
development in sea areas near the median line. This move could be
taken to mean that China, taking advantage of an opportunity of
Prime Minister Fukuda's visit to China, was willing for the first
time to show a certain degree of understanding toward Japan's
position.

According to a government official, however, Japan insisted that the
matter concerns national sovereignty, and that unless joint
gas-field development in both the Japanese waters and the Chinese
waters across the median line is specified in a statement, Japan

TOKYO 00000108 014 OF 015


could not accept China's offer. The negotiations intermittently
continued minutes before the Japan-China summit talks, but both
sides could not find middle ground.

17) U.S. beef that violated import conditions may have been sold:
MAFF reveals arrival of shipment containing beef from cattle over 20
months

NIHON KEIZAI (Page 3) (Excerpts)
January 13, 2008

The Ministry of Agriculture, Forestry and Fisheries (MAFF) and the
Ministry of Health, Labor and Welfare (MHLW) on Jan. 12 revealed
that U.S. beef violating the import condition that limits beef
eligible for exports to cattle aged 20 months or younger was shipped
to Japan and that these products may have been sold. There have been
shipments of beef violating the import conditions in the past as
well. However, this is the first case of products violating the
import condition actually being sold to consumers. MAFF takes the
position that since the case was due to human error, there is no
need to totally ban U.S. beef imports.

Smithfield's Pennsylvania plant shipped the product in question.
About 1.3 tons of beef from cattle aged 21 months was contained in
its Japan-bound shipments of 21.3 tons of beef and tongue, of which
17 tons, or 1,264 boxes, were actually shipped to Japan. Importers
sold about half of the products shipped to Japan to other domestic
retailers. Their whereabouts are not known.

The error happened because the plant mistakenly input "aged 21
months or younger" instead of "aged under 21 months" in its computer
beef control program. The error had continued since November last
year. The U.S. government's regular inspection in January found the
programming error. The U.S. side informed Japan of the error on Jan.
12.

MAFF and the MHLW stopped imports of products from the plant in
question as of the 12th. They also ordered Marudai Food Co. and
Shinwa-Ox, importers of the products in question, to stop selling
and recall the products.

The MHLW released a statement saying: "It will take several weeks to
determine the whereabouts of half of the cartons. As two months have
passed since the error occurred, there is a possibility that
consumers have already bought the beef."

However, since specified risk materials (SRM), which are believed to
pose a relatively large risk of BSE transmission, were not included,
the MHLW takes the position that it is unlikely that eating the
products in question would cause any heath problems.

18) Japan loses part of interests in development of oil fields in
Caspian Sea: Kazakhstan state-run company increases its stock
holding

NIKKEI (Page 1) (Slightly abridged)
January 15, 2008

The Kashagan oil field in the Caspian Sea in Kazakhstan is one of
the greatest oil development projects led by foreign companies. The
Kazakhstan government on Jan. 14 announced that it reached an
agreement with the foreign companies that its state-run company will

TOKYO 00000108 015 OF 015


increase its stake. As a result, a Japanese company taking part in
the project will also transfer part of its interests. Foreign
companies had to give up a majority of the management rights in
Sakhalin 2, Russia's natural resources development project. They
have apparently once again been deprived of part of their interests
in the Kazakhstan project due to the nation's resource-hoarding
policy.

Kazakhstan Energy and Mineral Resources Minister Mynbayev revealed
the agreement reached between his nation and foreign companies.
According to the agreement, KazMunay Gas (KMG), the nation's
state-run company, will raise the ratio of its stock holding from
the current 8.33 PERCENT to 16.81 PERCENT by purchasing stocks
from foreign companies taking part in the project. The amount of the
purchases is 1.78 billion dollars (approximately 190 billion yen).
Mynbayev revealed that the start of production will be delayed until
2011 and said that payments would be made after the production
started.

As a result, KMG's stock holding would become almost equal to four
foreign companies, such as Ente Nazionale Idrocarburi (ENI), which
have held 18.52 PERCENT as top shareholders. Japan's consortium
consisting of Inpex Corporation and Mitsubishi Corporation, has
invested in the project. Their share will likely drop to 7.56
PERCENT .

DONOVAN

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