Cablegate: Japanese Morning Press Highlights 01/18/08

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

Foreign policy agenda:
4) Vice Foreign Minister Yabunaka lists priorities: Resolution of
gas-field dispute with China before Hu visit; Cooperation with U.S.
to resolve the abduction issue (Nikkei)
5) Interview with ROK President-elect Lee: Stresses future-oriented
ties with Japan, will not seek apologies for colonial past

Political agenda:
6) Prime Minister Fukuda at LDP convention calls out for
prioritizing policies for the "people" 36 times but his speech
lacked specificity (Tokyo Shimbun)
7) LDP warns that if budget-related bills, including provisional gas
tax rate, not passed, it could spell turmoil for the daily lives of
the public (Yomiuri)
8) Democratic Party of Japan Secretary General Hatoyama frustrated
by party head Ozawa's willfulness: "He is not one to easily
apologize" (Tokyo Shimbun)
9) Regular Diet session opens today with all minds focused on the
fate of the gasoline tax (Sankei)

Defense and security affairs:
10) Japan to announce partial ban on cluster bombs (Mainichi)

Economic agenda:
11) Government's economic advisory body to present new economic
growth strategy this summer in structural reform report (Mainichi)

12) DPJ's Okada is against picking Muto as next Bank of Japan head

Whaling blues:
13) Japanese whaling ship turns over two trespassers to Australian
authorities (Sankei)
14) Labor party government's anti-whaling pledge spells trouble for
future of Japanese research whaling and bilateral ties with
Australia (Sankei)

15) Prime Minister Fukuda decides to announce concept of numeral
targets for greenhouse gas reduction that would be based on type of
industry (Yomiuri)



Asahi, Mainichi, Yomiuri & Sankei:
Three NHK employees investigated for suspected insider trading

Major Japanese firms, such as Bridgestone, Asahi Glass, to obtain
emissions credits through their overseas factories

Tokyo Shimbun:
24 dentists and others investigated by prosecutors of Saitama for
hiding income in form of donations

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Leading beauty parlor chain Ash pays overtime to all employees after
negotiations with beauticians' union


(1) Need to discuss not only "gasoline tax bill" but other important
bills in ordinary Diet session
(2) Don't force manual-like revised course of study on teachers

(1) NHK employees: Outrageous if they had made money via scoop
(2) LDP, DPJ both excessively inward-looking

(1) Drastic policies expected from LDP in power
(2) Mitsubishi's top leader found guilty of negligence of duty

(1) Both ruling and opposition parties should take action to deal
with staggering economy
(2) Outrageous if journalists implicated in insider trading

(1) LDP convention: The party failed to project its vision
(2) Court ruling over Mitsubishi defect vehicle: Top leader
responsible for safety

Tokyo Shimbun:
(1) No grand vision shown in LDP convention
(2) Violence in special express: Staying on sidelines regarded as

(1) Iwakuni mayoral election: Important battle in terms of
realignment of U.S. forces in Japan

3) Prime Minister's Official Residence (Kantei)

Prime Minister's schedule, January 17

NIKKEI (Page 2) (Full)
January 18, 2008

Attended a cabinet meeting at the Kantei.

Met LDP Secretary General Ibuki and others at the Grand Prince Hotel
Shin-takanawa. Afterward attended an LDP international politics,
foreign policy essay contest award ceremony.

Attended the LDP convention, followed by a reception.

Met at the Kantei Vice METI Minister Kitahata. Afterward had
informal discussions with news company editorial writers and Cabinet
Press Club member company heads.

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Met LDP lawmakers representing Kyushu, including Election Committee
Chairman Koga, at the Toranomon Pastoral.

Returned to his official residence.

Met at the Kantei incoming and outgoing vice foreign ministers
Yabunaka and Yachi.

Attended a Council on Economic and Fiscal Policy meeting.

Returned to his official residence.

4) Japan to settle gas field talks with China before Hu's visit to

NIKKEI (Page 2) (Full)
January 18, 2008

In a press interview after he became administrative vice foreign
minister yesterday, Mitoji Yabunaka revealed his plan to settle the
pending issue with China of developing gas fields in the East China
Sea before President Hu Jintao's Japan visit scheduled for this
spring. Regarding the deadlocked talks between Japan and North Korea
over diplomatic normalization, Yabunaka revealed a policy line of
seeking progress in its talks with North Korea while linking up with
the United States in its talks with North Korea over that country's
nuclear programs.

On the gas field issue, Yabunaka said, "We'd like to settle this
issue if we can, without waiting for President Hu to visit Japan."
He continued: "We've been negotiating quite hard, and our mutual
understanding has been deepening. We're now talking with each other
in a sincere manner." He indicated that Japan and China are about to
bridge the rift.

On North Korea normalization talks, Yabunaka pointed out, "Of
course, our talks with North Korea are linked (with progress in the
U.S.-North Korea talks on the nuclear issue). He indicated that
Japan would step up its cooperation with the United States and other
six-party talks members in order to settle pending issues between
Japan and North Korea, including North Korea's abduction of Japanese

Earlier in the day, Yabunaka, in meeting the press, stressed the
need for Japan to talk with North Korea in order to resolve the
abduction issue and other pending issues. At the same time, he
suggested the need for Japan to show a resolute attitude. He also
took the position that the international community should pressure
North Korea for dialogue.

5) South Korean president-elect expresses readiness to pursue
future-oriented relations with Japan

MAINICHI (Page 3) (Full)
January 18, 2008

Akiko Horiyama, Seoul

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South Korean President-elect Lee Myung Bak yesterday expressed his
readiness to develop future-oriented relations with Japan. Referring
to both countries' historical views, Lee said at a press conference
for foreign correspondents: "To build a mature relationship between
South Korea and Japan, I do not want to demand that Japan apologize
and reflect." He also expressed his desire to swiftly resume
reciprocal visits between the top leaders of the two countries,
which were suspended due to a row in 2005 over their historical

Lee apparently is aiming to reveal his willingness to improve
relations with Japan, switching from the Japan policy taken by
current President Roh Moo-hyun, who defined the issue of historical
views as a diplomatic war.

Lee, however, also said in the press conference: "It is true that
Japan's apology was just for pro-forma sake, and there was no
emotional impact on the South Korean people." He added: "Even if we
do not demand (that Japan apologize), I believe Japan will take a
mature diplomatic approach."

6) Prime minister uses the words "the people" 36 times in speech at
LDP convention; What are the specific measures?

TOKYO SHIMBUN (Page 2) (Abridged slightly)
January 18, 2008

The Liberal Democratic Party (LDP) held its annual convention
yesterday, at which Prime Minister Yasuo Fukuda (also LDP president)
played up "the people's viewpoint" with the aim of winning the next
House of Representatives election, defining the environment
surrounding the party since its crushing defeat in the previous
House of Councilors election as the most critical situation since
the party's foundation. But lacking specific policies, his speech
also drew grumbles from some attendees.

In his 11-minute speech at the party convention, the prime minister
used the words "the people" 36 times, including, "We will build
people-oriented politics," "The LDP stands on the side of the
people," and "We will reflect the viewpoint and voice of the people
in politics." He also said: "With politics and the administration
standing on the side of the people, we will make this year a turning
point so that consumers and working people can play a central

In last year's party convention, then Prime Minister Shinzo Abe used
the words "the people" only seven times, focusing on constitutional
revision, educational reform, and foreign policy with the aim of
making Japan a "beautiful country." Fukuda's speech emphasizing "the
people" reflected the prime minister's strong determination to erase
public mistrust in the LDP by returning to the viewpoint of working
people and consumers.

In addition, female representatives of the 47 prefectural chapters
reported on their challenges and resolutions for this year, while
playing up their determination to give consideration to the areas
that were overwhelmed by the major opposition Democratic Party of
Japan (DPJ or Minshuto) in the previous Upper House election.

General Council Chairman Toshihiro Nikai praised the convention,
saying, "Making everyone aware of the severe environment, it was a

TOKYO 00000135 005 OF 010

good convention in order to make a fresh start." Reform Headquarters
chief Tsutomu Takebe also lauded it, commenting, "It was very good
in that we can now understand the prime minister's people-oriented
thinking." Questions remain however, whether it can revitalize the

One attendee: "The prime minister's speech was too vague, so I
couldn't understand it."

In the convention, the party also adopted the 2008 action program
featuring people-oriented policies, such as redressing socioeconomic
disparities, measures for small businesses, and the promotion of
agriculture, forestry, and fisheries. But the prime minister failed
to discuss specifics. At the same time, stopping short of mentioning
the battle with the DPJ over the provisional tax rate on gasoline
and strategies for the next Lower House election, the prime minister
failed to drive his point home to some extent.

After the convention, Niigata chapter General Council Chairman
Mihashi said to reporters: "The prime minister got a strong sense of
crisis across to us, but what to do with the exhausted local regions
is not clear. Because concrete measures were not discussed, I cannot
explain to local residents and party members what Mr. Fukuda said."
About the maintenance of the provisional tax rates, he also
expressed concern, saying, "A solid explanation is necessary in
order to persuade people so that they can think the construction of
roads can wait if gasoline prices go down."

An attendee from Nagano said: "The prime minister's speech was too
vague, so I couldn't understand it." An assemblyman from Gifu also
said disapprovingly: "The prime minister was remorseful. I wanted
him to discuss what do to in the future and exhibit strong

7) LDP warns that if key bills are not passed, people's lives could
be seriously affected

YOMIURI (Page 2) (Excerpts)
January 18, 2008

In its annual convention yesterday, the Liberal Democratic Party
distributed copies of material intended for the public to read. The
material stressed that if bills that must be passed by the end of
March do not clear the Diet by the deadline, the people's lives and
the nation's economy could be seriously affected. The bills include
one amending the special tax measures law, which proposes
maintaining the current provisional high gasoline tax rate. This
move is aimed to counter the Democratic Party of Japan's (DPJ) call
that an abolishment of the provisional tax rate will bring down
gasoline prices by about 25 yen per liter. The government and the
ruling camp are now gearing up a public relations strategy to win
opinion over to their side.

The material notes that if the provisional rate loses effect: (1)
the central and local governments will see their tax revenues drop
by approximately 2.6 trillion yen, making it difficult for them to
maintain and construct roads, to remove snow, as well as to take
safety measures for school-commuting roads; and (2) the total amount
of decreased local governments' revenues, including the portion of
special grants for road maintenance and improvement, will reach
approximately 1.6 trillion yen, and financially troubled local
governments will fall into bankruptcy. The material further says

TOKYO 00000135 006 OF 010

that should the bill amending the special tax measures law is not
passed into law, other tax incentives will also lose effect,
resulting in increasing the people's tax burden, for instance, on
real property registration.

In reference to a bill amending the tariff law, the material notes
that if the bill expires, the prices of daily necessities like
clothes and food will shoot up. Regarding a bill that sets the
amount of government bond issuance for fiscal 2008, it emphasizes
that (if the bill is scrapped,) the government will have to hike
taxes and cut expenditures, which is impossible to implement,
further confusing the financial markets.

8) Hatoyama: Ozawa is slow to apologize

TOKYO SHIMBUN (Page 2) (Full)
January 18, 2008

Democratic Party of Japan Secretary General Yukio Hatoyama gave a
speech at a Rengo (Japanese Trade Union Confederation) Political
Center meeting yesterday. In it, he reiterated an apology for
President Ichiro Ozawa's exit from the House of Representatives
plenary session (on Jan. 11) before taking a vote on the
government-sponsored new antiterrorism special measures legislation,
saying, "Because Mr. Ozawa is slow to apologize for it, I would like
to offer an apology as the secretary general."

On Jan. 15, Hatoyama had mentioned the need for Ozawa to apologize,
but Ozawa in a press conference yesterday stood by what he did.

Hatoyama said: "Although a leader needs adamancy, he also needs the
flexibility to correct the course when the wrong step was taken."

9) Ordinary Diet session to open today; Tensions to rise over debate
on gasoline tax

SANKEI (Page 5) (Full)
January 18, 2008

The 169th regular session of the Diet, which is to be convened
today, will run 150 days until June 15. The ruling and opposition
camps will now start heated debate, focusing on the annual
revenue-related bills (fixed-deadline bills), which incorporate
measures to extend the provisional tax rates such as the tax imposed
on gasoline, which will expire at the end of March. Although the
government and ruling parties aim to enact them within this fiscal
year (end of March), the main opposition Democratic Party of Japan
(DPJ or Minshuto) and some other opposition parties are determined
to oppose such an extension. As it stands, a situation can be
expected to develop in which the DPJ and other parties will not
budge in their stances, intent of forcing a dissolution of the Diet
and a snap election.

The opening ceremony with the presence of the Emperor will be held
at the plenary hall of the House of Councillors starting at 1:00
p.m. After that, Prime Minister Yasuo Fukuda will deliver a policy
speech at a plenary meeting of the Lower House, followed by speeches
by the justice, foreign, and international economy and trade

The government and ruling coalition will start deliberations on Jan.
24 on the supplementary budget bill for fiscal 2007 which includes

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allocations for disaster relief, aid to Afghanistan, and measures to
deal with the costs created by a one-year-suspension of an increase
in medical co-payments for the elderly. The government aims to pass
the supplementary budget before the end of January. After that, the
government and ruling camp intend to start debate on the fiscal 2008
budget bill and revenue-related bills earlier than usual.

10) Japan offers to ban some cluster bombs

MAINICHI (Page 1) (Full)
January 18, 2008

GENEVA-The Japanese government announced its decision on Jan. 17 to
prohibit cluster bombs, with some exceptions. Duds from cluster
bombs can harm civilians. The government clarified the decision in
an expert meeting of the Convention on Certain Weapons (CCW) in
Geneva. The government has withheld its commitment over cluster
bombs. However, some countries are now working together in the "Oslo
process" to create a multilateral convention against cluster bombs.
Japan was apparently urged to change course.

The government clarified its decision to prohibit "unreliable
cluster bombs," and Japan will prohibit developing and producing new
cluster bombs. In addition, the government will offer to limit the
use of such cluster bombs during a certain period of time and will
prohibit using such bombs after that period of time. Japan also
suggested the need for CCW signatories to reach an accord on a
treaty. Japan will tolerate newly developed bombs whose dud rate is

11) CEFP to propose new growth strategy; Structural reform report to
be submitted this summer

MAINICHI (Page 2) (Full)
January 18, 2008

The government's Council on Economic and Fiscal Policy (CEFP chaired
by Prime Minister Yasuo Fukuda) held a meeting yesterday. Private
sector members, such as Fujio Mitarai, chairman of the Japan
Business Federation (Nippon Keidanren), proposed establishing a new
study panel consisting of experts to discuss structural reforms for
the continuous growth of the Japanese economy. The proposal was
adopted. The envisaged panel will this summer compile a report that
will serve as guidelines for a growth strategy to be taken by the
Fukuda cabinet. It will aim at coming up with a 21st century
equivalent of the Maehara Report, released in 1986.

The expert panel will first probe into the rapid growth of newly
emerging economies, the soaring prices of crude oil and other
natural resources, and changes in the environment surrounding the
global economy, including in the global flow of funds. It will then
propose making the structure of the Japanese economy more flexible
and risk-resistant through such means as building an open economic
system. The aim is to enable the Japanese economy to continue to
grow on its own. The panel will compile a report by the Lake Toya
Summit (G-8 summit) to be held in Hokkaido in July. The Fukuda
cabinet will thus demonstrate to the public its stance of attaching
importance to growth.

The CEFP also adopted a "Course and Strategy of the Japanese
Economy," mid-term guidelines for economic and fiscal management for
fiscal 2008 through fiscal 2011. Regarding the primary balance of

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the central and local governments, the panel adopted the Cabinet
Office's projection that it will be impossible to move the primary
balance into the black by fiscal 2011.

According to the projection, even in the event that nominal GDP
growth for fiscal 2011 reaches 3.3 PERCENT and the government
carries out spending cuts to the maximum extent (14.3 trillion yen),
the goal it has set to attain by fiscal 2011, a 0.1 PERCENT deficit
in ratio to the GDP or 70 billion yen, would remain. The government
has made a commitment to moving the primary balance into the black
by fiscal 2011. In order for it to deliver on the pledge, it would
need to further cut spending and increase taxes.

12) DPJ's Okada opposes promotion of Muto to BOJ governor; Party
leaders to meet today

MAINICHI (Page 2) (Full)
January 18, 2008

Katsuya Okada, vice president of the Democratic Party of Japan
(DPJ), yesterday held a press conference at the Japan National Press
Club. Commenting on Bank of Japan (BOJ) Vice Governor Toshiro Muto,
who is considered the most promising candidate to succeed incumbent
Governor Toshihiko Fukui, whose tenure expires on March 19, Okada
indicated his view that he is not appropriate for the position
because he once served as administrative vice finance minister. He
noted, "It is disagreeable that a person who served in the top
position responsible for the administrative side of the Finance
Ministry to assume the supreme post responsible for monetary
matters. It goes against the principle of separation of financial
affairs from monetary affairs.

DPJ executives, including Secretary General Yukio Hatoyama, will
today discuss for the first time what approach the party will take
on this issue.

Appointing a BOJ governor requires Diet approval. If the DPJ, which
controls the Upper House, opposes the appointment of Muto, his
selection for the post would fall apart. The DPJ opposed Muto when
he took office as vice governor.

Hatoyama during a press conference held in August last year noted,
"There has been nothing that would cause the DPJ to change its
stance from the time it opposed Mr. Muto assuming the vice
presidency." However, he had been vague about his stance, saying, at
a press conference on Jan. 11, "We do not intend to say that it is
absolutely unacceptable for him to assume the post, just because he
is a former bureaucrat."

13) Japan hands two anti-whaling activists obstructing research
whaling over to Australia

SANKEI (Page 3) (Full)
January 18, 2008

The Fisheries Agency (FA) late yesterday announced that the Japanese
side handed two anti-whaling activists of the U.S.-based
environmental protection group Sea Shepherd, who had been seized
after they had leapt aboard Japan's research whaling ship No. 2
Yushinmaru in the Antarctic waters, over to an Australian Customs
patrol boat around 10:30 p.m. that day, Japan time. Japan will now
resume research whaling, which was suspended by this incident, after

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confirming the safety of research whaling.

One of the two activists is British, and the other Australian. They
climbed aboard No. 2 Yushimaru to hand over a letter of protest
against whaling to the Japanese side. The Japanese side detained the
two because they took dangerous actions by winding rope around the
screw and sprinkling some kind of chemicals on the deck.

14) Source for controversy still remains between Japan, Australia
because Australian Labor Party-led government committed to

SANKEI (Page 3) (Full)
January 18, 2008

Kinya Fujimoto, Singapore

The Labor Party-led Rudd administration of Australia acted as an
intermediary for the release of two activists of the U.S.-based
environmental protection organization who had been seized by the
Japanese crew because they had boarded a Japanese research whaling
ship in the Antarctic Ocean. Australia's Labor Party is essentially
a strong opponent to whaling, and its position is close to that
environmental protection group. In Australia, opposition to whaling
is deep-seated among the public. Prime Minister Rudd, who took
office under the banner of attaching importance to environmental
policy, apparently has found himself in a fix. Relations between
Japan and Australia will inevitably be strained over the whaling

The Japanese side handed the two activists over to Australian
Customs patrol boat, which was patrolling the seas nearby to monitor
Japan's research whaling. The patrolling was aimed at collecting
evidence, such as photos and videos.

This kind of patrolling was inconceivable under the former Howard
administration. In Australia, whale watching is popular, and many
Australians are opposed to whaling, but former Prime Minister
Howard, who emphasized the importance of good relations with Japan,
contained the voices of anti-whaling groups and strived not to
create a source for controversy between the two countries.

However, in the general election in last November, the Labor Party
won a landslide victory, emphasizing the importance of environmental
protection. "Watch Japan's research whaling" is among the Labor
Party's campaign pledges. So it was forecast that the whaling issue
sooner or later would have a harmful effect on Japan-Australia

Given the news reports that Prime Minister Rudd's popularity already
is beginning to decline owing to inflation and high interest rates,
his administration may be forced to compensate by assuming a tough
position against Japan's research whaling.

15) Fukuda to announce policy of setting numerical targets for
greenhouse gas emissions cuts in Davos Conference

YOMIURI (Page 1) (Excerpts)
January 18, 2008

Prime Minister Fukuda decided yesterday to announce at the World
Economy Forum (Davos Conference) in Switzerland later this month

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that Japan will set its industry-specific and sector-specific
targets for reducing greenhouse gas emissions. Specific targeted
figures will be worked out in future discussions. The decision stems
from a desire to demonstrate Japan's willingness to take the
initiative in discussion on a new international framework to fight
global warming beyond the 2012 timeframe set under the Kyoto
Protocol. There is also the aim of achieving reduction goals
classified by industry, such as steel and electricity, effectively
and without pushing too hard.

The prime minister will also emphasize the importance of introducing
a mid-term target for the entire world to attain over the next 10 to
20 years.

A mid-term target will be a key element in forming a post-Kyoto
protocol. The prime minister intends to reiterate in his speech in
the Davos Conference his determination to display leadership to form
a mid-term target."

At the 13th session of the Conference of the Parties to the United
Nations Framework Convention on Climate Change (COP13) last
December, participants discussed a plan for industrialized countries
to reduce gas emissions by 25 PERCENT to 40 PERCENT from 1990
levels by 2020 as a mid-term target, but no agreement was reached.

Deputy Foreign Minister Masaharu Kono, who will serve as a Sherpa
for the prime minister at the Lake Toya Summit to be held in
Hokkaido in July, revealed in an interview with Yomiuri Shimbun
yesterday that he will look into setting a mid-term target, with an
eye on the Summit. Vice Foreign Minister Yabunaka also clarified in
an interview with newspaper companies the same day his view that
Japan should come up with its own numerical targets for reducing
greenhouse gas emissions, prior to the Lake Toya Summit.


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