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Cablegate: Daily Summary of Japanese Press 01/18/08

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UNCLAS SECTION 01 OF 20 TOKYO 000145

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 01/18/08


INDEX:

(1) New Vice Foreign Minister Yabunaka: Effective dialogue with
North Korea necessary (Asahi)

(2) Soka Gakkai urges New Komeito to be cautious about introducing a
permanent law to allow SDF overseas deployments (Asahi)

(3) Former Vice Foreign Minister Yachi: I failed to resolve
abduction issue (Asahi)

(4) Chief Cabinet Secretary Machimura gives special lecture on gas
tax, with pointer in hand (Asahi)

(5) Central, local governments concerned about effect of provisional
high tax rates' expiration on financial sources for road
construction (Asahi)

(6) Industrial circles worry about possible confusion in
distribution process in case of abolishment of current provisional
taxes (Asahi)

(7) Regular Diet session to open today; Inward-looking political
babble must end (Nikkei)

(8) Government trying to dodge criticism about resubmitting human
rights protection legislation (Asahi)

(9) Economic panel approves guideline on economic management aimed
at growth, focusing on environment measures (Nikkei)

(10) Nikkei economic symposium: Slowing Japanese economy: Will U.S.
stave off recession? (Nikkei)

(11) Okinawa Prefecture Environmental Impact Assessment Council
strongly calls for rewriting of plan for how to conduct assessment
of facilities replacing Futenma Air Station; More in-depth
recommendation report compiled (Ryukyu Shimpo)

(12) One month after U.S. Army sets up forward-deployed command for
1st Corps at Camp Zama in Kanagawa; Local communities concerned
about base buildup with no info (Akahata)

(13) It's unrealistic to call SDF troop dispatch based on U.N.
resolution constitutional: Japan's U.N. envoy (Akahata)

(14) Deputy Foreign Minister Kono: Focus to be on setting mid-term
goal for greenhouse gas emissions cuts at G8 summit (Yomiuri)

(15) G8 Hokkaido Toyako Summit in 2008: When will G8 leaders arrive
at New Chitose Airport? Hokkaido government in stew over
transportation, measures against aircraft noise (Hokkaido Shimbun)

(16) CIRO employee fired for info leaks (Sankei)

ARTICLES:

(1) New Vice Foreign Minister Yabunaka: Effective dialogue with
North Korea necessary

ASAHI (Page 4) (Full)
January 18, 2008

TOKYO 00000145 002 OF 020

New Administrative Vice Foreign Minister Mitoji Yabunaka said
yesterday: "An effective dialogue is needed for the North Korea
issue." Referring to the abduction issue, talks on which have been
stalled, he stated: "It is important to let that country understand
that resolving the issue will benefit it as well.

Yabunaka held yesterday a press conference and responded to
questions by media companies. As director general of the Asian and
Oceanian Affairs Bureau, he dealt with the North Korean nuclear
problem for two years from December 2002. Asked about his view on
North Korea, he said:

"Negotiations with Pyongyang are never easy. Japan has taken a
policy of giving priority to dialogue and pressure. However, we must
have an effect dialogue with that country."

With regard to the 4th Tokyo International Conference on African
Development to be held in May, and the July Group of Eight summit in
Hokkaido, Mitoji pointed out: "It is extremely important for
Japanese diplomacy to conclude the two conferences successfully." He
also stated: "It is important for Japan, China and South Korea to
cooperate over Africa assistance even though Beijing has carried out
resource diplomacy."

(2) Soka Gakkai urges New Komeito to be cautious about introducing a
permanent law to allow SDF overseas deployments

ASAHI (Page 4) (Full)
January 18, 2008

The New Komeito, the junior coalition partner of the ruling Liberal
Democratic Party (LDP), held a meeting yesterday at its headquarters
with the religious sect Soka Gakkai, its main backer. In the
session, the Soka Gakkai urged the New Komeito to carefully respond
to the idea of introducing a permanent law to allow overseas
deployments of the Self-Defense Forces, on which the religious sect
is concerned that the LDP and the largest opposition Democratic
Party of Japan (DPJ or Minshuto) might make a decision on it without
broad-based debate. New Komeito Secretary General Kazuo Kitagawa
explained his party's position: "Our party will not approve a
permanent law without public consensus."

Soka Gakkai Deputy Director Harada also asked the New Komeito to be
cautious about taking advantage of the two-thirds override vote in
the House of Representatives in enacting a bill on the budget for
2008 and its related bills after they are voted down in the House of
Councillors. He told Kitagawa:

"Although the two-thirds override vote in the Lower House, which is
stipulated in the Constitution, is a legal procedure, abusing it
should be avoided. As political parties, the ruling and opposition
camps must make efforts to reach an agreement."

(3) Former Vice Foreign Minister Yachi: I failed to resolve
abduction issue

ASAHI (Page 4) (Full)
January 18, 2008

Shotaro Yachi, who resigned as administrative vice foreign minister
yesterday, held a press briefing yesterday, in which asked about

TOKYO 00000145 003 OF 020


events he had dealt with during his tenure as vice minister, he
responded: "What I left unfinished is the abduction issue." He
described his achievements, quoting Douglas MacArthur's expression,
"The old soldier never dies, he just fades away." He became an
advisor to the Foreign Ministry as of yesterday.

He expressed bitterness, saying:

"What I left unfinished or what I failed to make achievements is
probably the abduction issue. Although there are many difficult
issues, including the Northern Territories issue, it is extremely
regrettable that results were not made on the abduction issue."

(4) Chief Cabinet Secretary Machimura gives special lecture on gas
tax, with pointer in hand

ASAHI (Page 4) (Full)
January 4, 2008

Countering the DPJ's call for abolition of the provisional gas tax
rate, Chief Cabinet Secretary Machimura in an unprecedented move
during a regular press conference yesterday gave a lecture on the
gas tax, using three panels.

He noted with a pointer in one hand: "The DPJ is claiming that
gasoline prices would drop 25 yen per liter if the provisional tax
is abolished. However, I want you to understand the problems with
the idea." He cited the following as problems: (1) a drop in tax
revenues of both the central and local governments up to 2.6
trillion yen; (2) adverse effects on the installation of guardrails
for school roads, measures for railroad crossings that rarely open,
and snow-removal; and measures to prevent global warming. In
particular, he stressed that gasoline prices in Europe are higher
than those in Japan. He said, "Would the international community see
Japan as being enthusiastic about preventing global warming if it
cuts the gasoline tax at a time when it is going to make a public
appeal on environmental issues at the G-8 summit?" He then joked,
"Perhaps the DPJ believes money will fall from the sky."

(5) Central, local governments concerned about effect of provisional
high tax rates' expiration on financial sources for road
construction

ASAHI (Page 2) (Full)
January 17, 2008

Financial sources for road constructions come from revenues from six
taxes, including the gasoline tax and the local road tax. The total
amount of annual revenues from these taxes is 3.3 trillion yen for
the central government and 2.1 trillion yen for local governments.
Of these taxes, their provisionally high rates of five taxes are to
expire at the end of March and at the end of April. If the hiked
rates expire, the central and local governments will lose revenues
of 1.7 trillion yen and 0.9 trillion yen, respectively.

Given this, the central and local governments are increasingly
concerned about the effect on their finances. In the case of Shimane
Prefecture, if the provision tax rate is removed, the 43.4 billion
yen allocated for road-construction projects in the fiscal 2007
budget will reduce to 18.8 billion yen.

Meanwhile, the Democratic Party of Japan also has come up with a

TOKYO 00000145 004 OF 020


tricky scheme. Under this, the main opposition party proposes having
the central government pay the total amount of costs for projects
under the direct jurisdiction of the central government. To do so,
however, about 600 billion yen will be needed.

(6) Industrial circles worry about possible confusion in
distribution process in case of abolishment of current provisional
taxes

ASAHI (Page 2) (Slightly abridged)
January 17, 2008

In a press conference yesterday, Petroleum Association of Japan
Chairman Bunmei Watari, chairman of Nippon Oil Corporation, said:
"It is imprudent even to think about the premise of expiration of
the current provision tax rates. I am not considering any measures,
assuming such a case, at the present point of time."

If the provisional high gasoline rate expires, the current regular
gasoline price, now at about 155 yen per liter, will drop by 25 yen.
This change will benefit drivers, but executives in the petroleum
industry are worried about possible confusion in the process of
distribution.

Since the gasoline tax is imposed at the stage of shipment, even if
the high rate is to expire on April 1, the current rate will be
applied to all gasoline to be shipped by the end of March. This
means that consumers will find different prices for gasoline
marketed at the same time due to differences in shipment timeframe.

In the case of diesel oil, though, the tax is imposed at the stage
of marketing. Once the high rate expires, high-rate diesel oil will
no longer be placed on the market.

A petroleum company executive complains: "If the government does not
formulate and distribute guidelines to drivers to let them know what
will change (if the high tax rates are not maintained), we will not
be able to cope with the situation."

If the ruling camp's bill is enacted in April or later, "the low tax
rate" will be applied for a short period of time. In such a case,
there may be a last-minute rise in demand.

If gasoline is out of stock, drivers might think that
refiner-marketers are unwilling to sell low-priced gasoline.
Adversely, there may be a case in which many consumers avoid
purchasing gasoline before and after the rate is lowered.

Some voice concern about the negative effect of an abolishment of
the current provisional tax rates on the environment. According to
the research group of the National Institute for Environmental
Studies, assuming that fuel prices drops by about 20 PERCENT as a
result of discontinuation of the current high gasoline and diesel
fuel tax rates, carbon dioxide (CO2) emissions may increase about 8
million tons annually on average during the period between 2008 and
2012.

(7) Regular Diet session to open today; Inward-looking political
babble must end

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

TOKYO 00000145 005 OF 020

The divided Diet is now set to enter the hardest stage yet:
deliberations on the fiscal 2008 budget bill. At the worst timing,
the Japanese economy has been hit by the global financial woes
resulting from America's subprime loan crisis.

DPJ holds the key

Although a budget bill can clear the Diet with the power of the
House of Representatives alone, if budget-related bills are rejected
by the House of Councillors, they must be readopted in the Lower
House by two-thirds overriding votes. But the Lower House stands on
equal footing with the upper chamber when it comes to key government
posts that require Diet endorsement, meaning the Bank of Japan
governor cannot be determined without cooperation between the ruling
parties and the main opposition Democratic Party of Japan (DPJ or
Minshuto).

The fate of Diet deliberations could be determined by the DPJ, the
largest party in the Upper House. In the previous extraordinary Diet
session, a personnel appointment bill was rejected in the Upper
House for the first time in 56 years. Major confusion in selecting a
successor to BOJ Governor Toshihiko Fukui would deal a blow to the
financial market, which fears an unstable political situation.

A number of bills, including one amending the Special Taxation
Measures Law governing the provisional tax rates on gasoline and
other things must be enacted by the end of March so as not to hamper
the revenues of the central and local governments. The DPJ contends
that the price of gasoline will drop 25 yen per liter with the
abolition of the provisional tax rates. The matter is not that
simple. The party needs to present solid financial resources logic
to support it.

An idea is circulating in the DPJ not to take a vote on the bill in
March in the Upper House with the aim of invalidating the
provisional tax rates temporarily. It is the Diet's responsibility
to reach a conclusion within a given fiscal year. The DPJ's posture
of maneuvering for its own interests is unacceptable.

Prime Minister Fukuda's responsibility is also heavy. In a Nikkei
opinion poll in January, the rates of support and non-support for
his cabinet stood at 42 PERCENT and 46 PERCENT , respectively, with
the non-support rate outpacing the support rate for two consecutive
months. Since assuming office last September, Prime Minister Fukuda
has yet to present a clear national vision. His management of the
administration lacks speed under heavy pressure from the divided
Diet. Discontent with his leadership has also been preventing Fukuda
from painting a picture of buoying up his administration.

The political battle in part comes from different desires for Lower
House dissolution. With a view to regime change, the DPJ is focused
on this spring when the budget-related bills will be handled and the
question of pension mismanagement is likely to become a breach of
the campaign pledge. The prime minister, on the other hand, has
expressed his desire to dissolve the Lower House after the G8 Lake
Toya Summit in July.

Reforms must be carried out

In order to enact the budget-related bills by the end of March, the
prime minister must seek DPJ President Ozawa's cooperation with a

TOKYO 00000145 006 OF 020


determination to dissolve the Lower House, if necessary. The pension
and taxation systems must be reformed fundamentally regardless of a
fear of an election.

This year, South Korea will have a new president and the
presidential election will also take place the United States. It is
desirable for the LDP and DPJ to come up with their respective
manifestos (campaign pledges) clearly specifying their policies
regarding pension reform and other matters and receive the people's
verdict at an appropriate time.

If the Lower House is dissolved and the ruling bloc wins a majority
as a result, chances are that the ruling camp would lose a
two-thirds majority that can override Upper House rejections of
bills. Looking at the period beyond the next Lower House election,
calls for forming a grand coalition between the LDP and DPJ and for
political realignment are likely to continue simmering at the bottom
of in the political community.

In 1993, the so-called 1955 framework, symbolized by the LDP
dominated system dating back to 1955 when the party was formed,
collapsed, and the non-LDP Hosokawa administration was launched. The
political world remained in turmoil until the Murayama
administration was launched in 1994 by the LDP, Social Democratic
Party of Japan, and Sakigake (Harbingers). In the political season
after the bursting of the bubble economy, a sense of alarm regarding
the country's economy was weak.

The Hosokawa administration's one of the economic challenges was to
ease the land tax system, but it did not go any further than a
limited review due to stiff opposition of the SDPJ and other parties
that insisted that the bubble economy would flare up again.

It was only one example of a delayed measure by the government.
Japanese politics might again follow the wrong path unless it puts
an end to the inward-looking political battle and come up with solid
and correct measures to deal with the economic situation.

The first regular Diet session under the Fukuda administration opens
today with four government speeches, including Prime Minister
Fukuda's policy speech. The session will run for 150 days through
June 15. Interpellations are expected to take place on Jan. 21-23.

(8) Government trying to dodge criticism about resubmitting human
rights protection legislation

ASAHI (Page 3) (Excerpts)
January 18, 2008

Human rights protection legislation was scrapped in 1993. A move is
underway in the government and ruling parties to submit a renewed
bill to the regular Diet session that opens today. The bill that
originated from antidiscrimination measures and that includes
contents transcending the original ideals, such as media
regulations, has drawn objections from conservative members in both
the Liberal Democratic Party and opposition parties. Proponents in
the LDP and the Justice Ministry are eager to review the contents
with the aim of obtaining the support of the two sides.

"Not many bills are hated to this extent by both the right- and
left-wing groups. In order to win their support, the splinters must
be removed," a Justice Ministry official studying the new bill

TOKYO 00000145 007 OF 020


said.

The scrapped old bill drew objections from both the conservatives
fixated on Japanese traditions and culture and those proponents of
giving consideration to human rights organizations.

To the LDP conservatives, the definition of human rights violations
and the nationality clause are the particularly irritating
splinters. The group to protect tradition and culture, composed of
junior members and chaired by Lower House member Tomomi Inada, is
studying an opposition position paper focused on those two points.

The old bill specified concrete cases subject to the special relief
procedures applicable to serious human rights violations. It also
specified that the voluntary general relief measures were applicable
to humanitarian rights violations in general.

The conservative group criticized the definition of human rights
violations was vague. The Justice Ministry is considering listing in
the new bill specific cases subject to the general relief measures.
"Although human rights violations cannot be defined, presenting
specific types would help dispel the concern that the scope would
expand endlessly," a senior member said.

The old bill also did not specify nationality for the regional human
rights counselors that number about 20,000 nationwide. The
conservative group, with the General Association of Korean Residents
in Japan (Chongryon) in mind, condemned the bill, saying that it
might end up increasing the influence of special groups. The
government and ruling parties have presented a policy to specify
nationality as residents with the right to vote for municipal
assemblymen, a substantial step to limit to Japanese nationals.

Asked about this review, one said: "Foreigners would be allowed to
serve as counselors. The significance of the legislation would be
become weaken." At the same time, there is deep-seated opposition to
granting suffrage to foreign residents to allow them to become
counselors.

Also under study are plans to insert the wording that relief
measures are not subject to religious and historical problems and to
protect those received complaints.

Elimination of media regulations under study

The DPJ clearly opposed the old bill due to media regulations.

The bill included a clause allowing the government to take special
relief measures against media violations of human rights of crime
victims and others. The clause drew fire that it might end up
restricting the media's news-gathering activities, and the ruling
bloc decided in 2005 to freeze it until an implementation date is
determined under a separate law.

Further, the government and ruling camp began studying eliminating
the clause altogether, thinking that it would be unfrozen someday.

The opposition camp, which wants to swiftly enact the legislation
based on the removal of the media regulations, has also begun
showing signs of softening its stance. A DPJ lawmaker responsible
for the matter said: "Human rights issues must not be politicized.
We could go on complaining about specifics, but first of all we need

TOKYO 00000145 008 OF 020


to implement the new system." The DPJ criticized the option of
establishing a human rights committee in the Justice Ministry's
external organ as surveillance by power. Reversing its stance, the
largest opposition party plans to approve it based on a condition
that it be reviewed in five years.

For this reason, once a new bill is submitted to the Diet, it is
likely to be enacted.

(9) Economic panel approves guideline on economic management aimed
at growth, focusing on environment measures

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

The government's council on economic and fiscal policy approved a
mid-term guideline on economic management in its meeting yesterday.
Given the recent sluggish growth of wages and consumption, as well
as the delay in recovery of small companies' business performance,
the panel also decided to hammer out a new strategy by this spring
to keep the nation's real economic growth rate at more than 2
PERCENT . For a new strategy, private-sector members made a number
of proposals, but many of them lack specifics, giving no clear
roadmap to turn into practice.

The keywords in the mid-term report as a new growth strategy are
"connective power and environment power." This expression reflects
Prime Minister Fukuda's policy of pursuing "independence and
coexistence." In the meeting, the prime minister said: "I want the
panel to also keep in mind that our policy will be dispatched to the
international community when it maps out a new strategy." With an
eye also to the July Lake Toya Summit, in which environmental issues
will take center stage, the panel will work out specific measures.

A private-sector member said: "It is necessary for Japan to make a
strong showing." He meant that Japan should make use of its
superiority in the environment and energy-conservation areas, such
as the production of hybrid cars and plant management whereby
hazardous materials are not released, in order to promote its
economic growth.

Regarding connective power, a private-sector member proposed
improving medical and nursing services. Given that the nation is
turning into aging society with a declining birthrate, this proposal
is aimed to create a new market by easing regulations in the nursing
and daycare service areas and encouraging private entities to enter
the business. As measures to enhance productivity at small
businesses, one member suggested that a tie-up between different
types of business will lead to improvement in their corporate
values.

But a roadmap to implementing the proposed measures is nowhere in
sight. Included among the proposals made for the environment area
are those to develop a new material that uses less energy and to
install more solar panels at public facilities, and they are nothing
new. It is not specified how the aid for Asian countries in the
energy sector should be connected to Japan's economic growth.

The proposed measures to deal with the ongoing economic
globalization seem to be just desk ones and are difficult to put
into practice. The guideline proposes introducing a training system
to accept high-skilled foreign trainees, but no timeframe and other

TOKYO 00000145 009 OF 020


specifics are not included. The guideline also refers to economic
partnership agreements (EPA) with Australian and the United States,
but a person related to the advisory panel grumbled: "With no
specific roadmap, that is a strategy without strategy."

Discussion has already been conducted on agricultural reform at an
expert committee of the advisory panel, but the mid-term guideline
does not refer to this theme. The issue of decentralization, which
is viewed indispensable to revitalize local communities, is not
taken up, either.

Prime Minister Fukuda gives priority to consumer affairs
administration. Reflecting this, the guideline notes: "Consumer
affairs administration should be reformed from its foundation" as
one of the tasks for this year. The prime minister also said: "I
want you to discuss future options for consumer affairs
administration."

In response to the ongoing global-scale financial market turmoil,
the panel also agreed to set up an expert body tasked with analyzing
in detail the world and Japanese economic structures.

(10) Nikkei economic symposium: Slowing Japanese economy: Will U.S.
stave off recession?

NIKKEI (Page 3) (Excerpts)
January 18, 2008

Yoshikawa - risks stemming from soaring crude oil prices will become
clear; Harada - drop in housing starts will affect employment;
Kojima - wage should be raised to shift income to household sector;
Okuda - consumers will increasingly exercise thrift

Nihon Keizai Shimbun (Nikkei)and the Japan Center for Economic
Research yesterday held a New Year economic symposium at Nikkei Hall
in Otemachi, Tokyo. Participants unanimously agreed that the
Japanese economy is gradually slowing down due to the sinking U.S.
economy, soaring crude oil prices and a decline in investment in
housing. A cautious view was prevalent about the future of the
economy. Participants also agreed that the U.S. economy, the focus
of attention, would slow for sometime to come, but a recession could
be avoided with the Federal Reserve Board (FRB) raising interest
rates.

-- Disturbing factors, such as the issue of subprime loans for
individuals with low creditworthiness and the soaring crude oil
prices, are increasing.

Yoshikawa: The U.S. and the Chinese economy, high crude oil prices
and exchange rates have been pointed out as risk factors. Of the
three, a yellow light has been flashing on and off on the U.S.
economy. But now, a red light is flashing on. As risks became
obvious, we have no other choice but to become more cautious in
projecting the future of the Japanese and global economies.

Okuda: Personal consumption has been sluggish since last summer. The
abolition of a fixed-rate tax break and the transfer of tax revenue
resources have increased a sense of tax burden. An increasing number
of consumers are tightening their purse strings with prices of daily
necessaries going up as a result of soaring crude oil prices. We
will have a considerably severe year this year.


TOKYO 00000145 010 OF 020


Harada: The subprime loan issue originates in the U.S., and yet,
the scope of the fall of Japanese stocks is greater. Domestic
companies have increased profits mainly because they raised profit
shares. Profits gained by enhancing added value are small. The
housing sector is in a slump following the amendment to the
construction standards law. Distrust in Japan is reflected in stock
prices.

Kojima: GDP's dependence on foreign demand was about 10 PERCENT in
2002, but the ratio now has risen to about 15 PERCENT . If the U.S.
economy slows sharply, the global economy would inevitably lose
steam as well. The Japanese economy, which has grown, relying on
exports, will require significant adjustment.

-- How do you see the domestic economy, close to home?

Okuda: Small- and medium-sized companies' business confidence is
bad. Since it is difficult for them to shift a rise in the prices of
raw materials to sales prices, a performance gap with major
companies is widening. Compared with urban areas, where major
companies are concentrating, sales of department stores in regional
areas are sharply dropping.

Harada: One reason for the sluggish labor income is a housing
recession. The impact of the housing recession on employment of
construction workers is significant. However, since demand for
houses and building has not declined, positive effects would appear,
once the situation gets back to normal.

Yoshikawa: The point is personal consumption. It accounts for 60
PERCENT of GDP. However, personal consumption has grown only 1
PERCENT . Upgrading part-timers to a permanent status holds the key.
Another point at issue is the movement of wage hikes, which an
increasing number of business leaders have begun to accept.

Kojima: The household income has continued to fall with income
shifted to the corporate sector. Corporate profits have reset a new
high. I think companies that can afford should raise wages, looking
ahead. An increase in family income would lead to sustainable
consumption, albeit mild.

-- What about overseas economies?

Harada: China's domestic demand is important. Unlike Japan, there is
actual demand for public works in China. Some are concerned about
the Chinese economy after the Beijing Olympic Games in August. There
are not so many public works related to the Olympic Games, compared
with the total number of overall public works. No recession would
come after the Olympic Games.

Kojima: Growth of the U.S. economy would be no more than 1 PERCENT
-2 PERCENT . However, once major adjustment is over, it could grow
again next year. Demand for the construction of infrastructure is
brisk in China, India and the Middle East. It will serve as a plus
factor for the global economy.

Yoshikawa: The U.S. will presumably cut interest rates again.
However, since the housing sector, where demand is expected to
increase as a result of an interest rate cut, has already suffered a
blow, monetary easing might not produce effects.

Okuda: There will remain a risk of the U.S. economy losing steam. If

TOKYO 00000145 011 OF 020


investment in housing declines, consumption of housing-related
goods, such as domestic houseware, would drop. The end-of-the-year
sales in the U.S. significantly declined. Discount stores are doing
well, but department stores and clothing stores are suffering a
decline in income.

-- What about an outlook for a real growth rate and Nikkei Stock
Average?

Yoshikawa: It would be difficult for the Japanese economy to attain
2 PERCENT growth. I would say that a real growth rate would be 1.8
PERCENT or so.

Okuda: I would say 1.3 PERCENT for fiscal 2007 and 1.5 PERCENT for
fiscal 2008. Stock prices would be between 13,000 yen and 16,000
yen.

Harada: My projection is that a growth rate for fiscal 2007 would be
1.5 PERCENT and 2 PERCENT for fiscal 2008. Stock prices at the end
of the year would be 17,000 yen.

Kojima: In my view, a growth rate for fiscal 2007 would be 1.3
PERCENT and around 2.0 PERCENT in fiscal 2008. Yen exchange would
be between 100 and 110 against the dollar.

Participants:

Akira Kojima: Chairman of the Japan Center for Economic Research
Yutaka Harada: Chief economist at the Daiwa Institute of Research
Tsutomu Okuda: President and CEO of J. Front Retailing

SIPDIS
Hiroshi Yoshikawa: Professor at Tokyo University

(11) Okinawa Prefecture Environmental Impact Assessment Council
strongly calls for rewriting of plan for how to conduct assessment
of facilities replacing Futenma Air Station; More in-depth
recommendation report compiled

RYUKYU SHIMPO (Page 1) (Full)
January 17, 2008

In response to the governor's commission, Okinawa Prefecture's
Environment Impact Assessment Council (chaired by Masamitsu
Tsukayama, honorary professor at Ryukyu University) has been

SIPDIS
examining a plan to recover land from the sea included in the
government notice specifying the outline of environmental impact
assessments on the construction of facilities replacing the U.S.
forces' Futenma Air Station. The panel on the evening of Jan. 16
held its second meeting at the prefecture's Welfare Center of the
Prefecture. Participants mapped out a recommendation report that
seeks reexamination of environmental assessments of reclamation of
the sea area in question, mentioning that the plan should be
rewritten at the present stage, where specifics of the construction
project can be assumed to some extent. The panel in its
recommendation report on the assessment of the construction of an
airfield, issued in December last year, employed the wording
"Research for environmental assessments should be conducted, once
specifics of the project have been decided to some extent." The
report this time employed more in-depth wording than that.

Policy report to be submitted to governor tomorrow

The panel will submit the report to the governor on the 18th. The

TOKYO 00000145 012 OF 020


report calls for measures to preserve the environment when
conducting assessments of barrack relocation work following the
construction of alternative facilities and extracting soil used to
recover land from the sea.

When the panel deliberated on the draft report on the 16th, the
notice carried only seven pages for the purpose and specifics of the
project. However, 150 pages of additional data were later provided.
The Okinawa Defense Bureau has thus revealed new facts each time the
panel asked for explanations, drawing a flurry of criticism as
disrupting the original procedures for inviting opinions on the
project plan from residents, by letting them know its details.

In view of such a situation, one panel member said, "It would be
most desirable to let the government undergo the procedures once
again." However, the prefecture's environmental policy division took
the stand that in terms of the interpretation of the assessment law,
it would be difficult to have the plan rewritten in such a way as
to give it legally binding power,.

However, some panel members strongly called for the rewriting of the
plan, whether it will have legally binding power or not. They
proposed that examination procedures similar to the method of
letting residents know details of the plan, including inviting
opinions from persons sitting in the public gallery during open
examinations, should be taken. As a result of efforts to explore a
method of having the plan written so that the Defense Bureau will
not start the project without considering objections, participants
agreed to directly mention in the panel's report their request for
rewriting the plan.

Regarding the reexamination of the environmental assessment and
construction project plan, Environmental Policy Division Director
Hiroshi Shimoji revealed his perception that he assumes that
explanations, including an investigation method matching the
specifics of additional data of as many as 150 pages, should be
provided in a manner that can convince the panel and the
prefecture.

(12) One month after U.S. Army sets up forward-deployed command for
1st Corps at Camp Zama in Kanagawa; Local communities concerned
about base buildup with no info

AKAHATA (Page 4) (Full)
January 17, 2008

The U.S. Army has now set up a forward-deployed command for its 1st
Corps, also known as I Corps ("eye core"), at Camp Zama, a U.S.
military base straddling the cities of Zama and Sagamihara in
Kanagawa Prefecture. The new command will now see its first full
month on Jan. 19. The U.S. Army is now steadily building up its base
functions without providing sufficient information to local
communities. There is also something unknown about the new command's
scale and task.

"We're developing our operational capabilities that differ from the
control capabilities we have had here." With this, I Corps Commander
Jacoby, posted to the U.S. Washington State city of Fort Lewis,
explains the forward-deployed command and its nature in an
electronic version of the Stars & Stripes dated Dec. 21, 2007.

In 1995, the U.S. Army abolished the headquarters of its 9th Corps

TOKYO 00000145 013 OF 020


(IX Corps), which used to keep tabs on the Korean Peninsula for a
potential emergency. Since then, Camp Zama has only functioned as a
base with control capabilities, namely logistics, and welfare for
GIs.

With the forward-deployed command's establishment, Zama has now
become a linchpin of the U.S. Army's war command again and liaises
with I Corps that is ready to send 100,000 troops to the
Asia-Pacific region.

Moreover, the I Corps forward-deployed command at Zama is a combat
command that is "modernized to meet the world situation," according
to Public Affairs Officer Crawford at the headquarters of U.S. Army
Japan.

According to the U.S. Department of Defense's budget for fiscal
2008-2009, the U.S. Army plans to upgrade the "Sensitive
Compartmented Information Facility" (SCIF) at Zama. In addition, the
U.S. Army also plans to build a "combat command training center" on
the neighboring premises of Sagami Depot, starting construction work
in March 2009.

However, the government has not provided local communities with
sufficient information about these functional buildup plans.

On Jan. 15, Sagamihara City held a meeting of local residents to
promote the reversion of U.S. military bases. One participant there
voiced concern about a base buildup with no local consent. "I will
strongly request the government to provide information," Sagamihara
Mayor Toshio Kayama said in the meeting.

Meanwhile, there is also something unclear about the new Zama
command.

At first, the Defense Ministry explained that the new command would
be staffed with about 300 personnel. In December last year, however,
the Defense Ministry said the new command would be staffed with
about 90 personnel by September 2008 and that the U.S. Army was
studying what to do about the new command's staffing after that.

The U.S. Army is also planning to deploy 300-400 military vehicles
to Camp Zama and Sagami Depot. However, the Defense Ministry says
the plan has yet to be finalized at this point.

Fort Lewis-where I Corps is headquartered-has sent troops to Iraq
since 2003. There are still several thousand troops in Iraq from
Fort Lewis. With the Iraq war being protracted, I Corps headquarters
is now troubled in its operation before reinforcing its
forward-deployed commands.

Furthermore, there is also something unknown about the new command's
task. The U.S. Department of Defense, in its budget program,
explains that the buildup of U.S. Army Japan is linked to a global
bottom-up review of the U.S. military presence (U.S. military
transformation). Zama is an advance position of the U.S. Army for a
global antiterror preemptive war. This is the Bush administration's
initial goal, and there is no change in this

However, this Bush strategy has fallen through. The future course of
the United States' antiterror war is invisible. There are also
changes in the Korean Peninsula situation, such as dialogue between
the United States and North Korea. Meanwhile, the United States

TOKYO 00000145 014 OF 020


needs to look strong against China, according to a U.S. Army Japan
source.

Japan and the United States are now certain to integrate their
military forces.

"I Corps has done a number of training exercises with the Ground
Self-Defense Force. From now on, we will also be able to develop our
relations with them throughout the year, not only to conduct
training exercises." With this, Jacoby stressed that the U.S. Army
would step up its cooperation with the GSDF's Central Readiness
Command, which will move its headquarters to Zama by fiscal 2012.

(13) It's unrealistic to call SDF troop dispatch based on U.N.
resolution constitutional: Japan's U.N. envoy

AKAHATA (Page 4) (Full)
January 18, 2008

Jiji Press, New York

Japanese Ambassador to the United Nations Yukio Takasu spoke to a
Jiji Press seminar in New York City on Jan. 15. In his speech there,
Takasu indicated that it is unrealistic to conclude that sending
troops from the Self-Defense Forces on an overseas mission-if that
is based on a U.N. Security Council resolution-does not conflict
with the Constitution's Article 9, which prohibits Japan from using
armed force overseas.

Takasu cited peacekeeping operations (PKO) as U.N. activities that
are based on a UNSC resolution. He said, "This includes tasks to be
conducted along with military operations to a considerable extent."
He added, "It is not realistic to say this does not correspond to
the use of armed force stipulated in Article 9.

(14) Deputy Foreign Minister Kono: Focus to be on setting mid-term
goal for greenhouse gas emissions cuts at G8 summit

YOMIURI (Page 4) (Full)
January 18, 2008

The main topics of discussion at the Group of Eight summit that
Japan will host in July in Hokkaido will be such political issues as
the environment, climate change, support for African development,
and nuclear nonproliferation. The global economy will be another
major item on the agenda at the G8 summit. I am sure that
Afghanistan and Pakistan will be taken up as regional issues. Many
prominent figures such as national political leaders and top
business leaders from the world will attend the annual meeting of
the World Economic Forum (WEF or Davos Conference), which will start
on Jan. 23. The participants are wondering what this year's G8 host
country will talk about. Prime Minister Yasuo Fukuda will send
messages responding to their expectations. Japan will kick off the
G-8 summit at the WEF meeting.

On the climate change issue, the highlight of the Summit is how to
set a mid-term goal for cutting greenhouse gas emissions in a
post-Kyoto Protocol international pact. In that regard, the G8
shared the same view in the first Sherpa meeting held this month.
The unprecedented heated discussion was held in the two-day Sherpa
meeting.


TOKYO 00000145 015 OF 020


Until July, Japan wants to link the G8 debate and the America-hosted
conference of major emitters. Linking the two discussions is
important because China is a member of the conference.

The U.S. will host the next meeting of the major emitters in late
January in Honolulu, and it is also expected to hold monthly
meetings. Washington is trying to consider the issue of setting a
mid-term goal in a responsible way.

Although the United Nations is the main venue to discuss climate
change, the Japanese government wants to make the upcoming G8 a
springboard for creating a mid-term goal. If the G8 fails to reach a
consensus, clashes of opinions will become more serious at the UN.
Therefore, Japan assumes a heavy responsibility.

(15) G8 Hokkaido Toyako Summit in 2008: When will G8 leaders arrive
at New Chitose Airport? Hokkaido government in stew over
transportation, measures against aircraft noise

HOKKAIDO SHIMBUN (Page 27) (Full)
January 17, 2008

The Hokkaido government and municipalities affected by the Group of
Eight (G8) industrialized countries summit conference in Lake Toyo,
Hokkaido (G8 Hokkaido Toyako Summit) are fretting about when the G8
leaders will arrive at New Chitose Airport, Hokkaido, and whether
they will arrive late at night or early morning. If they arrive late
at night or early morning, one problem is how to transport them.
Moreover, in order to deal with airplane noise if landing slots from
10:00 p.m. through 07:00 a.m. are set, it is necessary to discuss
the noise issue with local residents. Given the past discussions
between the Hokkaido government and residents on the noise problem,
it is difficult to forecast whether they can reach a conclusion if
they hold discussions.

According to the Hokkaido government's G8 Summit Promotion Bureau,
as of Jan. 16, no information about the schedule showing arrivals
and departures of the G8 leaders has been released by the Ministry
of Foreign Affairs' (MOFA) G8 Summit Preparation Office.

In the case of the 2000 G8 Okinawa Summit, all G8 leaders arrived in
Narita Airport instead of small Naha Airport. So no problem
occurred. But given New Chitose Airport's broad aircraft parking
apron, it is expected that some G8 leaders will directly arrive in
New Chitose Airport, says an official at the Hokkaido government's
Summit Promotion Bureau.

The bureau is consulting with MOFA ways to transport G8 leaders, if
they arrive in the airport daytime, to the area near the G8 Summit
venue Windsor Hotel Toya by carrying them by helicopter from the
airport to Lake Toya. However, no consultations have been held
concerning what to do about arrivals or departures late at night or
early morning. Depending on circumstances, G8 leaders may be asked
to stay one night at a hotel near the airport.

Another major pending question is related to the agreement made with
residents. Regarding arrivals and departures late at night and early
morning in New Chitose Airport, the Hokkaido government and the
governments of Chitose City and Tomakomai City agreed on six
departure-and-arrival slots a day. These slots are always all used
by cargo and passenger planes. The Hokkaido government's G8 Summit
Promotion Bureau said that now is not the right time to hold

TOKYO 00000145 016 OF 020


discussion with residents, but it added that it may seek residents'
understanding toward creating special landing slots.

Residents, however, are nervous that the agreement might be turned a
mere scrap of paper, given that during last year, there were nearly
300 landings after 10:00 p.m. because of equipment trouble and
unseasonable weather. Residents still harbor the ill feeling toward
the Hokkaido government over the question of whether to extend the
airport runway.

Hidenori Niwa, chair of the Uenae Block Association in Tomakomai
City, noted: "In terms of national interests, I feel it necessary
for us to show understanding toward creating special landing slots
if they are necessary. But (the Hokkaido government) tends to ignore
the voices of residents. I hope the Hokkaido government will fully
exchange views with residents so that they can convey their views to
the central government."

In the case of the Okinawa G8 Summit, it was four months before the
G8 Summit that none of the G8 leaders would arrive directly in Naha
Airport. The Hokkaido government's Summit Promotion Bureau noted
that given the need to hold discussion with residents, we need to
know early..., until spring...."

Hotel employees enthusiastic about learning English conversation

Noboribetsu Onsen

The Noboribetsu Grand Hotel (at Noboribetsu Onsen Town in
Noboribetsu City), which has been informally chosen as
accommodations for the U.S. government delegation, offer its
employees an English conversation class.

Since last fall, when the United States inspected the hotel, the
hotel side has held the English conversation class for its 100 or so
employees working at the reception desk and gift shops. After the
hotel was chosen as a facility to accommodate the U.S. delegation,
the English conversation class has focused on practical expressions.
The teacher of the class is Managing Director Yutaka Fukushima, who
has worked for an overseas hotel for eight years.

On Jan. 16, nine employees attended the class, which was held at a
karaoke room in the hotel. In the one-hour class, Fukushima played
the role of a visitor and taught employees how to respond to a
visitor who lost his wallet in a dressing room or how to explain to
a visitor the way to go to Sapporo. Aika Saito (20), who has
attended every class, said with enthusiasm: "I want to study hard
English so that I can respond well to visitors from the United
States." The class will continue just before the start of the G8
Summit.

(16) CIRO employee fired for info leaks

SANKEI (Page1) (Abridged)
January 18, 2008

Chief Cabinet Secretary Nobutaka Machimura took disciplinary action
yesterday under the National Public Service Ethics Law to discharge
a 52-year-old employee of the Cabinet Intelligence and Research
Office (CIRO or Naicho for short) for receiving money from a member
of the staff of the Russian Embassy in Japan in return for providing
information. This is the first disciplinary dismissal of a CIRO

TOKYO 00000145 017 OF 020


employee since the organization was established in 1986. The prime
minister's office (Kantei) has just taken the initiative to enhance
the counterintelligence setup of central government offices. In
addition, the Kantei has also set up a panel to reform the Defense
Ministry in order to secure information in a thoroughgoing way.
However, a government body under the Kantei's control is now
involved in a scandal. The bureaucracy exposed a laxity of moral
fiber from within the government's center.

CIRO, a government organization under the Kantei, has brought about
such an unheard-of scandal. This event greatly shocked the Kantei,
which is particularly nervous about intelligence.

Prime Minister Yasuo Fukuda was apparently upset on Jan. 16 when the
media reported the alleged leakage of information. "This kind of
problem occurred right under my office," Fukuda said later in the
day. "It's very regrettable-out of the question," Fukuda added.
Machimura, meeting the press yesterday, said in a hard tone of
voice: "There was such an event in a government office that must be
most sensitive to intelligence. I don't know what to say to the
people. It's an unforgivable act."

In the past, a diplomat posted to the Japanese Consulate General in
Shanghai committed suicide. In the wake of that incident, the
government set up a counterintelligence promotion panel under the
then Abe cabinet. In August last year, the counterintelligence panel
worked out a basic course of action to enhance the government's
counterintelligence functions.

In April this year, the government set up a body, called the
Counterintelligence Center, under the CIRO. The Counterintelligence
Center is tasked with collecting and analyzing information about
foreign intelligence agencies and their activities. In April next
year, the center is expected to work out guidelines for all
government personnel in order to prevent classified information
about national security and diplomatic affairs from being leaked.

In December last year, after the Fukuda cabinet's inauguration, the
government set up an advisory panel at the Kantei to discuss an
overhaul of the Defense Ministry due to Maritime Self-Defense Force
personnel's leakage of classified information about an Aegis ship
and other scandals. The government was studying measures to step up
information security.

Above all, Machimura lost face with the CIRO scandal. He presided
over the ruling Liberal Democratic Party's project team to
strengthen Japan's intelligence functions before assuming his
current cabinet post. He has emphasized the importance of
intelligence as chief cabinet secretary.

(Corrected copy): Poll on Fukuda cabinet, political parties, MSDF
refueling mission

SANKEI (Page 5) (Full)
January 16, 2008

Questions & Answers

(Note) Figures in parentheses denote the results of the last survey
conducted Nov. 10-11 last year.

Q: Do you support the Fukuda cabinet?

TOKYO 00000145 018 OF 020

Yes 36.6 (41.1)
No 47.3 (40.3)
Don't know (D/K) + Can't say which (CSW) 16.1 (18.6)

Q: Which political party do you support?

Liberal Democratic Party (LDP) 32.1 (32.2)
Democratic Party of Japan (DPJ or Minshuto) 25.0 (26.5)
New Komeito (NK) 4.0 (3.6)
Japanese Communist Party (JCP) 3.5 (3.1)
Social Democratic Party (SDP or Shaminto) 2.1 (2.6)
People's New Party (PNP or Kokumin Shinto) 0.6 (0.7)
New Party Nippon (NPN or Shinto Nippon) 0.3 (0.1)
Other answers (O/A) 0.9 (1.3)
None 30.6 (28.2)
D/K + Can't say (C/S) 0.9 (1.7)

Q: Do you appreciate Prime Minister Fukuda and his government on the
following points?

His personal character
Yes 58.0 (62.3)
No 33.4 (22.6)
D/K+CSW 8.6 (15.1)


His leadership
Yes 24.4 (28.5)
No 62.7 (43.1)
D/K+CSW 12.9 (28.4)

Foreign policy
Yes 30.9
No 48.8
D/K+CSW 20.3

Economic policy
Yes 17.0
No 64.7
D/K+CSW 18.3

North Korea policy
Yes 14.0 (15.5)
No 70.2 (60.3)
D/K+CSW 15.8 (24.2)

Response to Defense Ministry scandals
Yes 17.5 (13.3)
No 73.2 (66.9)
D/K+CSW 9.3 (19.8)

Response to pension issues
Yes 28.0 (31.2)
No 64.0 (53.9)
D/K+CSW 8.0 (14.9)

Response to hepatitis C infections
Yes 74.1 (43.5)
No 20.1 (37.5)
D/K+CSW 5.8 (19.0)


TOKYO 00000145 019 OF 020


Q: What do you think about those listed below in connection with the
newly enacted antiterrorism law intended to resume the Maritime
Self-Defense Force's refueling mission for multinational forces in
the Indian Ocean?

The new antiterror law was enacted
Good 45.1
Questionable 43.8
D/K+CSW 11.1

The Diet took time to deliberate, and the MSDF pulled out
Good 52.5
Questionable 35.2
D/K+CSW 12.3

The opposition-dominated upper chamber took time to deliberate
Good 48.8
Questionable 42.0
D/K+CSW 9.2

The ruling parties took a second vote in the lower chamber with a
majority of two-thirds
Good 39.4
Questionable 48.4
D/K+CSW 12.2

DPJ President Ozawa abstained from voting in the lower chamber's
last plenary sitting
Good 12.1
Questionable 77.0
D/K+CSW 10.9

Q: The ruling coalition holds a majority of the seats in the House
of Representatives, and the opposition bench dominates the House of
Councillors. What do you think about this lopsidedness in the Diet?
Pick only one from among those listed below.

That's good because there's political tension 13.8 (13.9)
The ruling and opposition parties should compromise 40.1 (41.3)
The House of Representatives should be dissolved at an early date
for a general election 43.7 (41.3)
DK+C/S 2.4 (3.5)

Q: Do you support a "grand coalition" of the LDP and the DPJ?

Yes 33.7
No 54.6
D/K+CSW 11.7

Q: The Fukuda cabinet has taken over almost all of the former Abe
cabinet's ministers. Do you think the Fukuda cabinet should be
shuffled substantially at an early date?

Yes 44.0 (41.1)
No 51.1 (49.2)
D/K+CSW 4.9 (9.7)

Q: When would you like the House of Representatives to hold its next
election?

During the first half of this year 23.6 (35.8)
After this July's G-8 summit in Japan and during the latter half of

TOKYO 00000145 020 OF 020


this year 45.9 (29.9)
Upon the current term's expiry or early next year 29.0 (19.9)
D/K+C/S 1.5 (4.8)

Q: Which political party's candidate would you like to vote for in
the next election for the House of Representatives?

LDP 34.4
DPJ 33.9
NK 4.1
JCP 3.9
SDP 2.6
PNP 0.5
NPN 0.3
O/A 9.2
D/K+C/S 11.1


Q: What form of government would you like to see after the next
election for the House of Representatives?

LDP-led coalition government 28.5 (29.7)
DPJ-led coalition government 32.5 (32.1)
LDP-DPJ grand coalition 34.4 (29.3)
D/K+C/S 4.6 (8.9)

Q: How long do you think the Fukuda government will continue?

Until around the next election for the House of Representatives 46.7
(56.2)
Until the fall of next year 34.0 (21.9)
Continue until after the fall of next year 15.8 (10.3)
D/K+C/S 3.5 (6.9)

Q: A gasoline tax law is due to expire this spring. What do you
think about this?

Extend the gasoline tax for local traffic networks 28.6
Abolish the gasoline tax in view of rising oil prices and other
circumstances 66.2
D/K+C/S 5.2

Polling methodology: The survey was conducted Jan. 13-14 by the
Sankei Shimbun and Fuji News Network (FNN) over the telephone on a
computer-aided random digit dialing (RDD) basis. For the survey, a
total of 1,000 persons were sampled from among males and females,
aged 20 and over, across the nation.

DONOVAN

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