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Cablegate: Japanese Morning Press Highlights 01//08

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WHITE HOUSE/NSC/NEC; JUSTICE FOR STU CHEMTOB IN ANTI-TRUST DIVISION;
TREASURY/OASIA/IMI/JAPAN; DEPT PASS USTR/PUBLIC AFFAIRS OFFICE;
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FAS/ITP FOR SCHROETER; PACOM HONOLULU FOR PUBLIC DIPLOMACY ADVISOR;
CINCPAC FLT/PA/ COMNAVFORJAPAN/PA.

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TAGS: OIIP KMDR KPAO PGOV PINR ECON ELAB JA

SUBJECT: JAPANESE MORNING PRESS HIGHLIGHTS 01//08


Index:

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

Diet agenda:
4) Ruling camp pulls back bridging bill on temporary tax, having
reached agreement with opposition to resolve tax budget issue by end
of fiscal year (Nikkei)
5) Brief truce between the ruling and opposition camps allows Diet
deliberations to return to normalcy (Tokyo Shimbun)
6) Fukuda administration avoids "March crisis": Markets appreciate
agreement between ruling and opposition camps on tax bill issue
(Yomiuri)
7) Former LDP Secretary General Hidenao Nakagawa: No chance now of
Diet dissolution in April (Mainichi)

Economic affairs:
8) After 8-year hiatus, Japan will host G7 meeting of finance
ministers and central governors Feb. 9 in Tokyo (Yomiuri)
9) G7 agenda to include global financial unrest, with Japan, U.S.,
Britain announcing environment fund (Yomiuri)
10) Japan, U.S. Britain working to ready a fund to help development
countries counter greenhouse-gas emissions (Asahi)

11) Muto slated to be the next governor of the Bank of Japan
(Mainichi)
12) Four of Japan's major banks suffer subprime loan-related losses
totaling 500 billion yen (Nikkei)
13) Private sector members of government's fiscal and economic
policy panel request front-loading of growth-strategy measures,
given current environment (Asahi)
14) Prime Minister Fukuda asks panel of experts to flesh out
proposed consumer administration agency (Nikkei)
15) Government plans infrastructure-building package of yen loans to
support Africa's development of an industrial base (Sankei)

16) China's foreign minister to visit Japan in March (Mainichi)

17) Defense Ministry as part of reorganized procurement system will
strengthen checks on cost of imported equipment (Nikkei)

18) Japanese, Australian foreign ministers to meet to try to iron
out differences on whaling issues (Mainichi)

Articles:

1) TOP HEADLINES

Asahi: Mainichi: Sankei: Tokyo Shimbun:
Ten suffer food poisoning from Chinese dumplings: Pesticide residue
to blame? Three made seriously ill; JT-affiliate recalls 23 items

Yomiuri:
Tax-related bills likely to secure Diet approval before end of this
fiscal year: Stopgap bill withdrawn

Nikkei:
Provisional gasoline tax rate: Ruling parties withdraw stopgap bill
following agreement with opposition camp to reach conclusion within
current fiscal year

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Akahata:
Ruling, opposition parties agree on withdrawal of stopgap bill,
accepting mediation by Lower House speaker, Upper House president

2) EDITORIALS

Asahi:
(1) Ruling, opposition parties agree on provisional gasoline tax
bill: Real discussion has yet to start
(2) Asahi, Nikkei Yomiuri to launch joint Japanese-language Web
site, Aratanisu: We want readers to see differences in opinions of
three leading dailies

Mainichi:
(1) Ruling, opposition parties reach agreement on gasoline tax bill:
First step toward responsible Diet
(2) Iwakuni mayoral election will question government's base
administration

Yomiuri:
(1) Mediation by Lower House speaker, Upper House president: DPJ
should hold vote on provisional gasoline tax bill within this fiscal
year
(2) Social security council: Consumption tax rate is central issue
of discussion

Nikkei:
(1) Drastically reform special-purpose road construction revenue
system, making best use of mediation by Lower House speaker, Upper
House president
(2) European countries should strengthen ties to stabilize financial
system

Sankei:
(1) Stopgap gas tax bill: Establish principles of divided Diet
(2) Chinese dumplings: Thoroughly examine how poisoning happened and
come up with preventive measures

Tokyo Shimbun:
(1) Stopgap bills killed: What was the furor about?
(2) Revision of system of reimbursement of medical fees to hospitals
under medical insurance system: Too much consideration given to
Japan Medical Association

Akahata:
(1) Stop mergers and abolition of public hospitals to protect
people's lives

3) Prime Minister's Official Residence (Kantei)

Prime Minister's schedule, January 30, 2008

NIKKEI (Page 2) (Full)
January 31, 2008

08:43
Met Secretary General Ibuki at the Kantei.

12:24
Met Deputy Chief Cabinet Secretary Futahashi at the Kantei.


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14:23
Met Lower House member Sanae Takaichi. Later, met LDP research
commission on consumer issues chairman Noda, executive secretary
Gotoda, and others, joined by Chief Cabinet Secretary Machimura.

15:44
Met Science and Technology Minister Kishida, Council for Science and
Technology Policy member Masuo Aizawa, and others. Kishida stayed
behind.

16:29
Met Economic and Fiscal Policy Minister Ota and others, joined by
Assistant Deputy Chief Cabinet Secretary Saka. Ota stayed behind.

17:10
Met cabinet office's special advisor Okuda.

18:00
Attended a meeting of the Council for Science and Technology Policy.
Later, met Beijing University Professor Yu Dan, with Upper House
member Hiroyuki Arakawa present.

19:27
Returned to his official residence.

4) Stopgap bill withdrawn

NIKKEI (Top play) (Abridged)
January 31, 2008

The ruling and opposition parties agreed yesterday to reach a
"certain conclusion" within the current fiscal year on how to handle
the rate of provisional taxation on gasoline and other road-related
tax revenues. The two blocs in the Diet will now try to find common
ground over the provisional gas tax rate as encouraged by the
leaders of the two Diet chambers. A bill revising the Special
Taxation Measures Law to retain the provisional gas tax rate will
clear the Diet within the current fiscal year, and the tax rate is
highly likely to be extended beyond its March 31 expiry. The
governing parties therefore see no need for their lawmaker-sponsored
gas tax stopgap bill submitted to the Diet in an aim to extend the
temporary gas tax rate until the end of May. The ruling coalition
will withdraw the bill today.

The ruling coalition of the Liberal Democratic Party and New Komeito
had threatened to push through the stopgap bill yesterday in the
House of Representatives. Even if the House of Councillors refused
to act, the ruling parties could have taken a second vote on it in
the House of Representatives within 60 days-just before the current
fiscal year ends-to extend the temporary gas tax rate up to the end
of May. The ruling parties had intended to extend the tax rate
beyond its March 31 expiry.

However, it is also true that a fierce fight between the ruling and
opposition parties was about to brew in the Diet and that the ruling
and opposition parties feared public criticism. As a result, the
ruling and opposition blocs apparently thought twice and chose to
talk with each other right before taking a vote in a plenary sitting
of the Diet's lower chamber.

The leaders of the Diet's lower and upper chambers yesterday met
with representatives from the ruling and opposition parties and

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encouraged them to talk. Premised on this compromise proposal from
the two top Diet leaders, the ruling and opposition parties agreed
to reach a conclusion within the current fiscal year on how to
handle the bill revising the Special Taxation Measures Law.

House of Representatives Speaker Yohei Kono met with secretaries
general from the ruling and opposition parties. In the meeting, Kono
said, "Reaching a certain conclusion means following the past
practice of examining the budget and revenue bills in both houses of
the Diet." After the meeting, Kono and House of Councillors
President Satsuki Eda met the press and stated that reaching a
conclusion is for the House of Councillors to decide on whether or
not to approve of it within the current fiscal year. Within the
current fiscal year, the House of Representatives can take a second
vote with a majority of two-thirds even if the House of Councillors
votes down the bill revising the Special Taxation Measures Law and
other legislative measures. The ruling coalition therefore can
prevent the provisional tax rate from expiring without a bridging
measure.

5) Ruling and opposition camps call truce for the moment, allowing
budget deliberations to return to normal; Next hurdle will be the
appointment of Bank of Japan governor

TOKYO SHIMBUN (Page 2) (Excerpts)
January 31, 2008

With the ruling parties' withdrawal of the bridging bill that would
have extended briefly the rate of the provisional taxes (including
the gasoline tax), the Diet today will return to normal, with
interpellations in the Upper House Budget Committee of the fiscal
2007 supplementary budget bill. The battle between the ruling and
opposition camps over the special measures revision bill on taxes
that includes the provision tax rates has only been put off, but for
the time being, it appears that budget bill deliberations will
proceed smoothly.

On the other hand, apart from budget deliberations, the issue of
appointing a successor to Bank of Japan Governor Toshihiko Fukui,
whose term comes to an end in March, will reach a climax in late
February. Appointments of this nature require the approval of the
Upper House. For the government, obtaining such approval will be "a
difficult case," as Chief Cabinet Secretary Machimura has said.

6) Fukuda administration averts "March crisis," receives praise from
market for agreement between ruling and opposition blocs

YOMIURI (Page 2) (Abridged)
January 31, 2008

The battle between the ruling and opposition parties over the
provisional tax rate for gasoline was brought to a conclusion
yesterday by the good offices of the Lower House speaker and the
Upper House president. The Diet will return to normal today. Now
that a "March crisis" for the Fukuda administration is most likely
to be averted, some in the ruling and opposition blocs indicate that
dissolution of the Lower House for a snap general election will not
occur before the Group of Eight summit in Lake Toya, Hokkaido in
July (G8 Toyako Summit).

Diet will return to normal


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With the avoidance of a full showdown between the ruling and
opposition parties, the Upper House will today hold a
question-and-answer session to discuss the fiscal 2007 supplementary
budget bill. The ruling bloc is becoming hopeful that debate on the
fiscal 2008 budget bill, too, which is expected to be discussed from
early February, will go smoothly.

The number of bills the government plans to submit to the current
Diet session totals 78. Given the lopsided Diet where the ruling
bloc controls the Lower House but the Upper House is under the
opposition bloc's control, the government has reduced the number of
bills to introduce in the Diet.

Except for the tax system-related bills, major bills are limited,
for instance, a basic reform bill for the national government
employees system (tentative name). Some outstanding problems, such
as the inaccurate records of pension premium payments, still remain
to be resolved, but a senior member of the ruling Liberal Democratic
Party (LDP) commented: "The administration appears to be able to
avoid a crisis until the G8 summit."

As for the selection of a successor to Bank of Japan Governor Fukui,
which requires approval from the Diet, the government is likely to
recommend someone sometime in February.

Debate on revisions

Following the agreement reached yesterday between the ruling and
opposition parties, the focus of debate in the Diet will now shift
to how to modify the tax system-related bills.

The major opposition Democratic Party of Japan (DPJ) is gearing up
to continue to call on the government to lower the additional
portion (25 yen) of the gasoline tax and incorporate the tax
revenues for road projects into general revenues.

DPJ President Ozawa, speaking of the provisional tax rate for
gasoline at a meeting yesterday of his party's general meeting of
the Lower and Upper House Caucus members, stressed: "(Lowering the
tax rate) would mean a tax cut for the general public."

A senior DPJ member gave this explanation about Ozawa's remarks: "A
number of ideas are conceivable, for instance, lowering the
additional portion by 20 yen instead of 25 yen. Revising would help
the ruling parties, and on our part, as well, we can appeal to the
public that we could lower the rate."

Japan can retain credibility

With the agreement reached yesterday between the ruling and
opposition parties on the provisional tax rate for gasoline, it is
highly likely that the expiration of that tax rate at the end of
March will be averted. Confusion in the public's daily lives
accordingly can be expected to be avoided.

Regarding the bill revising the Special Taxation Measures Law, which
at one point seemed unlikely to be adopted before the end of this
fiscal year, it contains an extension of the term of All Savers for
the offshore market where banking institutions procure funds abroad
and invest them abroad.

Speaking of the agreement between the ruling and opposition blocs,

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Takahide Kiuchi, a chief economist at Nomura Securities, said:
"There was the fear that if the tax rate expired, the image of the
Japanese market would worsen and that the flow of money from abroad
to Japan could stop. We appreciate the settlement this time, in
addition to an outlook that the budget bill will be approved by the
end of this fiscal year."

7) Former LDP Secretary General Nakagawa: No chance the Lower House
will be dissolved in April

MAINICHI (Page 5) (Full)
January 31, 2008

Hidenao Nakagawa, former secretary general of the ruling Liberal
Democratic Party (LDP), delivered a speech at a Mainichi
Shimbun-sponsored forum in Fukuoka. In it, Nakagawa stated:

"The Democratic Party of Japan (DPJ or Minshuto) has said that it
will force the Prime Minister to dissolve the House of
Representatives to call a snap election in April. But it is a lax
way of thinking. Prime Minister Fukuda will never carry out such
Lower House dissolution."

Referring also to the result of Sunday's Osaka gubernatorial
election, in which Toru Hashimoto, whom the LDP Osaka chapter
recommended, defeated the candidates backed by opposition parties,
Nakagawa emphasized: "The DPJ should consider this the most recent
will of the people."

8) Focus of attention in Tokyo G-7 likely on strengthening
restrictions on rating of financial products

YOMIURI (Page 9) (Slightly abridged)
January 31, 2008

A meeting of Group of Seven (G-7) finance ministers and central bank
governors will be held on Feb. 9 for the first time in Tokyo in
eight years. Given that the global economy was sustaining stable
growth in recent years, the G-7 has been drawing little attention.
But the upcoming session in Tokyo will be held when financial
markets across the world are volatile, triggered by the U.S.
subprime mortgage crisis. World market players are closely watching
what prescriptions the G-7 will present to deal with the subprime
problem.

Finance Minister Nukaga, who will chair the G-7 in Tokyo, emphasized
in a meeting of the House of Representatives Budget Committee on
Jan. 28: "We must send a message to stabilize global markets and
economies."

Prior to the meeting, the top leaders of four European countries
urgently met on Jan. 29. This is quite unusual, showing their great
expectations on the Tokyo G-7.

The subprime mortgage crisis originated in the U.S., and even
leading financial institutions in Europe suffered huge losses. Since
Japanese financial firms' losses are smaller than those in the U.S.
and Europe, Nukaga, as the chair, will be required to play a
mediatory role to iron out differences in their views.

Difference in views


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When it comes to discussion on specifics, however, it will not be
easy to iron out differences. For instance, the focus of attention
in the summit of four European countries was on ways of credit
rating for financial products. In Europe, many analysts attribute
the stock market volatility to rating agencies. They claim that
agencies gave higher ratings to subprime loan-related products than
their actual status and then lowered the rankings when the problem
occurred, resulting in accelerating the market turmoil. A joint
statement issued after the four-party summit also noted that the
four European countries were ready to strengthen their regulations
on rating agencies if such firms are found to have not fully
disclosed information.

But major ranking agencies are mainly in the U.S. A U.S. financial
authority said: "We are negative about new regulations on rating
agencies. As it stands, there is a wide gap in views of Europe and
the U.S.

The reinforcement of regulations on rating agencies is likely to be
high on the agenda in the Tokyo G-7.

Coordination with emerging countries

Such emerging countries in East Asia as China and South Korea will
also be invited to the Tokyo G-7. Reflecting the rise in the status
of emerging powerhouses, the turmoil in the emerging markets,
triggered by the subprime problem, will also have a negative effect
on the Japanese, U.S. and European markets. As the U.S. and Europe
have been calling on China to devalue its currency yuan, there is
also the issue of the yuan. How to untangle such complicated
problems facing the world is likely to be another challenge for the
coming G-7 in Tokyo.

9) Financial anxieties to top agenda of G-7 agenda: Japan, U.S.,
Britain to propose environment fund

YOMIURI (Page 2) (Full)
January 31, 2008

The outline of topics of discussion at a meeting of finance
ministers and central bank governors from the Group of Seven nations
(G-7) to be held in Tokyo on February 9 was revealed yesterday. The
main theme of the meeting is how to deal with uncertainties in the
international financial market, including global stock plunges
stemming from the subprime loan crisis. Participants will confer on
ways to strengthen the financial supervisory system of their nations
and how international rating firms, which have been pointed out as
one factor that has caused the subprime loan crisis, should operate
in rating credit.

The last G-7 hosted by Japan was held in January 2000. The meeting
will become a venue for promoting cooperation on international
financial affairs in the run-up to the Lake Toya Summit (G-8) in
Hokkaido in July. The G-7 will also focus on environmental issues,
which will take the center-stage of the G-8. Japan, the U.S. and
Britain will propose setting up a fund to finance expenses for the
transfers of environmental technologies from industrialized
countries to developing countries.

10) Japan, U.S., Britain gearing up for establishing anti-global
warming fund; World Bank likely to play major role


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ASAHI (Page 11) (Excerpts)
January 31, 2008

There is growing momentum in Japan, the United States, and Britain
to establish an international fund with the aim of introducing clean
energy in developing countries as a global warming countermeasure.
The plan seems to be high on the agenda of the G7 finance ministers
and central bank governors meeting to be held in Tokyo on Feb. 9.

On Jan. 28, U.S. President George W. Bush unveiled a plan to inject
2 billion dollars (approximately 200 billion yen) in what is called
the International Clean Energy Technology Fund. Prime Minister Yasuo
Fukuda, too, indicated on Jan. 26 that Japan will aim at
establishing a fund to disseminate environmental technology across
the world. Britain also plans to contribute hundreds of millions of
pounds. A senior U.S. Treasury Department official expressed
eagerness on Jan. 29 for establishing the fund before the end of the
year.

Greenhouse gas emissions by developing countries are expected to
increase sharply due to their economic growth. "There have been many
cases in which advanced clean technology was not used due to a lack
of funds," a U.S. Treasury Department official noted. According to
an estimate, a shortfall of funds for developing counties total over
30 billon dollars (approximately 3 trillion yen).

The dominant plan is to determine how the fund should be used
centering on the World Bank. The plan is to extend grant aid or
low-interest-rate loans to developing countries that want to import
clean technology in power generation, transport, and production. The
three countries are also considering a framework allowing the fund
contributor to determine projects and its recipient while preserving
bilateral nature. In order to encourage the self-help efforts of
developing counties, there is a plan to let receiving countries to
make due contributions to the fund.

11) Muto to become BOJ governor; DPJ likely to endorse his
promotion

MAINICHI (Page 1) (Excerpts)
January 31, 2008

Final coordination is likely to be made to replace outgoing Bank of
Japan Governor Toshihiko Fukui, 72, whose term expires on March 19,
with BOJ Vice-Governor Toshiro Muto, 64. Amid growing economic
concerns, the government and ruling parties have decided that Muto,
who has been responsible for financial policy over the last five
years as BOJ vice governor, is fit for the job. They are expected to
propose Muto's appointment shortly to the Democratic Party of Japan
and other opposition parties. The DPJ is expected to endorse the
promotion of Muto, who is not only well-versed in financial policy
but also has strong communication channels to the political and
bureaucratic worlds.

Muto entered the former Finance Ministry after graduating from the
University of Tokyo in 1966. Left the ministry in January 2003 after
serving as administrative vice-finance minister; serving as BOJ vice
governor since March 2003.

12) Subprime losses at 4 major banks expected to total 500 billion
yen


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NIKKEI (Page 1) (Excerpts)
January 31, 2008

Japanese banks' losses related to U.S. subprime loan mortgages to
low-income earners are increasing. Losses suffered by four banks of
the six major banking groups are estimated to total 500 billion yen
for the period ending March 31, 2008, due to a drop in value of
securitized products. It will be an increase of 70 PERCENT from the
300 billion yen posted on the September interim report, announced in
November 2007.

The four banks are Mizuho Financial Group Inc., Sumitomo Mitsui
Financial Group Inc., Mitsubishi UFJ Financial Group Inc., and
Sumitomo Trust & Banking Co. Mizuho and Mitsubishi UFJ will release
their April-December 2007 business performance on Jan. 31.

Japanese banks invested primarily in highly rated securitized
products. But ratings downgrades have cast a pall over the market,
with prices plunging since November. The resulting turmoil has
adversely affected other market segments not directly tied to these
mortgages.

The losses suffered by the four banks are expected to reach a little
less than 30 PERCENT of the consolidated net profit (1.9 trillion
yen) for the current business period.

Mitsubishi UFJ is expected to report roughly 50 billion yen in
subprime-related losses for the nine months ended Dec. 31. The
figure could grow to some 90 billon yen for the full year through
March.

The banking group logged 4 billion yen in such losses in the
April-September half. In addition to 23 billion yen in valuation
losses as of Oct. 31, the downgrade of an investment vehicle, in
which the company invested 80 billion yen, is seen widening losses
by tens of billions of yen.

Mizuho Securities Co.'s losses from related securitized products
have also increased. Mizuho Corporate Bank faces several tens of
billions of yen in losses from its leveraged buyout financing
operations in Europe. Group-wide subprime losses had been estimated
at 170 billion yen for fiscal 2007, but the figure could hit 300
billion yen.

Sumitomo Trust yesterday reported 29.9 billion yen in related losses
for the April-December period, up from 9 billion yen in the fiscal
half year that ended Sept. 30. SMFG booked 99 billion yen in such
losses over the same nine months. The figure had been estimated at
87 billion yen in November 2007.

13) CEFP private-sector members call for speeding up implementation
of growth strategy to deal with deteriorating economic environment

ASAHI (Page 11) (Full)
January 31, 2008

Asahi Shimbun has learned that private-sector members of the
government's Council on Economic and Fiscal Policy (CEFP) are
calling on the Fukuda administration to speed up the implementation
of its economic growth strategy. They will make this proposal at a
CEFP meeting today. The administration plans to compile the
envisaged growth strategy in the spring. However, those CEFP members

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have determined that the government needs to speed up the process
due to the sea change in the economic situation triggered by the
supbrime loan crisis. As part of such efforts, they will urge
concerned government agencies to tackle the issue, by listing
specific measures they can implement before the spring.

Their targets include improving child-rearing services incorporated
in the strategy to eliminate waiting lists for nursery schools,
which Prime Minister Fukuda proposed in his policy speech, and
boosting productivity of the services industry and small- and
medium-sized businesses. The Financial Services Agency is aiming at
implementing a financial and capital market competitiveness
strengthening plan by the first half of 2009. Of proposals
incorporated in that plan, private-sector members are calling for
the implementation by this spring of the diversification of
exchange-traded funds and inclusion of overseas real estate in real
estate investment trust funds.

In addition, they have also pointed out proposals that should be
immediately tackled once the growth strategy is mapped out. Such
proposals include revising the way each company employee contributes
premiums under the defined-contribution pension plan system,
consolidating the environment for an increase in inward foreign
direct investment, including a revision of takeover rules, and
promoting the use of landing and departure slots late at night and
early in the morning at Haneda Airport.

14) Fukuda to set up expert panel to give specificity to plan for
new consumer administrative body

NIKKEI (Page 2) (Excerpt)
January 31, 2008

Prime Minister Yasuo Fukuda revealed his plan yesterday to set up in
the Prime Minister's Office (Kantei) an expert panel tasked with
discussing specifics of a new body to integrate administrative
functions. He announced this idea in his policy speech on Jan. 18.
Administrative functions are now split among various government
offices, so they are expected to put up resistance. Given this, the
prime minister judged it necessary to push ahead with the plan under
the lead of the Kantei. He apparently is aiming to underscore his
stance of giving priority to consumers.

15) Japan to back industrial development in Africa; Infrastructure
construction planned by yen loans

SANKEI (Page 3) (Abridged)
January 31, 2008

Japan will use yen loans under its official development assistance
(ODA) in order to launch a new program of industrial development
assistance to Africa. The government will announce a package of
measures to increase assistance to Africa at the upcoming fourth
Tokyo International Conference on African Development (TICAD) in
Yokohama City in May. In an effort to put the economy on a growth
track so as to reduce poverty, Japan aims to raise the general
economic level of African countries by constructing socioeconomic
infrastructure, an area Japan is good at.

As a centerpiece of the package, the government is considering
providing 10 billion yen in yen loans for repair and expansion of
the international highway Nacala Corridor that links Africa's

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southeastern country Mozambique to Malawi and Zambia. The Japan Bank
for International Cooperation (JBIC) will hold a seminar for
government officials in Mozambique's capital city of Maputo on Feb.
19 for the purpose of industrial development by using the corridor.

In addition to assistance in the area of road construction, Japan
will also provide know-how necessary to invite private firms, for
instance, construction of a comprehensive distribution network that
will link between the corridor and the distribution base Nacala
Port, establishment of a special economic zone and an industrial
park, and improvement of the tax system.

The seminar will be joined also by Vietnamese government officials
and its industrial park-affiliated officials so that the experience
obtained from assistance to the construction of the East-West
Corridor that spans the countries in the Mekong River area (Vietnam,
Laos, Thailand, and Myanmar (Burma)) will be made well use of.

Last year Japan decided to provide 26.7 billion yen in yen loans to
Africa for a port development project at Mombasa Port in Kenya and
has assisted the project in the construction of infrastructure. A
plan being floated now is to rehabilitate another international
highway besides the Nacala Corridor.

Japan is advancing a strategic use of ODA, but its expansion of aid
to Africa is also aimed at gaining support for its bid for a
permanent seat on the United Nations Security, as well as bringing
about a stable supply of strategic materials, such as rare metals.

16) Coordination underway for visit to Japan by Chinese foreign
minister in March

MAINICHI (Page 5) (Full)
January 31, 2008

The Japanese and Chinese governments have launched coordination a
visit to Japan by Chinese Foreign Minister Yang Jiechi in mid-March
after the annual session of the National People's Congress. In a
meeting with Foreign Minister Masahiko Koumura, Yang is expected to
finalize the visit to Japan in the spring by President Hu Jintao, as
well as to hold last-ditch negotiations to settle the dispute over
exploration rights in the East China Sea gas fields. Prior to Yang's
trip to Tokyo, Chinese State Councilor Tang Jiaxuan is expected to
come to Tokyo probably on Feb. 20 to meet with Prime Minister Yasuo
Fukuda and Koumura.

In the Japan-China summit in late last year, President Hu agreed to
visit Japan around cherry-blossom time. The two governments have
agreed to achieve an early resolution to the gas exploration issue.
The planned visits to Japan by influential Chinese government
officials appear to be an indication that the Chinese government has
placed importance on the 30th anniversary of the Japan-China
Friendship Treaty.

17) Defense Ministry to tighten checks of imported equipment prices

NIKKEI (Page 2) (Full)
January 31, 2008

The Defense Ministry's project team tasked with studying the
procurement of defense equipment yesterday released a package of
measures to ensure fair procurement prices for equipment imported

TOKYO 00000250 012 OF 012

SUBJECT: JAPANESE MORNING PRESS HIGHLIGHTS 01//08

through trading companies. The package includes a measure to add a
new provision to Defense Ministry contracts with trading firms that
would have the ministry directly ask foreign equipment manufacturers
for estimates. As another measure to strengthen the ministry's
oversight, the package also proposes that trading firms be asked to
present the prices of products and costs for technical support
separately. The package also incorporates measures to beef up
sanctions against padded bills.

18) Japanese-Australian foreign ministerial occurs today; Research
whaling may become diplomatic issue; Cautious view in government
prior to G8 summit

MAINICHI (Page 5) (Full)
January 31, 2008

There is a possibility that Japan's research whaling in the Southern
Ocean will turn into a serous diplomatic issue with Australia. The
expectation is that the whaling issue will be on the agenda in a
meeting of Foreign Minister Masahiko Koumura and his Australian
counterpart Stephen Smith, who will arrive in Tokyo today.
Environmental activists from Australia and other countries have
attempted to disrupt Japan's research whaling. It is difficult to
find a breakthrough strategy because of cultural differences.

Prime Minister Yasuo Fukuda criticized antiwhaling protests by
environmental groups in a plenary session on Jan. 23 of the House of
Councillors: He stated: "Research whaling is a legal activity on the
high seas. Interference endangers those involved, and it is an
unforgivable and illegal act."

Komura, who held talks on Jan. 22 with Australian Trade Minister
Simon Crean, underscored: "An agreement has been reached on the
point that efforts should be made so that the issue will not have a
negative impact on a relationship between the two countries."
However since U.S. and European media have repeatedly broadcasted
the video images showing bleeding whales, Japanese embassies
overseas and the Fisheries Agency have received a spate of
protests.

Of the membership of 78 countries of the International Whaling
Commission (IWC), 42 are against whaling and 36 favor it. Japan has
made efforts to expand support for whaling. The Japanese government
plans to seek an IWC interim meeting in March for calm discussion,
not emotional argument, which will lead to resource management based
on scientific data, according to a senior Foreign Ministry official.


With the Group of Eight summit at Lake Toya in Hokkaido coming up in
July, however, there is a view in the government that since major
countries consider whales a symbol of environmental protection, the
national interests Japan will lose are too serious, compared to the
merits of keeping whaling culture.

SCHIEFFER

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