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Cablegate: Japanese Morning Press Highlights 01//08

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UNCLAS SECTION 01 OF 13 TOKYO 000278

SIPDIS

SIPDIS

DEPT FOR E, P, EB, EAP/J, EAP/P, EAP/PD, PA;
WHITE HOUSE/NSC/NEC; JUSTICE FOR STU CHEMTOB IN ANTI-TRUST DIVISION;
TREASURY/OASIA/IMI/JAPAN; DEPT PASS USTR/PUBLIC AFFAIRS OFFICE;
SECDEF FOR JCS-J-5/JAPAN,
DASD/ISA/EAPR/JAPAN; DEPT PASS ELECTRONICALLY TO USDA
FAS/ITP FOR SCHROETER; PACOM HONOLULU FOR PUBLIC DIPLOMACY ADVISOR;
CINCPAC FLT/PA/ COMNAVFORJAPAN/PA.

E.O. 12958: N/A
TAGS: OIIP KMDR KPAO PGOV PINR ECON ELAB JA

SUBJECT: JAPANESE MORNING PRESS HIGHLIGHTS 01//08


Index:

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

Defense and security affairs:
4) Refueling mission: Government exchanges of notes with U.S., other
countries operating in Indian Ocean ban diversion of fuel for other
purposes (Asahi)
5) Heated mayoralty race in Iwakuni City centered on issue of
relocation of U.S. Navy carrier-based jets to local base (Mainichi)

6) Road revenue resources being tapped to build U.S. armed forces'
housing at Sasebo for 2.5 million yen per unit (Akahata)
7) Defense ministry firms up new equipment procurement system that
would allow direct purchases (Mainichi)
8) Ruling parties ready to launch project team to prepare permanent
SDF dispatch legislation (Sankei)

9) Prime Minister takes lead in "Killer dumpling" issue (Nikkei)

10) Four African countries picked as candidates to first $10 billion
tranche of Japan's environmental aid program (Tokyo Shimbun)

11) Joint gas-field development scheme between Japan, China would
split the benefits down the middle (Nikkei)

12) Japanese police authorities ready to file charges against those
who impede research whaling, including two incidents last year when
crewmen were hurt (Sankei)

13) Russia plans to invest fund money into Japanese stocks
(Nikkei)

Diet affairs:
14) Supplementary budget bill to pass the Diet on Feb. 6 (Nikkei)

15) Early dissolution of the Diet becoming unlikely as both camps
are yet unprepared to run a full slate of Lower House candidates
(Nikkei)
16) Democratic Party of Japan's Naoto Kan on TV takes positive view
about revising parts of controversial bill (Sankei)

Articles:

1) TOP HEADLINES

Asahi: Mainichi: Yomiuri: Sankei: Tokyo Shimbun
Poisoning from Chinese gyoza dumplings: Pesticide residues found
from six more packets manufactured same day when one caused
poisoning in Hyogo; Hole found in one packet

Nikkei:
Japan-China joint gas field development in East China Sea:
Governments of both countries to aim at reaching agreement to divide
total profits equally, in principle

Akahata:
Special-purpose road construction revenues: Mid-term plan worth 59
trillion yen: Policy Committee Chairman Koike calls for using road
funds for other purposes

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2) EDITORIALS

Asahi:
(1) Mechanism of protecting nursing-care givers as well: Proposals
for hopeful society; Attractive workplace to attract nursing-car
givers; Reciprocal support, by having more young people contribute
to nursing-care insurance

Mainichi:
(1) We want to see next-generation communications network lead to
shoring up Japan
(2) Births by surrogate mothers: Collecting data is not only
challenge by editorial member Yuri Aono

Yomiuri:
(1) Reform of public servant system: Bureaucratic society must be
revitalized
(2) Return of democratic government in Thailand: Can new
administration restore stability?

Nikkei:
(1) Do not miss opportunity to take part in fierce competition for
international standard

Sankei:
(1) Proposals for public servant system question prime minister's
seriousness
(2) New type of flu is challenge that is equally difficult to
anti-terror measures

Tokyo Shimbun:
(1) Reform of public servant system: Watered-down bill unacceptable
(2) Who is job card system for?

Akahata:
(1) Going ahead with medical services system for elderly patients
aged over 75 in April impermissible

3) Prime Minister's Official Residence (Kantei)

Prime Minister's schedule, February 1

NIKKEI (Page 2) (Full)
February 2, 2008

09:01
Attended a cabinet meeting in the Diet building. Foreign Minister
Koumura stayed behind.

09:56
Met METI Vice Minister Kitabata at the Kantei.

10:40
Met Assistant Deputy Chief Cabinet Secretary Saka. Followed by Vice
Foreign Minister Yabunaka. Later, met Australian Foreign Minister
Smith.

11:28
Met Lower House members Taku Yamasaki and Koichi Kato. Followed by
Deputy Chief Cabinet Secretary Futahashi.


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14:29
Met Futahashi. Later, met Saka, Cabinet Office People's Livelihood
Bureau Director General Nishi, Agriculture Ministry Consumers Safety
Bureau Director General Sato, Foreign Ministry Asian and Oceanian
Affairs Bureau Director General Saiki, and others.

15:56
Met Cabinet Intelligence Director Mitani. Then met Policy Research
Council Chairman Tanigaki, head of the LDP emergency headquarters on
safety of imported food, and others. Followed by Vice Minister of
Finance for International Affairs Shinohara.

17:21
Met New Komeito Deputy President Hamayotsu and Prop Station
President Nami Takenaka.

18:17
Met LDP Reform Promotion Headquarters Head Takebe.

19:22
Met Futahashi at his official residence.

Prime Minister's schedule, February 2

NIKKEI (Page 2) (Full)
February 3, 2008

10:04
Arrived at his private residence in Nozawa.

17:42
Dined at an Italian restaurant in Minami-Aoyama with his wife,
Kiyoko, and his secretary.

19:27
Returned to his official residence.

Prime Minister's schedule, February 3

NIKKEI (Page 2) (Full)
February 4, 2008

Spent all day at his official residence

4) Japan to exchange notes with U.S., other countries on 'no fuel
diversion'

ASAHI (Page 1) (Full)
February 3, 2008

Japan will now resume the Maritime Self-Defense Force's refueling
activities in the Indian Ocean, and the government will exchange
official notes with foreign countries under a newly enacted special
measures law for the MSDF's refueling support. MSDF fuel provided
under an old special measures law was allegedly used for other
purposes, so the official note expressly stipulates that the MSDF's
fuel supply is limited to use for maritime interdiction operations
that are intended to prevent weaponry and drug trafficking. Japan
has already agreed with the United States, Britain, France, and
Pakistan. The government will make a cabinet decision on Feb. 6 to
adopt the note. After that, Japan will sign it with these four
countries. Japan is now negotiating with Canada and Germany as

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well.

The official note to be exchanged is a document describing bilateral
arrangements between the Japanese government and foreign countries
on the MSDF's free fuel supply to their vessels participating in
Operation Enduring Freedom and Maritime Interdiction Operations
(OEF-MIO) in Afghanistan and its environs. The official note this
time says Japan will proactively contribute on its own to the
international community's efforts by providing fuel to vessels
engaged in antiterror maritime interdiction operations. With this,
the note clearly prohibits MSDF fuel from being used for military
operations in Iraq and for any other purposes.

The exchange of notes, which was concluded under the old
antiterrorism special measures law, did not expressly stipulate that
MSDF fuel must be used for antiterror operations only and must not
be used for any other purposes. Therefore, MSDF fuel provided to a
U.S. oiler was disclosed to have been supplied to a U.S. naval ship
that later engaged in Iraq operations.

In addition, the new exchange of note prescribes bilateral
consultations between Japan and its signatories in order to
implement this note in an effective manner. With this, the note
expressly stipulates that Japan will step up bilateral cooperation.

Meanwhile, the question is whether foreign vessels will use MSDF
fuel after receiving it. Japan has no choice but to entrust this
matter to their governments. The Japanese government does not have
any specific power to check them later. Foreign naval vessels could
be doubly tasked with OEF activities and Iraq operations. Refueling
in this case, however, is not prohibited under the new antiterrorism
special measures law.

As another measure to prevent fuel diversion, the government will
also introduce a new system, under which an MSDF liaison officer
will hear from foreign governments about the schedules of their
vessels. If their schedules are ambiguous, the defense minister will
then make a final decision on the advisability of refueling foreign
vessels, according to government sources.

5) Fukuda-Ihara battle kicks off for Iwakuni mayoral race

MAINICHI (Page 1) (Abridged slightly)
February 4, 2008

The official campaign kicked off yesterday for the mayoralty
election in Iwakuni, Yamaguchi Prefecture. The biggest campaign
issue is the U.S. plan to relocate carrier-based fighter jets to the
base in the city. Former LDP House of Representatives member
Yoshihiko Fukuda, who supports the plan, and former Mayor Katsusuke
Ihara, who opposes the plan, filed their candidates for the election
on Feb. 10. A by-election will also take place on April 27 in
Yamaguchi No. 2 constituency due to Fukuda's resignation as a Lower
House member. The outcome of the race in Iwakuni, a large bloc of
votes for No. 2 constituency, is likely to affect the by-election as
well.

In reaction to U.S. force realignment, the city conducted a
referendum in March 2006 and a mayoralty race in April 2006
following the merger with its neighboring municipalities. This is
the third time for the city to go to the polls. In the referendum,
some 87 PERCENT of residents opposed the relocation of the jets.

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Ihara, in the previous mayoral race, won by a large margin.

The race this time was triggered by the government's decision in
December 2006 to freeze 3.5 billion yen in subsidies for the
construction of a new city hall, citing the city's opposition to the
relocation. The municipal assembly voted down four times then Mayor
Ihara's budget plans to make up for the lost subsidies. As a result,
Ihara resigned as mayor last December to "seek the will of the
people."

Fukuda has pledged that he will negotiate with the central
government regarding specific issues, such as possible noise
resulting from the relocation and other security matters, without
agreeing to the government's views at all times. "I will stake my
political life on the race. Let us change Iwakuni," Fukuda said in a
campaign speech yesterday.

Ihara, on the other hand, criticized the government regarding the
relocation, saying, "The freeze on the subsidies for the city hall
is clearly a violation of their promise. The relocation plan
concerns the very foundation of central and local governments. I am
prepared to directly negotiate with Prime Minister Fukuda on the
matter to bring an early settlement to it."

6) U.S. forces' housing built in Sasebo, Nagasaki, financed with
special-purpose road construction revenues: 250 million yen per
unit, as U.S. Navy planned originally

AKAHATA (Top Play) (Abridged)
February 2, 2008

Shimbun Akahata has learned that although the U.S. Navy in Japan had
planned to build housing accommodations for naval officers, using
host-nation support funding for the U.S. forces stationed in Japan
(the so-called "sympathy budget" allocations), the facilities were
actually built by the Ministry of Land, Infrastructure and
Transportation (MLIT) at a total cost of approximately 2.8 billion
yen, drawn from special-purpose road construction revenues but
allocated for use by the U.S. forces. The government has complied
with a long-standing U.S. forces' request for such construction
under the pretext of the relocation of U.S. military housing
accompanying the construction of expressways. The case has raised
the question whether outlays of road-related funds for such a
purpose was appropriate.

The housing in question is Fiddlers' Green, a U.S. military housing
complex built in 2007 and located in Kompira-cho, Sasebo City. A
slope abutting a road was developed at the cost of 1.4 billion yen.
It has a castle-like wall revetment, which is 14 meters high at the
highest point. There are eight blocks with 11 apartments in each
block on a site of approximately 12,000 square meters. The
construction cost per unit is approximately 250 million yen.

The MLIT Nagasaki River and National Road Office explained that the
facilities were financed with road funds to replace U.S. forces'
housing to be demolished following the acquisition of the site for
the construction of a Nishi-Kyushu Express Way. The Japan-U.S. joint
committee in May 2004 agreed on a basic housing construction plan.
The housing was then built with the Nagasaki River and National Road
Office repeatedly carrying out detailed coordination with the U.S.
Navy.


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However, it was found that the U.S. Navy had already planned to
build housing at this state-owned land in its Sasebo Bay U.S. Navy
Facilities Master Plan, mapped out in September 1990, when the route
of the express way had not yet been decided. The Japanese government
included in a list of facilities to be constructed under the
sympathy budget, six Fiddlers' Green family houses at the cost of 2
million dollars. (U.S. forces' data as reported by Hiromichi
Umebayashi in "U.S. forces stationed in Japan as learned under the
Freedom of Information Act."

7) Defense Ministry's import control office to enter into direct
contracts for procurement

MAINICHI (Page 1) (Full)
February 3, 2008

The Defense Ministry, which began in October last year to study
measures to reform its procurement system for the Self-Defense
Forces, outlined a conceptual plan yesterday. The plan features
setting up a new import and procurement section in its Equipment
Procurement and Construction Office (EPCO), a body directly under
the defense minister. In addition, the plan also proposes
strengthening the ministry's functions to check its procurement with
certified public accountants and other experts from outside the
ministry. The ministry's project team, chaired by Parliamentary
Defense Secretary Minoru Terada, will finalize and release the plan
within the current fiscal year.

The project team's reform plan lays emphasis on reducing the
involvement of trading companies, reflecting on a number of scandals
that involved the Defense Ministry. Specifically, Yamada
Corporation, a trading company dealing in defense equipment, padded
bills to the ministry. The ministry has imported equipment through
trading houses. However, the ministry will newly set up an import
control section consisting of certified public accountants and other
outside specialists. This newly planned office will directly enter
into contracts with overseas manufacturers. For the time being, the
ministry will ask trading firms to provide information. However, the
ministry intends to raise the percentage of direct contracts.

The Defense Ministry will also inquire of overseas manufacturers
about trading firms' estimates of equipment so as to prevent them
from fabricating estimates. In addition, the ministry will impose
penalties on trading companies against overbilling. The ministry
used to purchase defense equipment during several fiscal years.
However, the ministry will purchase equipment at a time to attain a
reduction of 5 PERCENT in its cost of procurement over the next
five years.

8) Ruling coalition to launch project team this month for permanent
SDF dispatch law

SANKEI (Page 2) (Abridged)
February 4, 2008

The ruling coalition of the Liberal Democratic Party and New Komeito
will hold a preparatory meeting its project team on Feb. 6 to create
a permanent law allowing Japan to send the Self-Defense Forces on
overseas missions whenever necessary. The project team will be
launched within the month. Its chair is former LDP Vice President
Taku Yamasaki, currently chairman of the LDP Research Commission on
Foreign Affairs. Its members include Gen Nakatani, chairman of the

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LDP Research Commission on Security Affairs, and others who once
served as defense chief. The project team will also have former
Parliamentary Vice Defense Minister Natsuo Yamaguchi from New
Komeito.

New Komeito, which upholds itself as a party for peace, has remained
cautious about the idea of creating a permanent law for SDF missions
overseas because its backer, Soka Gakkai, was negative about sending
SDF troops overseas. However, Prime Minister Yasuo Fukuda and
Democratic Party of Japan (Minshuto) President Ichiro Ozawa met last
fall and then took up permanent legislation in their "grand
coalition" initiative. New Komeito therefore feared that the LDP and
the DPJ could go on without New Komeito.

Given such circumstances, New Komeito early this year kicked off an
intra-party full-fledged discussion of the permanent legislation, in
an aim to lead discussions in the ruling coalition, according to New
Komeito sources.

9) Prime Minister takes lead to deal with poison-laden gyoza
dumplings, since bureaucrats slow to act

NIKKEI (Page 2) (Excerpts)
February 3, 2008

Prime Minister Yasuo Fukuda has instructed relevant government
officials to speed up discussions of integrating consumer
administration. This move reflects Fukuda's judgment that given the
current criticism of the government for its delay in dealing with
the rash of poison-laden Chinese-made dumplings, it is necessary to
take action swiftly to cap the issue, as well as to revamp the
current food administration system. Fukuda will establish a panel in
the Prime Minister's Official Residence (Kantei) to deal with the
problem, with a spring deadline for reaching its conclusions.
However, cautious views are coming from relevant ministries and
agencies, as well as business circles. The Prime Minister has
referred to (unifying consumer administration) as his "showcase
policy," but his leadership in this area is soon to be tested.

"Why are you so slow to take action?" On the afternoon of Feb. 1,
Fukuda stormed at bureau directors-general from the Cabinet Office,
the Ministry of Agriculture, Forestry and Fisheries (MAFF), and the
Ministry of Foreign Affairs (MOFA), when they visited Fukuda to tell
him that they remained unable to take action because the causes of
the problem had yet to be figured out. Fukuda told them to
thoroughly implement safety measures, for instance, by expanding the
scope of import products subject to inspections beside dumplings.

Growing criticism of government's slow action

On the night of Jan. 31, when he was informed of the problem, Fukuda
did not appear to be taking it so seriously. He told reporters: "I
think relevant government offices will deal with it after fully
investigating why it occurred." But his attitude grew severed as
criticism mounted that the government's delay in dealing with the
problem had led to a spreading of the problem, some complaining that
a month had gone by since the problem erupted before the government
announced the problem after its occurrence

The approval ratings for the Fukuda administration plunged at the
end of last year linked to its delay in dealing with the problem of
false records of pension premium payments and the lawsuit against

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the government by drug-infected hepatitis C patients. Fukuda's
decision to take the lead in discussion of unifying consumer
administration reflects a sense of crisis that his administration
could be in dire straits if it failed to unify consumer
administration. Merging consumer administration is the issue that
Fukuda plans to focus his energies on as a showcase policy for his
administration.

Fukuda was so highly motivated by his desire to unify consumer
administration that he mentioned it at the beginning of his recent
Diet policy speech, but the Cabinet Office's Quality-of-Live Policy
Bureau, which was tasked with examining the task, was slow to act.
Fukuda complained that the bureau "lacks speed."

On the night of Feb. 1, Fukuda declared his intention to set up in
Kantei a "consumer administration promotion headquarters," which
will be composed of relevant cabinet members and experts, to discuss
specific measures to unify consumer administration. It was supposed
to reach a conclusion in June, but Fukuda instructed that the report
be ready much earlier.

10) Government picks four African countries as candidates for first
tranche of financial aid to counter global warming

TOKYO SHIMBUN (Page 1) (Full)
February 4, 2008

The government chose yesterday Nigeria, Madagascar, Senegal, and
South Africa as countries to which Japan will provide the first
tranche of its grant aid and yen loan package amounting to 10
billion dollars (approximately 1.07 trillion yen) to help them
counter global warming.

The four countries have seriously suffered from natural disasters
and crop damage caused probably by global warming. The government
will sent this week a mission of Foreign Ministry International
Cooperation Bureau officials to discuss aid measures for forest
preservation and drought and flood.

Prime Minister Yasuo Fukuda announced the so-called Fund Mechanism
last month at the annual meeting of the World Economic Forum (Davos
Conference). The government will host the fourth Tokyo International
Conference on African Development (TICAD) in May in Yokohama, along
with the United Nations and World Bank. The government has placed
top priority on its support for African nations since global warming
and African development will become main topics of discussion at the
July Group of Eight summit at Lake Toya in Hokkaido.

11) Japan, China plan to split profits from joint development of gas
fields in East China Sea

NIKKEI (Top Play) (Abridged)
February 4, 2008

The government unveiled a joint development plan, now under
negotiations between the governments of Japan and China in an effort
to resolve the standoff over gas filed development in the East China
Sea. Both sides are considering evenly dividing profits from joint
development. On the areas subject to joint exploration, no agreement
has yet to be reached. Japan has proposed that the areas should
include sites that straddle the Japan-claimed median line separating
Japanese and Chinese territorial waters. The two countries aim to

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reach a settlement based on a two-step approach - reaching an
agreement on basic conditions first and then determining details,
such as the sites for joint exploration, under a treaty they would
conclude.

The two countries expect to resume vice minister-level talks in
February in anticipation of having an agreement on basic terms in
place prior to Chinese President Hu Jintao's planned visit to Japan
this spring. Later, working-level meetings will be held to hammer
out the details of the treaty. They think that signing a treaty is
necessary to give legal endorsement to the agreement.

Japan and China have been at loggerheads over the demarcation of
their respective exclusive economic zone. Japan insists that the
line equidistant from the land territory of Japan and China as the
median line, but China does not recognize it. While putting aside
this territorial issue, both sides will engage in negotiations to
translate joint oil field development into action.

Under the plan, (1) Japan would invest more than 50 PERCENT in gas
fields closer to it, while China would also invest more than 50
PERCENT in sites closer to it; and (2) The share of profit from
each gas field would be determined according to the ratio of
investment. To prevent a significant difference from being caused in
profits for both countries, they will work out details on what gas
fields should be selected and how to set the areas subject to joint
development.

Japan and China are also negotiating on the gas fields which China
has independently developed near the median line, such as the
Chunxiao oil and gas field. China asserts that only the areas on the
Japanese side from the median line should be subject to joint
development, refusing Japan's proposal. China has made a compromise
to hold negotiations on Japan's proposal as of now, but it has yet
to agree to it.

Japan has proposed to pay half of the money China has already
invested in order to include the gas fields under development by
China in joint development projects. But China has not accepted this
proposal.

12) MPD envisions building a case concerning obstruction of whaling
as crew members injured in two obstruction cases last year

SANKEI (Page 1) (Full)
February 4, 2008

It was learned yesterday that the Tokyo Metropolitan Police
Department (MPD) is conducting an investigation into the United
States environmental protection group Sea Shepherd, which in this
past January, had obstructed Japan's research whaling by throwing
bottles containing chemicals at a Japanese research whaling ship, on
charge of forcible obstruction of business for throwing bottles of
chemicals at a Japanese research whaling ship and injuring crew
members in last February. It is unusual for the Japanese police to
investigate the act of obstruction conducted in international
waters. The Public Security Department already confirmed through the
owner of the research vessel that the vessel was obstructed by Sea
Shepherd, and it is investigating into who actually engaged in the
obstruction.

The cases under police investigations are two acts of obstruction

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that occurred in the Antarctic Ocean in February of last year. On
Feb. 9 of that year, Sea Shepherd threw a bottle containing
chemicals that threatened vision and had an offensive odor and a
flare at the mother research whaling ship "Nisshinmaru." It also
attacked the ship by using a gun that fired life-saving rope. Two
crewmembers of the research whaling ship were exposed to chemicals
and suffered burns on their faces. Reportedly Nisshinmaru was forced
to suspend the work of dismantling a whale.

On Feb. 12 of that year, Sea Shepherd threw a flare at the visual
inspection ship "Kaikomaru" and collided with it, distorted the
handrail on the port side of Kaikomaru, and forced it to stop
navigating. Both on Feb. 9 and 12, Sea Shepherd threw rope at the
screw.

The United Nations Convention on the Law of the Sea stipulates that
the right to investigate criminals that occur in international
waters lies with the country where the ship is registered. The
Public Security Department questioned the owner company in Tokyo of
Nisshinmaru and Kaikomaru about the damages the ships suffered. It
also confirmed the damages.

The Public Security Department is examining whether the charge of
forcible obstruction of business or assault is applied to those
activities. It will identify through videos recording obstruction
and countries concerned who engaged in the obstruction.

Once persons who obstructed whaling are identified and the country
they stay are found, Japan is likely to consider whether to seek
they be put on the international wanted list and whether to demand
they be handed over to Japan under the Convention for the
Suppression of Unlawful Act against Vessels at Sea.

Regarding the recent obstruction case where on this past Jan. 15,
two activists of Sea Shepherd threw a bottle of chemicals having an
offensive odor at the deck of the Japanese research whaling ship
"No. 2 Yushinmaru" and climbed aboard the ship illegally, the Public
Security Department is expected to question persons concerned.

13) Russian government fund to invest in Japanese stock, according
to Finance minister

NIKKEI (Page 1) (Full)
February 4, 2008

(Sakai, Moscow)

A Russian government fund worth 32 billion dollars (3.4 trillion
yen) that launched on Feb. 1 will invest in Japanese stocks,
according to Russian Deputy Prime Minister and Finance Minister
Alexei Kudrin in an interview with the Nikkei. Prior to a meeting of
Group of Seven finance ministers and central bankers in Tokyo on
Feb. 9, in which Kudrin will attend, he said that Russia is willing
to contribute to normalizing the international monetary market,
which has become unstable, triggered by the U.S. subprime mortgage
crisis.

The fund is now allowed to invest only in U.S. dollar, Euro, and
British pound-dominated assets. Kudrin, however, said: "The
government is considering adding the yen to the list. Experts
analyze it is an appropriate move." The fund will be operated with
foreign bonds for the time being, but it plans to invest in foreign

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stocks after obtaining government approval in sometime after
October. He also said that the fund will not get involved in
corporate management, remarking: "The fund will not hold a stake of
more than 5 PERCENT in a company."

Kudrin expressed concern about the current weakening dollar in the
aftermaths of the subprime loan problem. Kudrin also emphasized that
the G-7 should include such emerging countries as Russian, which
holds 480 billion dollars in foreign reserves and has become a major
energy supplier, China, and India as its official members. He
warned: "Without Russia, China and India, the G-7 may lose its
influence on the global economy."

14) Fiscal 2007 supplementary budget bill to pass Diet as early as
Feb. 6

NIKKEI (Page 2) (Excerpt)
February 4, 2008

The ruling and opposition parties will set focus this week on fierce
discussions in the ongoing Diet session over a bill revising the
Special Taxation Measures Law, which includes measures to maintain
the current provisional rate for gasoline and other road-relates
taxes. The bill on supplementary budget for fiscal 2007 is expected
to be enacted as early as Feb. 6.

The House of Councillors Budget Committee will carry out today
intensive deliberations on social security issues. Since the upper
chamber's panel will spend more time for the supplementary budget
bill than the House of Representatives' committee, the opposition
bloc plans to respond to a vote tomorrow at the committee. The bill
will be voted on the 6th in the opposition-controlled Upper House,
but it will be enacted based on the Constitution that stipulates the
Lower House holds supremacy for budget packages.

The ruling parties are expected to hold a basic question-and-answer
session on the 7th and 8th on the fiscal 2008 budget bill. The bill
will be enacted before the end of March if it clears the Lower House
by March 2 as the Constitution stipulates that budget packages are
enacted after they are sent to the Upper House. The ruling
coalition, therefore, aims to get it passed by the Lower House by
Feb. 29.

15) Ruling, opposition parties making no preparations for Lower
House election, feeling that chance is slipping away

NIKKEI (Page 2) (Full)
February 4, 2008

The ruling and opposition parties appear to be making little
preparations for the next House of Representatives election. Both
the ruling Liberal Democratic Party (LDP) and largest opposition
Democratic Party of Japan (DPJ or Minshuto) are not pushing forward
with the selection of their candidates, although they had decided to
pick them in early this year. With the agreement by the ruling and
opposition camps through the good offices of the leaders of the two
Diet chambers on the controversial provisional tax rates, there is
growing observation that the chances for a Lower House election has
slipped away. There is little mood for the next Lower House taking
place soon. Another reason is that there still remains the lurking
notion of forming a "grand coalition."


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SUBJECT: JAPANESE MORNING PRESS HIGHLIGHTS 01//08

The main reason for the dwindling enthusiasm, about election
preparations among the parties is that DPJ President Ichiro Ozawa
indicated that his party would focus on the fall. He, quoting the
U.S. presidential election in November, said: "I feel that the
election in Japan would coincide with that of the United States."

Criticizing media reports, Ozawa stated in a lecture at his
political study group: "Even my poetic remarks become reports on
political developments." He has repeatedly made similar remarks that
could be taken that his party would take the offensive in the fall
or later: "I am concerned about the Chinese economy after the August
Olympic Games. I expect there will be a great change."

In the ruling camp, New Komeito Election Policy Committee Director
Yoshihisa Inoue categorically said in a meeting yesterday in
Yamagata City: "It is said that this year is a year for a decisive
political battle, but the chance for the battle occurring in March
or April has slipped away."

Seeing the election preparations by the ruling and opposition
parties, the LDP has yet to pick candidates for nine of the 15
electoral districts, although it had decided to finish up by its
January annual national convention.

The LDP has found it difficult to coordinate candidates for six
districts in which both "former assassins" and former "postal
rebels" who rejoined the party are expected to run. The party plans
to file former rebels in the Gifu No. 1 and Tokushima No. 2
districts. However, the issue has not yet been settled because
supporters for the former assassins have thronged to party
headquarters. Election Committee Vice Chairman Yoshihide Suga
commented: "Our choice will be criticized, anyway."

Coordination between the LDP and New Komeito has not been pushed
ahead in connection with the candidate for the Okinawa No. 1
district. The two ruling parties have no longer expecting a possible
April Lower House dissolution. The religious sect Soka Gakkai, the
main backer for the New Komeito, has advocated that the next Lower
House election should either be conducted sometime after the July
Group of Eight summit (Lake Toya Summit) or around July next year
when the Tokyo Metropolitan assembly election occurs. Inoue predicts
that the next Lower House election will probably occur in the fall.

16) Kan take positive stance about revision talks during Hodo 2001
program on February 3

SANKEI (Page 5) (Full)
February 4, 2008

Appearing on Fuji TV's program Hodo 2001 on February 3, DPJ Deputy
President Naoto Kan discussed a bill to maintain the provisional
gasoline tax and the question of road-related tax reverences. The
following is a gist of the main questions and answers.

-- The bridging bill has been withdrawn owing to mediation by the
Lower House speaker and Upper House president.

"The bridging legislation was designed to increase taxes without
deliberations. If it had been adopted, the Fukuda cabinet would have
collapsed."

-- LDP Secretary General Bunmei Ibuki is saying that (the DPJ) has

TOKYO 00000278 013 OF 013

SUBJECT: JAPANESE MORNING PRESS HIGHLIGHTS 01//08

promised to bring the matter to a vote within the current fiscal
year.

"If questions and answers are conducted thoroughly, there might be
some modifications to it. 'A certain conclusion' will be reached
after all those developments. The compromise note must be taken
literally. There could be a vote within this fiscal year as well as
additional deliberations."

-- Wasn't it the DPJ's strategy to force the prime minister into
Lower House dissolution with the bridging legislation?

"(Bridging dissolution) was not what we initially aimed at. If the
government and ruling parties had rammed the bridging bill through
the Lower House, they would have had to use a two-thirds majority
override vote twice in late March. They would not have been able to
steamroller it. That is why the ruling bloc made concessions (to the
DPJ)."

-- If there are talks between the ruling and opposition camps on
making changes to a revenue bill, there could be: (1) a shortened
period, (2) turning a part into a green tax, (3) (using road-related
tax revenues) for general purposes, and (4) lowering the tax rates.

"One theory goes that because the DPJ holds a majority in the Upper
House, the Land and Transport Ministry said that the term should be
left at 10 years. There also is a talk in the LDP that (the
legislation must be revised) to shorten the period. However, there
are many LDP lawmakers who have vested interests in the road
industry. They are blustering that they will not allow anyone to
flirt with road-related revenues. The LDP would lose unity (as
revision talks) move forward."

-- Mr. Kan, you said that the faces of LDP Election Committee
Chairman Makoto Koga and General Council Chairman Toshihiro Nikai
can tell their determined to hold onto road-related interests. Your
comment resulted in a letter of protest from the LDP.

"Did I say anything wrong? Mr. Nikai and Mr. Koga have said that
they would absolutely defend the road revenues, so I said that their
resolve was clear on their faces."

SCHIEFFER

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