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Cablegate: Japanese Morning Press Highlights 02/15/08

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UNCLAS SECTION 01 OF 13 TOKYO 000409

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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 02/15/08


TOKYO 00000409 001.2 OF 013


Index:

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

4) Chinese official reports that DPRK leader Kim Jong Il was pleased
with President Bush's State of Union Address last month (Sankei)

USFJ incidents:
5) U.S. forces Japan to take legal action against four Iwakuni-based
Marines accused of gang raping 20-year old Japanese woman (Tokyo
Shimbun)
6) USFJ Commander Wright toughening off-base privileges of U.S.
military personnel after Okinawa rape incident (Tokyo Shimbun)
7) U.S., Japan scrambling to put new measures into effect to prevent
anti-base feeling from spreading following Okinawa rape incident
(Yomiuri)
8) Prime Minister Fukuda meets Okinawa Governor, promises to work
with U.S. on measures to stop U.S. military incidents (Nikkei)
9) Senior Pentagon official expresses regret for alleged rape of
schoolgirl by U.S. Marine, hopes to see continued implementation of
Futenma relocation plan (Sankei)
10) New Iwakuni mayor meets defense and foreign ministers in Tokyo
on Atsugi jet-relocation issue (Mainichi) 8

Defense and security affairs:
11) LDP plans delegation to U.S. to explain why Indian Ocean
refueling services were broken off for a while (Asahi)
12) Government considering new legal system to protect secrets
(Asahi)
13) Japan-style CIA plan shelved as another element of former Prime
Minister Abe's policy agenda is stripped away (Mainichi)

DPJ in action:
14) Democratic Party of Japan leaders one by one come out with
statements backing Ozawa for staying on as party head (Sankei)
15) After three-year hiatus, DPJ resumes dialogue with Japanese
business circles (Yomiuri)
16) DPJ finally agrees to go along with government's plan to appoint
Muto as Bank of Japan governor (Sankei)

17) Global warming: UN official in Tokyo urges Japan to set a
greenhouse gas reduction targets during upcoming G8 Summit
(Mainichi)

18) Fair Trade Commission plans to raise fines 50 PERCENT on
bid-rigging practices (Maincihi)

Articles:

1) TOP HEADLINES

Asahi, Sankei, and Tokyo Shimbun:
Quality-of-Life Policy Council recommends requiring food products to
uniformly display use-by-dates

Mainichi:
Intentional contamination suspected in pesticide-tainted gyoza
dumplings

Yomiuri:

TOKYO 00000409 002.2 OF 013


Japanese history classes to be mandatory at Kanagawa senior high
schools as early as 2012

Nikkei:
Health, Labor, and Welfare Ministry to subsidize small companies to
help turn part-time, contract workers into regular employees

Akahata:
Chairman Shii calls for solidarity in demanding reduction and
elimination of U.S. bases in wake of Okinawa and Iwakuni cases

2) EDITORIALS

Asahi:
(1) Justice Minister Hatoyama's "false accusation" comment: He must
watch his tongue
(2) Open the door to foreign ownership of airports

Mainichi:
(1) Hatoyama's aptitude questioned as justice minister
(2) Wage hike the best economic stimulus measure

Yomiuri:
(1) GDP data good, but uncertainties growing
(2) Recommended medical fee hike insufficient to improve environment
surrounding hospital doctors

Nikkei:
(1) Be alert against signs of economic downturn
(2) Is country fully prepared against new flu?

Sankei:
(1) Is it necessary to resubmit human rights protection bill?
(2) Lowering age of majority to 18 requires in-depth debate

Tokyo Shimbun:
(1) "False accusation" comment raises question about Hatoyama's
insight
(2) Too early for conclusion in gyoza dumpling investigation

Akahata:
(1) Time to review U.S. military presence in Japan

3) Prime Minister's Official Residence (Kantei)

Prime Minister's schedule, February 14

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

08:52
Met with Toyota Chairman Fujio Cho, former Prime Minister Mori and
Deputy Secretary General Hosoda at restaurant Blue Gardenia in Grand
Prince Akasaka.

09:33
Met at Kantei with South Korea Ambassador to Japan Yu Myung Hwan
joined by Chief Cabinet Secretary Machimura, Foreign Ministry Asian
and Oceanian Affairs Bureau Director General Saiki. Met afterwards
with Nuclear and Industrial Safety Agency head Komota.

10:30

TOKYO 00000409 003.2 OF 013


Met with Deputy Foreign Minister Sasae, followed by Vice Foreign
Minister Yabunaka. Met later with LDP Secretary General Yabunaka.

11:55
Met with special advisors to the Cabinet Okuda and Kurokawa, Special
Advisor to the Cabinet Nishimura, Tokyo Electric Power President
Katsumata, and Nippon Steel President Mimura.

13:03
Met with Okinawa Gov. Nakaima attended by Deputy Chief Cabinet
Secretary Futahashi. Met again with Okuda, Kurokawa, Nishimura,

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Katsumata and Mimura.

14:55
Met with New Komeito Vice Representative Higashi, followed by Deputy
Foreign Minister Kono.

16:17
Met with Machimura.

17:00
Had regular eye checkup at Mitsui Memorial Hospital.

18:45
Returned to Kantei.

19:12
Met with former BOJ Gov. Mieno, Japan Tobacco President Nagaoka at
Imperial Hotel.

20:20
Dined with his family at a Chinese restaurant in Higashi-Azabu.

21:00
Returned to his official residence.

4) North Korean leader Kim appreciates U.S. State of the Union
address but assumes wait-and-see attitude on nuclear issue

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

Yasunobu Kiuchi, Beijing

It was learned yesterday that in a meeting on Jan. 30 with Wang
Jiarui, head of the International Department of the Communist Party
of China, North Korean leader Kim Jong Il had expressed appreciation
for President George W. Bush's last State of the Union address,
telling Wang, "It is to be noted that there was no criticism of our
country in the address." This was revealed by sources familiar with
China-North Korea relations. This is the first revelation of Kim's
remarks about the United States made in the session between Kim and
Wang.

Reportedly, Kim noted, "I will closely watch the presidential
campaign in the U.S. to see whether the U.S. will shift (its
attitude toward North Korea)," and indicated that even though the
U.S. and North Korea are still at loggerheads over the question of
nuclear program reporting, he will ascertain whether the U.S. will
soften its stance toward his country. Given that Washington has
demanded Pyongyang make a full, complete declaration of all its
nuclear programs, it is likely to take time before the six-party

TOKYO 00000409 004.2 OF 013


talks are resumed.

According to sources, although the denuclearization process,
including the declaration of nuclear programs, as agreed on in the
six-party talks, has fallen behind the schedule, Kim told Wang that
"Our country is not responsible for this (delay)." Kim made this
remark, apparently keeping in mind such factors as the delay in
economic assistance by means of, for instance, the supply of heavy
fuel oil, and America's slow move to delist the North as a state
sponsor of terrorism. In addition, Kim reportedly indicated his
intention to watch in what direction the Lee Myung Bak
administration of South Korea, which is to be inaugurated on Feb.
25, will move.

Wang asked Kim to visit China, but Kim refrained from making a
clear-cut answer. Yet, reportedly, speaking of his tour of the
economic special zone in the south of China during his visit to that
country in January 2006, Kim expressed his hope of visiting
underdeveloped regions when he visits China next time.

Furthermore, First Vice Foreign Minister Kang Sok Ju, who also
attended the session, reportedly voiced dissatisfaction about
Japan's policy of linking economic and energy assistance to a
resolution of the abduction issue.

5) U.S. military charges 4 U.S. servicemen with gang rape

TOKYO SHIMBUN (Page 27) (Full)
February 15, 2008

In connection with Iwakuni-based U.S. Marines' alleged rape of a
20-year-old Japanese woman, four Marines, aged 20-39, have been
charged with a violation of the Uniform Code of Military Justice
(UCMJ), sources revealed yesterday.

In November last year, the Hiroshima District Public Prosecutors
Office decided not to prosecute the four after receiving papers from
police over their alleged gang rape. If the U.S. military
court-martials them, such would differ from Japan's action taken
under its criminal code as an unprecedented case. Hiroshima
prosecutors say they are not in a position to comment.

According to the Iwakuni base, the four were charged in December
last year with crimes, including sexual violence, theft, and
disobedience under the UCMJ.

U.S. military authorities yesterday pre-examined the four at the
Iwakuni base to determine whether or not to court-martial them. The
victimized woman, with tears and in a trembling voice, testified
that she was raped by the four.

The woman consented to perform sexual intercourse with one of the
four. However, she explained, "The other three guys came into the
car during that time...and I was raped by the four."

The woman did not tell Hiroshima police that she had consented with
one of the four. Asked why, she said she felt ashamed of what she
did thoughtlessly.

She also explained that her bag and shoes were thrown away after she
was raped. She had cash, about 12,000 yen, in her wallet and found
almost no money in it.

TOKYO 00000409 005.2 OF 013

The four U.S. servicemen also appeared in court. However, they were
not arraigned. The U.S. military will continue its preliminary
inquiry of the four today.

The four investigated the incident, suspecting that the four got to
know the woman at an event hall in the city of Hiroshima early on
October 14 last year and that they took her into a car and
gang-raped her. However, the police decided not to arrest the four,
reasoning that there was something ambiguous in her explanation. The
police sent papers to prosecutors. The Hiroshima District Public
Prosecutors Office decided not to prosecute the four.

6) Stricter curfew planned: USFJ chief

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

In connection with the recent rape of a third-year junior high
school girl in Okinawa, U.S. Forces Japan (USFJ) Commander Wright,
meeting the press in Tokyo yesterday evening, said the USFJ is now
planning to review its educational programs and take other
preventive steps. "We'd like to finish this in two to four weeks,"
Wright said. With this, the USFJ commander indicated that USFJ would
reach a conclusion within a month on its plan, which includes
imposing a stricter night curfew on U.S. military personnel and
barring them from specially designated areas and stores. "We're
considering every possible measure," he added.

Wright took a negative view about revising the Japan-U.S. Status of
Forces Agreement (SOFA), which stipulates legal status for U.S.
military personnel stationed in Japan. "The SOFA has no direct
bearing on the incident this time," he said, "so we won't be
discussing that matter."

Wright suggested the need to provide SOFA personnel with more
education regarding sexual abuse and violence in particular. "We
will take strong action against such acts," he stressed. USFJ set up
a taskforce at its headquarters on Feb. 13 to work out a preventive
action plan. The taskforce consists of commanding officers from all
U.S. Army, Navy, Air Force, and Marine Corps bases in Japan. "We'd
like to work it out as soon as possible," he said.

7) In response to Marine rape incident, Japan, U.S. hurry to work
out measures to prevent recurrence with aim of constraining
anti-base sentiment

YOMIURI (Page 4) (Full)
February 15, 2008

The Japanese and U.S. governments are in a hurry to work out
measures to prevent a recurrence of similar incidents like the
latest alleged rape of a junior high schoolgirl by a U.S. Marine in
Okinawa. Ideas being discussed between the two governments, for
instance, include having the U.S. military police and Japanese
police officers jointly patrol shopping and entertainment districts.
The installation of security cameras in such areas is also being
mullled.

Okinawa Gov. Hirokazu Nakaima yesterday called on Prime Minister
Fukuda at the Prime Minister's Official Residence to tell him: "I
would like you to work out measures to prevent a recurrence of

TOKYO 00000409 006.2 OF 013


similar incidents in the way that will convince the Okinawa people
and then to make them open to the public."

Late yesterday, Fukuda told the press: "The governor asked me to
prevent a recurrence of similar incidents. We must do something in
cooperation with Okinawa. We must prevent a recurrence (of similar
incidents)."

Fearing that the incident could have a harmful effect on bilateral
relations, the government is quickly working out countermeasures.
Through such measures, the government aims to constrain a growing
anti-base sentiment among locals and contain the moves seeking to
review the Japan-U.S. Status of Forces Agreement (SOFA).

At a press briefing yesterday, the opposition People's New Party's
Secretary General Hisaoki Kamei, speaking of the SOFA, noted, "I

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hope a substantial review will be made." One idea being floated
among the opposition parties is to let local municipalities join in
the Japan-U.S. Joint Committee established in line with the SOFA.
One senior Foreign Ministry official stated on behalf of government
concern: "Revising the SOFA would bring about the same confusion
that Japan experienced when the Japan-U.S. Security Treaty was
revised."

8) In meeting with Okinawa governor, Prime Minister Fukuda promises
to ask U.S. to take measures to prevent recurrence of similar
incidents like rape of schoolgirl this time

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

In order to deal with the recent alleged rape of a schoolgirl by a
U.S. Marine, Okinawa Gov. Hirokazu Nakaima yesterday called on Prime
Minister Yasuo Fukuda at the Prime Minister's Official Residence and
asked him to make a request to the U.S. side to strengthen
discipline among the U.S. military personnel and take measures to
prevent a recurrence of similar incidents. Fukuda gave his word to
the governor, telling him: "I understand the feelings of the Okinawa
people. I take your request seriously and will do all I can."

In the session, Nakaima emphasized: "Every time a similar incident
took place, I have asked the central government to take measures to
prevent a recurrence. I would like it to work out measures to
prevent a recurrence that can convince the Okinawa people and make
them open to the public."

9) High-ranking Pentagon official voices hope for implementation of
Futenma relocation, expresses regret for alleged schoolgirl rape

SANKEI (Page 3) (Full)
February 15, 2008

Yoshihisa Komori, Washington

A high-ranking U.S. Defense Department official, giving an interview
to the Sankei Shimbun recently, discussed a variety of issues
associated with the Japan-U.S. security setup. The official
expressed his hope once again for the implementation of the planned
relocation of Futenma Air Station in accordance with the bilateral
agreement, enhanced Japan-U.S. joint military exercises, and the
promotion of missile defense, while expressing his regret over the
recent alleged rape of a schoolgirl by a U.S. Marine sergeant in

TOKYO 00000409 007 OF 013


Okinawa. He also expressed hope that Japan will participate in
security activities in Afghanistan, while emphasizing the positive
effect of the Maritime Self-Defense Force's resumed refueling
operation in the Indian Ocean.

The Pentagon official, who is deeply involved in Japan-U.S. security
relations under the Bush administration, played up the U.S.
government's zero-tolerance policy toward sexual violence regarding
the recent incident involving the U.S. sergeant, saying: "It is
truly regrettable that such an incident occurred. I would like to
extend my deepest sympathy toward the girl and her family."

At the same time, he highlighted the importance of Futenma
relocation, while expressing hope that the latest incident will not
affect U.S. force realignment. He said:

"There seems to be a perception in parts of Japan that the United
States is strongly pressuring Japan, but in reality, relevant
Japanese government offices from the prime minister on down are in
total agreement, and they are pushing ahead with the program by
taking the initiative at times."

He also made it clear that altering the plan is not envisaged,
noting:

"The Japanese media have reported on a desire to alter the shape and
location of the new runways to be constructed as a Futenma
replacement facility. However, in their contacts with us, a desire
for altering the plan has never been expressed by responsible
Japanese offices, such as the Defense and Foreign Ministries or the
Prime Minister's Office. Everyone has presented the relocation
policy, as was agreed upon."

Touching on the planned relocation of 8,000 U.S. Marines from
Okinawa to Guam -- a major pillar, along with the Futenma
relocation, in USFJ realignment -- the official said:

"The United States has accepted the Japanese government's pledge to
contribute a total of 6 billion dollars to the project, and in fact,
we are about to launch the relocation."

About the planned relocation of a U.S. carrier-based air wing from
the U.S. Navy's Atsugi base to the U.S. Marine Corps' Iwakuni Air
Station, the official simply said:

"I will abstain from commenting on the results of the mayoral race
so as not to give an impression that I am interfering in Japan's
domestic affairs. The United States is advancing U.S. force
realignment based on an agreement with the Japanese government."

About overall Japan-U.S. security relations, the official mentioned
the following as priorities: (1) promotion of USFJ realignment for
strengthening the bilateral alliance, (2) strengthening joint
military drills between the SDF and the U.S. military on Guam and
other locations, and (3) promotion of the Japan-U.S. missile defense
initiative.

About the fact that Japan has resumed the MSDF's refueling operation
in the Indian Ocean as part of the international antiterrorism
operation, he said:

"The United States greatly welcomes the step at a time like this

TOKYO 00000409 008 OF 013


when the country's burden is growing, given the bad situation in
Afghanistan."

He also indicated that Japan's action would significantly contribute
not only to the Japan-U.S. alliance but also to international
security and that especially between Japan and the United States, it
would positively affect other security areas as well, including the
abduction issue.

Further, the official expressed his hope that Japan will participate
in the area of security in the war on terror in Afghanistan in the
form of cooperating with the United States and other countries, in
addition to the refueling operation in the Indian Ocean.

10)Iwakuni mayor wants expanded measures to mitigate base burden

MAINICHI (Page 2) (Full)
February 15, 2008

Yoshihiko Fukuda, who won the earlier Iwakuni mayoral election, in
which the question of whether to accept the relocation of
carrier-based aircraft to Iwakuni was put to local voters, met
separately with Defense Minister Shigeru Ishiba and Foreign Minister
Masahiko Koumura in Tokyo last evening. In the meetings, the new
Iwakuni mayor called for additional measures to resolve noise and
other problems generated from the Marine Corps Air Station Iwakuni
before starting negotiations with the central government on
accepting the transfer plan.

In his meeting with Ishiba, Fukuda requested that now frozen
subsidies (3.5 billion yen) for constructing a new city hall be
granted to the municipal government at an early date. Ishiba
replied: "We want to proceed with administrative work so that we
will be able to offer the subsidies as soon as possible."

On the propriety of the aircraft transfer plan, Fukuda said: "I
think our city will be able to cooperate on the relocation plan if
local citizens' concerns about noise and safety are removed."
Specifically, he cited an expansion of the area where anti-noise
measures are undertaken and a review of the flight routes.

Upon confirming Fukuda's support of the transfer plan, the Defense
Ministry will determine how to grant the subsidies to the city.

11) LDP to dispatch delegation to U.S. to explain circumstances
behind temporary suspension of refueling mission

ASAHI (Page 4) (Full)
February 15, 2008

Liberal Democratic Party Secretary General Bunmei Ibuki called on
Prime Minister Fukuda at his office yesterday and informed him of
the party's plan to shortly send a delegation to the United States,
following the Maritime Self-Defense Force's resumption of its
refueling mission in the Indian Ocean. The prime minister approved
the plan. The delegation will explain to U.S. government officials
and others why Japan had to suspend the operation. Coordination is
now underway on forming a group to be headed by House of
Representatives' Special Antiterrorism Committee Chairman Takashi
Fukaya.

12) Gov't mulls info security legislation

TOKYO 00000409 009 OF 013

ASAHI (Page 1) (Abridged)
February 15, 2008

The government held a meeting of its intelligence functionality
panel yesterday, with Chief Cabinet Secretary Machimura presiding.
In the meeting, the panel decided to establish "Cabinet Intelligence
Analyst" posts in the Cabinet Intelligence and Research Office in
order to enhance the intelligence functions of the prime minister's
office. In addition, the panel has also decided to look into the
possibility of creating an information security law with severer
penalties against information leaks by government personnel.
Machimura yesterday told a team, headed by Deputy Chief Cabinet
Secretary Masahiro Futahashi, to set about specific studies.

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13) Panel in final report calls for shelving idea of Japanese CIA

MAINICHI (Page 2) (Full)
February 15, 2008

The government's conference on strengthening the diplomatic and
security information-gathering functions of the Prime Minister's
Office (Kantei), chaired by Chief Cabinet Secretary Nobutaka
Machimura, unveiled its final report yesterday. The report calls for
postponing drastic organization reform, such as establishing a
Japanese version of the CIA, and for making only minor revisions to
the interim report released last February. The idea of strengthening
the Kantei's intelligence capabilities was one of the eye-catching
measures proposed by former Prime Minister Abe.

The panel was launched in December 2006. Improvement in the Kantei's
intelligence capabilities was one of the key security policies of
the former administration, together with the idea of creating a
Japanese-version NSC (National Security Council). The NSC initiative
was turned into a bill without full discussion and was killed in the
last extraordinary Diet session. Discussion on improvement in the
Kantei's intelligence capabilities also lost momentum.

In the government, there are the Cabinet Information Conference (by
vice ministers) and the Joint Information Conference (by bureau
director generals). These panels are composed of officials of the
National Police Agency (NPA), the Foreign Ministry, the Defense
Ministry, and the Public Security Intelligence Agency. But since
they are unwilling to fully present their own information, results
have been limited.

The final report emphasizes the importance of sharing information to
improve the Kantei's analysis capabilities and designates the
cabinet intelligence director as intelligence coordinator. This
measure is also unlikely to be able to contribute to promoting the
sharing of information among government agencies, because it is
possible for government offices to make a report directly to the
Kantei.

The government plans to assign five intelligence analysts in the
Cabinet Intelligence and Research Office this April. The
introduction of analysts was included in the interim report. It is
looking into appointing experts from relevant government agencies,
as well as from the private sector. They will analyze and evaluate
information forwarded from government offices and draft a report on
intelligence analysis from medium- and long-term perspectives.


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This government expects this measure will work effectively to
reinforce the intelligence functions of the research office. But
some are skeptical of its effectiveness, focusing on the fact that
the post of cabinet intelligence director, the top of the research
office, has been held by former NPA officials and that the office is
considered an outpost of the NPA.

Following the 2001 terrorist attacks in the U.S., the government and
the Liberal Democratic Party have come up with a number of reports
with recommendations on strengthening the Kantei's information
capabilities. Many ideas were presented, but all of them were
dropped in the final report.

14) Senior DPJ members to support reelection of Ozawa as party head

SANKEI (Page 5) (Full)
February 15, 2008

Democratic Party of Japan (DPJ or Minshuto) Deputy President Naoto
Kan and Azumi Koshiishi, chairman of the DPJ caucus in the House of
Councillors, announced yesterday in succession that they would
support the reelection of Ichiro Ozawa in the September presidential
election. Secretary General Yukio Hatoyama and Diet Affairs
Committee Chairman Kenji Yamaoka have already expressed their
intentions to back Ozawa. As it stands, the DPJ leaders have now
united with an eye on the next House of Representatives election.

At a press conference yesterday, Kan revealed his intent to aim at
an early Lower House dissolution and general elections. He stated:
"I would like to take over the reins of government under the
leadership of President Ozawa" even if the Lower House election is
not conducted by September. He also emphasized:

"It is only natural for the DPJ to fight in the next Lower House
election under President Ozawa. There is a proverb that 'Don't
change horses in midstream when a battle is going on.'"

Koshiishi said: "We will take over political power under the
leadership of President Ozawa. There is no need to confirm it."

It is most likely now that Ozawa will be reelected as president even
if a Lower House election does not take place by September and he
commits no blunders. However, some have pointed to the possibility
that Yoshito Sengoku, a former secretary general, Yukio Edano, a
former policy chief, and other members, who have distanced
themselves from Ozawa, will field a candidate for the leadership
race.

15) DPJ-Keidanren talks for first time in three years: Gaps in views
on special-purpose road funds

YOMIURI (Page 4) (Full)
February 27, 2008

An opinion-exchange meeting between Democratic Party of Japan (DPJ
or Minshuto) President Ichiro Ozawa and Japan Business Federation
(Nippon Keidanren) Chairman Fujio Mitarai was held yesterday at a
Tokyo hotel. Top-level talks between them are the first since the
ones held about three years' ago between former DPJ President
Katsuya Okada and former Nippon Keidanren Chairman Hiroshi Okuda.
Relations between the party and big business have thus far not been
close. The DPJ has apparently moved forward to strengthen channels

TOKYO 00000409 011 OF 013


with business circles in the run-up to the next Lower House
election.

At the outset of the meeting, Mitarai requested, "I would like the
DPJ as the top party in the Upper House to promote reform through
constructive and proactive talks with the government and the ruling
parties." Ozawa noted, "It appears that Keidanren's evaluation of
the DPJ's stance is harsh. However, I would like you to understand
that if we discuss matters, based on the mechanism of traditional
politics and administration, we will get nowhere in our efforts to
settle problems." He thus sought understanding from Keidanren
regarding the policy of his party, which is aiming at taking over
the reins of government.

Concerning the key tax system-related bills, the DPJ explained its
policy of abolishing special-purpose road construction revenues and
reallocating the funds for other uses. However, Keidanren's side
called for early passage of the fiscal 2008 budget bill in order to
avoid turmoil in the national life, highlighting a gap in their
views on the issue.

16) DPJ to approve of government's plan to appoint Muto as BOJ
governor

SANKEI (Page 1) (Full)
February 15, 2008

The main opposition Democratic Party of Japan's (DPJ or Minshuto)
decided yesterday to approve the government's plan to promote Vice
Governor of Japan Toshiro Muto, 64, a former administrative vice
finance minister, to the BOJ governor's post. Following the DPJ's
decision, the government is now in the final stage of coordination
for presenting its appointment plan to the Diet as early as Feb. 19.
Kyoto University Prof. Masaaki Shirakawa, 58, a former BOJ official,
and Rikkyo University Prof. Teizo Taya, 62, an academic expert, are
strong candidates for BOJ vice governor.

The ruling Liberal Democratic Party (LDP) and DPJ have agreed to
avoid a blank period of BOJ governor after the March 19 expiration
of incumbent Gov. Toshihiko Fukui.

Many DPJ lawmakers opposed the plan to appoint Muto as governor for
the reason that financial authorities should not get involved in
monetary policy. However, there are strong calls for the appointment
of Muto as governor in the BOJ. There is also concern that If Japan
picked the second best person, such would prompt international
society's distrust in Japan's economy, according to a government
source. Under such circumstances, the government and ruling parties
were waiting for anti-Muto moves in the DPJ calming down. The DPJ
finally decided to approve the government's plan for the reason that
Muto is not a person who would impede the stability of currency
values.

Yesterday morning LDP Secretary General Bunmei Ibuki, Diet Affairs
Committee Chairman Tadamori Oshima and DPJ Diet Affairs Committee
Chairman Kenji Yamaoka exchanged views on the matter. After the
meeting, Ibuki met with Prime Minister Yasuo Fukuda. Fukuda met last
night with former BOJ Gov. Yasushi Mieno and other officials.

An LDP executive member stressed last evening: "It is reasonable for
the government to appoint a person whom financial authorities and
former BOJ officials recommend." General Council Chairman Toshihiro

TOKYO 00000409 012 OF 013


Nikai told reporters: "An appropriate person should be picked as
early as possible."

17) Measures to combat global warming

MAINICHI (Page 3) (Full)
February 15, 2008

Visiting United Nations Framework Convention on Climate Change
(UNFCCC) Executive Secretary Yvo de Boer held a press conference in
Tokyo yesterday. Referring to the Lake Toya Summit in Hokkaido in
July, he urged Japan to come up with a specific numerical target for
greenhouse gas emissions cuts as the host nation, noting, "Japan can
lead discussions by coming up with an ambitious mid-term goal. The
world wants definiteness on this issue." He also called on Japan to
introduce emissions rights trading, which Japanese business circles
are strongly opposing.

The executive secretary noted participants at the G-8 will need to
show the extent they intend to cut greenhouse gas emissions by
2020.

Regarding the use of an emissions rights trading market, he said,
"It is the most sophisticated method of curbing climate change.
Whoever the next U.S. president is, all industrialized countries
will be looking in this direction." He also stressed, "Likewise,
Japan will be put to the test regarding whether it will adopt this
method. It will be possible to create a universal mechanism even
without the participation of Japan."

18) FTC presents draft amendment to AML: 50 PERCENT increase in
administrative surcharge to be imposed on companies that lead
bid-rigging

MAINICHI (Page 3) (Full)
February 15, 2008

The Fair Trade Commission (FTC) yesterday reported the outline of a
bill amending the Anti-Monopoly Law (AML) at a meeting of the
Liberal Democratic Party's (LDP) AML Research Council. The FTC
revealed its policy of increasing an administrative surcharge
imposed on companies that played a leading role in bid-rigging and
cartel activities by 50 PERCENT . It also showed calculation rates
applied to illegal business practices to be newly subject to
administrative surcharges. The FTC plans to submit the amendment
bill to the current Diet session after obtaining approval from the
ruling camp.

Though the FTC had decided to increase administrative surcharges
imposed on companies that played a leading role in bid-rigging, the
scope of the increase had not been set. An administrative surcharge
imposed on a leading manufacturing that led bid-rigging would be
raised from the current 10 PERCENT of sales achieved through
illegal business practices to 15 PERCENT .

The calculation rates for illegal business practices subject to
administrative surcharges will be 3 PERCENT of sales achieved by
false labeling, including false or confusing labeling, and 6 PERCENT
of sales achieved through such monopolistic practices as excluding
competitors by such means as dumping. In the case of the abuse of
dominant bargaining position, in which leading companies make
unlawful demands to suppliers or subcontractors, trading amounts

TOKYO 00000409 013 OF 013


exceeding 2 billion yen will subject to the punishment with an
administrative surcharge of 0.5 PERCENT of the trading amounts.

SCHIEFFER

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