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Cablegate: Japanese Morning Press Highlights 02/26/08

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UNCLAS SECTION 01 OF 10 TOKYO 000495

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 02/26/08


Index:

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

4) Severe public eye on Fukuda Cabinet, whose support rate plummets
7.9 points to 28.7 PERCENT ; Over 70 PERCENT dissatisfied with
handling of Aegis accident (Sankei)

Defense issues:
5) Defense Minister Ishiba knew the night of Aegis collision that
fishing boat was spotted 12 minutes before and not two minutes but
held back announcement (Asahi)
6) Iwakuni mayor announces acceptance of relocation of Atsugi jets
to Iwakuni base (Yomiuri)

Fukuda-Lee summit meeting:
7) Prime Minister Fukuda, ROK President Lee agree to repair strained
bilateral ties, work toward signing an EPA (Nikkei)
8) Preparation to sign an EPA now made possible by Fukuda-Lee
meeting (Mainichi)
9) Gist of meeting between Prime Minister Fukuda, South Korean
President Lee (Yomiuri)

Diet affairs:
10) Struggle now in Diet over setting date for adopting national
budget with ruling camp wanting vote in February and opposition
wanting to keep deliberating (Yomiuri)
11) Ruling parties ready to work with opposition to accept some
revisions in controversial tax bill (Tokyo Shimbun)
12) Government and ruling camp moving in direction of allowing now
dedicated gasoline tax revenue to be absorbed into general tax
revenues (Mainichi)
13) DPJ President Ozawa rebuffs Fukuda's suggestion for another set
of talks (Mainichi)

14) Japan's national debt now at a record 838 trillion yen (about 8
trillion dollars) (Mainichi)

Articles:

1) TOP HEADLINES

Asahi:
With Defense minister being informed that Aegis destroyer crew
spotted fishing boat "12 minutes before collision," he may face
question of whether to stay or resign

Mainichi:
Greenhouse gas emission reduction targets likely to be set for
offices, convenience stores, schools

Yomiuri:
Japan, ROK will reopen shuttle diplomacy with emergence of new South
Korean President Lee

Nikkei:
Sharp, Daiwa House to tie up for joint development of storage cells
for housing in effort to make best use of solar energy generation

Sankei:

TOKYO 00000495 002 OF 010


FNN poll: Cabinet approval rating falls to below 30 PERCENT with
more than 70 PERCENT "do not appreciate" MSDF's response to Aegis
destroyer collision

Tokyo Shimbun:
Defense minister was informed on the day of collision that the Aegis
destroyer Atago spotted a fishing boat 12 minutes before collision

Akahata:
One week has passed since the Aegis destroyer collided with a
fishing boat: Questioning of Aegis captain not conducted yet

2) EDITORIALS

Asahi:
(1) Murder case in LA: What is the "new evidence"?
(2) We hope new ROK president will live up to expectations

Mainichi:
(1) Japan-ROK summit: Japan, ROK need to look to the future
(2) Disclosure of Microsoft basic code: We want software development
to attract young talent

Yomiuri:
(1) ROK President Lee: Best opportunity for Japan, U.S., ROK to
rebuild trilateral ties
(2) ShinGinkyo Tokyo should withdraw from market

Nikkei:
(1) We expect ROK President Lee to do his part on DPRK, EPA
(2) Destruction of satellite by missile leaves us with concern about
space arms race

Sankei:
(1) New ROK president: Japan, ROK should look to the future instead
of the past
(2) Murder case in LA: Time to debate statute of limitations on
murder

Tokyo Shimbun:
(1) Japan, ROK need to work to stabilize Asia
(2) Microsoft: Now is time to open everything

Akahata:
(1) One week has passed since collision of Aegis destroyer and
fishing boat: Intensive discussion essential to shed light on truth

3) Prime Minister's Official Residence (Kantei)

Prime Minister's schedule, February 25

NIKKEI (Page 2) (Full)
February 26, 2008

Morning
Attended the inauguration of Lee Myung Bak as president of South
Korea at the National Assembly plaza in Seoul.

Afternoon
Held a meeting with President Lee at the Blue House.

Night

TOKYO 00000495 003 OF 010


Departed from Seoul Air Base.

20:52
Arrived at Haneda Airport.

21:25
Arrived at his official residence.

4) Poll: Cabinet support falls below 30 PERCENT

SANKEI (Top play) (Abridged)
February 26, 2008

The Sankei Shimbun and Fuji News Network (FNN) conducted a joint
public opinion survey on Feb. 23-24, in which the rate of public
support for Prime Minister Yasuo Fukuda's cabinet dropped 7.9
percentage points from the last survey (taken Jan. 13-14 this year)
to 28.7 PERCENT . The Fukuda cabinet's support rate fell below 30
PERCENT for the first time. Meanwhile, its nonsupport rate rose 4.9
points to 52.2 PERCENT , also topping 50 PERCENT for the first
time. In the breakdown of public support for political parties, the
ruling Liberal Democratic Party stood at 27.8 PERCENT , down 4.3
points. The leading opposition Democratic Party of Japan (Minshuto)
was at 25.3 PERCENT .

On a gender basis, the Fukuda cabinet's support rate among women was
higher than that among men, scoring 31.1 PERCENT from women and
26.1 PERCENT from men. However, the Fukuda cabinet's popularity
rating among women was down 9.3 points from the last survey. In
addition, the Fukuda cabinet's approval rating among men also
dropped 6.4 PERCENT . This can be taken as a factor that caused the
support rate to fall below 30 PERCENT in the survey this time.

In the survey, respondents were asked what they thought about the
Fukuda cabinet's response to the recent collision of a Maritime
Self-Defense Force Aegis destroyer with a fishing boat. To this
question, positive answers came from 11.6 PERCENT , with negative
answers accounting for 76.1 PERCENT . As seen from these figures,
many were concerned about the Fukuda administration's crisis
management capability. Respondents were also asked about the Fukuda
cabinet's handling of a series of recent incidents caused by U.S.
service members in Japan. To this question, negative answers
accounted for 70 PERCENT . Respondents were further asked about the
Fukuda cabinet's economic policy and its way of dealing with the
government's pension record-keeping flaws. In response, negative
answers accounted for over 60 PERCENT .

In addition, the survey also asked respondents if they would support
a "grand coalition" of the LDP and the DPJ. In response, 30.5
PERCENT answered "yes," with 50.8 PERCENT saying "no." Meanwhile,
they were asked if they would like to see political realignment. To
this question, "yes" accounted for 58.9 PERCENT . As is evident from
these figures, the public is critical of the idea of the LDP and DPJ
joining hands. On the other hand, the public is dissatisfied with
the present-day framework of government.

Respondents were next asked how long they thought the Fukuda cabinet
would continue. To this question, "until around the next election
for the House of Representatives" topped all other answers at 49.1
PERCENT , followed by "until around the fall of next year" at 33.6
PERCENT . Respondents were also asked when they would like the next
House of Representatives election to take place. To this question,

TOKYO 00000495 004 OF 010


however, "after this July's G-8 summit in Japan and during the
latter half of this year" accounted for 45.3 PERCENT , topping all
other answers. "Upon the current term's expiry or early next year"
was at 34 PERCENT .

5) Defense minister informed that night that Aegis destroyer crew
spotted fishing boat "12 minutes before"; Could affect whether he
will resign or not

ASAHI (Top play) (Excerpts)
February 26, 2008

The Ministry of Defense (MOD) initially announced that the Maritime
Self-Defense Force's (MSDF) Aegis destroyer Atago crew had spotted
the fishing boat Seitokumaru "two minutes before the collision," but
afterwards MOD corrected that time and said it was "12 minutes
before." In this connection, it was learned that Defense Minister
Ishiba on the night of the 19th was informed that it was "12 minutes
before," but that at a press briefing held later by the Maritime
Staff Office (MSO), MOD did not give correct information and instead
it said it was "two minutes before." As the reason why it did so,
MOD explained that because it did not fully confirm the time before
the collision, it refrained from saying it was '12 minutes before.'
But if this was done to intentionally conceal the fact, the question
of whether Ishiba will stay or resign in office could be affected.

According to MOD, the MSO told the Aegis destroyer's chief navigator
to come to the MSO by a helicopter at 10:00 a.m. of Feb. 19 before
the start of the Japan Coast Guard's (JCG) questioning. In the MSO,
the chief navigator told the MSO staff that it was two minutes
before he had spotted the fishing boat. This information was
conveyed by the MSO staff to Ishiba around noon of that day. Based
on the information, Ishiba said at a ruling Liberal Democratic
Party's (LDP) division meeting that started at 5:00 p.m. of that
day: "The Aegis destroyer spotted the fishing boat two minutes
before colliding with it."

At a press briefing held at 11:00 p.m. of that day, the MSO's
Operations and Plans Department director-general declared: "The
Aegis destroyer spotted the light of the fishing boat two minutes
before colliding with it." MOD's explanation about this announcement
was that at that point in time, MOD did not fully confirm the time,
so it announced the same as it did at an LDP division meeting.

At a Lower House Security Committee session on Feb. 22, Ishiba said,
"It is only natural for me to take responsibility if there is any
covering up. I have always cut off my retreat when I serve in the
ministerial post." This remark implied that he would resign if a
concealment of information comes to light.

6) Iwakuni mayor to accept U.S. jet relocation

YOMIURI (Page 2) (Full)
February 26, 2008

Yoshihiko Fukuda, the newly elected mayor of Iwakuni City in
Yamaguchi Prefecture has now made up his mind to accept a
government-proposed plan to relocate U.S. carrier-borne fighter jets
from the U.S. Navy's Atsugi base in Kanagawa Prefecture to the U.S.
Marine Corps' Iwakuni base in his city along with the realignment of
U.S. forces in Japan, city officials said yesterday. Fukuda will
clarify the decision before his city's municipal assembly in its

TOKYO 00000495 005 OF 010


opening session on Feb. 28. He will shortly come up to Tokyo and
formally convey his decision to the government. The relocation plan
has been at a standstill because his predecessor, Katsusuke Ihara,
had raised an objection. The plan, however, is now expected to make
progress.

Fukuda will address his city's assembly at the opening of its
regular session. In his policy speech there, the mayor will
appreciate the government for considering a plan to ease the city's
base-hosting burden, including noise abatement measures, officials
said. He will state before the assembly that he thinks he should
basically cooperate on the U.S. military's realignment if the
government takes specific measures, according to the officials.

7) Fukuda, Lee agree to repair Japan-ROK relations and hold EPA
preliminary talks

NIKKEI (Page 1) (Excerpts)
February 26, 2008

Hiroshi Minegishi, Seoul

Prime Minister Yasuo Fukuda held talks with new South Korean
President Lee Myung Bak at the Blue House presidential office
yesterday afternoon in which the two leaders agreed to rebuild
Japan-South Korea relations which were strained during the previous
Roh Moo Hyun administration over the historical and Yasukuni issues.
They also agreed to begin preliminary talks to resume the economic
partnership agreement (EPA) talks, which have been on hold for three
years. A decision was also made for President Lee's visit to Japan
in April as part of the reciprocal visits by top leaders of Japan
and South Korea.

Prime Minister Fukuda called for building a new Japan-South Korea
era, saying: "The two countries are most important to each other. I
would like to forge relations in which we can exchange views
frankly." President Lee agreed with Fukuda. They also agreed to
strengthen cooperative ties between Japan, the United States, and
South Korea in order to press North Korea to abandon its nuclear
programs.

The prime minister also invited South Korea to attend the G8 Lake
Toya Summit Outreach Meeting to be held in July. President Lee
expressed his gratitude in response.

The Japan-ROK EPA talks that started in December 2003 have not been
held since in November 2004 when South Korea, which sought 90
PERCENT of the agricultural market be opened up, expressed
displeasure with Japan's response.

The prime minister said: "(An EPA) is necessary in order to
strengthen economic relations between the two countries. I would
like see preliminary talks between the two countries in order to
determine a direction (of the EPA talks)." In response, the
president said, "I agree."

8) Fukuda, Lee agree to hold preliminary talks on resuming EPA
negotiations

MAINICHI (Page 9) (Full)
February 26, 2008


TOKYO 00000495 006 OF 010


In a meeting held between Prime Minister Yasuo Fukuda and new South
Korean President Lee Myung Bak yesterday, the two leaders decided to
hold preliminary talks on reopening negotiations talks on forming a
bilateral economic partnership agreement (EPA) after a hiatus of
about three years. Between the two countries, there are such
historical issues as Japan's colonial rule of South Korea. These
issues stand in the way of moves to strengthen bilateral economic
relations between the two neighbors. Japan-South Korea relations are
now set to grow stronger under the new president, who places
emphasis on rebuilding the economy.

"Talks (on concluding an EPA) have been suspended over many years,
so let's start with preliminary talks." Fukuda and Lee agreed to set
moves in motion to resume EPA negotiations. Both sides are expected
to discuss specifics when Lee visits to Japan in April. In the
summit, they also shared the need for the two countries to further
deepen bilateral economic ties. It is now expected that EPA
negotiations will rapidly make headway.

Japan and South Korea started EPA negotiations in December 2003.
South Korea called on Japan to open its agricultural market 90
PERCENT , but Japan responded to the request in a cautious manner,
upsetting its negotiator. Since November 2004, no negotiations have
been held. Japan has lagged behind other countries in competition
over EPAs. Based on the judgment that concluding an EPA with South
Korea is indispensable, Japan has been exploring ways to resume
negotiations.

With the inauguration of Lee, who places emphasis on revitalizing
the economy, is turning the situation around. Some observers
anticipate that the growing mood for building a new Japan-South
Korea era will prompt both sides to reach an agreement in EPA
negotiations. In the Korean automobile industry, however, many are
still calling for caution about concluding an EPA. Meanwhile, Japan
remains opposed to significantly opening its agricultural market.
The rift between the two countries is still wide.

9) Gist of Fukuda-Lee meeting

YOMIURI (Page 4) (Full)
February 26, 2008

The following is a gist of the summit meeting held on February 25
between Prime Minister Yasuo Fukuda and South Korean President Lee
Myung Bak:

Japan-ROK relations

Prime Minister Fukuda: This is your first summit meeting as
president of South Korea. I am grateful for this opportunity,
believing it reflects your true feelings. South Korea is our most
important neighbor. I would like to build a new Japan-South Korea
era working with you, Mr. President.

President Lee: Cooperation between our two countries can wield great
influence in the international community. You, Mr. Prime Minister
are placing high priority on policy toward Asia. I totally agree
with you.

Prime minister: It is important to recognize what took place in the
past as facts and humbly face history. We must always consider what
the other party thinks. It is important to discuss the future from

TOKYO 00000495 007 OF 010


such a perspective.

President: I would like to realize cooperation while looking toward
the future.

North Korea

Prime minister: I would like to see cooperative ties between Japan
and South Korea and between Japan, the United States and South Korea
strengthened further in our efforts to denuclearize North Korea.

President: I also would like to see close cooperation between Japan,
the United States, and South Korea. I am fully aware of Japan's
positions (on the abduction issue and other matters).

Economic cooperation

Prime minister: I would like to see preliminary talks on a
Japan-South Korea Economic Partnership Agreement (EPA).

President: I will study ways to resume the talks.

Prime minister: I would like to see cooperation on energy policy and
policy toward small and medium-sized companies, as well. It is
important to strengthen the dialogue and cooperation of business
circles.

President: I totally agree with you.

10) Fierce battle between ruling and opposition camps over when to
take vote on budget bill

YOMIURI (Page 4) (Excerpts)
February 26, 2008

The House of Representatives Budget Committee approved yesterday to
open an ad hoc subcommittee on Feb. 27 and 28 by a majority of the
ruling parties, paving the way for an environment for taking a vote
a bill on the budget for fiscal 2008 as early as the 28th. The
ruling coalition aims to pass taxation-related bills, including one
to amend the Special Taxation Measures Law, which would retain the
current provisional tax for gasoline, through the Lower House by the
end of this month. The opposition camp, however, intends to put up
do-or-die resistance, calling for concentrated deliberations on the
road-use revenue issue and the collision between a Self-Defense
Force Aegis ship and fishing boat. Intertwined with the Diet
approval of a new governor of the Bank of Japan, a tug-of-war has
now reached a crucial stage between the ruling and opposition camp
at the Lower House.

The Diet affairs chiefs of the two Diet chambers from the ruling
Liberal Democratic Party (LDP) and its junior coalition partner New
Komeito confirmed yesterday a policy of getting the FY2008 budget
and taxation-related bills through the Lower House before the end of
February. In yesterday's meeting of the Budget Committee directors,
the two ruling parties proposed putting the bills to a vote on the
28th.

11) Ruling parties to approve revision to provisional tax rate bill
subject to DPJ coming up with counterproposal

TOKYO SHIMBUN (Page 2) (Full)

TOKYO 00000495 008 OF 010


February 26, 2008

The ruling parties yesterday decided to respond to the Democratic
Party of Japan's (DPJ or Minshuto) call for a revision to their bill
amending the Special Tax Measures Law, which includes the
maintaining of the special rate on the gas tax, if it presents a
counterproposal to the Upper House.

Ruling party members, especially road lobby members in the Liberal
Democratic Party (LDP), who have strong influence on road
administration, had been strongly opposing the idea of revising the
bill. However, the LDP leadership has judged that there is a strong
possibility that if the ruling parties do not lend an ear to the
DPJ, which controls the Upper House as the no. 1 party, it would
delay a roll call on the bill, causing the provisional rate to
expire.

Regarding the issue of whether to revise the bill amending the
Special Tax Measures Law, proposals, such as shortening the margin
of the extension of the provisional tax rate from the planned 10
years, taking a second look at the mid-term road construction
program, which includes 59 trillion yen as project expenses covering
10 years and turning part of special-purpose road construction
revenue sources, such as the gas tax, into an environment tax, have
been floated in the ruling camp.

However, the views of the DPJ, which is calling for scrapping the
provisional tax rate and reallocating special-purpose road
construction revenues for other uses, are far apart from the ruling
camp-sponsored bill amending the Special Tax Measures Law. So
revision talks will likely encounter difficulties.

Prime Minister Yasuo Fukuda on Feb. 24 expressed his intention to
positively respond to the opposition camp's call for a revision of
the bill. He told reporters in Seoul, which he was visiting then, "I
will deliberate on the bill with the possibility of revising it and
securing Diet passage within the current fiscal year into
consideration."

Election Committee Chairman Makoto Koga, a heavyweight in the LDP's
road policy clique in the Diet, on Feb. 23 indicated his intention
to approve a revision to the bill on condition that the DPJ submits
a counterproposal.

12) Surplus gas tax revenues: Government, ruling parties mulling
stricter enforcement of reallocation of road funds for other uses,
shifting stance to talks to revise amendment to special tax measures
law

MAINICHI (Page 1) (Excerpt)
February 26, 2008

The government and the ruling parties yesterday started
reconsidering the bill amending the Road Construction Revenues
Special Exemption Law aimed at reallocating revenues from the
gasoline tax that exceed road construction expenses in each fiscal
year for other uses. Specifically, they are looking into the
possibility of deleting a provision stipulating that the amount of
money equal to road funds reallocated for other uses should be
transferred to special-purpose road construction funds for the
following fiscal year and beyond. This proposal was intended to
enable the construction of roads as planned, while reallocating road

TOKYO 00000495 009 OF 010


funds for other uses as well. However, in an effort to enact the
bill amending the Special Tax Measures Law, which incorporates an
extension of the special rate on the gas tax, the government and the
ruling camp decided to use the scrapping of that proposal as a
trigger for revision talks with the Democratic Party of Japan (DPJ
or Minshuto).

13) Ozawa reveals Prime Minister Fukuda sounded him out on another
direct meeting, but he declined

MAINICHI (Page 2) (Full)
February 26, 2008

Ichiro Ozawa, president of the main opposition Democratic Party of
Japan (DPJ or Minshuto), revealed yesterday at a press conference in
Kumamoto City that Prime Minister Yasuo Fukuda's side had sounded
out him about a face-to-face meeting on the issue of selecting a new
Bank of Japan governor, but he had declined the offer, saying:
"Since there has been no progress since (the grand alliance uproar)
last year, I will not hold a direct meeting with the Prime
Minister."

Fukuda is believed to have a desire to form a grand alliance.
Therefore, he might have approached Ozawa to hold a meeting taking
advantage of the issue of selecting a new BOJ governor. Fukuda told
reporters about a possible meeting with Ozawa: "I cannot predict
whether there will be need for it or not."

It has been decided that the government will present its choice of
new BOJ governor to the steering committees of the two Diet
chambers. Despite that, if Fukuda considered a face-to-face meeting
with Ozawa, speculation would erupt in political circles.

Ozawa said in the press conference: "I was not directly sounded
out." Some in the DPJ are still worried and doubts that Ozawa may
rekindle the grand alliance notion in concert with Fukuda. The
reason for Ozawa having clarified Fukuda's secret approach seems to
a desire to sweep away such doubts in his party.

14) National debt hits record 838 trillion yen at end of 2007

MAINICHI (Page 9) (Full)
February 26, 2008

The balance of the nation's debt jumped to a record 838 trillion yen
as of the end of last year, up 4,306.8 billion yen from the level
posted Sept. 30, according to the Finance Ministry yesterday. This
figure is 5,741.9 billion yen larger than the level at the end of
December 2006. The balance of per-capita debt is calculated at 6.56
million yen, up about 50,000 yen from the year before.

The Finance Ministry announces the balance of the nation's debt,
calculated by adding the government's borrowings and financing bills
(FB), every three months. Of the total, government bonds increased
3,365.3 billion yen to 534,514.5 billion yen. Investment-and-loan
bonds climbed 845.5 billion yen to 141,043.4 billion yen.

Borrowing under the general and special accounts of the national
budget reached 57,036.6 billion yen, up 119.9 billion yen. FB, used
to make up for temporary funding shortages, stood at 102,326.9
billion yen, up 222.9 billion yen. The amount worked out by
deducting the total amount of investment-and-loan bonds and FB from

TOKYO 00000495 010 OF 010


the balance of debt is regarded as the balance of long-term debt.
The Finance Ministry estimates this amount at approximately 607
trillion yen as of the end of fiscal 2007. The total amount of the
central and local governments' long-term debt is expected to reach
about 772 trillion yen.

SCHIEFFER

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