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Cablegate: Japanese Morning Press Highlights 02//08

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UNCLAS SECTION 01 OF 12 TOKYO 000520

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//08


Index:

(1) U.S. Secretary of State Rice calls alleged rape of junior high
school girl "extremely regrettable" and emphasizes need for measures
to prevent recurrence (Jiji Press)

(2) Rally to protest crimes by U.S. military servicemen to be held
on March 23 (Akahata)

(3) Japanese security guards working at U.S. bases in Okinawa
carried pistols outside bases; Foreign Ministry: Carrying guns
outside bases prohibited (Ryukyu Shimpo)

(4) Editorial: Measures to prevent accidents more important than
restructuring MOD (Nikkei)

(5) Editorial: Ishiba's resignation unavoidable (Tokyo Shimbun)

(6) Restrictions on foreign ownership of airports necessary to
ensure safety for people (Sankei)

(7) Waning of Japan (Ekonomisuto)

ARTICLES:

(1) U.S. Secretary of State Rice calls alleged rape of junior high
school girl "extremely regrettable" and emphasizes need for measures
to prevent recurrence

JIJI PRESS ONLINE (Full)
February 27, 2008, 15:26 p.m.

U.S. Secretary of State Rice met with Japanese and American
reporters at the U.S. Ambassador's Residence in Tokyo on the
afternoon of Feb. 27. Speaking of the alleged rape of a junior high
school girl by a U.S. Marine in Okinawa, she said, "It's extremely
regrettable. It is an incident that should not have occurred."

In addition, Rice stressed that the U.S. Forces Japan have devoted
all their efforts to working out measures to prevent a recurrence of
similar incidents by establishing a working group.

(2) Rally to protest crimes by U.S. military servicemen to be held
on March 23

AKAHATA (Page 2) (Full)
February 27, 2008

The Okinawa Women's Association (Okifuren) and the Liaison Council
to Nurture Children's Groups (Okikoren) held a meeting yesterday at
the association's hall in Naha City and decided to hold a rally on
March 23 to protest the rape of a junior high school girl by a U.S.
Marine and a series of other crimes committed by U.S. military
servicemen. The rally is named "Okinawa rally to protest sexual
assaults on school girls and women by U.S. military personnel." The
meeting decided to hold a demonstration march after the rally.
Coordination is now under way for a plan to hold the rally in the
town of Chatan.

Besides the two above organizations, attending yesterday's meeting
include the Federation of Senior Citizens Clubs, the Federation of
Parents and Teachers Associations of High Schools, the Council of

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Youth Organizations, the Association to Talk about Youth, the
Okinawa Elementary and Junior High School Teachers' Union, and the
High School Teachers' Union.

Okikoren Chairman Tetsuei Tamayose said: "There is no change in the
situation since 12 years ago. This means that there is no
improvement in Okinawa. I want to call for revision of the
Japan-U.S. Status of Forces Agreement (SOFA)."

The meeting picked the six organizations, excluding the two
teachers' unions, as executive committee members, and decided to
have the committee call on various organizations to support and join
their effort.

After the meeting, Tamayose and Okifuren Chairperson Haruko Odo
visited the prefectural assembly to ask nonpartisan assembly members
to take part in the planned rally. Tamayose said: "We want the
prefectural assembly chairman to become chairman of the executive
committee. We also want the prefectural assembly to take a lead." He
then presented a petition to the secretariat of the assembly.

(3) Japanese security guards working at U.S. bases in Okinawa
carried pistols outside bases; Foreign Ministry: Carrying guns
outside bases prohibited

RYUKYU SHIMPO (Page 1) (Full)
February 27, 2008

It was learned yesterday that 59 Japanese security guards working
under the U.S. Marines' military police at Camp Foster and Camp
Courtney carried pistols while in civilian zones outside the base
facilities on February 11 and 12, by order of the military police
commander. House of Representatives member Mikio Shimoji (of the
People's New Party, Sozo, and Mushozoku-no-kai) raised questions
about it in a Lower House Security Committee session yesterday.
Foreign Ministry International Legal Affairs Bureau Director-General
Ichiro Komatsu indicated that the act violated U.S. military
provisions, saying: "Japanese security guards are prohibited from
carrying guns outside U.S. military facility areas." Hosei
University Professor Hiroshi Honma, who is well versed in base
issues and the Japan-U.S. Status of Forces Agreement, said,
"Japanese security guards leaving the bases while carrying firearms
constitutes a violation of Japan's Swords and Firearms Control Law."
Some Japanese guards have consulted the prefectural police on the
matter.

By commander's order

According to a concerned source, a platoon leader on February 8
showed the guards the military police commander's directive reading:
"Changes to what was agreed upon between the United States and Japan
have now made it possible to carry pistols in moving to facilities
adjacent to (U.S. bases). This is the commander's official order.
Anyone rejecting it will be subject to administrative punishment or
disciplinary action. The commander does not want to see personnel
not carrying firearms."

In accordance with the order, the Japanese guards crossed national
highways or moved to urban areas from 7:00 a.m. February 11 through
0:30 p.m. February 12 while carrying firearms on duty. Gate guards
moved to head for their posts and patrol personnel moved to cover
for gate guards, take lunchtime breaks, or make rounds. They moved

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by car or on foot while carrying guns that were loaded with bullets.
Travel distances varied from approximately 2 kilometers from Camp
Courtney to Camp McTureous to just crossing national highways.

The personnel temporarily stopped carrying guns as a Japanese
supervisor verbally ordered them at noon February 12 to suspend the
act because the matter had not been cleared between Japan and the
United States. On February 11, 35 personnel moved out of Camp Foster
while carrying firearms, and eight did the same from Camp Courtney.
On February 12, 12 guards left Camp Foster and four left Camp
Courtney. According to the source, magazines that are removed from
the handguns by U.S. military police officers are usually kept in
boxes and that those boxes are moved from facility to facility by
separate vehicle.

(4) Editorial: Measures to prevent accidents more important than
restructuring MOD

NIKKEI (Page 2) (Full)
February 27, 2008

Defense Minister Shigeru Ishiba seems to have got the order of his
priorities all wrong. His series of statements proposing
restructuring the Ministry of Defense (MOD) gives us such an
impression.

What is vital at this point when a search is underway for the
victims of the recent collision between the Maritime Self-Defense
Force's Aegis-equipped destroyer Atago and a small fishing boat is
to have the Japan Coast Guard uncover the facts and the MSDF to
strictly implement preventive measures. Restructuring MOD is less
vital at this time.

Sometime ago, we have raised questions about Defense Minister
Ishiba's restructuring plan that seems to be capitalizing on the
scandal involving former Vice-Defense Minister Takemasa Moriya. Days
later, the Aegis collision occurred. Although the delay in notifying
the defense minister about the collision is unpardonable, the root
cause lies in a lack of understanding of the emergency reporting
procedures. This seems insufficient to support why the ministry must
be restructured.

Faced with a string of improprieties, such as a leak of Aegis data
and a fire on another destroyer, Shirane, the MSDF has long been
urged to improve its nature. The latest accident has just added fuel
to the fire.

There is a box containing some rotten apples. If the rotten ones are
kept there, other apples will all go bad. The MSDF can be likened to
such a box. What is essential is not change the shape of the box but
quickly remove the bad apples.

MSDF personnel, whose basic duties are onboard, have a strong sense
of teamwork and tend to close themselves off to the outside. They
defend colleagues every time an irregularity occurs. Such an
irresponsible nature will spoil all the apples.

Former Defense Minister Yuriko Koike stepped down last summer,
citing the leak of classified data on the Aegis system, which
undermined U.S. trust in Japan as its ally. SDF Joint Staff Chief
Takashi Saito (former MSDF chief of staff) and MSDF Chief of Staff
Eiji Yoshikawa did not take responsibility. It is an example of the

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irresponsible nature of the MSDF.

The MSDF's underestimation of the incident coincided with the wishes
of Moriya, who wanted to continue serving as vice minister out of
fear of his scandal coming to light. The bad relationship between
Moriya and the MSDF was widely known. Saito and Yoshikawa were
appointed at a time when Moriya had absolute power.

Although likening Saito and Yoshikawa to bad apples is
inappropriate, an immediate dismissal of them by Ishiba would send
needed shockwaves through the MSDF. That would be the most effective
step to prevent a recurrence of accidents.

As defense minister, Ishiba is also to blame for the current
situation. There is momentum to seek Ishiba's resignation over the
sequence of events leading to MOD's correction of its initial
announcement on when (the Atago) first spotted the light of the
fishing boat. If Ishiba resigns now, the MOD would have its fifth
minister in a year.

The MSDF is quietly waiting for such to happen. The force's slack
nature would then be preserved. As was the case with Koike's
resignation over the Aegis data leak, (the Atago accident) is
unlikely to prompt the MSDF to severely reflect on itself. There is
something else for Defense Minister Ishiba to do before discussing
his abstract MOD restructuring plan.

(5) Editorial: Ishiba's resignation unavoidable

TOKYO SHIMBUN (Page 5) (Full)
February 27, 2008

It has been brought to light that the Defense Ministry had covered
up another fact about the recent collision of a Maritime
Self-Defense Force destroyer with a fishing boat. This time around,
Defense Minister Shigeru Ishiba is involved. Ishiba explained that
he had no intention to manipulate information. However, his
resignation now seems unavoidable.

The Defense Ministry has changed its account of the MSDF Aegis
destroyer Atago's collision with the tuna trawler Seitoku Maru that
left the trawler's two crewmen missing.

On Feb. 19, the day of the accident, the Defense Ministry initially
explained that the Atago detected a fishing boat's light "two
minutes" before the collision. On the evening of Feb. 20, however,
the Defense Ministry said the Atago became aware of the fishing boat
"12 minutes" before the collision. This time, another fact has come
to light. Ishiba received an initial report from the MSDF Maritime
Staff Office on the night of Feb. 19 about the accident. Based on
that information, Ishiba announced that the Atago discovered the
fishing boat "12 minutes" before the collision. He received a formal
report from the MSO at 8:30 a.m., Feb. 20. Nevertheless, he did not
make it public until his attendance at a meeting of the ruling
Liberal Democratic Party's defense panel on the evening of Feb. 20.

That fact was concealed for almost a full day after Ishiba received
the initial report-nearly nine hours after he received the confirmed
information. "We must fulfill our public accountability in an
appropriate manner." This was Ishiba's own word, wasn't it? He also
said, "If there is cover-up, it's only natural that I should take
responsibility."

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In his Diet reply yesterday, Ishiba stated that the Defense Ministry
needed time to confirm the facts and coordinate with the Japan Coast
Guard on the advisability of making it public. With this, Ishiba
denied that he had covered up or manipulated information.

We wonder how far Ishiba had public accountability in mind. Ishiba
could announce at a comparatively early hour that the Atago first
noticed the fishing boat "two minutes" before the accident. However,
Ishiba later said it was "12 minutes" before the accident. The
question is why it took him so long to make it public. His account
was misleading. As it stands, the Defense Ministry should have
immediately corrected it at its own discretion. We want him to come
up with a convincing account.

The Atago is said to have had enough time to avoid colliding with
the fishing boat if it had confirmed the fishing boat's light 12
minutes before the accident. However, the Atago reportedly continued
its autopilot, with its crewman on the watch thinking to himself
that the fishing boat would get out of the way. This is an
incredible blunder. The blame is much heavier for "12 minutes." We
then cannot but surmise that the Defense Ministry was therefore
hesitant to make it public and had something to do.

In the wake of the tragedy, Ishiba indicated that he was willing to
restructure the Defense Ministry. His overhaul plan features
integrating and reorganizing the Defense Ministry's bureaucracy and
the SDF's staff offices. That is, however, on a different plane. We
do not want him to shift away from the seriousness of the accident.

"I think people probably don't know at all who is doing what in this
organization." So saying, Ishiba raised a question that is not
appropriate for the defense minister who is at the center of
civilian control.

We understand that Ishiba cannot cave in at once to the opposition
parties' calls for his resignation. He should find out the truth and
take preventive steps. After that, he should take responsibility on
his own.

(6) Restrictions on foreign ownership of airports necessary to
ensure safety for people

SANKEI (Page 13) (Full)
February 27, 2008

By Tomomi Inada, House of Representatives member and lawyer

Views split in LDP, cabinet

Discussion is heating up over a bill amending the Airport
Development Law to limit foreign investment in the companies that
operate major domestic airports. The conflict of opinion should not
be simply viewed as antagonism between those calling for structural
reform and lawmakers lobbying for the interests of domestic airport
operators. This issue involves the security of Japanese airports and
the nation. The bill calls for limiting the voting rights of foreign
investors to less than one-third in the operators of Narita
International Airport Corp, which is currently preparing to go
public as early as next year, and Japan Airport Terminal Co., which
operates Haneda Airport. On the bill, views are split even in the
Liberal Democratic Party and the cabinet.

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Opponents of the proposed regulations list these reasons for their
opposition: "Restrictions on foreign ownership could send a wrong
message that the Japanese market is closed;" "Regulations are
disputably to discriminate against foreign investors, regarding them
as bad;" and "The Ministry of Land, Infrastructure, and Transport is
aiming to secure postretirement jobs by introducing
foreign-ownership restrictions."

The proposed imposition of restrictions, however, is not a wrong
message but a right message that Japan is a normal country in terms
of crisis management. Opponents say that the Japanese market will be
defined as closed if restrictions are imposed. However, also in the
U.S., airports are built and operated by public corporations. In
France, the government holds 68 PERCENT of the shares in airport
operators. According to such critics, it is meant that the markets
of the U.S. and France are also closed.

There are no restrictions on foreign ownership only in Britain,
Denmark, Italy, and Belgium. In Britain, a Spanish firm has acquired
a 93 PERCENT share in the operator of Heathrow Airport, and the
stock of the airport has been delisted. What would happen if a fund
affiliated with a communist country's government purchases Narita
Airport and if its stock is delisted?

Limit to market openness

Some say that since airport terminals are commercial facilities,
there is no need to worry about security. Even so, airport terminals
are not merely shopping centers. Major airport buildings, such as
Haneda and Narita, are open to the world. Should a secret passage be
built in an airport terminal, it would be impossible to prevent
terrorists from poisoning the food, such as dumplings. An airport
includes runways, a control tower, and an airport building housing
an immigration office, quarantine office, and a facility for baggage
inspection.

Critics assert that foreign-capital regulations will not work
effectively to prevent activities by vicious domestic groups, such
as the Aum religious cult. But it is a leap of logic to say that it
is unnecessary to introduce regulations that are not designed to
protect people from the Aum religious cult. Since we cannot expect
other countries' firms to protect our national interests, a
framework for market openness should be created.

There are also advocates of imposing restrictions not on foreign
ownership but on certain misdeeds. Regulations on deeds do not work
effectively in Japan, because government ministries with authority
have no guts, as shown in their responses to the share-transaction
cases involving former Livedoor President Takafumi Horie and the
Murakami Fund. It is impossible to list all misdeeds beforehand, so
regulations on specific deeds are ineffective for vicious dedicated
criminals. In the securities areas, even if such regulations do not
work effectively, it will not be detrimental to national security.
When it comes to airport buildings, however, that is another story.
It is irresponsible to say that the safety of airports should be
ensured only with restrictions on activities.

Application of foreign exchange law ineffective

There is an idea of applying the prior notification system in the
Foreign Exchange and Foreign Trade Control Law. Under the law, the

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government is given the authority to recommend or order a foreign
investor to halt or change his or her investment plan if the foreign
investor acquires more than 10 PERCENT of the total share in a
Japanese firm under the plan and if this acquisition is considered
to undermine national security and the maintenance of public order
or the protection of public safety. Some suggest that the prior
notification system should be also applied to airport operators.

But there is no case of the system applied in the past. At present,
a British investment fund has filed an application for raising its
current holding of 9.9 PERCENT in J Power, the nation's largest
wholesale electric power firm, to 20 PERCENT . Yet, no decision has
been reached on this issue.

This system is the same as foreign-capital restrictions in terms of
sending a message, but it remains to be seen how effectively it will
work. Investors may be more confused at their investment obstructed
based on such a comprehensive rule than in the case of being
obstructed based on the foreign-capital regulations.

Some critics see airport companies as important nests of cushy
reemployment for bureaucrats retiring from the Transport Ministry.
Even if their claim is true, this case and foreign-capital
regulations are on different levels. Even if airport companies are
found to have offered lucrative postretirement positions to former
ministry officials, restrictions should be placed on foreign
ownership if they are judged to be necessary in view of national
security and interests.

It is now necessary to review the trend of totally praising
privatization, deregulation and competitive market mechanism. Such
values certainly must be important to increase business efficiency
and to reconstruct fiscal conditions, but there are also areas in
which other than competition, efficiency, and prices are needed. The
principle of market mechanism cannot be brought into families. In
the area of food self-sufficiency, too, competition is not
everything. Airports are indisputably categorized in such an area.

(7) Waning of Japan

EKONOMISTO (Full)
February 26, 2008

Japan's economic system losing competitiveness due to "Galapagos
phenomenon"

By Naohiro Yoshikawa (senior consultant at Nomura Research
Institute)

"Unfortunately, the age when the Japanese economy was one of the
best is over." State Minister Hiroko Ota made this statement in an
economic speech given during the regular Diet session on Jan. 18.
Her statement sent a major shock wave not only to lawmakers, who are
in constant fear of moves that have anything to do with a Lower
House dissolution and snap election, but also to business circles,
which are increasingly wary of the sluggish stock prices and the
future of the economy.

The 1956 Economic White Paper noted that the postwar period was
over. When Ota made that statement, she probably had that wording in
mind. However, the assessment of the present Japanese economy is
diametrically opposed to the assessment of the economy at that time.

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Ota based her statement on such facts as that Japan's per-capita
nominal GDP, which used to rank second, slipped to 18th among 30
members of the Organization for Economic Cooperation and Development
(OECD).

Her perception of Japan's economic situation is correct, though it
is arguable whether it is appropriate for an economic minister to
make such a statement. One of the reasons why the Japanese economy
is no longer one of the best is that Japan is presenting the
so-called Galapagos phenomenon.

Japan left behind in world

The Galapagos Islands are located in the Pacific Ocean 900
kilometers off Ecuador in South America. On the islands, there are
many native species that have undergone unique evolution. It is said
that the environment of the islands, which are isolated from the
continent, has affected the unique evolution of creatures there.
Creatures that have undergone evolution on their own way are
extremely vulnerable to attacks by foreign species.

Japanese companies have achieved industrial development by
successfully using the more-than-100-million-person domestic market.
However, aside from some globalized companies, Japanese companies
have provided goods and services only on the domestic market. Their
competitiveness is now on the decline with such a business policy
working as a drag on their efforts to advance into overseas markets.
They were under the belief that they had created global standards on
the strength of high technical power. However, their corporate
behavior has, as a matter of fact, become peculiar in the world.

This peculiarity of Japanese companies is extremely similar to what
happened on the Galapagos Islands. Our Institute calls this the
"Galapagos phenomenon."

Industries and companies present the "Galapagos phenomenon" under
the following circumstances: (1) there is a goods and services
market in the country, based on high-level needs; (2) unlike the
domestic market, there are markets for low-quality and low-function
goods and services; (3) while the domestic market is evolving
independently, de-facto standards are established and spreading in
foreign countries; and (4) domestic companies and industries
belatedly find themselves left behind global trends.

Japan disadvantaged in de facto standard competition, lacks
consumers' perspective

One typical example is cell-phone handsets. Japan's cell-phone
services are most advanced in the world if contents services, such
as video and music downloads and e-mail services, as well as the
high dissemination rate of handsets, are taken into consideration.
It can also be said that Japan's cell-phone industry has developed
quite independently of other countries. The negative impact can be
seen in the low international competitiveness of its cell-phone
handsets.

According to IDC, a research company, Nokia Corp.'s share of
cell-phone handsets in the global market in 2007 was 38.2 PERCENT ,
followed by SamSung of South Korea with 14.1 PERCENT , Motorola of
the U.S. with 13.9 PERCENT , Sony Ericsson with 9.0 PERCENT and LG
Electronics of South Korea with 7.0 PERCENT . These five companies
alone account for 82.2 PERCENT of the global market. Among Japanese

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cell-phone companies, Sony Ericsson, a venture company between Sony
and Ericson of Sweden, ranked fourth, but the shares of more than 10
other Japanese cell-phone manufacturers are miserable.

What has brought on this situation? One reason is that the Global
System for Mobile Communications (GSM) developed in Europe has
become the mainstay global communications system. For that reason,
Japanese companies were disadvantaged in the competition to secure a
de facto global standard for their system. Another reason why they
have lost competitiveness is that Japan's cell-phone industry
adopted a system of telecommunications service providers buying up
cell-phone handsets, damping the incentive for cell-phone
manufacturers to make marketing efforts on their own.

The same holds true of semi-conductors, PCs and operating systems
(OS). Though Japan's technical capability is on the top level, U.S.
and South Korean products in those areas have become de facto
standards. That is why Japanese companies shut themselves away from
the global market and focused on the domestic market.

The key to success for Japanese companies was that if their
competitiveness is heightened with their products exposed to
consumers of the world's most sophisticated Japanese market, their
products would be accepted all over the world. However, this
pattern of success is now undergoing change. Whether Japanese
companies can win shares in emerging economies centered on the
BRICs, creating standards that are acceptable to and usable in the
BRICs holds the key to their improving competitiveness.

Bill for avoiding efforts for global standardization

The "Galapagos phenomenon" is seen not only in merchandise but also
in corporate and social systems. One such example is the corporate
accounting system. Amid the rapid globalization of corporate
activities and investment behavior, importance has been given to the
convergence of corporate accounting systems since the 1990s. This
trend has spread rapidly, mainly in the U.S. and Europe.

This means that the EU and the U.S. have vied for leadership in a
bid to make their own system a standard. In the meantime, all Japan
did while they were competing was, if I may put it in the strongest
terms, to ask that its existing rules be accepted as an exception,
by citing their uniqueness, though it approved the convergence of
corporate accounting systems as a general argument.

The agreement that necessitated Japan abandoning the uniqueness of
its accounting system was reached in Aug. 2007. The Accounting
Standards Board for Japan and the International Accounting Standards
Board agreed to match Japan's accounting standards with the
International Financial Reporting Standards (IFRS).

It was the EU that triggered this move. Regarding corporate
accounting principles special to Japan, there had been mutual
recognition with the EU. However, in a bid to take the initiative in
creating international accounting standards, the EU urged Japan to
match its accounting standards with the IFRS by 2009 to make it
eligible for procuring funds within the EU region, by fully adopting
the IFRS.

In contrast, the U.S. Financial Accounting Standards Board (FASB)
ensured the compatibility of the U.S. system with the IFRS, by
reaching an agreement on mutual recognition with the FASB and making

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arrangements for procedures to make necessary revisions to its own
standards by 2008. All other key countries decided to converge with
the IFRS. The only option left for Japan to avoid isolation was to
abandon its long-standing unique system.

Japan has postponed reform of the business accounting system for
more than a decade, defending it as unique. As a result, it is now
pressed to reform the system by 2011 as agreed on last year. That is
to say, its preoccupation with uniqueness has increased the cost for
Japan's corporate accounting to switch to global standards. There is
even a risk of the reform process undermining companies'
competitiveness, albeit temporarily.

A similar case occurred when the Bank for International Settlements
(BIS) adopted a capital adequacy ratio rule (BIS rule) applied to
banks.

Japanese banks accelerated overseas operations, including buyouts of
foreign companies, on the back of ample funds and a strong yen.
However, following the introduction of the BIS rule in the 1990s at
the initiative of European and U.S. financial authorities, all
Japanese banks were forced to constrain lending, because their
capital adequacy ratios were low, which served as a remote cause of
the lost decade in the 1990s and the 1998 financial crisis.

Japan steers clear of taking lead in setting rules

It has been long pointed out that Japanese universities lack
international competitiveness. The World University Ranking released
by the British daily The Times is one of the rankings referred to
most frequently in the evaluation of universities. Universities
throughout the world are fiercely competing in order to occupy the
upper echelon of the list.

Harvard University stood first in the comprehensive ranking in 2007.
Only four Japanese universities -- Tokyo University ranked 17th,
followed by Kyoto University at 25th, Osaka University at 46th and
Tokyo Institute of Technology at 90 -- were included in the top 100.
It is a problem that while U.S. and British universities occupy the
upper echelon of the list, only four Japanese universities were
ranked. However, another problem involves their commitment to the
process of creating such rankings.

According to a certain Japanese private university source, only a
few universities took part in a meeting to review evaluation
indexes, which are held once a year between evaluators and
universities. However, overseas universities, mainly European and
U.S. universities, actively exchanged views on how indexes should be
laid down and the weight of each index in an effort to turn the tide
of the meeting to their favor. It means that problems about Japanese
universities are not only that few universities were included in the
ranking but also that they do not positively involve themselves in
the forum of setting the rules of the game, namely, setting indexes
for evaluating competitiveness.

One should not assume the matter is only about ranking. Until now,
it has been all right for Japanese universities to target only
Japanese students. However, as the number of young people drops,
they need to actively accommodate foreign students in order to
survive. Being ranked in the upper echelons of the list serves as a
key factor in drawing competent students from all over the world and
enhancing their reputation.

TOKYO 00000520 011 OF 012

SUBJECT: JAPANESE MORNING PRESS HIGHLIGHTS 02//08


Japanese universities appear to be trying to only obtain a domestic
reputation both in education and research without making forays
abroad. This can be seen as part of the Galapagos phenomenon.

Young people staying at home

Creatures on the Galapagos Islands seldom leave due in part to the
oceanic current that flows from the continent to the islands.
Likewise, fewer young people now travel abroad.

The number of overseas travelers is decreasing, especially among men
in their twenties. The number significantly dropped in 2003, when
there was the SARS scare. Approximately 16-17 million Japanese have
traveled abroad annually over the past decade. However, a breakdown
of overseas travelers according to gender and age showed that the
absolute number of men in their twenties has been continuing to drop
since 2004. This is due in part to the fact that since the
so-called second-generation baby boomers have reached their
thirties, the population of those in their twenties has decreased.
Even so, the ratio of overseas travelers per unit of population has
also dropped.

The Nomura Research Institute conducted an Internet questionnaire
survey asking whether respondents have an aversion to the idea of
them or their spouses working abroad. Young pollees visibly showed
resistance to an overseas assignment. Elderly respondents in their
fifties and sixties had no such aversion. We want to see young
people play a role in globalizing Japanese companies. However, they
are in fact more inward-looking.

Lack of sense of crisis

The number of Japanese households is decreasing due to the falling
population. Local areas have become impoverished. The nation is
experiencing socio-economic stagnation in many areas. Furthermore,
the "Galapagos phenomenon," meaning that industrial activities and
social systems undergo evolution separately from global standards,
is taking place in many areas, undermining Japan's competitiveness.
In order for Japan to emerge from this situation, it is necessary
for it to open the country anew, making forays overseas.

Japan has experienced major openings twice in the past. The first
time was the Meiji Restoration. Ending its 300-year seclusion of the
Edo period, Japan opened the country to the world. The second
opening of the nation was the process of becoming a trading power,
restoring exchanges with foreign countries that had been blocked
during the World War II era. Japan is now pressed to open the
country for a third time.

It is also necessary to globalize inward-focused industries, mainly
the nonmanufacturing sector, by promoting freer exchanges of people.
It is also necessary to promote globalization in rural areas. Since
there will be no Black Ships or foreign pressure to urge Japan to
open the country, it is necessary for us to do so on our own.

Japan must create companies that can build de facto global standards
or companies that can successfully use global standards. It must
also provide global forums for young people to display leadership.
Japan significantly lacks a sense of crisis toward less-visible
changes, such as the graying population and declining birthrate. Not
much time is left for Japan.

TOKYO 00000520 012 OF 012

SUBJECT: JAPANESE MORNING PRESS HIGHLIGHTS 02//08


SCHIEFFER

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