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Cablegate: Japanese Morning Press Highlights 02/28/08

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UNCLAS SECTION 01 OF 15 TOKYO 000522

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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 02/28/08


Index:

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

Visit of Secretary Rice:
4) Secretary Rice, Prime Minister Fukuda see need to strengthen
alliance in wake of schoolgirl rape incident (Tokyo Shimbun)
5) Secretary Rice offers apology for Marine rape incident
(Mainichi)
6) Rice stresses resolve to prevent recurrence of incidents like the
Okinawa rape (Nikkei)
7) Rice confirms with Prime Minister Fukuda importance of preventive
measures to halt U.S. military misconduct (Yomiuri)
8) - Issue of SOFA revision put to rest by Rice visit, but Okinawa
sentiments still strong for changing the pact (Mainichi)
9) Rice stresses cooperation among Japan, U.S., ROK to deal with
North Korean issue (Asahi)
10) Rice: No deadline set for DPRK to declare nuclear programs
(Nikkei)
11) Rice urges North Korea again to completely declare its nuclear
programs (Mainichi)
12) Japan, Israel issue joint statement at summit meeting giving
priority to peace process (Yomiuri)

Defense issues:
13) USFJ releases report on off-base housing that shows more than
half or the 21,885 residents in 15 prefectures are in Okinawa
(Mainichi)
14) Permanent PKO dispatch law put on hold due to Aegis collision
incident (Yomiuri)
15) Vice defense minister apologizes for failure to inform JCG about
questioning of navigating officer (Asahi)

Political issues:
16) Ishiba's conduct in questioning captain without informing Coast
Guard another blow for the Fukuda administration (Mainichi)
17) Fight over budget adoption in the Diet further sidetracked by
the Aegis row (Nikkei)
18) Bank of Japan appointment also bumped back by the Aegis incident
(Asahi)
19) Democratic Party of Japan again pushing for someone other than
Muto for BOJ governor (Asahi)
20) Democratic Party of Japan to present counterproposal to the
government's road funding bill that uses gasoline taxes (Nikkei)

21) Fukuda to host 16 nation summit on global warming to coincide
with the Lake Toya G-8 Summit in July (Asahi)

22) Restrictions on foreign investment in airports will be approved
by the cabinet next week but in a scaled-down version (Mainichi)

Articles:

1) TOP HEADLINES

Asahi, Mainichi, Yomiuri, Sankei, & Tokyo Shimbun:
Defense Ministry questions navigator of Atago without approval from
Japan Coast Guard; Calls growing in ruling camp for Ishiba's
resignation


TOKYO 00000522 002 OF 015


Nikkei:
Government shelves plan to limit foreign stakes in airport operators
for now

Akahata:
Rally calling for revision of Worker Dispatch Law held in Diet
Building

2) EDITORIALS

Asahi:
(1) Prince Hotel should have had courage to counter right-wing
group's outrageous acts toward Japan Teachers' Union
(2) Take initiative in forming international emissions-trading
system

Mainichi:
(1) Bush administration should express resolve to denuclearize North
Korea during term of office
(2) Focus on Improving pension system, special accounts in
discussion on establishing Japanese-version SWF

Yomiuri:
(1) Rice's Japan visit as part of steady efforts to maintain
Japan-U.S. alliance
(2) Contain financial resources by revising Anti-Gangster Law

Nikkei:
(1) Government must present new prescriptions for structural reform
in report due out in June
(2) Burmese military junta's dictatorship unacceptable

Sankei:
(1) What Defense Minister Ishiba should address now is ministry
reform, reflecting on Aegis collision incident
(2) Rice's visit to Japan: It's time to reconstruct alliance among
Japan, U.S., and South Korea

Tokyo Shimbun:
(1) Labor unions' abilities tested over rectifying income
disparities in spring wage struggle
(2) Cuban Castro's retirement should be made chance for easing
tensions

Akahata:
(1) Stop maneuverings to change the nature of treaty to ban on use
of cluster munitions

3) Prime Minister's Official Residence (Kantei)

Prime Minister's schedule, February 27

NIKKEI (Page 2) (Full)
February 28, 2008

08:47
Met with Health and Labor Minister Masuzoe and State Minister in
Charge of Declining Birth Rate Kamikawa at Kantei.

09:37
Met with Chief Cabinet Secretary Machimura, Deputy Chief Cabinet
Secretary Futahashi, and Deputy Assistant Chief Cabinet Secretary

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TOKYO 00000522 003 OF 015


Saka.

10:17
Met with METI Vice Minister Kitabatake, METI Economic and Industrial
Policy Bureau Director-General Suzuki, METI Manufacturing Industries
Bureau Director-General Hosono, and METI Trade and Economic
Cooperation Bureau Director-General Adachi. Afterwards, met with
Administrative Vice Agriculture Minister Shirasu.

11:06
Met with Ambassador to Israel Katori and MOFA Middle Eastern and
African Affairs Bureau Director-General Okuda. Afterwards, met with
Futahashi.

12:30
Attended a session of the Consumer Administration Promotion
Council.

14:58
Met with Futahashi.

15:52
Met with House of Representatives member Yasufumi Tanahashi.

16:25
Met with U.S. Secretary of State Condoleezza Rice.

17:36
Met with House of Representatives members Taku Yamasaki and Koichi
Kato.

18:02
Met with Israeli Prime Minister Olmert. Afterwards, held a joint
press conference and hosted, together his wife, a dinner party for
him.

20:49
Arrived at residential quarters in Kantei.

4) Secretary of State Rice meets with Prime Minister Fukuda: Both
expresses sense of crisis over rape of school girl by U.S. Marine,
emphasizes need to strengthen alliance

TOKYO SHIMBUN (Page 2) (Full)
February 28, 2008

Yuji Nishikawa

U.S. Secretary of State Condoleezza Rice yesterday met separately
with Prime Minister Yasuo Fukuda, Foreign Minister Masahiko Komura,
and other Japanese leaders. In those dialogues, both Japan and the
United States repeatedly emphasized the need to strengthen the
bilateral alliance. Standing in the way of the two governments'
efforts to do so is a spate of misconducts by U.S. service members,
including the recent alleged rape of a junior high school girl by a
U.S. Marine in Okinawa. In order to prevent any harmful effect on
the bilateral alliance, the Japanese and U.S. governments
highlighted their determination to take measures to prevent a
recurrence of similar incidents, revealing their sense of crisis
over the situation.

At the outset of these meetings, Rice expressed regrets over the

TOKYO 00000522 004 OF 015


incident and stressed her intention to make all she can to prevent a
recurrence, noting, "We never hope to see such an incident occur. In
order to prevent a recurrence of similar incidents, I'd like to
cooperate with the Japanese government." In response, the Japanese
side expressed concern about a possible impact on the Japan-U.S.
alliance with Defense Minister Shigeru Ishiba saying, "It was an
unfortunate incident for the alliance."

Japan resumed the Maritime Self-Defense Force's (MSDF) refueling
mission in the Indian Ocean, which had been suspended in last
November and had been pending for the Japanese and U.S. governments
since then just until recently, on Feb. 21 after a hiatus of four
months. In last December, the MSDF succeeded in its missile defense
(MD) intercept test conducted in waters off Hawaii. The bilateral
alliance was thus in a good shape, but it is now being rocked by a
spate of misconducts committed by U.S. service members.

On Feb. 22, the Japanese government released a set of measures to
prevent a recurrence of similar incidents, such as receiving a
report on the number of U.S. military personnel living off-base once
a year from the U.S. side. The Ministry of Defense (MOD), as if to
be aware of Rice's visit to Japan, yesterday publicized the numbers
of U.S. service members (who live off-base) in cities, towns, and
villages respectively across the country.

However, doubts are already raised about the effectiveness of those
preventive measures. Okinawa Prefecture calls for a drastic review
of the U.S.-Japan Status of Forces Agreement (SOFA) in order to
specify that suspects detained by the U.S. side should be hand over
to Japan before indictment.

The Japanese government, however, is negative about reviewing SOFA
because it does not want to touch on cumbersome issues for the
alliance. The Japanese government intends to simply improve the
operation of SOFA. In fact, in the meeting yesterday with Rice,
Koumura said, "We aim to take effective, comprehensive and
continuous measures to prevent a recurrence of similar incidents in
order to minimize the impact of the incident on the Japan-U.S.
alliance." Both leaders did not discuss SOFA.

5) Rice offers apologies for U.S. serviceman's incident

MAINICHI (Page 3) (Full)
February 28, 2008

Prime Minister Yasuo Fukuda yesterday met at his office with U.S.
Secretary of State Rice. In the meeting, Rice offered her apologies

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for an Okinawa-based U.S. Marine's alleged rape of a junior high
school girl and other recent incidents involving American servicemen
in Japan. "It's extremely regrettable and we're sorry," Rice said,
"and we take these incidents seriously." She added, "We want to make
our utmost efforts to prevent similar incidents." Fukuda responded
by saying he would like to convey her words to the Japanese people.
"We would like to work together between Japan and the United States
to prevent a recurrence," Fukuda told Rice.

After the meeting, Fukuda told reporters, "We agreed to make
steadfast efforts so that there will never be this sort of incident
again." With this, Fukuda underscored the need for Japan and the
United States to cooperate in building a system to prevent such
incidents from recurring.


TOKYO 00000522 005 OF 015


Rice then met with Foreign Minister Masahiko Koumura, during which
the two confirmed a course of action to continue efforts for
"effective and comprehensive" measures in order to prevent similar
incidents. Meanwhile, Japan has now resumed the Maritime
Self-Defense Force's refueling activities in the Indian Ocean.
"Japan will aim to be a peaceful cooperative nation," Koumura told
Rice. He also said the Japanese government would consider
establishing a permanent law allowing Japan to send the Self-Defense
Forces for overseas missions. In connection with North Korea's
nuclear programs, Koumura referred to the issue of delisting North
Korea as a terror sponsor and explained that Japan's position is to
see progress in the pending issue of Japanese nationals abducted to
North Korea before that. Rice answered, "We will fully consult with
Japan."

6) Rice stresses resolve to put efforts into preventing similar
cases to U.S. Marine raping schoolgirl in Okinawa

NIKKEI (Page 2) (Full)
February 28, 2008

Visiting U.S. Secretary of State Condoleezza Rice met Prime Minister
Yasuo Fukuda, Foreign Minister Masahiko Koumura, and Defense
Minister Shigeru Ishiba in succession yesterday. Rice and Fukuda
agreed on the need for Japan, the U.S., and South Korea to cooperate
in persuading North Korea to resolve the issue of is past abductions
of Japanese nationals and to scrap its nuclear development program.
On the recent rape of a schoolgirl by a U.S. Marine in Okinawa, Rice
expressed her sincere regret and promised to make utmost efforts to
prevent similar incidents.

Fukuda and Rice also promised to cooperate in forming a new
international framework to fight global warming beyond the 2012
timeframe set under the Kyoto Protocol. Rice said: "In tackling the
issue of climate change, it is necessary to also take economic
growth into consideration."

Secretary Rice and Foreign Minister Koumura shared the importance of

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strengthening cooperation among Japan, the U.S., and Australia, as
well as with the North Atlantic Treaty Organization (NATO).

In a joint press conference, Koumura stated: "We agreed on the view
that it is necessary for Japan, the U.S., and South Korea to
strengthen cooperation in dealing with common challenges, including
issues related to North Korea." In reference to the issue of
dropping North Korea from a U.S. terrorism blacklist, Koumura said:
"She told me that the U.S. will fully discuss the issue with Japan."
Regarding the abduction issue, Rice emphasized: "The U.S. would like
to continue to support bilateral talks between Japan and North
Korea."

7) Rice apologizes for string of irregularities involving U.S.
service members, confirms with prime minister to take preventive
measures

YOMIURI (Page 2) (Full)
February 28, 2008

Prime Minister Yasuo Fukuda held a meeting with U.S. Secretary of
State Condoleezza Rice at his office yesterday. In the session,
Secretary Rice apologized for a series of misconducts involving U.S.

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service members in Okinawa, including the recent alleged sexual

TOKYO 00000522 006 OF 015


assault against a junior high school girl by a U.S. Marine, saying,
"We feel deeply sorry and take them seriously."

Secretary Rice also said that "the United States would like to work

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closely with Japan" in taking measures to prevent such incidents
from occurring. The two leaders confirmed that the two countries
would make utmost efforts to take preventive measures, with Prime
Minister Fukuda saying, "It is a matter that must be taken
seriously."

Further, regarding climate change, a central topic in the G8 Lake
Toya Summit in July, the prime minister said: "Combating global
warming is imperative. We would like to work closely with the United
States with the G8 Summit in mind." In response, Secretary Rice
said, "In addressing climate change, it is important to keep a
balance with economic growth." She thus indicated that the United
States would carefully deal with accepting a quota for reducing
greenhouse gas emissions.

Secretary Rice also held talks in succession with Chief Cabinet

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Secretary Machimura, Foreign Minister Koumura, and Defense Minister

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Ishiba. In her talks with Koumura, the secretary welcomed Japan's
resumption of the refueling operation in the Indian Ocean under the
current Antiterrorism Special Measures Law. In response, Foreign
Minister Koumura told her about the government's plan to study a
permanent law specifying conditions for the overseas dispatch of the
Self-Defense Forces.

As for North Korea's nuclear programs, they also confirmed the
policy course for Japan, the United States and South Korea to
strengthen trilateral cooperative ties. They further agreed to
continue to work together on pressing North Korea to present a
complete and correct declaration of its nuclear programs. In her
meeting with Defense Minister Ishiba, Secretary Rice, based on the
establishment of the new South Korean administration led by
President Lee Myung Bak, said: "Japan and South Korea are U.S.
allies. We would like to strengthen those alliances in dealing with
not only the denuclearization of North Korea but also with overall
security in this region."

8) Visit of Secretary Rice puts seal on government talk about
revising the SOFA over the Okinawa rape incident, but prefectural
distrust likely to grow

MAINICHI (Page 5) (Excerpt)
February 28, 2008

In connection with the rape of a schoolgirl in Okinawa, the Japanese
and U.S. governments through a series of meetings, including that
between Prime Minister Fukuda and Secretary of State Rice, have
confirmed that they will cooperate to prevent a recurrence of
similar incidents. Although the government's measures to stop
recurrences has been appreciated in Okinawa Prefecture as a rapid
response, the gap between public opinion in Okinawa and the
government over revising the Status of Forces Agreement (SOFA),
which the government will not do, remains as wide as ever. The
effectiveness of the preventive measures has only led to even
greater distrust in the prefecture.

9) U.S. Secretary of State Rice: Cooperation among Japan, U.S., ROK
necessary to deal with North Korea issue; Offers apology for rape
incident

TOKYO 00000522 007 OF 015

ASAHI (Page 4) (Full)
February 28, 2008

Visiting U.S. Secretary of State Condoleezza Rice met yesterday with
Prime Minister Yasuo Fukuda and Foreign Minister Masahiko Koumura
separately. She offered an apology for the alleged rape of an
Okinawan schoolgirl by a U.S. Marine. In the meetings, agreement was
reached that Japan and the United States would cooperate to prevent
a recurrence of similar incidents. In an interview to the Asahi
Shimbun held prior to the meeting with Fukuda and Koumura, Secretary
Rice said that the U.S. administration would place priority
especially on cooperation between the U.S., Japan and South Korea in
dealing with North Korean issues, following the inauguration of
South Korean President Lee Myung Bak, who has stressed the
importance of cooperation with the United States and Japan. The
cooperation includes the resumption of foreign ministerial meetings
among the three countries.

In the interview, Secretary Rice expressed sincere regret over the
U.S. Marine's rape incident. She said: "The incident was extremely
regrettable. American people and the U.S. government are concerned
about the girl and her family." Prime Minister Fukuda told her: "I
would like to see cooperation between Japan and the United States to
prevent a recurrence."

Referring in the interview to how to strengthen cooperation between
the U.S., Japan and South Korea, Secretary Rice stated: "It is only
natural for the United States to cooperation with Japan and South
Korea because we are allies." She underscored a stance of
strengthening cooperation more with the new South Korea government
than the previous Roh Moo Hyun government, which distanced itself
from the United States and Japan. She also said: "The United States,
Japan and South Korea once held foreign ministerial meetings. The
three countries will probably continue them from now on." She
indicated a resumption of meetings of the Trilateral Cooperation and
Oversight Group (TCOG), which have been suspended since 2003. Prime
Minister Fukuda pointed out: "Cooperation between Japan, the United
States, and South Korea is also important."

10) Rice indicates no intent to set deadline for North Korea to
declare nuclear programs

NIKKEI (Page 2) (Full)
February 28, 2008

In a press conference at the U.S. ambassador's official residence
yesterday, U.S. Secretary of State Condoleezza Rice said that the
U.S. would not set any new deadline for North Korea to declare its
all nuclear programs. The deadline had been set for late last year,
but Rice said: "The delay is not a problem." She indicated that the
U.S. will continue to call on Pyongyang to fully explain its nuclear
development programs using plutonium and highly enriched uranium, as
well as its nuclear nonproliferation measures involving nuclear
technology and materials, without setting a deadline.

11) Rice urges N. Korea again for "complete declaration" of nuclear
programs

MAINICHI (Page 3) (Abridged)
February 28, 2008


TOKYO 00000522 008 OF 015


Visiting U.S. Secretary of State Rice met Japanese and foreign
reporters at the U.S. ambassador's official residence in Tokyo
yesterday afternoon.

On the issue of North Korea's nuclear programs, Rice said she has
left Assistant Secretary of State Hill in Beijing to "move the
six-party talks forward."

In the press interview, Rice suggested the need for North Korea to
declare its nuclear programs in order to "make the next step
productive." With this, she urged North Korea to submit a complete
declaration of its nuclear programs in order to build a relationship
of mutual trust. She indicated that North Korea's declaration of its
nuclear programs should include its storage of plutonium and other
nuclear materials, highly enriched uranium (HEU) program, and
nuclear technology and material proliferation.

Rice indicated that the issue of Japanese nationals abducted to
North Korea is an issue relating to human rights. She also indicated
that North Korea will have to implement its second-stage action,
including declaring its nuclear programs, in order for the United
States to delist North Korea as a terror sponsor.

12) Fukuda, Olmert issue joint statement committing to cooperation
toward Middle East peace

YOMIURI (Page 2) (Full)
February 28, 2008

Prime Minister Fukuda met with visiting Israeli Prime Minister
Olmert at the Prime Minister's Office yesterday. The two leaders
later issued a joint statement in which Japan committed to
contributing to resolving the Israeli-Palestinian conflict and
moving the Middle East peace process forward. This is the first
Israeli prime ministerial visit to Japan in 11 years. The two
countries exchanged political documents for the first time.

The statement notes: (1) Japan, Israel, Jordan, and the Palestinian
autonomous government should cooperate in turning into a concrete
arrangement the "Corridor for Peace and prosperity" initiative, a
project Japan has proposed to develop the Jordan Valley; and (2)
Japan and Israel should establish a taskforce to strengthen their
economic relations. The statement emphasizes a willingness to
activate exchanges in the political, economic, and science /
technology areas.

In the meeting, Olmert expressed his concern about Iran's nuclear
development and North Korea's moves for nuclear proliferation in the
Middle East region. In response, Fukuda pointed out the importance
of nuclear nonproliferation, while adding: "North Korea's nuclear
problem is an imminent challenge. Resolving the abduction issue is
also essential for our nation. We are stepping up efforts to improve
relations with North Korea, but progress has not been made as we
expected." Prior to meeting with Fukuda, Olmert met Foreign Minister
Koumura at a Tokyo hotel. Koumura voiced apprehension about the
construction by Israel of houses in East Jerusalem for immigrants,
saying: "The move is aggravating the conflict."

13) U.S. military's off-base population totals 21,885; Nearly half
live in Okinawa

MAINICHI (Page 3) (Abridged)

TOKYO 00000522 009 OF 015


February 28, 2008

In the wake of an Okinawa-based U.S. Marine's alleged rape of a
local junior high school girl, the Defense Ministry yesterday
announced the number of U.S. military personnel living outside their
bases in Japan, as well as civilian employees and family members, as
part of its measures to prevent similar incidents. They total 21,885
in 15 prefectures, including Tokyo and Hokkaido. In Okinawa
Prefecture, the U.S. military's off-base population is 10,319-nearly
half of the total number. Including on-base population, the U.S.
military's total population in Japan is 92,491. The U.S. military's
off-base population in Japan accounts for a little over 20 PERCENT
of its total population in Japan.

U.S. Forces Japan provided the Japanese government with data as of
the end of March, 2007. In the breakdown of municipalities, Kanagawa
Prefecture's Yokosuka City has the largest number of off-base U.S.
military residents at 3,420, followed by Okinawa Prefecture's Chatan
Town at 2,893, Okinawa City at 2,705, Nagasaki Prefecture's Sasebo
City at 2,008, and Aomori Prefecture's Misawa City at 1,550.

14) SDF legislation project team put off

YOMIURI (Page 4) (Abridged)
February 28, 2008

The ruling coalition of the Liberal Democratic Party and New Komeito
has now decided to postpone its plan to set up a project team
intended to study overseas missions for the Self-Defense Forces. The
project team was initially set to launch yesterday. New Komeito
became cautious about the plan, following the recent fatal collision
of a Maritime Self-Defense Force Aegis destroyer with a fishing boat
that has left the fishing boat's two crewmen missing.

"We will have to discuss a general (permanent) law for the
Self-Defense Forces' overseas missions," New Komeito Secretary
General Kitagawa told reporters yesterday. "But," Kitagawa added,
"we're not in such an environment to do so for now" given the
public's growing criticism of the government over the Aegis
accident.

The idea of establishing a permanent law for the SDF's overseas
missions is intended to prepare for a newly enacted antiterrorism
special measures law's expiry in January next year. The ruling
coalition is planning to present a bill to the Diet during its
current session.

The LDP held a joint meeting of its panels on Feb. 13 to enter into
discussions on the permanent legislation for the SDF's overseas
activities, with former LDP Vice President Taku Yamasaki presiding.
New Komeito has also held hearings with opinion leaders since this
January. The party was expected to set about a full-fledged study of
the permanent legislation with the ruling coalition's project team.
The Aegis accident seems to have dampened that momentum.

15) Vice defense minister apologizes for failure to inform JCG about
questioning of navigating officer

ASAHI (Top play) (Excerpts)
February 28, 2008

Administrative Vice Defense Minister Kohei Masuda late yesterday

TOKYO 00000522 010 OF 015


held a special news conference in order to give an account of the
Maritime Staff Office's (MSO) questioning of the navigating officer
of the Aegis destroyer Atago on the day of the collision with the
fishing boat Seitoku-maru. The navigating officer was told by the
MSO to come to the MSO by helicopter for questioning. Masuda
admitted that the way the MSO informed the Japan Coast Guard (JCG)
of the questioning was "inappropriate." Although Masuda still
insisted that the MSO contacted the JCG before noon, the JCG denied
there was such contact, so Masuda told the press: "I was unable to
confirm our side contacted the JCG." Masuda in effect confirmed
Defense Minister Ishiba's reply made in Diet deliberations yesterday
morning, in which Ishiba said that "it was not necessarily
appropriate" to have the questioning without approval from the JCG.

According to Masuda's explanation, on the morning of Feb. 19, when
the collision took place, the chief of the Fourth Chief of Staff
Office of the Yokosuka District Headquarters told the Yokosuka Coast
Guard Department by phone: "We will have one senior officer
disembark before entering the port in order to have him transport an
injured person and report to our unit." But Masuda added that
"Because I don't have a clear memory of whom our side telephoned, I
can't confirm" whether these matters were well relayed to the
Yokosuka Coast Guard Department."

16) Prime Minister Fukuda, protective of defense minister under
fire, also feeling the adverse effect; Budget bill, selection of new
BOJ governor may be affected

MAINICHI (Page 2) (Full)
February 28, 2008

Katsumi Kawakami

Defense Minister Shigeru Ishiba now finds himself in an even tighter
spot since he has admitted that it was "inappropriate" for him to
question, without obtaining approval from the Japan Coast Guard
(JCG), the navigating officer of the Maritime Self-Defense Force's
(MSDF) Aegis destroyer Atago over the collision of the Atago and a
fishing boat. With the opposition parties gearing up to grill the
government over its handling of the collision, the backlash from the
accident could affect struggles in the Diet between the ruling and
opposition blocs over the passage of the 2008 budget bill, as well
as the selection of a successor to the incumbent Bank of Japan (BOJ)
governor, whose term of office is to expire shortly. Prime Minister
Yasuo Fukuda, who has been defending Ishiba, has put himself into
the line of critical fire, as well.

A senior member of the ruling Liberal Democratic Party (LDP) Upper
House Caucus said yesterday, "With the two fishermen still missing
after the collision, Mr. Ishiba naturally needs to take
responsibility for that. However, the first thing for him to do is
to pave the way for a full accounting of the facts about the
collision." This lawmaker indicated that Ishiba's resignation is
unavoidable, once he certain light is thrown on the cause of the
accident.

Fukuda yesterday evening told reporters at the Prime Minister's
Official Residence: "It is only natural for the minister in charge
to investigate the incident on his own in order to shed light on
what happened. I think what he did was within his responsibility."
Fukuda defended Ishiba for questioning the Atago's navigator about
the collision. But Fukuda added: "It would have been good if he had

TOKYO 00000522 011 OF 015


paid more careful attention and contacted the Japan Coast Guard."

17) Battle over budget bill between ruling, opposition camps

NIKKEI (Page 2) (Full)
February 28, 2008

The ruling and opposition parties are conducting fierce discussions
as to setting a date for passing the fiscal 2008 budget bill through
the House of Representatives. Although the ruling camp aims to get
the bill passed on Feb. 29 by the Lower House, the opposition
parties are putting up do-or-die resistance against the plan,
seeking thorough deliberations on the collision of a Maritime
Self-Defense Force destroyer and a fishing boat. The government and
ruling coalition are engaging in complicated maneuvering because of
their desire to avoid a damaging standoff with the main opposition
Democratic Party of Japan (DPJ or Minshuto) in order to secure the
DPJ's approval of their appointment of a new governor of the Bank of
Japan.

Ruling Liberal Democratic Party (LDP) Diet Affairs Committee
Chairman Tadamori Oshima and his DPJ counterpart Kenji Yamaoka
yesterday discussed the issue of setting a date for taking a vote on
the budget bill in the House of Representatives.

Yamaoka: "How about putting off your plan to next week?"

Oshima: "We absolutely cannot give up on our plan of adopting the
budget bill this week."

Oshima insisted that the bill pass the Lower House this week, and
the meeting ended in rupture.

The ruling camp plans to hold concentrated deliberations on the
collision between the Aegis ship and fishing boat on Feb. 29 and to
pass the budget bill and a bill amending the Special Taxation
Measures Law, which includes measures to retain the current
provisional tax rates for road construction, through the Lower House
on the same day. The budget bill is sent to the House of Councillors
after the Lower House adopts it. The bill will be enacted
automatically if the Upper House does not take a vote within 30 day
s after it receives it. The ruling coalition is seriously concerned
about being forced to compile a temporary budget (i.e., continuing
resolution).

Referring to the state budget and the Special Taxation Measures Law
revision bill in a consultation yesterday between the government and
ruling parties, LDP Secretary General Bunmei Ibuki pointed out that
passing the bills before the end of the current fiscal year is a
precondition for an agreement between the ruling and opposition
camps reached thorough the good offices of the Lower House speaker
and Upper House president that a certain conclusion should be
reached. He said: "The Lower House speaker should express his own
view."

Some in the ruling camp think that a vote on the bill revising the
tax law should be taken next week or later, separately from the
budget bill. Their aim is to show a certain level of consideration
to the opposition in order to prevent deliberations on the budget in
the Upper House from stalling. A senor ruling coalition member said:
"Whether the ruling and opposition camps can reach agreement is
still a fifty-fifty chance."

TOKYO 00000522 012 OF 015

18) Ruling bloc's presentation of candidate for new BOJ governor to
be delayed

ASAHI (Page 4) (Excerpts)
February 28, 2008

The government has yet to present its Bank of Japan personnel plan.
Although the ruling coalition has followed procedures with the aim
of presenting a plan on key positions requiring Diet approval by
mid-February, Prime Minister Yasuo Fukuda has now made a decision to
postpone the presentation until next week. The ruling camp's careful
attention to moves by the major opposition Democratic Party of Japan
(DPJ or Minshuto) has been distracted by the fierce battle with the
opposition camp over Lower House approval for the budget bill and
the unexpected recent collision between an Aegis destroyer and a
small fishing boat. A delay in the government's presentation of a
"shoo-in" has rekindled the argument in the DPJ to find another
candidate.

The ruling bloc has aimed at setting the stage so that is easy for
the DPJ to give its consent to the ruling bloc's list of new key BOJ
officials.

The confrontation between the ruling and opposition bloc affecting
personnel affairs is something that is not envisaged even under the
Constitution, according to LDP Secretary General Bunmei Ibuki. In
order to avoid the Upper House's rejection of a hastily crafted
plan, Ibuki has repeatedly advised the prime minister to wait for a
while to present a plan. To secure sufficient time for setting the
stage, the ruling coalition set the deadline at late February, later
than the government's plan of mid-February.

During that period, talks were held centering on LDP Diet Affairs
Committee Chairman Tadamori Oshima and his DPJ counterpart Kenji
Yamaoka, and an agreement was reached on new rules as a result of
accepting the opposition camp's plan as is. The ruling bloc was
hoping that the DPJ would later on endorse its plan to promote
Deputy Governor Toshiro Muto, the government's favorite candidate.

On Feb. 21, Ibuki and Oshima sounded Yamaoka out on Muto's promotion
behind the scenes. But Yamaoka said: "Many DPJ members are opposed
to Mr. Muto's promotion." This has spread the pessimistic view in
the LDP that President Ozawa would not be able to unite the party on
the matter of Muto's promotion.

As if to add insult to injury, an Aegis destroyer collided with a
small fishing boat on Feb. 19.

The incident was followed by the opposition bloc's call for Defense
Minister Ishiba's resignation and intensive Diet deliberations to
uncover the truth. This has led to an intensified battle with the
ruling bloc, which aims at Lower House approval before the end of
February of the fiscal 2008 budget bill and budget-related bills.
Tensions have heightened between the two camps this week over the
presentation of BOJ executive candidates.

19) Argument calling for person other than Muto reignited

ASAHI (Page 4) (Abridged slightly)
February 28, 2008


TOKYO 00000522 013 OF 015


About the prime minister's decision to delay the presentation of a
candidate for the Bank of Japan governorship, a member of the major
opposition Democratic Party of Japan said: "The prime minister might
be searching for someone other than Mr. Muto." There has been the
hopeful observation in the DPJ that the prime minister will make a
decision to recommend a person other than Mr. Muto. That observation
is gaining ground in the party.

The group determined to oppose Muto's promotion has also gained
momentum. A member of the Diet Affairs Committee, which makes a
final decision on the party's response, categorically said: "If Mr.
Muto is (the government's decision), we will put up do-or-die
resistance to the decision."

If the government comes up with a plan to promote Muto in the
knowledge that it will face the DPJ's fierce resistance, chances are
that the BOJ governorship will temporarily remain unfilled. The DPJ
envisions that the government will be held responsible for such an
eventuality.

Some in the government and ruling coalition have also begun calling
for someone other than Muto. Following the ruling bloc's decision to
leave the matter to the prime minister, a government source said, "I
wonder if promoting Mr. Muto is the best way." Former LDP Secretary
General Hidenao Nakagawa, too, noted in a speech: "I do not think
the prime minister will insist on promoting someone the DPJ has
rejected." There are flexible views in the ruling camp as well.

Even if the ruling bloc recommends Muto under such circumstances,
the DPJ, regardless of its response, will not able to escape
undamaged. For this reason, an opinion has emerged in the DPJ to
hold behind-the-scenes talks with the prime minister to prevent the
ruling bloc from presenting a plan to promote Muto.

20) DPJ to present own bill on road funds

NIKKEI (Page 2) (Full)
February 28, 2008

The Democratic Party of Japan (DPJ or Minshuto) adopted yesterday in
a meeting of its shadow cabinet a framework for its highway
construction policy that contains five basic principles, including
the integration of the special account of road-related taxes into
the general account budget and abolishing the provisional tax rates,
including the gasoline tax. The DPJ also adopted an outline of a
bill to reform the special-purpose tax revenue system. The reform
bill stipulates measures for revenue sources to be provided to local
governments, in addition to reallocation of revenues from the
gasoline tax, as well as abolition of the provisional tax rates.
Considering these as its counterproposals to the government's bill
amending the Special Taxation Measures Law, which would retain for
another ten years the current provisional tax rates, the largest
opposition party will submit its own bill now to the House of
Councillors.

Policy Research Committee Chairman Masayuki Naoshima pointed out:
"Since our bill is significantly different from the (bill drafted by
the government and ruling coalition), it will be difficult to launch
consultations on revising the government's bill." Deputy President
Naoto Kan also took the view that the ruling camp's broad compromise
would become a precondition for consultations on revising the bill.
He stated: "We have no intention of remaining flexible on the matter

TOKYO 00000522 014 OF 015


by slightly changing the bill."

21) Measures to combat global warming: Leaders of 16 countries to
meet during Lake Toya G-8

ASAHI (Page 1) (Excerpts)
February 28, 2008

The government will hold a meeting of leaders of 16 major greenhouse
gas emitters in conjunction with the Lake Toya G-8 (Summit) to be
held in July in Hokkaido. The meeting will be joined by China,
India, South Korea and Brazil, as well as G-8 member nations. This
will be the largest forum for major economies to directly discuss
global warming. Participants will aim at reaching a certain level of
common understanding on an international framework to be launched in
2013, replacing the Kyoto Protocol.

The meeting will have the participation of G-8 members, China,
India, South Africa, South Korea, Brazil, Mexico, Australia and
Indonesia. These countries account for 80 PERCENT of global
greenhouse gas emissions. The government had been making
preparations for inviting heavy emitters, such as China and India,
aside from G-8 nations. In the end, it has sent invitations to eight
countries.

The government is now undertaking coordination with the possibility
of holding the envisaged meeting between July 7-9 during the G-8.
Since the development of Africa is also a major part of the Summit
agenda, several leading African countries will also be invited.
Leaders of more than 20 countries will gather at the Lake Toya
Summit, exceeding the scale of the Kyushu-Okinawa Summit in 2000.

22) Foreign investment restriction to be eliminated from bill
amending Airport Development Law; Cabinet decision to come as early
as next week

MAINICHI (Page 1) (Excerpts)
February 28, 2008

The propriety of the inclusion in a bill amending the Airport
Development Law of a clause restricting foreign investment in
airport operators has been a focus of attention. The government
yesterday started undertaking coordination with the possibility of
deleting the clause from the bill. It will reach a decision at a
cabinet meeting as early as next week. Some government officials are
opposing the inclusion of the clause in the bill. As such, the
government has decided that it would be necessary to reach a
conclusion in order to give priority to early passage of this
budget-related bill amending the Airport Development Law.

According to that bill, the ratio of ownership by foreign companies
of airport terminal operators, such as Narita International Airport
Corp. and Japan Airport Terminal Co., would be limited to below
one-third on a voting-right basis. The Ministry of Land,
Infrastructure and Transport has aimed at introducing such a
restriction for security reasons. However, cabinet ministers, such
as State Minister for Financial Policy Yoshimi Watanabe, have been
opposing the proposal as going against the trend of
internationalization. The notion of limiting foreign investment in
airport operators has been proposed with an eye on the listing of
Narita International Airport Corp. on the stock market in fiscal
2009. The government sees that there will still be time for looking

TOKYO 00000522 015 OF 015


into the issue, even if the clause is eliminated from the bill.

SCHIEFFER

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