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Cablegate: Japanese Morning Press Highlights 03/24/08

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UNCLAS SECTION 01 OF 14 TOKYO 000785

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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 03/24/08

Index:

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

Opinion polls:
4) Fukuda support plunges 9 points to 31 PERCENT in Nikkei poll
(Nikkei)
5) Yomiuri poll finds 64 PERCENT dissatisfied with Fukuda's
performance during first 6 months of premiership; 90 PERCENT
clueless as to what his policy aims are (Yomiuri)

Yokosuka incident:
6) Deserter turns self in to Navy security police, likely to be
questioned by Kanagawa police in connection with cab driver slaying
(Asahi)
7) Kanagawa police to question seaman in U.S. custody on involvement
with cab driver slaying; Suspect connected to African group in
Roppongi (Yomiuri)
8) U.S. Navy Commander Kelly pledges "full cooperation" with
Japanese investigators when the seek to question seaman now in
custody (Nikkei)

Okinawa incidents:
9) Protest rally in Okinawa in wake of school girl rape incident
draws 6,000 in pouring rain (Mainichi)
10) Calls for SOFA revision accompany protest rally in Okinawa
(Mainichi)

11) Prime Minister Fukuda in speech at defense university graduation
promises Defense Ministry reform; 26 graduates, however, refuse
commissions (Mainichi)

12) Japanese, Chinese finance ministers meet, pledge cooperation to
stabilize economic situation, agree on need for sustained growth
(Nikkei)

13) President-elect Ma of Taiwan stresses strong ties with Japan,
expresses hope to visit Japan soon (Yomiuri)

14) South Korean President Lee seeks multilateral solution to
Japan's abduction problem with North Korea (Nikkei)

Political economy issues:
15) Democratic Party of Japan (DPJ) refuses talks with ruling
parties on gax-tax revision (Tokyo Shimbun)
16) DPJ Secretary General Hatoyama, still playing hardball, will not
agree to revise tax bills before Diet unless gas tax is first
scrapped (Yomiuri)
17) Gasoline price will drop in April when tax expires, wreaking
havoc on local government finances which will lose 1.6 trillion yen
(Sankei)
18) Foreign investors leaving Japan's stock market in droves,
dealing another blow to the weakening economy (Nikkei)
19) Well-known political scientist Kabashima wins Kumamoto
gubernatorial election with LDP backing (Yomiuri)
20) Exit poll in Kumamoto governor's race shows strong LDP support
gave Kabashima the win (Yomiuri)

Articles:


TOKYO 00000785 002 OF 014


1) TOP HEADLINES

Asahi, Mainichi, Yomiuri, Sankei and Tokyo Shimbun:
Man wanted on murder stabs eight people around Ibaraki station, one
dead

Nikkei:
South Korean President Lee in interview calls for joint efforts by
Japan, ROK, and China for trade accord and environmental issues;
"Time is also ripe" for Emperor's visit to South Korea

Akahata:
Okinawa prefectural rally held to protest crimes by U.S. service
members

2) EDITORIALS

Asahi:
(1) Make House of Councillors into chamber of local districts

Mainichi:
(1) Economic foundations must be strengthened
(2) Junior high schools need higher morals

Yomiuri:
(1) White paper failed to embrace nuclear power
(2) Lay judge system requires more court interpreters

Nikkei:
(1) Improved investment market necessary for emerging companies

Sankei:
(1) Death sentence should have been handed down to child killer
(2) Professional baseball community must be reformed this year

Tokyo Shimbun:
(1) Thoughts on matters at beginning of week in spring

Akahata:
(1) Sympathy budget agreement financial support for U.S. military
strategy

3) Prime Minister's Official Residence (Kantei)

Prime Minister's schedule, March 21

NIKKEI (Page 2) (Full)
March 22, 2008

08:10
Attended meeting of Regional Bloc System (doshusei) Special Zone
Promotion Headquarters. Attended cabinet meeting. Handed written
appointment to BOJ deputy governors Shirakawa and Nishimura, joined
by Finance Minister Nukaga and Chief Cabinet Secretary Machimura.

09:05
Met at Kantei with Internal Affairs and Communications Minister
Masuda, followed by Tokyo Metro President Umezaki.

10:05
Met with Special Advisor Ito. Recorded video-message for "Symposium
to Realize Universal Society" attended by New Komeito deputy chief

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Hamayotsu.

11:00
Met with Deputy Foreign Minister Kono.

13:28
Met with Machimura.

14:32
Met with Machimura, Special Advisor to the Cabinet Okuda, Ito,
Assistant Deputy Chief Cabinet Secretary Saka, METI Economic and
Industrial Policy Bureau chief Suzuki, Cabinet Office Economic and
Fiscal Management Director General Saito, and Financial Services
Agency Supervisory Bureau chief Nishihara.

15:46
Met with Deputy Chief Cabinet Secretary Futahashi.

16:47
Met with Special Advisor Yamatani, followed by Vice Foreign Minister
Yabunaka.

19:01
Attended meeting of National Conference on Social Security.

20:16
Returned to his official residence.

Prime Minister's schedule, March 22

NIKKEI (Page 2) (Full)
March 23, 2008

09:24
Arrived at his private residence in Nozawa.

14:11
Met Chief Cabinet Secretary Machimura at his official residence.

Prime Minister's schedule, March 23

NIKKEI (Page 2) (Full)
March 24, 2008

09:23
Departed from the Kantei by GSDF helicopter.

09:45
Met Defense Minister Ishiba, National Defense Academy President
Iokibe and others at NDA in Yokosuka, Kanagawa Prefecture.

10:02
Attended the National Defense Academy graduation ceremony.

11:47
Departed from the National Defense Academy by GSDF helicopter.

12:05
Arrived at the Kantei.

12:10
Returned to his official residence.

TOKYO 00000785 004 OF 014

4) Poll: Cabinet support dips to 31 PERCENT

NIKKEI (Page 1) (Abridged)
March 24, 2008

The approval rating for Prime Minister Yasuo Fukuda and his cabinet
dropped 9 percentage points from February to 31 PERCENT in a public
opinion survey conducted by the Nihon Keizai Shimbun on Mar. 21-23.
The disapproval rating rose 6 points to 54 PERCENT . The Fukuda
cabinet's nonsupport rate topped 50 PERCENT for the first time
since it came into office and paralleled that of the Abe cabinet
around the election in July last year for the House of Councillors.
This can be taken as reflecting confusion over the appointment of
Bank of Japan Gov. Toshihiko Fukui's successor and road-related tax
revenues.

In the breakdown of public support for political parties, the ruling
Liberal Democratic Party stood at 40 PERCENT , up 1 point. The
leading opposition Democratic Party of Japan (Minshuto) was at 30
PERCENT , down 1 point. The gap between the LDP and the DPJ has
increased from 8 points in the last survey to 10 points. The survey
was taken by Nikkei Research Inc. over the telephone on a random
digit dialing (RDD) basis. For the survey, samples were chosen from
among men and women aged 20 and over across the nation. A total of
1,574 households with one or more eligible voters were sampled, and
answers were obtained from 865 persons (55 PERCENT ).

5) Poll: 64 PERCENT unhappy Fukuda cabinet's performance

YOMIURI (Page 1) (Full)
March 24, 2008

Mar. 26 will mark a half year since Prime Minister Fukuda and his
cabinet came into office. The Yomiuri Shimbun, in a face-to-face
nationwide public opinion survey conducted Mar. 15-16, asked people
if they gave high marks to the performance in office of Fukuda and
his cabinet. Negative responses of "don't appreciate very much" and
"don't appreciate at all" added up to 64 PERCENT , while affirmative
answers, including "very much" and "somewhat," totaled 34 PERCENT .
The Fukuda cabinet's support rate continued to drop for the third
straight month and is now at 33.9 PERCENT , markedly down from the
59.1 PERCENT rating in a face-to-face survey taken after its
inaugural last October. As seen from these figures in the survey,
the public is taking a severe view of Fukuda and his cabinet.

In the latest poll, the public also was asked to pick one or more
aspects of the accomplishments of the prime minister and his cabinet
that could be positively evaluated. The choice of "blanket relief
for all hepatitis C virus victims" accounted for 50 PERCENT ,
followed by "response to pension record-keeping flaws" at 18 PERCENT
, and "resuming the Maritime Self-Defense Force's refueling mission
in the Indian Ocean" and "initiative to deal with global warming" at
12 PERCENT each. But 27 PERCENT of the public found nothing to
appreciate him for.

The public was further asked if they understood what kind of
political goals the prime minister was aiming at. To this question,
"yes" accounted for only 9 PERCENT , with "no" reaching 89 PERCENT .
Asked if they thought the prime minister's job performance was
sound. In response, 43 PERCENT answered "yes," with 48 PERCENT
saying "no."

TOKYO 00000785 005 OF 014

Respondents were asked how long they would like the Fukuda cabinet
to continue. To this question, "quit as soon as possible" accounted
for 25 PERCENT , topping all other answers.

6) U.S. seaman contacted Navy of whereabouts on own volition;
Kanagawa to seek cooperation for voluntary questioning of suspect
(in connection with cab driver's slaying)

ASAHI (Page 39) (Abridged)
March 23, 2008

In connection with the slaying of Masaaki Takahashi (61), a taxi
driver from Yokosuka City in Kanagawa Prefecture, a seaman attached
to the U.S. Naval Base at Yokosuka who had been absent without leave
turned himself in to U.S. Navy authorities on the 22nd and was taken
into custody. He had been missing for about three weeks. Although
the seaman's credit card was found inside the taxi, there is no
other evidence to show that he actually rode in the cab. His
involvement in the killing remains a "blank sheet," so the police
have decided to seek the cooperation of the U.S. Navy for voluntary
questioning of the suspect.

According to U.S. Navy command, the Naval Criminal Investigation
Service (NCIS) at 03:41 am on March 22 took custody of the deserter.
The seaman said he had got into trouble at the base and could not
make the time of departure for his ship, the USS Cowpens, an Aegis
destroyer, of which he was a crewman. He was subsequently declared
a deserter on March 10, having been missing since the first of the
month.

While NCIS was searching for him, the seaman voluntarily turned
himself in by contacting the Navy about his whereabouts. After being
taken into custody, he was questioned about his desertion. According
to an informed source, he reportedly has denied any connection with
the killing.

In the investigation by the prefectural police, authorities found
the seaman's credit card at the foot of the seat of the slain
driver. However, in the NCIS investigation until now, except for the
credit card, there is no other evidence to indicate the seaman had
been riding in the cab.

During the NCIS investigation, the seaman himself contacted the U.S.
Navy about his whereabouts. After being taken into custody, he has
been confined to base, where he has been questioned about his
desertion. According to an informed source, he has reportedly denied
being connected with the murder incident.

7) Kanagawa prefectural police to possibly question U.S. seaman
today over taxi driver murder case, suspecting he is linked to
incident

YOMIURI (Page 39) (Excerpts)
March 23, 2008

Masaaki Takahashi, 61, a taxi driver from Shinagawa Ward, Tokyo, was
stabbed to death in Yokosuka City, Kanagawa Prefecture on the night
of March 19. A special investigation team at the Yokosuka Police
Station has asked U.S. Navy headquarters in Japan for permission to
question as early as today a 22-year-old seaman based at Yokosuka
Naval Base they are holding for being absent without leave,

TOKYO 00000785 006 OF 014


suspecting that he is linked to the incident. The investigation
headquarters has information that the sailor is a U.S. citizen of
Nigerian origin and that he has been keeping company with a private
group for foreigners from Africa living in Tokyo. Police will also
investigate the group, believing the group holds the key to
establishing the seaman's movements and other information.

Seaman might have contacted Roppongi group after desertion

According to U.S. forces, the U.S. Naval Criminal Investigation
Service (NCIS) apprehended the sailor at 3:41 a.m. March 22 in
Gotanda, Shinagawa Ward, Tokyo, after the sailor called the base
earlier that day saying he was in the Tokyo metropolitan area and
that he wanted someone to come for him. In questioning by the NCIS
after being taken to the base, the seaman reportedly denied
involvement in Takahashi's murder.

According to the police, after leaving the base on March 1, the
seaman is believed to have met with members of the group for
foreigners of African descent that have links to U.S. service
members. The group is based in Roppongi, Tokyo, which is close to
where the sailor was apprehended in Gotanda.

The investigation headquarters has been looking into the seaman's
activities before and after the incident. In its voluntary
questioning of the seaman, the special investigation team plans to
probe him over the circumstances in which a credit card belonging to
him was found in the taxi. The team will also investigate the
seaman's connection to the group.

U.S. Naval Forces Japan headquarters explained yesterday afternoon
to the Kanagawa prefectural police that it would respond to its
request for questioning the seaman.

The U.S. Navy headquarters specifically said that it was prepared to
accept a request from Japanese authorities to hand the sailor over
for questioning at any time and that it would fully cooperate with
the police's voluntary questioning at the base.

8) Yokosuka murder: U.S. Navy commander vows to fully cooperate on
investigation

NIKKEI (Page 43) (Full)
March 24, 2008

The U.S. military has now detained a 22-year-old U.S. Navy
serviceman, who is the owner of a credit card that was discovered in
a taxi when its driver was found slain in the city of Yokosuka,
Kanagawa Prefecture. U.S. Naval Forces Japan Commander Rear Adm.
Kelly held a press conference yesterday afternoon at the U.S. Navy's
Yokosuka base. Kelly said there was still no request from Kanagawa
prefectural police for questioning. However, he clarified that the
U.S. Navy would fully cooperate on the prefectural police's
investigation if there is a request.

The Kanagawa prefectural police's Yokosuka Police Station
investigative taskforce asked the U.S. military yesterday if it
would be possible to question the U.S. serviceman. The local police
will make a formal request to the U.S. military after obtaining its
answer.

"As a representative of the U.S. Navy in Japan, and as a citizen of

TOKYO 00000785 007 OF 014


Yokosuka, I am worried about the incident this time," Kelly said.
However, he avoided accounting in detail for whether the serviceman
was involved in the incident. "Japanese investigative authorities
are investigating the murder case, and I neither confirm nor deny
what has been reported," Kelly said. He added: "He is in custody for
desertion. At this point, he is not a suspect in the murder case."

Kelly said he was "not in a position to comment" when asked how the
serviceman explained the credit card that was found in the taxi. He
revealed that the serviceman, who had been absent without leave
since Mar. 8, called U.S. naval authorities to report his
whereabouts. However, Kelly said he had no information about what
made the serviceman turn himself in.

9) 6,000 take part in protest in Okinawa against crimes by U.S.
military personnel

MAINICHI (Page 2) (Full)
March 24, 2008

Teruhisa Mitsumori

A rally in protest against incidents and accidents caused by U.S.
military personnel was held yesterday in a park in front of a
baseball stadium in Okinawa's Chatan Town. Despite heavy rain, some
6,000 persons (according to the rally's executive committee)
attended.

Because of a series of crimes committed by U.S. military personnel
even after the arrest of a U.S. Marine on charge of raping a junior
high school girl (though the victim withdrew her complaint later),
96 organizations, including the Prefectural Liaison Council for
Nurturing Children, organized an executive committee to hold a
rally. The executive committee initially aimed at staging a
suprapartisan rally, but the rally was not joined by the LDP, the
largest group in the prefectural assembly. Nor did Gov. Hirokazu
Nakaima attend it. But the New Komeito, a junior coalition partner
of the LDP in the prefectural assembly, joined the rally. Ten heads
of municipalities, including conservatives, such as Naha Mayor
Takeshi Onaga, the former secretary general of the LDP Prefectural
Chapter, attended the rally.

Tetsuei Tamayori (73), chair of the executive committee and chair of
the above prefectural liaison council, stated in a speech: "We need
to continue our efforts so that the Japan-U.S. Status of Forces
(SOFA) Agreement will be modified drastically." Okinawa City Mayor
Mitsuko Toumon said: "I am indignant with the central government for
its inability to take any effective measures even after an incident
occurs." Naha Mayor Onaga said: "I am really angry at the
possibility that Okinawa will be forced to continue to bear a large
burden of the Japan-U.S. Security Treaty."

The rally adopted a four-point resolution, which calls for a drastic
revision to the SOFA, in which the U.S. military has the upper hand,
a reduction and realignment of U.S. military bases, and a troop cut
of U.S. forces in Okinawa. Executive committee members will visit
Tokyo, possibly in early April, and present the resolution to the
central government.

10) Need for review of SOFA voiced by many in rally in Okinawa;
Ruling parties now positive about review


TOKYO 00000785 008 OF 014


MAINICHI (Page 2) (Full)
March 24, 2008

Nakae Ueno

A rally protesting incidents and accidents committed by U.S.
military personnel was held in Okinawa yesterday. The calls voiced
in the rally were focused on the need for a drastic revision to the
Japan-U.S. Status of Forces Agreement (SOFA). Joining the rally from
the ruling bloc, whose previous position toward the SOFA was
improving its operation, was the junior coalition partner New
Komeito's Prefectural Chapter members. They attended the rally to
call for a review of the SOFA. In response to the local call, the
ruling Liberal Democratic Party (LDP) now appears willing to discuss
a review of SOFA. The rally has created momentum in the ruling bloc
to review the SOFA.

Immediately after a U.S. Marine was arrested on a charge of raping a
junior high school girl last month, Chief Cabinet Secretary Nobutaka
Machimura and other leaders in the central government clearly ruled
out the possibility of revising SOFA. Their attitude came under
criticism from a number of rally participants, including Naha City
Mayor Takeshi Onaga. The New Komeito's House of Councilor member
Kiyohiko Toyama also stated: "It is necessary for Okinawa to
demonstrate its intent to seek to revise the SOFA. I also would like
everybody to realize that the problem facing Okinawa is a problem
facing Japan."

With the prefectural assembly election slated for June in Okinawa,
the ruling and opposition parties will assume a more confrontational
stance. The New Komeito was initially not positive about attending
the rally by noting that its attendance would only benefit the
opposition bloc, whose position toward the base issue is different
from the ruling bloc's. But because the focus of the rally shifted
later to calling for a review of the SOFA, the New Komeito decided
to participate in the rally on the grounds that doing so meets the
party's assertions.

The central government and the ruling bloc have moved in tandem so
far by containing calls for a review of the SOFA but insisting on
improving its operation. But senior members of the LDP and the New
Komeito in the Okinawa Prefectural Assembly have asked the
government since the start of the month to drastically review SOFA.

Taku Yamasaki, a former vice LDP president who now heads the LDP's
foreign affairs panel as well as the Okinawa economic promotion
panel, noted: "After seeing a proposal made by the prefectural side,
I want to set a timetable for a joint session and begin discussion
on specifics." New Komeito Representative Akihiro Ota, as well,
softened his attitude and told a news conference on March 21: "We'd
like to discuss fully the matter with the Okinawa side."

11) Fukuda pledges Defense Ministry reform in National Defense
Academy graduation ceremony; 26 refuse commissions

MAINICHI (Page 2) (Full)
March 29, 2008

Delivering a speech in a graduation ceremony at National Defense
Academy (in Yokosuka, Kanagawa Prefecture, with Principal Makoto
Iokibe) yesterday, Prime Minister Yasuo Fukuda restated his
determination to reform the Defense Ministry to regain public trust.

TOKYO 00000785 009 OF 014


He said:

"Public trust in the Defense Ministry and the Self-Defense Force has
been significantly undermined due to the collision between a
Maritime Self-Defense Force destroyer and a fishing boat and other
incidents. I am determined to prove what problems lay in them and
why such incidents took place. I will also make utmost efforts to
carry out reform."

Defense Minister Shigeru Ishiba indicated in a speech the need to
ensure civilian control, saying:

"The past war is a striking example of civilian control not
functioning. After losing the war, our nation has not directly
tackled the essence of security with military affairs as the core.
Those who learn nothing from history repeat the same mistakes."

Excluding nine students from overseas, 415 graduated from the
school. This year, 26 graduates - 16 more than last year - refused
to receive commissions. In FY1990 during the bubble economy years,
the number was 94, marking the highest record since the school was
established, but the 26 is the highest since (the 34 was marked) in
FY1991. With three not appointed for such reasons as health
problems, 386 have received commissions. Those who left school
midway through totaled 100, two less than last year.

12) Japanese, Chinese finance ministers agree on cooperative efforts
to stabilize Asia economy

NIKKEI (Page 3) (Excerpts)
March 24, 2008

Finance Minister Fukushiro Nukaga and his Chinese counterpart Xie
Xuren met yesterday as part of the second Japan-China Finance
Dialogue to discuss their countries' economic and financial issues
at the Finance Ministry. Given concerns growing about a slowing
global economy triggered by the U.S. subprime mortgage crisis, the
two finance ministers agreed that Japan and China should work
together to keep the Asian economy from being negatively affected by
such concerns. Nukaga asked his counterpart to make the yuan more
flexible against foreign currencies so that China's economic growth
will continue into the future.

The two finance ministers discussed the Asian economic situation and
other issues for about one and a half hours. In reference to the
ongoing panic in the U.S. economy caused by the subprime loan
problem, Nukaga said: "To avoid any negative impact on the Asian
economy, it is important for Japan, China, and India to play the
role of a locomotive to drive forward the economy." Xie replied:
"Japan and China should exchange frank views and make efforts to
resolve various global economic issues." The two agreed to cooperate
for continued Asian economic growth.

The finance ministers also referred to the recent poisoning outbreak
caused by tainted Chinese dumplings. They agreed that they should
endeavor to resolve the issue at an early date in order to provide
the peoples of the two countries with a sense of safety. The next
session of the dialogue will be held in China in 2009. Nukaga and
Xie also agreed to hold vice-ministerial and bureau-director-level
meetings as the need arises.

13) Taiwan's present-elect Ma emphasizes "importance of relations

TOKYO 00000785 010 OF 014


with Japan"; Wishes to visit Japan soon

YOMIURI (Page 2) (Excerpts)
March 24, 2008

(Kenichi Yoshida, Taipei)

Taiwan's president-elect Ma Ying-jeou gave an interview to members
of the Japanese press corps, including Yomiuri Shimbun, at his
election office in Taipei on March 23. The 57-year-old Ma revealed
that he is looking into an early visit to Japan, remarking: "I won't
exclude Japan and the U.S. (from my first overseas trip prior to my
presidential inauguration) in light of the importance of those
countries' relations with Taiwan." It was Ma's first interview with
foreign press corps after his election on the 22nd.

Ma emphasized: "I place great importance on ties with Japan." He
then indicated a desire to further promote cooperative relations
with Japan in a variety of areas, such as culture, education, and
science and technology. But Chinese President Hu Jintao is scheduled
to visit Japan in May. Given this, attention is focused on whether
Ma's Japan visit will be realized.

Ma stressed his willingness to build a favorable relationship with
Japan through continuous efforts to be knowledgeable about Japan,
saying: "I support the Japan-U.S. Security Treaty. Although I have
yet to learn much about Japan, I would like to deepen my
understanding of Japan from various quarters."

14) ROK President Lee: "Abduction issue should be resolved through
multilateral framework"

NIKKEI (Page 2) (Excerpts)
March 24, 2008

Masanori Yamaguchi, Seoul

South Korean President Lee Myung Bak called for a multilateral
framework that will involve Japan, South Korea, the United States,
and China as a means to resolve the issue of abductions of Japanese
nationals. Lee noted: "I think it will be better for countries to
work together to resolve the issue than for Japan to singly try to
resolve the issue." On how to strengthen Japan-South Korea
relations, Lee said, "I will discuss an action plan in concrete
terms with Prime Minister Yasuo Fukuda, when he visits South Korea."
Lee indicated his plan to reach agreement on specifics on the action
plan when Fukuda visits South Korea this fall.

The South Korean government has estimated that the number of South
Koreans abducted by North Korea totaled some 480. It also has
estimated that there are 500 or more South Korean soldiers still
taken prisoners of war (POWs) in North Korea since the Korean War.
Lee stressed: "North Korea needs to take a humanitarian measure
without any conditions attached to deal with the issue." Lee
indicated his willingness to resolve the humanitarian issues
involving North Korea, particularly the abductions of South
Koreans.

Keeping in mind also the issue of abductions of Japanese nationals,
Lee stated, "Cooperation between South Korea and Japan, between
South Korea and the U.S., and between South Korea and China are all
necessary in order to resolve the humanitarian issues

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comprehensively." Lee indicated he will use the six-party framework
on the North Korean nuclear issue to pressure (North Korea) to
resolve the humanitarian issues. Lee's diplomatic position is in
sharp contrast to his predecessor Roh Moo Hyun, who prioritized
reconciliation with North Korea and was critical of the Japanese
government for its seeking to resolve the abduction issue at the
forum of six-party talks.

15) DPJ to reject ruling bloc's call for gasoline tax revision
talks

Evening, TOKYO SHIMBUN (Page 1) (Excerpts)
March 22, 2008

Democratic Party of Japan Secretary General Yukio Hatoyama,
appearing on a commercial television program on the morning of March
22, indicated that his party would not respond to the ruling camp's
call for talks on revising a bill amending the Special Taxation
Measures Law, including the maintenance of the provisional gasoline
tax rate, unless the ruling bloc assures that it would place the
road tax revenues into the general account and abolish the
provisional tax rates. The DPJ leadership, including President
Ichiro Ozawa, is expected to formally decide to reject the ruling
bloc's request in their talks on March 24.

16) DPJ Secretary General Hatoyama: Abolition of provisional tax
rates precondition for passage of tax reform bills within this
fiscal year

YOMIURI (Page 2) (Excerpts)
March 24, 2008

When asked about his party's response to a revision of the tax
reform-related bills including a bill amending the Special Taxation
Measures Law, aimed at retaining the current provisional gasoline
tax, Democratic Party of Japan (DPJ) Secretary General Yukio
Hatoyama said during an NHK talk show: "It is impossible to enact
the bills while maintaining the present provisional tax rates." He
expressed again that the DPJ would agree to the government's and
ruling coalition's plan to enact the bills within the current fiscal
year if they accept its proposal abolishing the provisional tax
rates.

Hatoyama, however, took a negative stance toward a ruling camp call
for consultations on a revision of the bills, saying: "We should
debate at the Diet, not behind closed doors.

DPJ Deputy President Naoto Kan delivered a speech yesterday in
Utsunomiya City. In it, Kan stated: "(The ruling camp) does not
intend to modify the bills. Since their plan does not specify
details, we cannot discuss them."

Liberal Democratic Party Secretary Bunmei Ibuki, also appearing on
yesterday's NHK talk show, criticized the DPJ, noting: "Noting will
be decided if the DPJ rejects consultations when things do not go as
they wish."

Referring to the agreement mediated by the top leaders of the two
Diet chambers that a certain conclusion will be reached within this
fiscal year, Ibuki stated on a Fuji TV program yesterday: "The
mediation would be authoritative. I think the Lower House speaker
will present a solution this week." He hoped for coordination by the

TOKYO 00000785 012 OF 014


speaker.

17) Drop in gasoline prices: What are local governments going to do
about revenue shortfalls totaling 1.6 trillion yen?

SANKEI (Page 1) (Full)
March 24, 2008

With the battle between the ruling and opposition parties entering
the homestretch with the expiration of the provisional gas tax rate
close at hand on Mar. 31, cheaper gasoline prices appear inevitable.
The Liberal Democratic Party (LDP) and the New Komeito are placing
their last glimmer of hope on revision talks with the Democratic
Party of Japan (DPJ or Minshuto). However, there are no indications
of the DPJ responding to the call. Provided that the provisional tax
rate for special-purpose road construction revenues is abolished,
the central and local governments would suffer revenue shortfalls
totaling 2.6 trillion yen. Taking measures to deal with this
situation has emerged as a pressing issue.

LDP Secretary General Bunmei Ibuki and his DPJ counterpart Yukio
Hatoyama yesterday appeared on Fuji TV's Hodo-2001 and other TV talk
shows to discuss the issue. However, their exchanges ended up
without the two making any progress, with Ibuki noting: "We will
protect local government's fiscal resources. We have proposed
holding talks to that end," and Hatoyama rebutting: "Upper House
deliberations have yet to start. Discussing the issue at another
venue at such a stage is tantamount to bid-rigging."

Hatoyama categorically said that the ruling camp's revision policy
is forgoing the issue and making no revisions. He thus indicated his
party's stance of making no concessions on the abolition of the
provisional gas tax rate.

Hatoyama is taking such a bullish stance because he finds the
current situation overwhelmingly advantageous to his party. That is
to say, if the Upper House at the end of the month adopts the DPJ's
counterproposal -- three bills related to road policy reform,
excluding portions for special-purpose road construction revenues,
all provisional rates, such as tariffs, would be abolished. In order
to avoid a major panic from occurring, the ruling parties have no
other option but to adopt the DPJ-sponsored bills in the Lower
House.

If the price of gasoline drops about 25 yen per liter starting on
April 1 and the ruling camp reinstates the provisional rate one to
two months later by adopting their bills once again in the Lower
House, public criticism of the government and the ruling parties is
bound to mount. In addition, the DPJ says that if the ruling camp
adopts the bills once again in the Lower House, it would most likely
submit a censure motion against the prime minister, as Hatoyama
warned. Should that occur, the likelihood is that the administration
would be pushed over the precipice.

Local governments will lose tax resources worth approximately 900
billion yen, such as the light oil delivery tax and the automobile
acquisition tax, if the provisional rate for road funds is scrapped.
They will also lose approximately 700 billion yen in special local
tax allocation subsides for road construction. As a result, they
would register a total of 1.6 trillion yen in revenue shortfalls.

18) Foreign investors moving away from Japanese stocks due to strong

TOKYO 00000785 013 OF 014


yen, uproar over selection of BOJ governor: Selling in second week
of March second-heaviest on record

NIKKEI (Page 1) ( Full)
March 22, 2008

According to statistics released on March 21 by the Tokyo Stock
Exchange, foreign investors' Japanese stocks selling on balance in
the second week of March (Mar. 10-14) on the Tokyo, Osaka and Nagoya
Stock Exchanges increased to 922.6 billion yen, marking the second
largest figure, following 1.122 trillion yen recorded in the third
week of October 1987, after "Black Monday." Japan-selling by foreign
investors apparently reached a record level following the turmoil
over the selection of Bank of Japan governor.

Foreign investors are a major market player, commanding 60 PERCENT
of the trading volume. Up until recently, the second-largest selling
on account was 751.9 billion yen recorded in the third week of
August last year, which saw world-wide stock plunges stemming from a
commotion on the financial market due to the subprime mortgage
crisis. But the amount marked in March topped that amount by about
170 billion yen.

Japanese stocks are increasingly suffering setbacks, such as the
strengthening yen, with the currency breaking the 100 yen to the
dollar level. Candidates for BOJ governor have been rejected in the
Upper House, which has dampened foreign investors' expectations of
structural reforms, as it indicates that political decision-making
is not going smoothly, as Nikko Citigroup securities strategist
Patrice Moor put it. This has also accelerated the trend of foreign
investors moving away from Japanese stocks.

19) Poll: Kabashima gets most votes of ruling coalition supporters,
Kamakura fails to obtain many DPJ supporters' votes

YOMIURI (Page 2) (Excerpts)
March 24, 2008

According to the results of Yomiuri Shimbun's exit polls on
yesterday's Kumamoto gubernatorial election, Ikuo Kabashima received
most votes from supporters of the ruling Liberal Democratic Party
and New Komeito. However, Takayuki Kamakura failed to get votes from
supporters of the main opposition Democratic Party of Japan (DPJ),
which recommended him. He was also unable to obtain support from
nonaligned voters.

A total of 61 PERCENT of the LDP supporters voted in favor of
Kabashima and about 70 PERCENT of the New Komeito supporters voted
for him.

Only 40 PERCENT of the DPJ supporters voted for Kamakura. Kabashima
secured 26 PERCENT of the votes of the DPJ supporters, while 10
PERCENT of the DPJ votes went other candidates Toshiaki Kitazato
and Masayoshi Yagami respectively.

20) Kabashima wins Kumamoto gubernatorial election

YOMIURI (Page 2) (Full)
March 24, 2008

Ikuo Kabashima, 62, a former University of Tokyo professor, backed
by the ruling Liberal Democratic party, won the Kumamoto

TOKYO 00000785 014 OF 014


gubernatorial election yesterday, defeating Takayuki Kamakura, 61,
who was recommended by the main opposition Democratic Party of Japan
(DPJ) and three other candidates. Kabashima said (during his
election campaign) that he would make a decision after six months
after taking over the governorship on whether to implement a project
to build a dam on the Kawabe River (in Sagara Village) or cancel the
project, even though the construction project was planned 41 years
ago. Therefore, all eyes are now on what decision Kabashima will
make after he assumes the governor's post. Voter turnout was 49.36
PERCENT , topping the record law of 38.67 PERCENT in the previous
election.

The election was contested by Kabashima, Kamakura and three other
conservative candidates.

Because of his desire to secure support from wide-ranging voters,
Kabashima refrained from receiving formal support and recommendation
from the LDP. He, however, won a landslide victory, backed by
supporters of the LDP and New Komeito, as well as unaffiliated
voters.

Meanwhile, Kamakura played up his opposition to the dam construction
project, while stressing his experience of serving as a prefectural
government official. However, the DPJ decided to recommend Kamakura
immediately before the start of the official campaign for the
gubernatorial race. The Rengo (Japan Trade Union Confederation)
Kumamoto decided to let its members cast their votes independently.

SCHIEFFER

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