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Cablegate: Japanese Morning Press Highlights 05/29/08

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UNCLAS SECTION 01 OF 11 TOKYO 001471

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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 05/29/08


Index:

1) Top headlines
2) Editorials
Prime Minister's daily schedule: Attended TICAD IV; Bilateral
meetings also with African leaders

Earthquake in China:
3) China asks Japan to send SDF planes to deliver relief goods for
earthquake victims (Mainichi)
4) ASDF airlift of relief goods to China could start within days of
government's order (Nikkei)
5) Japan surprised by China's request to send ASDF planes with
earthquake relief goods (Asahi)
6) Sudden request for SDF earthquake assistance may be Hu Jin Tao's
way of silencing hard-core critics of his Japan policy (Sankei)

TICAD-IV - African development conference:
7) African nations support Japan's anti-global warming measures and
the initiative will be mentioned in the TICAD's Yokohama Statement
(Nikkei)
8) In meeting on TICAD sidelines with Sudan's president, Prime
Minister Fukuda presses for early resolution of Darfur issue
(Nikkei)
9) Change in government's policy toward cooperative financing
(Asahi)
10) Government in between a rock and hard place in pledges of large
amounts of aid and fiscal discipline (Sankei)

11) Global warming countermeasures: Over dozen countries including
Japan willing to put up $5.5 billion to held countries fight
greenhouse-gas emissions (Asahi)

North Korea problem:
12) Assistant Secretary Hill in meeting with North Korean
counterpart conditions DPRK removal from terror-sponsoring list to
progress on abduction issue (Yomiuri)
13) Prime Ministerial Advisor Nakayama in speech hopes for returning
to the starting point on abduction negotiations with DPRK (Sankei)


14) Bank of Japan Governor Shirakawa: Low interest rates caused
Japan, U.S. bubble economy (Yomiuri)

15) Former LDP postal rebel Hiranuma lining up forces through a
series of Diet members' leagues (Yomiuri)

Articles:

1) TOP HEADLINES

Asahi:
Japan considering sending SDF aircraft to China to transport relief
supplies

Mainichi:
Government to send SDF planes to quake-hit areas in Sichuan at
China's request

Yomiuri:
ASDF aircraft to be dispatched to China to transport relief
supplies

TOKYO 00001471 002 OF 011

Nikkei:
Government to inform China of sending SDF planes

Sankei:
ASDF aircraft to be dispatched to China for first time; President Hu
might try to press anti-Japanese group

Tokyo Shimbun:
Government to send SDF planes to China

Akahata:
Atomic lawsuit: New standards for designation of atomic-bomb victims
insufficient

2) EDITORIALS

Asahi:
(1) Investigation of insider trading: We are surprised at NHK's lack
of sense of crisis
(2) Appointments requiring Diet approval: Bad rules should be
abolished as quickly as possible

Mainichi:
(1) ASDF plane dispatch to China: Japan should provide China with
maximum support
(2) Agreement on public servant system reform: Politicians, you can
do it

Yomiuri:
(1) Aid to Africa: Japan to grow with African states
(2) Reform of civil servant system: Need for concrete measures to
implement reform

Nikkei:
(1) Drastic reform necessary for decentralization
(2) SDF should join China relief operations

Sankei:
(1) Recommendations for decentralization: "Zero answers" no longer
forgiven
(2) Banning cluster bombs: Security of Japan will be impaired

Tokyo Shimbun:
(1) Public servant system reform: Why is the system not being
completely reformed?
(2) Stock trading in NHK: Three-time investigations needed

Akahata:
(1) Setting of mid-term goals: Seriousness for battle against global
warming being tested

3) Government to send SDF planes to quake-hit areas in Sichuan
Province at China's request

MANI CHI (Top Play) (Full)
May 29, 2008

In order to transport such relief supplies as tents and blankets to
earthquake-hit areas in Sichuan Province, China, the Japanese
government, at the request of the Chinese government, decided
yesterday to send shortly Air Self-Defense Force C-130 transport

TOKYO 00001471 003 OF 011


aircraft in line with Japan Disaster Relief Team Law. The government
is considering having the ASDF planes transport supply goods from
Japan to airports of the quake-hit areas in China. It will be the
first time for an SDF relief unit to be dispatched to China. It will
be the first time for the SDF to carry out relief operations since
they did so in 2006 when Indonesia was hit by a massive earthquake.

Chief Cabinet Secretary Nobutaka Machimura revealed yesterday in a
press conference that the Chinese government had asked Japan through
the Japanese embassy in Beijing for relief goods as well as the
dispatch of SDF aircraft. He stated: "We understand that China wants
the SDF to deliver tents and blankets to airports in China."

Since the tents and blankets that the Japan International
Cooperation Agency (JICA) has stockpiled in Singapore are running
out because many were provided to cyclone-hit Burma (Myanmar), the
Government is now considering sending goods held by the SDF to China
in the form of a grant. The Defense Ministry is now carrying our
coordination with the Finance Ministry as to the procedure for using
state-owned assets for international assistance.

If the dispatch of SDF aircraft is ordered, a fact-finding team will
be sent within 48 hours and a C-130 transport plane will be
dispatched within five days. According to the Defense Ministry, two
to three C-130 transport planes will likely be dispatched to China.
The government is considering transporting relief supplies from the
Komaki base where a transport unit is stationed to Shengdou and
Chengdou in China.

It the dispatch this time around is realized, it will be the first
case for Japan in the postwar period, excluding a government plane
used for the prime minister's overseas trips. Assuming that the
private sector will provide relief goods to China, the government is
also considering the dispatch of private charters along with the SDF
planes. Japan dispatched a 61-member relief team to the quake-hit
areas in Sichuan Province and a 23-member medical team has been now
carrying out its mission.

4) ASDF cargo aircraft to depart for China within 5 days after
receiving order

NIKKEI (Page 2) (Abridged)
May 29, 2008

The government is preparing in full swing to send Air Self-Defense
Force transport planes to China in order to carry out relief
operations for those affected in the Sichuan earthquake, officials
said yesterday. This is for the ASDF to airlift relief goods for
victims after intergovernmental coordination between Japan and
China. The government will map out how to collect tents and blankets
as well as specific flight plans for ASDF C-130 transports. A main
unit of the ASDF will be readied to depart within five days after
receiving government orders.

The Defense Ministry is now planning to fly Komaki-based C-130
transports to airlift tents, blankets, and medical supplies to
Beijing, Chengdu, or elsewhere. The C-130 is a mainstay cargo plane
of the Self-Defense Forces. The ASDF has a total of 16 C-130s, three
of which are currently engaged in a mission for reconstruction
assistance to Iraq. The ASDF can fly up to six C-130s for disaster
relief operations.


TOKYO 00001471 004 OF 011


In the case of overseas activities under the International Emergency
Relief Law and the Self-Defense Forces Law, the SDF is to send an
advance team within 48 hours after receiving dispatch orders. That
is intended to check the conditions of runways. The ASDF's main unit
will be readied within two or three days after that.

5) China's turnaround surprises Japan

ASAHI (Page 3) (Full)
May 29, 2008

China has asked Japan to send Self-Defense Forces aircraft to help
transport relief supplies following the devastating quake that hit
Sichuan earlier this month. The Chinese asking for help was a
surprise to officials in the foreign and defense ministries. "I
never expected China to change like this," a senior official of the
Defense Ministry admitted, "because they used to have such an
allergy to the SDF."

Shortly after the Sichuan quake, some of the Japanese government
wondered if the government would send the SDF to China for emergency
relief operations. However, the government was negative of it, with
one high-ranking official saying: "China has enough people in its
military and police and will use them, so I don't think they will
ask for help. Also, China has pride as a big power."

In 1992, Japan amended its law for international emergency
assistance. This legal reform has made it possible for Japan to
engage the SDF in overseas emergency relief operations. Japan, under
the revised law, has so far tasked the SDF with a total of nine
overseas missions, including those in Asia and in the Middle East.
After the 2004 Sumatra offing earthquake and the 2006 Java
earthquake, the Air Self-Defense Force's C-130 transport planes
airlifted supplies to Indonesia. In addition, the Ground
Self-Defense Force was engaged in medical support and epidemic
prevention. However, Japan has never sent the SDF to China.

Chief Cabinet Secretary Machimura, meeting the press yesterday,
commented on the Chinese government's request: "The damage over
there is so serious, so I presume that they judged they would have
to depend on foreign countries for what they can't do themselves."
The government is now studying specific ways to transport relief
supplies. "We will probably use C-130 transport planes," a
high-ranking government official said. An ASDF staff officer also
said, "It depends on how much we would carry, but it's possible to
fly several C-130 transports."

Such an unprecedented move reflects the recent improvement in
bilateral relations. Chinese President Hu Jintao visited Japan early
this month and met with Prime Minister Fukuda. In their meeting, the
two leaders just released a joint statement and confirmed "strategic
reciprocity" in bilateral relations. The SDF and the People's
Liberation Army are also about to promote defense exchanges. This
time, a Chinese military official first sounded out the Japanese
embassy in Beijing on airlift activities involving SDF aircraft.

However, some of the Japanese government's officials are also
cautious about the Chinese request. "It's a sensitive issue," a
senior official of the Foreign Ministry said. China's public
sentiment toward Japan has now improved through Japan's dispatch of
a relief team for the Sichuan quake. Even so, there is no knowing
how the dispatch of SDF aircraft will work on the Chinese people's

TOKYO 00001471 005 OF 011


mindset.

Meanwhile, Foreign Minister Koumura was careful about his choice of
words. "They're not asking us to carry something on SDF aircraft,"
Koumura told reporters yesterday evening in Yokohama. He added:
They're saying it's also all right if we use SDF aircraft. That's my
understanding." He also said, "There are many things to study, so I
think we need the prime minister's judgment." With this, Koumura
underscored the necessity of a political judgment.

A senior official of the Defense Ministry is enthusiastic, saying,
"There's nothing better than this in a way to deepen defense
exchanges between Japan and China." However, another Defense
Ministry official says there is no predicting how it will affect
Japan-China relations in the future.

6) By requesting SDF assistance, Hu administration may to be trying
to contain hard-liners toward Japan

SANKEI (Top play) (Full)
May 29, 2008

Toshu Noguchi, Beijing

The Chinese government's decision to ask Japan for a dispatch of the
Self-Defense Forces' (SDF) aircraft to China in the aftermath of the
Sichuan earthquake is likely to bring about a major change in
bilateral relations. Behind this decision seems to be the Chinese
government's intention to contain hard-liners in the Chinese
military and to underwrite his stance of attaching importance to
Japan. He is doing so by taking advantage of the current mood in the
country where public sentiment toward Japan is improving due to
Japan's international disaster relief team's rescue activities
following President Hu Jintao's recent visit to Japan.

In China, how the Chinese Communist Party, which has formed a
single-party regime, came into being is related to the war against
Japan. Anti-Japanese education, including encouraging teaching about
the atrocities of the former Imperial Japanese Army, culminated in
fostering anti-Japanese feelings and patriotism. Even the Japanese
"Rising Sun Flag" has been seen as a symbol of the history of
Japan's aggression in China.

However, the recent visit to Japan by President Hu was called a
"warm spring trip." When the Sichuan earthquake occurred afterwards,
the Japanese rescue team was the first foreign group to arrive in
the disaster-hit area. Chinese mass media gave wide coverage to the
Japanese rescue team, with one Chinese daily reporting that "the
rescue team members are making desperate efforts at the risk of
their lives." Their activities, as well as the follow-on medical
team's, have been appreciated and received with gratitude in China.

China's request to Japan to send SDF aircraft to China followed
those Japanese teams' activities, but a Chinese military officer
noted: "It is not that we lack transport planes due to rescue
activities." Perhaps because of anti-Japanese sentiments and in
terms of the People's Liberation Army's honor, some in the army are
reportedly opposed to the government's request to Japan for a
dispatch of SDF planes to China.

The Japanese rescue team was asked to rescue victims in a
mountainous area where there seemed to be scant survivors. As a

TOKYO 00001471 006 OF 011


result, it failed to demonstrate its capability to rescue.
Reportedly, the Japanese team was sent to such an area in line with
the Chinese military's intention, for the Chinese military has
jurisdiction over the disaster-hit areas. In one disaster-affected
area, some Chinese soldiers criticized the Japanese rescue team and
voiced opposition to it. Given the situation regarding the rescue
team, one can easily imagine how Chinese hard-liners against Japan,
including those in the military, will negatively react to the SDF
when they start relief operations in China.

Notwithstanding, the Chinese government asked Japan for a dispatch
of SDF planes. That is perhaps because: (1) as an actual problem,
China is in extremely short supply of goods, such as tents; (2)
China wants to show at home and abroad its stance of attaching
importance to international cooperation; and (3) China wants to
improve the public's feelings toward Japan for the better. Above
all, rebuilding a good relationship between Japan and China would
lead to strengthening the power base of President Hu, given the
existence of former President Jiang Zemin, a hard-liner against
Japan who is still influential.

In part helped by the state-run TV's news reports on inspections of
the disaster-hit areas by Hu and Premier Wen Jiabao, their
popularity is rising. Meanwhile, "Jiang Zemin, who demonstrates his
voice over personnel selection of key central officials in the
party, tends to be sinking," a Chinese source said. Expectations are
building on a "political effect" of SDF aircraft.

7) TICAD: African countries support Japan's global warming
countermeasures; Yokohama Declaration to specify sector-by-sector
reduction approach

NIKKEI (Page 2) (Abridged slightly)
May 29, 2008

In the fourth Tokyo International Conference on African Development
(TICAD-4) that kicked off yesterday in Yokohama, African countries
are likely to express their support for Japan's measures to combat
global warming. In return for Japan's assistance in preventing
global warming in terms of funds and technology, African nations
will announce their support for Japan's countermeasures, including
the sector-by-sector approach to reduce greenhouse gases. Their
support will be incorporated in the Yokohama Declaration to be
adopted on May 30.

Prime Minister Yasuo Fukuda, delivering a speech in the opening
ceremony, played up his determination to spread Japan's Cool Earth
Partnership initiative to combat global warming throughout the
African continent. The partnership initiative is a
10-billion-dollar-scale measure toward developing countries designed
to assist them in proliferating new energy. The initiative also
includes the promotion of the sector-by-sector approach.

In a plenary session held yesterday afternoon to discuss the global
warming issue, leaders of many African nations, including Seychelles
and Tunisia, expressed their support for Japan's support measures.

The framework after the Kyoto Protocol, which expires in 2012, has
not been determined, and international talks are underway. Japan
aims to advance the ongoing talks in its favor by enlisting support
from over 50 African nations. Emitting only a small amount of
greenhouse gases and lacking large industries, African countries

TOKYO 00001471 007 OF 011


seem to have found the sector-by-sector approach easy to support.

8) Fukuda urges Sudanese president to settle Darfur conflict
swiftly

NIKKEI (Page 2) (Abridged slightly)
May 29, 2008

Prime Minister Yasuo Fukuda held a meeting yesterday morning with
Sudanese President Bashir at a Yokohama hotel. In the session,
Fukuda urged the Sudanese president to swiftly resolve to the
conflict in Darfur, an international concern, saying: "Whether Japan
can extend (economic) assistance depends on the president." In
response, Bashir indicated that pressure must be applied to the
antigovernment forces, saying: "The problem is that the
antigovernment forces do not attend the talks."

9) Africa aid: Switch to concerted financing

ASAHI (Page 1) (Full)
May 29, 2008

Prime Minister Fukuda during the Fourth Tokyo International
Conference on African Development (TICAD IV) revealed a plan to
extend fresh yen loans worth 4 billion dollars (approximately 420
billion yen) to Africa. In connection with this proposal, the
government and the World Bank have firmed up a policy of sealing a
comprehensive tie-up deal with an eye to extending concerted
financing for their joint projects. They will formally reach an
agreement at a meeting between Prime Minister Fukuda and World Bank
Group President Robert B. Zoellick on May 29.

Japan's ranking in the list of donors of official development
assistance (ODA) dropped to fifth place due to its harsh fiscal
conditions. Under such a situation, the government has determined
that Japan is limited in what it can do on its own in addressing
African countries' request for major development projects aimed at
integrating their economies. As such, it will shift the focus of its
aid policy to giving priority to aid items extended jointly with
international agencies, based on this framework.

The comprehensive tie-up deal with the World Bank will cover a wide
range of areas, including the consolidation of infrastructure,
promotion of private-sector investment, agriculture, education,
health care and climate change.

Concerted financing will smoothen the wide-area development of
infrastructure, such as the building of a principle road network
system straddling several countries. For instance, for the
consolidation of road networks, which the prime minister in a speech
delivered at the opening ceremony stressed as most important, up to
8 million dollars (approximately 84 billion yen) in yen loans will
be provided mainly for projects eligible for concerted financing
between Japan and the World Bank. The construction of principal
roads in Kenya and West Africa and highways in Senegal will likely
be eligible for concerted loans. Up to 760 million dollars will be
extended for power development. Japan jointly with the World Bank
will help Zambia and Mozambique build power distribution grids.

Following the sharp rise in food prices, which are hitting
impoverished people in Africa, the government will provide up to 480
million dollars (approximately 50 billion yen) in yen loans mainly

TOKYO 00001471 008 OF 011


for projects eligible for concerted loans with the World Bank. Japan
will also contribute over 22 million dollars (approximately 2.3
billion yen) for various funds aimed at improving agricultural
productivity.

For measures to combat climate change, Japan will tie up with the
United Nations Development Program (UNDP). As part of such an
effort, the government will help governments of African nations
reduce damage from droughts and submersion under water, by outlaying
a total of 120 million dollars (approximately 12.6 billion yen) from
the Cool Earth Partnership, a funding mechanism totaling 10 billion
dollars (approximately 1 trillion yen), which it has established for
assisting developing countries.

10) Japan's "4 billion dollars" aid plan faces predicament of being
caught between aid commitment to Africa and fiscal discipline

SANKEI (Page 1) (Full)
May 29, 2008

Prime Minister Yasuo Fukuda made a public pledge on Japan's aid to
Africa in a keynote speech at the 4th Tokyo International Conference
on African Development (TICAD IV) yesterday. The Africa issue will
also be high on the agenda at the upcoming Group of Eight (G-8)
Summit (Lake Toya Summit in Hokkaido) in July. As the chair, Japan
is aiming to take the initiative in discussions there, bringing in
Africa. By enticing the participation of Africa, Japan will aim at
securing its national benefits over the medium to long term. But the
prime minister's pledges lacked specifics in a sense.

Emphasizing the necessity to promote infrastructure building in
Africa, Fukuda announced in the speech Japan's plan to extend up to
4 billion dollars in yen loans to Africa over the next five years.
Japan's decision to offer aid, despite its austere fiscal
conditions, stems from a judgment that financial aid is necessary in
order to solicit support from Africa for Japan's bid for a permanent
seat on the United Nations' Security Council.

However, there is a trick in the "4 billion dollar" aid plan. In
offering yen loans to a certain nation, the government has so far
announced within Japan an amount worked out by deducing repayment
money. But the "4 billion dollar" includes such money.

In the run-up to TICAD4, the Foreign Ministry was calling for a
significant increase in the nation's official development assistance
(ODA) disbursements to Africa. But the government's annual economic
and fiscal policy guideline adopted in a cabinet meeting in 2006
specified an annual 2-4 PERCENT cut in the ODA budget. When
considering this policy, it was all the government could do to come
up with a plan to increase yen loans by up to 160 million dollars
annually by 2012. Fukuda was under the predicament of being caught
between the two challenges of "aid to Africa" and "fiscal
discipline." As a result, he hammered out the "4 billion dollars,"
as a Foreign Ministry source remarking: "This is a good showy
figure," giving consideration to both challenges.

Fukuda stressed: "Our nation, as a peace-cooperation nation, is
determined to step up efforts to consolidate and build peace in
Africa." For Japan's bid to become a permanent UNSC member,
international contributions in the security area are also
indispensable, but Fukuda made no reference to specific plans.


TOKYO 00001471 009 OF 011


Self-Defense Force (SDF) troops have not joined the ongoing UN
peacekeeping operations (PKO) in Africa. The government is now
planning to dispatch three to four SDF officials to the headquarters
of the United Nations Mission in Sudan (UNMIS) in southern Sudan.

In a bilateral meeting with Sudanese President Omar al-Bashir
yesterday, Fukuda was expected to reveal Japan's PKO assistance
plan, but it was not taken up because "time ran out," according to a
diplomatic source. Although Fukuda expressed his determination to
win a UNSC permanent seat, he failed to demonstrate his eagerness to
prove it.

11) Global warming prevention fund worth 5.5 billion dollars to be
created to assist developing countries: More than 10 countries to
contribute

ASAHI (Page 1) (Full)
May 29, 2008

It seems likely that industrialized countries, such as Japan, the
U.S. and Britain, will reach an agreement at the G-8 (Lake Toya
Summit) to be held in Hokkaido in July to establish a fund aimed at
helping developing countries battle against global warming. More
than 10 countries are expected to contribute to the establishment of
the planned fund, disbursing 5.5 billion dollars in total
(approximately 570 billion yen). The aim of establishing such a fund
is to encourage developing countries to take part in a new framework
for cutting global warming greenhouse gas emissions.

President Robert Zoellick of the World Bank, which will be in charge
of managing the fund, yesterday revealed the plan. Australia and
Canada will also take part in the fund, making it the largest ever
scale as a measure to combat climate change. Zoellick underscored,
"The fund will make a significant contribution in backing
negotiations for setting up a framework replacing the Kyoto
Protocol." The fund will be named the Climate Investment Fund. The
plan was proposed by Japan, the U.S. and Britain at a meeting of
finance ministers and central bank governors from the Group of Seven
nations (G-7) held in Tokyo in February. Agreement in principle was
reached at a working-level meeting held in the middle of this month,
bringing together participants from about 40 countries. The fund
will be established as early as this fall if G-8 participants
support it.

The U.S. and Britain plan to disburse 2 billion dollars
(approximately 210 billion yen) and 800 million pounds
(approximately 170 billion yen) respectively over three years. Japan
is also undertaking coordination with the possibility of disbursing
more than 100 billion yen. Finance Minister Nukaga will call on
other countries to take part in the fund at the Group of Eight
finance ministerial meeting to be held in Osaka from June 13.

The fund consists of two pillars -- the Clean Technology Fund worth
5 billion dollars for the dissemination of solar energy generation,
etc, and the Strategic Climate Fund worth 500 million dollars for
helping forest conservation and control.

There is strong dissatisfaction with the Kyoto Protocol for its
insufficient funding assistance to developing countries. This has
been one cause for developing countries hesitating to take part in
official UN talks on the creation of a post-Kyoto Protocol
framework. The focus will be whether industrialized countries can

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succeed in having developing countries take proactive action.

12) Progress in Japan-North Korean relations required before DPRK
delisted as state sponsor of terrorism

YOMIURI (Page 4) (Full)
May 29, 2008

Shoji Minami, Beijing

The Japanese and American chief delegates to the six-party talks on
the North Korean nuclear issue, U.S. Secretary of State Christopher
Hill and Japan's Foreign Ministry's Asian and Oceanian Affairs
Bureau Director-General Akitaka Saiki, met late yesterday (late
yesterday, Japan time) in Beijing. On the question of whether to
delist North Korea as a state sponsor of terrorism, they confirmed
that removing that country from the list of state sponsors of
terrorism is premised on progress in Japan-China relations,
including the abduction issue.

13) Prime Ministerial Advisor Nakayama hopes Pyongyang would
readdress abduction issue

SANKEI (Page 5) (Abridged slightly)
May 29, 2008

Kyoko Nakayama, advisor to the prime minister on the abduction
issue, held a press conference yesterday at the Japan National Press
Club in Tokyo's Uchisaiwaicho. Touching on the talks in May 2004
between then Prime Minister Junichiro Koizumi and North Korean
leader Kim Jong Il, Nakayama said: "General Secretary Kim has sent
us a message to return to the starting point. Although a North
Korean official in charge said, 'The issue has been settled,' it is
conceivable to return to the first visit to North Korea in September
2002 and start talks all over again." Thus Nakayama expressed her
strong hope about the possibility of North Korea readdressing the
abduction issue.

In addition, while stressing Japan's policy to aim at the
repatriation of all abductees, Nakayama spoke of conditions for
Tokyo to lift sanctions against the North: "If concrete talks begin
with the North for returning (abductees) to Japan, that would be
progress."

About the relationship between the option of bringing the Yodo-go
airliner hijackers back to Japan from the North and the United
States' plan to delist the North as a state sponsor of terrorism,
Nakayama said: "(Bringing them back to Japan) is considered to be a
plus factor for the delisting of the North, but it has no direct
bearing on the abduction issue." She emphasized her position that
the United States should not delist the North on the grounds of the
repatriation of the Yodo-go hijackers.

14) BOJ governor attributes low-interest rates to asset bubbles in
Japan, U.S.

YOMIURI (Page 9) (Full)
May 29, 2008

Bank of Japan (BOJ) Governor Masaaki Shirakawa said yesterday: "Many
of the recent asset bubbles in Japan and the United States were
caused by prolonged low interest rates despite commodity prices

TOKYO 00001471 011 OF 011


stabilized." He indicated that the state of interest rates remaining
low was a major cause for asset bubbles in Japan and the U.S. He
made this comment, focusing on the bubble economy in Japan in the
latter half of the 1980s and the subprime mortgage crisis in the
U.S.

Regarding the bubble economy in Japan, Shirakawa said: "At that
time, many companies anticipated that interest rates would remain
low for a long term. It is impossible to say that this is nothing to
do with the bubble economy."

Shirakawa concluded: "If (central banks) focus their attention only
on inflation rates, they may fail to swiftly take necessary monetary
measures and eventually may allow significant changes to occur in
economic activities." He thus emphasized the importance of taking
monetary measures while keeping in mind price rise rates over the
medium- to long-term. He made the above remarks in his speech at the
central bank's 2008 International Conference.

15) Hiranuma active in various parliamentary groups

YOMIURI (Page 4) (Full)
May 29, 2008

Former Minister of Economy, Trade and Industry Takeo Hiranuma
(independent) is eager to organize a new party. He is briskly taking
part in a number of parliamentary groups.

Yesterday, Hiranuma assumed the post of chair of the supraparty
parliamentary group "Parliamentary League to Consider the Japanese
Language." Its inaugural meeting was attended by 45 lawmakers. Among
the council's executive members are former Prime Minister Mori, the
major opposition Democratic Party of Japan's (DPJ) Upper House
Steering Committee Chair Takeo Nishioka, and the People's New
Party's Representative Watanuki. In the meeting, Hiranuma
emphasized: "In Japan, we call words the spirit of language, and for
generations, we have set a high value on words. Unfortunately,
however, the Japanese language has become very corrupted due to the
Occupation's policies. I want to lead a campaign to restore a good
Japanese language."

Hiranuma also heads the "Parliamentary League to Take Swift Action
to Rescue Japanese Citizens Abducted by North Korea" and the
"Japan-Taiwan Parliamentary Council". Today, Hiranumra will assume
the post of supreme advisor to the "Japanese People's Forum"
(represented by Teikyo Heisei University Prof. Kenzo Yoneda), a
supraparty study group that conservative local assembly members are
to launch today. In its inaugural meeting, Hiranuma will deliver a
speech.

One participant in the forum said: "A number of local assembly
members sympathize with Hiranuma about his idea of aiming at being a
'true conservative.' If he forms a 'Hiranuma party,' I want to join
it." Will Hiranuma's brisk activities in parliamentary groups lead
to his establishing a new party? His moves are drawing much
attention in Japan's political center Nagata-cho.

SCHIEFFER

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