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Cablegate: Daily Summary of Japanese Press 06/03/08

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UNCLAS SECTION 01 OF 10 TOKYO 001516

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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: DAILY SUMMARY OF JAPANESE PRESS 06/03/08


INDEX:

(1) Ruling party executives eager to eliminate wasteful spending;
Tanigaki has consumption tax hike in mind; Nakagawa thinks spending
must be cut first (Nikkei)

(2) METI Minister Amari stresses need to lower abnormally high oil
prices in interview prior to energy ministerial on June 7-8 (Tokyo
Shimbun)

(3) METI to introduce CO2 emission-labeling system for food, daily
necessities (Tokyo Shimbun)

(4) Biofuel effect assessment to be conducted; COP-9 picks Nagoya to
host COP-10 (Tokyo Shimbun)

(5) Deliberations on bill amending Antimonopoly Law likely to be put
off, with priority given to bills related to people's daily lives
(Nikkei)

(6) Editorial: Independent administrative agency reform bill;
Ruling, opposition parties should find common ground (Asahi)

(7) Defense Ministry concerned about "vacuum" in Japan's security
setup (Mainichi)

(8) Medical system for elderly a major campaign issue for Okinawa
prefectural assembly election (Tokyo Shimbun)

ARTICLES:

(1) Ruling party executives eager to eliminate wasteful spending;
Tanigaki has consumption tax hike in mind; Nakagawa thinks spending
must be cut first

NIKKEI (Page 2) (Excerpts)
June 3, 2008

The subject of trimming wasteful spending has cropped up in the
ruling bloc's policy discussion on hiking the consumption tax rate.
Although the Liberal Democratic Party and New Komeito are in accord
on the need to increase the efficiency of the state budget for
fiscal 2009, there are huge gaps in motives of those calling for
reducing waste. Some are skeptical about whether the ruling bloc,
which has applied pressure for greater spending, can come up with
any effective reform plan.

Former LDP Secretary General Hidenao Nakagawa appearing on a
television program yesterday announced his determination to cut
expenditures. He also unveiled a plan to set up a study group on
June 5 to inspect the government's wasteful spending in the
Machimura faction, in which he serves as a secretary.

Meanwhile, LDP Policy Research Council Chairman Sadakazu Tanigaki,
an advocate of a consumption tax hike, indicated in his May 29
speech that he would launch work to trim the fat off state spending.
He will launch a waste elimination project team (PT) on June 3. The
team plans to put together by August the results of surveys of such
sectors as public works project and social security to reflect them
in the fiscal 2009 budget.

Although the two groups' ostensible objectives seem the same, their

TOKYO 00001516 002 OF 010


real aims are quite different. The PT's main aim is to play up its
total devotion to streamlining the spending with the aim of
obtaining voters' understanding of the need to raise the consumption
tax. In fact, the envisaged reform plan will be produced by Yoichi
Miyazawa, a lawmaker supportive of a consumption tax hike.

In contrast, the Nakagawa study group's aim is to avoid an early
consumption tax hike on the grounds that efforts for reducing
wasteful spending are insufficient. The New Komeito also set up last
November a project team to prevent the wasteful use of tax money.
Its objective is close to Nakagawa's aim of putting off hiking the
consumption tax. New Komeito Representative Akihiro Ota, speaking to
reporters at the Prime Minister's Official Residence (Kantei)
yesterday, indicated his party's intention to put time into
considering ways to reduce wasteful spending, saying, "In order to
reduce waste, we will exert our energy into all administrative
bodies systematically."

For streamlining expenditures, PTs are expected to focus on such
costly sectors as public works project, social security, and
education. With the approach of the next Lower House election,
ruling party members with vested interests in those sectors are
applying pressure for greater spending. Some LDP lawmakers think
that the effort will not advance any further than reviewing budgets
for some public-interest corporations.

DPJ eyes drastic reform

The Democratic Party of Japan, which regards the concentration of
power on the Kasumigaseki bureaucratic district and the amakudari
practice of former government officials landing lucrative jobs in
the private sector after retirement as a breeding ground for the
rigid allocation of budget money, is calling for drastic reform of
the system itself that resulted in waste. The party plans to produce
a manifesto (campaign pledges) for the next Lower House election
vowing to boldly shift power from the central government to local
governments and to abolish individual subsidies.

As for reform of road-related tax revenues, the party has already
adopted a basic policy to: (1) abolish the special account, (2)
cancel the medium-term road construction plan costing 59 trillion
yen over a ten-year period, and (3) consider totally abolishing the
local development bureaus as outposts of the Ministry of Land,
Infrastructure and the Transport (MLIT). The DPJ has also criticized
the government's and ruling bloc's plan to free up road-related
revenues for general spending as only a shift of interests from the
MLIT to the Finance Ministry. The party aims to shift the weight of
the road construction mechanism to local districts as a means to cut
waste.

About the amakudari issue, the DPJ has pointed out that
approximately 12.6 trillion yen has flown into public-interest
corporations and other organizations that hire a good number of
retired government officials in the form of discretionary contracts.


(2) METI Minister Amari stresses need to lower abnormally high oil
prices in interview prior to energy ministerial on June 7-8

TOKYO SHIMBUN (Page 9) (Full)
June 3, 2008


TOKYO 00001516 003 OF 010


Economy, Trade and Industry Minister Akira Amari responded to an
interview with Tokyo Shimbun and other news companies prior to the
meeting of the energy ministers of the Group of Eight (G-8)
countries, China, India, and South Korea scheduled for June 7-8 in
Aomori City. He emphasized his readiness to devote himself to
drawing up a message calling for lowering skyrocketing oil prices.
He said: "The participants are major consumer countries, so it will
be possible for the whole world to deal with the issue with a sense
of crisis."

The flow of speculative money into the market has pushed up oil
prices to over 130 dollars per barrel. Amari said: "The current
prices are abnormal. The high oil prices have led to raising the
prices of natural resources and food. The current burden is
unbearable for developing countries."

He then pointed out that high oil prices would deal a serious blow
to the global economy and could lead to pulling the prices down. He
said: "It is totally wrong for oil producers to think that high oil
prices will augment the value of exports." In the message to be
issued in the environment summit, he intends to urge the
oil-producing countries to fully increase output and to upgrade the
reserve capacity of such facilities as oil centers.

Amari said: "All the participant countries account for two-thirds of
global energy consumption." He thus stressed the extensiveness of
the G-8 summit's influence.

The energy issue, which is closely linked to global warming, will
also be high on the agenda at the energy ministerial. Amari said:
"Energy saving will contribute to reducing energy procurement and
enhancing competition, resulting in reinforcing energy security.
Energy saving will thus bring about various advantages." He will
work on the participant countries to reach an agreement on forming
an international framework to support measures to save energy.

Specifically, Japan is ready to pledge to transfer its renewable
energy and clean-coal technologies, as well as to offer cooperation
in producing legal frameworks and developing human resources.

(3) METI to introduce CO2 emission-labeling system for food, daily
necessities

TOKYO SHIMBUN (Page 9) (Full)
June 3, 2008

The Ministry of Economy, Trade and Industry (METI) yesterday
announced plans to introduce a system to require manufacturers of
foodstuffs and daily necessities to label the amount of carbon
dioxide (CO2) emitted during the production process. The ministry
will produce guidelines with leading distribution companies and food
manufacturers and will implement the system in FY2009 on a trial
basis.

METI thinks that if consumers, based on the label, begin to select
goods with fewer CO2 emissions, manufacturers will step up efforts
to reduce gas emissions and eventually contribute to curbing global
warming. In Britain, some major supermarket chains have already
introduced this system, but this will be the first case in Japan.

To take potato chips for example, the total amount of CO2 emitted in
the whole process, including potato cultivation, production, and

TOKYO 00001516 004 OF 010


distribution, is displayed on the package.

METI will establish a study group in June to work out specifics
about calculation and labeling methods and will compile a set of
guidelines by next March.

(4) Biofuel effect assessment to be conducted; COP-9 picks Nagoya to
host COP-10

TOKYO SHIMBUN (Page 3) (Full)
May 31, 2008

Koki Miura, Bonn

The ninth Conference of the Parties of Convention on Biological
Diversity (COP9), being held in Bonn, Germany, decided on the
afternoon May 30 that the 10th meeting of COP would be hosted by the
city of Nagoya in October 2010. COP-9 presents a basic policy of
setting up country-by-country numerical targets as a new strategy of
preserving species. If the basic policy is adopted at the COP10
conference, the numerical targets would become an international
index known as the "Nagoya targets."

Following the COP-9 decision that Nagoya will hold the COP-10
meeting, Environment Minister Ichiro Kamoshita delivered a speech on
the last day in which he stated:

"Based on the great achievements at COP-9, Japan will make efforts
for the success of COP-10, which will be held in 2010, and to see
that it will become a milestone for biological diversity."

The COP-9 conference proposed a policy of setting country-by-country
numerical goals for 2011 and beyond, citing that countries should
set up quantitative targets if possible. Regarding the utilization
of biological resources, the toughest confrontational issue, and
profit-sharing, Various possibilities, including the creation of a
legally-binding international framework, will be looked into.

Japan, which will chair COP-10, intends to propose a "Satoyama" plan
as a model for coexistence of human beings and nature. COP-9 started
on May 19 in Bonn with about 6,000 participations, including
representatives from 191 countries, regions and non-profit
organizations.

On May 30, the last day of the meeting, COP-9 adopted a resolution
calling for a set of guidelines for research on the effects of
biofuel, such as the adverse impact on the food supply.

The resolution stresses concerns about the positive and negative
effects of biofuel production and utilization on biological
diversity. In order to find the appropriate production level and use
of biofuel, the resolution calls for creating guidelines for an
environmental impact assessment, including the effect on the
ecosystem.

Japan's leadership to be tested

(Commentary)

Since Nagoya will host the COP-10 meeting in 2010, Japan will have
to bear responsibility for tackling the problem of preserving
species. However, since there are many issues to which Japan

TOKYO 00001516 005 OF 010


objects, views questioning Japan's leadership are being raised.

Japan will play up its "Satoyama" plan as a model for coexistence of
humans and nature at COP-10. That plan is now being gradually
recognized by the international community, with the Italian
representative to COP-9 noting, "We are paying attention to Japan's
Satoyama." However, a source in the German foreign ministry said:
"There are fierce conflicting interests (among member countries)" in
concrete discussions. Especially, the issues of using species and
profit-sharing became fierce confrontation between the North and
South in COP9. Japan was the forefront of opposing the idea of
creating a legally binding international framework called by
developing countries.

With the leadership of Germany, COP-9 reached a conclusion that
discussion would continue on the issues, including whether to create
a legally binding framework. Japan's response was ridiculed by a
source familiar with German foreign policy, saying: "Certain
countries attempted resistance." Germany showed its presence by
announcing its annual contribution of 500 million euros
(approximately 82 billion yen) for forest protection. Japan's
leadership will be tested by COP-10.

(5) Deliberations on bill amending Antimonopoly Law likely to be put
off, with priority given to bills related to people's daily lives

NIKKEI (Page 2) (Full)
June 2, 2008

The fates of the bills on the Diet agenda will be determined before
the ongoing session is adjourned on June 15. The ruling and
opposition camps have clashed head-on over a bill amending the
Antimonopoly Law, which features stiffer penalties against companies
that play a leading role in price-fixing cartels. The bill is thus
likely to be carried over to the extraordinary Diet session in the
fall. The two camps have agreed to support an increasing number of
bills related to the daily lives of the population, but on bills
over which the two sides have been at odds, the ruling coalition has
no choice but to rely on its two-thirds majority in the House of
Representatives (to override bills rejected in the opposition
controlled House of Councillors). Although a mood of compromise is
growing between the two camps, the results are still limited.

Of the 80 bills submitted by the government to the ongoing Diet
session, 49 had cleared the Diet as of June 1. About 70 bills, or
about 80 PERCENT of the total, are expected to pass the Diet by the
end of the session, lower than the 92 PERCENT recorded in the
regular Diet session last year. The government and the ruling camp
have remained unable to move ahead with deliberations as they had
expected, given the opposition camp's control of the House of
Councillors.

The number of bills on which both camps have been at loggerheads is
decreasing. Such bills include a bill amending the Special Taxation
Measures Law and a special measures bill on highway tax revenues.
But of the some 20 government-sponsored bills still left in the
Lower House, only five are expected to clear the current Diet
session, including a bill amending the Juvenile Law. The ruling
coalition has judged it difficult to enact in the current session
about 10 bills, including a bill designed to support the government
health insurance system with assistance from corporate health
insurance society. It intends to continue to discuss these bills in

TOKYO 00001516 006 OF 010


the Lower House in the next session.

On the bill amending the Antimonopoly Law, not even deliberations
have started yet. The Democratic Party of Japan (DPJ), while
approving the government plan in outline, has judged it necessary to
obtain a guarantee for fair procedures to be taken. The main
opposition party has unofficially presented to the Liberal
Democratic Party (LDP) an amendment to the bill, calling for
hearings to be held by the Fair Trade Commission and for lawyers to
be allowed to attend questioning. The government and the ruling camp
are reluctant to totally accept the DPJ plan, on the ground that the
plan will affect the legal system as a whole. It seems impossible to
start even negotiations on revising the bill during the current
session.

A number of DPJ members have voiced opposition to a bill designed to
help joint ventures financed by the public and private sectors and
others saddled with excessive debts reconstruct their businesses by
establishing regional industrial revitalization corporations. One
member said: "The bill will make it ambiguous to clarify where
responsibility lies for a slump in business. In the party, many are
calling for putting off a conclusion, rather than rejecting the
bill.

Nonetheless, as seen from an agreement reached recently between the
ruling and opposition camps to seek the passage of a bill aimed at
reforming the public servant system, momentum is certainly gathering
for them to make concessions. The LDP, the New Komeito, and the DPJ
are eager to reach an agreement on issues related to the people's
daily lives and to a secure social environment by
lawmaker-initiative legislation before the end of the session.

The three political parties are apparently concerned that if they
fail to enact such bills into law, the voters would form a negative
impression about them. LDP Diet Affairs Committee Chairman Tadamori
Oshima emphasized in a speech in Sapporo on May 31: "Some DPJ
members should be aware that as long as they continue to raise
opposition to everything, they will not be able to fulfill their
responsibilities to the people. Such a development will contribute
to forming a new type of Japanese democracy."

Even so, in the extraordinary Diet session in the fall, the focus of
attention will be on how to treat the law governing the Maritime
Self-Defense Force's refueling mission in the Indian Ocean, which
expires next January. The DPJ is expected to oppose the bill. As it
stands, on controversial bills, the situation in which the ruling
and opposition camps find it difficult to cooperate with each other
remains unchanged.

(6) Editorial: Independent administrative agency reform bill;
Ruling, opposition parties should find common ground

ASAHI (Page 3) (Full)
June 3, 2008

One hundred and one independent administrative agencies are under
the jurisdiction of central government agencies. The predecessors of
those independent administrative agencies are either special public
corporations or various agencies' operating divisions. A bill
reforming their mechanism is now under deliberation in the Diet.

The bill itself should be basically promoted. However, the close of

TOKYO 00001516 007 OF 010


the Diet session is drawing near. We urge both the ruling and
opposition parties to make efforts to enact the bill by finding
common ground and taking the time.

Following the criticism that there are many unnecessary projects
that have become hotbeds for amakudari (golden parachute) practices,
reform of independent administrative organizations have been looked
into. The bill prepared by the government includes some of the
results of such efforts.

One of such results is a proposal for a new method of assessing the
performance of independent administrative agencies. At present, an
assessment committee attached to each relevant government agency is
in charge of assessing their performance. Under the proposed bill, a
new committee consisting of members appointed by the prime minister
would be established for sole jurisdiction over all independent
administrative agencies.

At present, peer review by colleagues is rampant. For instance, the
Ministry of Agriculture, Forestry and Fisheries' assessment
committee gave the second best rating on a scale of one to five to
the Forestry and Forest Products Research Institute, which was later
abolished following the discovery of a government-led bid-rigging
practice.

It would be difficult to correct the inefficiency of organizations,
based on assessment made under the influence of concerned government
agencies, because government offices tend to attach importance to
defending their own organization.

The reform drive also targets the personnel appointment system.
Under the proposed bill, a public recruitment system would be
adopted for the selection of top personnel and auditors, a watchdog
of the organizations, of independent administrative agencies. These
posts have often been filled by former bureaucrats. However, under
the new system, their appointments would require cabinet approval.
Under such a system, it may become possible to appoint private
citizens who launch a bid for those posts.

The bill also mandates the return of unnecessary assets possessed by
independent administrative agencies, such as housing compounds and
recreation facilities, to the government. According to an estimate
by the government's administrative reform promotion secretariat,
assets totaling over 600 billion yen can be sold off. Selling such
assets will thus bring about valuable fiscal resources at a time
when the fiscal condition is stringent.

Those proposals are a step forward to reforming independent
administrative agencies. Many proposals made by the DPJ overlap with
those proposed by the government. It may be impossible for them to
agree on every item. However, they should at least cooperate with
each other in order to realize at an early date reform proposals
both can agree on. The divided Diet cannot be used as an excuse for
stalling reforms that can be implemented, if the government puts its
mind to it.

Apart from those reform items, it is also important to remember that
the key part of the reform is to keep really necessary agencies in
place and eliminate unnecessary ones.

The consolidation and rationalization plan, which the government
presented at the end of last year, has been left unfinished. It

TOKYO 00001516 008 OF 010


stipulated that the number of independent administrative agencies
should be reduced to 86. However, since the goal was to be achieved
in a manner of a mere juggling of numbers -- some were to be merged
and others were to be turned into special public corporations, the
86 agencies might include those that should be abolished.

Some agencies, such as those aimed at nurturing science, technology
and culture, should be kept in place in view of their public nature.
It is important to continue the work of sorting out independent
administrative agencies, by identifying such agencies and
determining unnecessary organizations and projects.

(7) Defense Ministry concerned about "vacuum" in Japan's security
setup

MAINICHI (Page 7) (Full)
June 3, 2008

"The Foreign Ministry stopped thinking about defense and became cold
as soon as they cleared the issue with the United States. They tried
to play cool." With this, a senior official of Japan's Defense
Ministry vented his frustration at the Foreign Ministry because the
government held discussions at the Foreign Ministry's initiative for
Japan's consent to a treaty banning cluster munitions.

The Foreign Ministry and the prime minister's office went all out to
consider the United States. Eventually, the treaty's text
incorporated a clause allowing joint operations with the United
States, which is not a signatory of the treaty. The Foreign Ministry
therefore deemed it possible to ensure a 'safety valve' for the
Japan-U.S. alliance, and then the Foreign Ministry moved for a de
facto ban on all cluster bombs. After that, the Defense Ministry
voiced concerns about Japan's national defense. However, the Foreign
Ministry was in no mood to listen. "They wouldn't listen at all," a
senior official of the Defense Ministry said. "There was a tide," he
added. The Defense Ministry, which was left behind, had no way to
resist.

"Defense Minister Shigeru Ishiba said in a press conference on the
morning of May 30: "The cluster bombs we have at present are not for
fun or a joke." So saying, Ishiba was apparently upset. The
Self-Defense Forces has cluster bombs for the purpose of bringing
the coastline under control in order to block enemy troops from
landing in Japan. "I wonder what to do about the vacuum in our
national security," one of the Defense Ministry's officials said.
The Defense Ministry is concerned about the deterioration of Japan's
defense functions.

"The neighbors of Britain (which decided to prohibit cluster bombs)
are European countries. In the case of Japan, there are China and
Russia among its neighbors. Japan's security environment is quite
different from Britain's. We need the same bombs (as those of China
and Russia)." With this, another senior official of the Defense
Ministry criticized the fact that Japan was affected by Europe.

However, the treaty allows joint operations. This seemed be good for
the Defense Ministry. One of the Defense Ministry's officials said:
"The United States will use cluster bombs in the event of an
emergency on the Korean Peninsula. If the SDF and shipping companies
cannot transport them, that's a problem. But we've cleared this
problem."


TOKYO 00001516 009 OF 010


However, the Defense Ministry is now saddled with a heavy workload.
Japan has four types of cluster munitions. Its procurement of
cluster munitions for the Air and Ground Self-Defense Forces totals
27.6 billion yen. All of their cluster munitions are subject to
scrapping. The ASDF and the GSDF will have to sustain an enormous
amount of losses from an all-out prohibition, including vehicles to
launch cluster munitions. The ASDF will need 10 billion yen to scrap
its cluster munitions, according to an ASDF staff officer.

Japan is still in dire fiscal straits. Meanwhile, Japan is going to
debate how to prepare alternatives. The treaty reportedly exempts
the newest generation of so-called "smart" cluster munitions. If
Japan is going to replace its cluster munitions with these smart
ones, it will inevitably take a large amount of money, and it will
also take time. "Cluster bombs are effective weapons for deterrence,
but if the government says it will agree to prohibit cluster
munitions for Japan and its people, then we will comply with that
and scrap them," a senior official of the Defense Ministry said with
a deeply-troubled look.

This is the last of a three-part series.

(8) Medical system for elderly a major campaign issue for Okinawa
prefectural assembly election

TOKYO SHIMBUN (Page 2) (Excerpts)
June 2, 2008

The ruling and opposition camps are engaged in a fierce campaign
battle for the June 8 Okinawa prefectural assembly election. The
focus is now on whether the ruling bloc can maintain its majority
under strong national criticism of the newly introduced medical
system for people aged 75 and older.

At present, 27 Okinawa prefectural assembly seats are held by the
ruling Liberal Democratic Party and New Komeito that are supporting
Governor Hirokazu Nakaima and 20 seats by the opposition parties,
including the Social Democratic Party of Japan, Japanese Communist
Party, Social Democratic Party, and Okinawa Social Mass Party. One
seat remains vacant. The win-lose line is set at a 25-seat majority.
As of May 30, the day the campaigning officially kicked off, 74
individuals filed their candidacies. Problems associated with U.S.
bases in the prefecture have always been campaign issues in the
past. But this time around, DPJ Okinawa Chapter Public Relations
Committee Chairman Tadashi Uesato said: "The majority of the DPJ
candidates are focused on the new medical system for the aged rather
than on base issues in their campaigns."

In his kick-off ceremony, a certain DPJ candidate also said
vigorously, "Everyone says that the new medical system is absurd.
The system must be abolished."

On June 1, DPJ Deputy President Naoto Kan, JCP Chairman Kazuo Shii,
and SDP head Mizuho Fukushima all visited Okinawa to stump for their
respective candidates.

Meanwhile, the ruling parties have been explaining the government's
policy to improve the new medical system in a desperate effort to
obtain the understanding of voters. The LDP has been running a
television commercial in Okinawa in which former LDP Lower House
member Koichi Hamada states, "The Liberal Democratic Party is a
party that cherishes the elderly."

TOKYO 00001516 010 OF 010

There are no signs of the storm of criticism of the government
waning, however. A senior LDP Okinawa chapter official said
discouragingly: "Elderly people are really angry. It is going to be
an uphill battle for us." A New Komeito official also noted: "At
least half an hour is necessary in order to obtain the understanding
of voters regarding the medical system. Maintaining the majority
seems hard." The ruling bloc is being forced to run a negative
campaign, saying, "If the opposition bloc wins a majority, the
prefectural administration would be thrown into turbulence."

LDP Okinawa Chapter Secretary General Tetsuji Shingaki emphasized,
"In order to realize Governor Nakaima's pledge to revitalize the
industries and create more jobs, the ruling camp must keep its
majority." A veteran candidate running on the LDP ticket underlined
the need for the stability of the prefectural administration,
saying, "As a ruling party, we are going to implement the governor's
pledges," without touching on the medical issue.

LDP Election Strategy Council Chairman Makoto Koga, General Council
Chairman Toshihiro Nikai, and New Komeito Representative Akihiro Ota
have all visited Okinawa in a desperate effort to give a boost to
their candidates.

SCHIEFFER

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