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Cablegate: Japanese Morning Press Highlights 06/09/08

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UNCLAS SECTION 01 OF 09 TOKYO 001558

SIPDIS

DEPT FOR E, P, EB, EAP/J, EAP/P, EAP/PD, PA;
WHITE HOUSE/NSC/NEC; JUSTICE FOR STU CHEMTOB IN ANTI-TRUST DIVISION;
TREASURY/OASIA/IMI/JAPAN; DEPT PASS USTR/PUBLIC AFFAIRS OFFICE;
SECDEF FOR JCS-J-5/JAPAN,
DASD/ISA/EAPR/JAPAN; DEPT PASS ELECTRONICALLY TO USDA
FAS/ITP FOR SCHROETER; PACOM HONOLULU FOR PUBLIC DIPLOMACY ADVISOR;
CINCPAC FLT/PA/ COMNAVFORJAPAN/PA.

E.O. 12958: N/A
TAGS: OIIP KMDR KPAO PGOV PINR ECON ELAB JA

SUBJECT: JAPANESE MORNING PRESS HIGHLIGHTS 06/09/08


Index:

Political news:
1) Ruling parties lose majority in Okinawa assembly election as
voters react against controversial medical plan for the elderly
(Mainichii)
2) Government, ruling parties considering one-week extension of
current session of Diet (Mainichi)
3) Former Prime Minister Mori says that Prime Minister Fukuda has no
desire to shuffle his cabinet, despite press rumors he will do so
(Yomiuri)
4) Former head of Democratic Party of Japan (DPJ) Maehara criticizes
party president Ozawa in national journal article (Yomiuri)

Energy ministers meeting in Aomori:
5) Secretary Bodman calls for investments that would increase oil
supply (Nikkei)
6) G-8 plus 3 Energy Ministers Meeting closes in Aomori with joint
statement (Asahi)
7) U.S., Japan, India, ROK energy ministers issue joint statement of
concern about soaring oil price, urge more supply (Mainichi)
8) Energy minister call for joint government-private sector fund to
promote innovative ideas in environmental and energy areas
(Mainichi)

9) Japan to provide financial cooperation to build nuclear power
plant in U.S. (Mainichi)

North Korea problem:
10) Japan, North Korea to restart bilateral talks on June 11
(Nikkei)
11) Japan enters talks with North Korea, buttressed by U.S. pushing
from behind for progress on abduction issue (Tokyo Shimbun)
12) Formal U.S., North Korea talks to restart June 11, with DPRK
expected to press for removal of its name from U.S. terror-sponsor
list (Mainichi)
13) Congressional Research Service report sounds warning against
premature removal of North Korea from U.S. list of states sponsoring
terrorism (Sankei)

14) LDP proposes bringing in 10 million immigrants into Japan,
establishing immigration agency, and easing restrictions on
naturalization (Yomiuri)

Articles:

1) Ruling parties lose majority in Okinawa assembly election as
voters react against controversial medical plan for the elderly

MAINICHI (Internet edition) (Full)
June 9, 2008

Okinawa residents went to the polls on June 8 to cast their votes
for candidates in the prefectural assembly election (48 seats), in
which the main campaign issue was the propriety of the medical
system for the elderly over 75. The ruling camp's forces, made up of
the Liberal Democratic Party (LDP), New Komeito and independent
conservatives only won 22 seats, while the opposition parties,
centered on the Democratic Party of Japan (DPJ), Social Democratic
Party (SDP) and the Japanese Communist Party (JCP) took a majority
of 26 seats, trading places to become the ruling camp. The turnout
for the election was a record low 57.82 PERCENT , a 0.9 point drop

TOKYO 00001558 002 OF 009


from the previous prefectural-assembly election in 2004, when it was
58.72 PERCENT .

On the issue of the relocation of Futenma Air Station, Governor
Hirokazu Nakaima has gone along with moving the base to a site on
the coast of Camp Schwab in Nago City, with conditions. In contrast,
the opposition camp has opposed relocation within the prefecture.
The result of this election is likely to have an impact on the
relocation.

In the current election, the two campaign issues were the propriety
of the medical system for the elderly, which is a national policy
problem, and the relocation of Futenma Air station, which the
governor approves. Party leaders from both the ruling and opposition
camps came to Okinawa one after the other to stump, but it appears
that the tail wind for the opposition that allowed it to pick up
seats was the medical-service issue.

A break down of the ruling camp's wins by party gives the LDP 16
seats, the New Komeito 3 seats, and independents 3 seats. In the
opposition camp, the JCP won 5 seats, the SDP also took 5 seats, and
the DPJ came in with 4 seats. In addition, other minor parties won 3
seats, and independents favoring the opposition took 6 assembly
seats.

Prior to the election, the then ruling camp had 27 seats, holding a
majority on the assembly.

2) Ruling bloc considering extending Diet session by one week

MAINICHI (Page 2) (Full)
June 8, 2008

The government and ruling parties yesterday began considering
extending the current Diet session, scheduled to close on June 15,
by about one week, according to sources connected with the
government and ruling bloc. The reason is that the major opposition
Democratic Party of Japan has decided to submit a censure motion
against Prime Minister Fukuda to the Upper House on June 11. The
planned extension is aimed at preventing Diet approval of six
treaties from being carried over to the next Diet session after
Upper House deliberations on them stall.

In accordance with a constitutional provision stipulating the
precedence of a Lower House decision, a treaty automatically wins
Diet approval after 30 days of its passage of the Lower House.
Nevertheless, the Diet must be in session.

The six treaties passed the Lower House between May 20 and 22. An
LDP executive said to reporters yesterday, "If the session is
extended until June 21, they will automatically clear the Diet."

3) Yoshiro Mori: Prime Minister Fukuda has no intention to shuffle
cabinet

YOMIURI (Page 4) (Full)
June 7, 2008

Former Prime Minister Yoshiro Mori, a member of the ruling Liberal
Democratic Party (LDP), appeared on June 6 on a TBS program, which
will be aired at a later date. In it, asked about the possibility of
a cabinet shuffle after the Group of Eight summit in July in

TOKYO 00001558 003 OF 009


Hokkaido, Mori said: "I have said that (a cabinet shakeup) on Prime
Minister Fukuda's own decision would be good, but it seems me he has
no such intention."

Referring to the fact that Democratic Party of Japan (DPJ) President
Ichiro Ozawa has tried to force a dissolution of the House of
Representatives as early as the fall, Mori pointed out:

"If the cabinet is shuffled, a snap election will be held to ask for
a vote of confidence after the (dissolution of the Lower House). It
is unnecessary to conduct an (election) on the enemy's timetable."

Mori had shown a positive stance toward an early cabinet shuffle.

4) DPJ's Maehara criticizes Ozawa's manifesto for last year's Upper
House election

YOMIURI (Page 4) (Full)
June 8, 2008

Seiji Maehara, former president of the Democratic Party of Japan
(DPJ), engaged in a dialogue with former Chief Cabinet Secretary
Kaoru Yosano in the monthly magazine Chuo Koron's July issue, which
will go on sale on June 10. In it, Maehara voiced doubts about the
feasibility of his party's manifesto (set of campaign pledges) for
last year's House of Councillors election, which was compiled under
the initiative of President Ichiro Ozawa. He said: "Should the DPJ
hold the reins of government as things stand, the party will not be
able to decently manage the government.

The DPJ's manifesto stated that 15.3 trillion yen would be needed to
implement major policy measures, including compensation for
individual farmers, and that this would be covered by abolishing
subsidies.

Maehara asserted that about 18 trillion yen would be needed if
additional pledges such as the scrapping of provisional taxes for
road construction and maintenance were added. He pointed out the
responsibility of Ozawa for signing on to such plans. He noted:

"It would be impossible to come up with such fiscal resources by
administrative reform alone. I heard that some members who were in
charge of drafting the manifesto were reluctant to accept it when
mapping it out, citing as the reason that the grounds for such
fiscal resources were insufficient. But Mr. Ozawa gave it the
go-ahead."

Maehara also stressed the need to substantially revise the
manifesto:

"What the DPJ must avoid is just talking about policy measures in
order to please the public and then later say that we were unable to
carry them out when we are at the political helm. If so, power will
immediately return to the Liberal Democratic Party (LDP). Such will
be the worst thing possible."

In a meeting on June 7 in Kyoto, Maehara stated: "There is criticism
of the compensation scheme for individual farmers as a waste of
public funds. I strongly agree."

5) U.S. Secretary of Energy Bodman calls for greater investment to
increase oil supply

TOKYO 00001558 004 OF 009

NIKKEI Online
20:07, June 7, 2008

U.S. Secretary of Energy Samuel W. Bodman, currently attending the
G-8 Energy Ministerial and related meetings, held a group press
interview including with the Nihon Keizai Shimbun on the morning of
June 7 in Aomori City. Commenting on the steep rise in crude oil
prices, Secretary Bodman said, "The flat supply of oil is the cause
of the unstable market. I hope adequate investments (to expand oil
production) will be made." Responding to a comment that speculative
capital is a factor in the current high level of crude oil prices,
the secretary said, "It is not due to such a financial factor."

Secretary Bodman added that there was a structural factor behind the
high crude oil prices: "The supply of crude oil has not increased
for the past three years, even though there is growing demand for
oil production."

6) G-8 plus China, India and South Korea energy ministerial closes,
adopting Aomori Declaration

Asahi.com
17:56, June 8, 2008

Energy ministers from the Group of Eight (G-8) Nations, China, India
and South Korea closed on June 8, adopting an Aomori Declaration,
which incorporates concern about the steep rise in crude oil prices
and a call for facilitating energy-conservation measures.
Representatives from the G-8 at a separate meeting agreed to launch
by 2050 a total of 20 large-scale demonstration projects to look
into CO2 underground storage.

The Declaration consists of four joint statements. Concerning the
present steep rise in crude oil prices, a joint statement issued by
the 11 countries called for cooperation from all countries, noting,
"The situation is abnormal and against the interests of both
consumer and producer countries." The statement gave a high score to
the sector-specific approach on reducing greenhouse gas emissions, a
method for industry-wide technical transfers proposed by Japan.
Noting that the 11 countries will make a concerted effort for the
practical application of the proposed approach, the statement
indicated their determination to analyze and gauge the present state
of energy-conserving measures and facilitate the selection of
technologies to be transferred.

The 11 countries also agreed to map out voluntary country-specific
goals and action programs for the promotion of energy-conserving
policy and the development of clean energies. As a venue for
conferring on those energy-saving policies, they will set up a new
international framework "International Partnership for Energy
Efficiency Cooperation (IPEEC). This will be the first framework
involving China and India as well as Japan, the U.S. and Europe.

7) Energy ministerial: Five countries adopt joint statement
expressing concern over soaring oil prices and calling for greater
supply

MAINICHI (Page 2) (Abridged slightly)
June 8, 2008

A meeting on June 7 of energy ministers of Japan, the United States,

TOKYO 00001558 005 OF 009


China, India and South Korea adopted a joint statement expressing
strong concern about soaring oil prices, saying, "The current level
of oil prices is unprecedented and against the interest of both
consuming and producing countries."

As countermeasures, the statement underlines the need for major
consuming countries to work together to promote energy conservation,
while urging producers to expand supply capacity.

Crude oil prices have reached record levels, with the WTI price
closing in on 140 dollars a barrel on June 6. Pointing out that
skyrocketing oil prices place heavy burdens on resource-poor
developing countries, the statement urges producing countries to
increase investments (for greater production) to achieve sufficient
supply.

The statement also specifies the need for consuming countries to
enhance their domestic policies in order to significantly increase
their energy efficiency. In addition, outlining steps to beef up
emergency measures, such as stockpiling oil, the statement also
highlights the need for International Energy Agency member countries
to take steps, such as releasing emergency stockpiles, in
cooperation with China and India. The statement also says that it is
desirable for China and India to gradually abolish their subsidy
systems to curb prices of energy-related products.

On June 8, the energy ministers of 11 countries -- the Group of
Eight plus China, India, and South Korea -- will hold their
meeting.

8) Government to establish government-private fund for environment
and energy

MAINICHI (Top play) (Abridged)
June 8, 2008

The government decided yesterday to establish what is tentatively
called the Innovation Creation Organization, a government-private
fund to promote corporatization by putting together cutting-edge
technologies in growing areas, such as the environment and energy,
possessed by universities, small ventures and leading companies at
home and abroad. The new framework is designed to combine top-notch
business-government-academic personnel beyond boundaries to
selectively provide funds to innovative technologies in the
environment, energy and other areas from a long-term perspective.

By fostering strong technologies, the government intends to increase
the country's economic competitiveness internationally. As the first
step to rebuilding an economic structure of the 21st century, Prime
Minister Fukuda is expected to order on June 9 Economy, Trade and
Industry Minister Amari to come up with a specific plan to establish
the envisaged organization. The organization will be incorporated in
the 2008 basic policy guidelines to be crafted in ate June.

Over 200 billion yen funded by the government and the private
sector, the Innovation Creation Organization will be run as a stock
company. It will be run by private-sector personnel well-versed in
economic, financial and technological affairs. Besides the
government, funds will be solicited from a wide range of sources,
including foreign sovereign wealth funds.

Sub-funds by theme will be established under the organization's

TOKYO 00001558 006 OF 009


umbrella to provide them with funds and personnel. The organization
will combine technologies and personnel possessed by leading
companies and buy promising yet financially-troubled ventures to
lead them corporatization. It will further put together technologies
possessed by small ventures and provide them with funds to promote
the development of new technologies. Once businesses are put on
track, the government will sell its share to the private-sector to
make profits.

Planning to establish the organization in next fiscal year as a 10-
to 15-year project, the government intends to submit related bills
to next's regular Diet session.

9) Japan to extend financial cooperation for construction of U.S.
nuclear plants

MAINICHI (Page 2) (Full)
June 8, 2008

The governments of Japan and the United States released on June 7 a
joint nuclear cooperation statement specifying their decision to use
Nippon Export and Investment Insurance (NEXI) and the Japan Bank for
International Cooperation (JBIC) in funding a project to build new
nuclear power plants in the United States. An agreement was reached
as a result of talks in Aomori City between Economy, Trade and
Industry Minister Akira Amari and U.S. Secretary Energy Samuel
Bodman. The United States has a plan to build over 30 nuclear
reactors, but raising funds for them has been a challenge. Given the
situation, NEXI and JBIC will consider financial assistance, and
increased opportunities for Japanese companies to join the project
are also expected.

10) Japan, N. Korea to resume talks June 11-12

NIKKEI (Page 2) (Full)
June 9, 2008

BEIJING-Japan and North Korea held a meeting of working-level
officials yesterday afternoon at the Japanese embassy in Beijing to
resume negotiations for diplomatic normalization. Japan insisted
again that it is extremely important for Japan and North Korea to
see progress on the issue of Japanese nationals abducted to North
Korea, and called for North Korea to take specific action at an
early date. Japan and North Korea did not hold in-depth talks and
agreed to enter into full-fledged talks in Beijing on June 11-12.

In the working-level meeting were six officials from Japan,
including the Foreign Ministry's Asian and Oceanian Affairs Bureau
Director General Akitaka Saiki. From North Korea were seven
officials, including Song Il Ho, ambassador for negotiations over
the normalization of diplomatic relations between North Korea and
Japan. The meeting this time was for informal consultations and
ended after two hours and 40 minutes. Japan and North Korea will
enter into formal consultations, beginning with the next round of
talks.

"We talked about many things, including the present state of
bilateral relations between Japan and North Korea and what we should
do from now on," Saiki told reporters after the meeting. "They also
said we should see progress," he added.

On the abduction issue, Saiki said, "We told them that we hope North

TOKYO 00001558 007 OF 009


Korea would make a decision and show something specific for us in
the next round of talks." His North Korean counterparts were "taking
note while listening" to him, according to Saiki. However, Japan and
North Korea did not hold in-depth discussions, he added.

One of the prime minister's aides said late at night that there was
no specific progress in the meeting. However, this aide also said,
"I heard that this time they didn't say the abduction issue has
already been settled."

Japan and North Korea held talks for the first time in about eight
months since the two countries held a meeting in Shenyang, China in
October last year. This time, the two countries gave first
consideration to resuming talks between their working-level
officials and forwent full-fledged talks over the abduction issue
and past issues, such as the liquidation of issues in the past. They
also did not talk about the issue of sending Japan Airlines
hijackers back to Japan, according to government sources.

The future course of consultations between Japan and North Korea is
closely intertwined with the process of North Korea's nuclear
abandonment in the six-party talks. The six-party talks are now in
the final stage of "second-phase steps," including North Korea's
declaration of its nuclear programs. North Korea has called for the
United States to delist North Korea as a state sponsor of terrorism
in return. However, the United States has urged North Korea to move
Japan-North Korea relations forward.

A government source said, "The United States told North Korea to
work hard on its issues with Japan, so I guess North Korea
reluctantly made up its mind to do so."

11) Formal talks with North Korea to be resumed: U.S. calls on
Pyongyang to come to negotiating table to move abduction issue
forward

TOKYO SHIMBUN (Page 3) (Excerpts)
June 8, 2008

Japan and North Korea during informal talks on June 7 agreed to hold
a formal working-level meeting. Following the agreement, the
government intends to press Pyongyang to come up with concrete
measures regarding the issue of the abduction of Japanese nationals
by North Korea. However, the future course of the envisaged talks is
unclear, because the two countries had been in direct opposition in
past talks when it came to specific matters.

One senior Japanese government official said, "The North Korean side
even before the informal talks said the talks would be for a very
short time. The envisaged talks are for us to exchange opinions on
what to do in the future." The Japanese side had viewed that
concrete talks on the abduction issue and North Korea's nuclear arms
program would be held at a formal meeting.

Formal talks between the two countries have been suspended since the
working group meeting on Japan-North Korea normalization talks under
the six-party talks held in Mongolia in September last year.

It is viewed that North Korea has agreed to hold formal talks with
Japan mainly because of U.S. urgings, a senior Foreign Ministry
official revealed. The U.S. is seeking Japan and North Korea to
improve their relations as a premise for it to delist Pyongyang from

TOKYO 00001558 008 OF 009


its list of state sponsors of terrorism.

However, the Japanese side is concerned that North Korea may try to
be removed from the list by only showing its eagerness to respond to
the call for talks, with the abduction issue making little
progress.

12) Japan, DPRK to restart formal talks, influenced by U.S.
pressure, with the possibility of the U.S. removing North Korea from
its list of terrorist-sponsoring states

MAINICHI (Page 3) (Abridged)
June 8, 2008

Beijing

Japan and North Korea agreed yesterday to restart formal
working-level talks on June 11-12. The agreement was greatly
influenced by the changing situation, in which the final stage, or
"second-stage measures," under the Six Party Talks, with North Korea
reporting its nuclear programs, will be reached, and the possibility
then of the United States removing North Korea from its list of
states sponsoring terrorism.

In every negotiation with North Korea, the U.S. has been urging the
North to reach a breakthrough in its relations with Japan. The U.S.
has been working on Pyongyang as a condition of its removing North
Korea from the terrorist-sponsoring list, to make progress in
relations with Japan.

Following the informal talks between working-level officials of the
U.S. and North Korea held in Beijing on the 7th, Asia-Pacific Bureau
Director General Saiki of the Foreign Ministry stressed the current
situation: "We talked about what would be best for Japan-North
Korean relations as part of the mechanism of the Six-Party Talks."
North Korea is motivated by a desire to win the U.S.' good will so
that its name will be removed from the terror-sponsoring list. A
diplomatic source in Beijing said, "The leadership recognizes that
progress on the abduction front would lead to removal of North
Korea's name from the terrorist-sponsoring list." In order to avoid
a stalemate in Japan-DPRK relations blocking the removal of the
designation, North Korea seems to have judged that it needs to show
a stance of responding at the very least to the talks.

There is still a deep-seated view of skepticism about how serious
North Korea is on this issue. In reality, when Saiki in the informal
talks stressed the importance of resolving the abduction issue, Song
Il-ho, the North Korean ambassador in charge of normalization of
relations took notes assiduously, but reportedly never uttered a
positive statement. He and other officials seems to have wanted just
to appeal to the U.S. and other parties that Japan and the DPRK were
negotiating.

For that reason, Saiki in the informal talks sought to nail down the
issue with the North Korean side by saying, "In the next round of
talks, we hope to reach a decision on the abduction issue by
handling it in a concrete manner." The U.S., too, apparently will
not respond by making a decision to remove the North from the list
only by the two sides carrying out talks. There is no change in the
situation of it seeking progress from the North on that issue.

13) Negative impact on Japan-U.S. relations: CRS report

TOKYO 00001558 009 OF 009

SANKEI (Page 5) (Abridged)
June 9, 2008

Takashi Arimoto, Washington

The U.S. Congressional Research Service (CRS) has released a report
on the issue of delisting North Korea as a state sponsor of
terrorism, warning that it could have a negative impact on
Japan-U.S. relations and could cause North Korea to continue or
expand its support for terrorist groups in the Middle East.

The CRS report quotes a Japanese government official as warning that
delisting North Korea without substantive progress on the pending
issue of Japanese abductees would impair Japan-U.S. relations in the
short term. The report also indicates that delisting North Korea, in
the long term as well, could affect the Japanese government's policy
toward the U.S. military presence in Japan and could also impact
Japan's support for U.S. military operations against terrorist
groups.

14) LDP lawmakers propose accepting up to 10 million immigrants,
establishing immigration agency, easing requirements for
naturalization

YOMIURI (Page 4) (Full)
June 9, 2008

A set of proposals compiled by a group of Liberal Democratic Party
(LDP) lawmakers, which advocates promotion of exchanges of skilled
foreign workers, was revealed yesterday. The group is headed by
former LDP Secretary General Hidenao Nakagawa. The draft says that
in order to strengthen Japan's strength the country needs to greatly
accept immigrants since its population will continue to decrease. It
stipulates that Japan should aim to become a multiethnic state (with
about 10 million immigrants) or 10 PERCENT of Japan's population
over next 50 years. The group will formally adopt the set of
proposals and present it to Prime Minister Yasuo Fukuda next week.

The 10 million immigrants would amount to a 12 fold increase over
the present population of foreign residents (870,000), including
general and special permanent residents.

The group suggests establishing an immigration law, which would call
for Japan becoming a multi-ethnic state with many immigrants, and
propose the establishment of an immigration agency. It also proposes
that local governments create a system under which they would be
able to easily provide foreigners residing in Japan with services,
such as a registry network for foreigners.

The group suggests that the restriction on acquiring permanent
residency be eased to 7 years from the present 10 years or more, and
that the naturalization system be revised so that foreigners living
in Japan for at least 10 years would be able to obtain Japanese
citizenship.

SCHIEFFER

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