Cablegate: Daily Summary of Japanese Press 06/23/08

DE RUEHKO #1719/01 1750831
P 230831Z JUN 08




E.O. 12958: N/A



(1) Pending issues in education, ODA put on back burner:
Coordination of views on basic policy guidelines for fiscal 2008
budget reaching final stage (Nikkei)

(2) Regular Diet session adjourned, with key bills carried over to
next session (Nikkei)

(3) Japan, ASEAN expect to put EPA into effect this fall (Nikkei)

(4) Two weeks before G8 summit: Lake Toyako area already on high
alert (Sankei)

(5) Nago education board to start cultural heritage probe next month
at Camp Schwab (Ryukyu Shimpo)

(6) "Objective data" prepared for U.S. on Futenma traffic pattern
(Okinawa Times)

(7) Schwab fit for Futenma relocation: USFJ chief (Ryukyu Shimpo)


(1) Pending issues in education, ODA put on back burner:
Coordination of views on basic policy guidelines for fiscal 2008
budget reaching final stage

NIKKEI (Page 3) (Almost full)
June 22, 2008

Government coordination of views over the compilation of basic
policy guidelines on economic and fiscal management for the fiscal
2008 national budget is reaching its final stage. The focus is on
the extent of restraints on social security expenditures and cuts in
public works spending. However, the Council on Economic and Fiscal
Policy (CEFP) has discussed little about expenditures in such areas
as education, official development assistance (ODA), and the local
allocation tax, where demand for more allocations is high. The basic
policy guidelines call for maximum spending cuts. However, specific
issues on those spending areas have been apparently put off until
the year-end budget compilation.

The basic policy guidelines for fiscal 2008 are to be adopted at a
cabinet meeting on June 27, after going through discussions by the
CEFP and the ruling parties on June 23.

Though no discussions have taken place on education at official
venues, a fierce clash over the specifics of descriptions is
continuing behind the door. A proposal to make preschool free has
newly been added to the draft, though it was not included in the
rough plan.

The Ministry of Education, Culture, Sports, Science and Technology
(MEXT) had wanted to adopt at a cabinet meeting in June a basic
education promotion program including a numerical target for
investment in public education and a significant increase in
teachers to have them reflected in the basic policy guidelines.
However, the Finance Ministry has remained opposed to MEXT's
proposal. Chief Cabinet Secretary Nobutaka Machimura on June 20
expressed his hope to see a settlement reached through negotiations
between the chiefs of the two ministries. However, decision-making

TOKYO 00001719 002 OF 008

at a cabinet meeting will most likely be put off, with the Finance
Ministry taking the stance that there is no room for negotiations as
long as MEXT sticks to a numerical target.

The CEFP has also contained pressure for an increase in the ODA
budget for the time being. The draft mentions that ODA for Africa is
to be doubled, but it does not refer to aid types eligible for the
increase. The Finance Ministry insisted that the volume of projects
needed to be carried out should be secured through a revision of the
contents of projects, noting that many projects financed by Japan's
aid are costly in comparison with projects financed by international
organizations. It is determined not to give in on the policy of
cutting the ODA budget by 2 PERCENT -4 PERCENT , compared with the
previous year's level over five years as stipulated in the basic
policy guidelines for fiscal 2006.

No discussions on the local allocation tax, whose increase local
governments are strongly calling for, have been held thus far. There
are indications that now that local governments' interest has
shifted to the distribution of revenues from an increase in the
consumption tax, taking into account a debate on a consumption tax
hike likely to occur in the fall, related sources are determined to
see how things go.

There are many crucial junctures to come before the year-end budget
compilation, such as the compilation of guidelines for budget
appropriation requests, talks on the reallocation of road
construction revenues for other uses and discussion of the tax code
reform to be held starting in the summer. Requests for an increase
in expenditures are bound to emerge in other areas as well.

One senior Finance Ministry official said, "It is impossible to
envision a budget at the stage of drafting basic policy guidelines.

Points of draft basic policy guidelines for fiscal 2008

(Economic growth strategy)
Promote 200-year housing.
Realize flights connecting Haneda Airport with Asian hubs at an
early date.
Double the ODA budget to Africa.

(Administrative, fiscal and political reforms)
Overall check of special accounts
Free up special-purpose road construction revenues starting in
fiscal 2009. Review how revenues are reallocated from the
perspective of working people.
Carry out maximum spending cuts in compliance with the basic policy
guidelines for fiscal 2006 and 2007.

(Social security)
Settle shortage of obstericians and pediatricians.
Reduce the burden on low-income pensioners in implementing the new
public health care system.

Promote education, based on the basic education promotion program to
be formulated anew.
Consider free preschool in the future.

(2) Regular Diet session adjourned, with key bills carried over to
next session

TOKYO 00001719 003 OF 008

NIKKEI (Page 5) (Full)
June 21, 2008

The regular Diet session was adjourned yesterday. Given the
opposition camp's control of the House of Councillors, such
important pieces of legislation as a bill revising the Antimonopoly
Law and one amending the National Pension law, without being
discussed, were carried over to the next extraordinary Diet session
to be convened after the summer. It is uncertain whether the bills
will be enacted or not. Depending on their future course, a damper
might be cast on the discussions on the government's structural
reform and tax system reform.

Of the bills that have been carried over to the next session, the
bill amending the Antimonopoly Law and a bill to create local
industrial revitalization corporations were drawing attention in
promoting the government's structural reform. The first bill is
intended to bolster competition among companies by introducing
stiffer penalties on firms that take the initiative in bid-rigging
or cartel cases in a drive to prevent illegal acts. The local
revitalization corporation bill is aimed to help local governments
reconstruct their finances. It is an imminent task for the
government to write off bad loans held by the third sector. But the
Democratic Party of Japan (DPJ) opposed the bill, on the grounds
that standards for aid to be provided remain unclear. There was no
scene in which the main opposition presented countermeasures in
order for the ruling and opposition camps to reach a compromise

In the health and labor sector, two important bills have been
carried over. A bill amending the National Pension Law proposes
adding about 130 billion yen to the state contribution amount of
pensions, prior to the planned increase in the rate of the burden on
the national treasury for basic pension benefit from 1/3 to 1/2 by
FY2009. Finding revenues to fund the raised portion of state subsidy
is a major theme in discussing drastic tax reform. But no conclusion
on this fiscal revenue issue has yet to be reached.

The government's goal for trimming spending will be affected by the
future course of a bill to have major corporations' health insurance
unions assume the burden that the government-managed health
insurance program joined by small to medium-sized companies place on
the national treasury. Over the opposition of the companies and
labor unions to be pressed with the additional burden, the
government submitted the bill to the Diet session as a pillar among
the specific measures for FY2008 to reduce 220 billion yen in annual
growth of social insurance spending. The government expects a 100
billion yen spending cut with the measures in the bill. But if the
bill is scrapped, it will become impossible to implement the planned
spending cut for this fiscal year.

A bill revising the law to promote the return of the so-called
"buried money" of independent administrative corporations to the
national treasury is also among those carried over to the next Diet
session. The bill is designed to have independent administrative
corporations return the income earned from selling their real assets
such as land and buildings to the national treasury. Their assets
are said to total more than 60 trillion yen. If this money is used
effectively, it will become possible to streamline their business

TOKYO 00001719 004 OF 008

(3) Japan, ASEAN expect to put EPA into effect this fall

NIKKEI (Page 5) (Full)
June 21, 2008

An economic partnership agreement (EPA) between Japan and the
Association of Southeast Asian nations (ASEAN) is likely to come
into effect this fall after the countries concerned change their
systems. Although the vote on a related bill was not taken in the
House of Councillors as the opposition camp has control of the Upper
House, the bill was automatically approved today under the relevant
rule in the Constitution. This will be the first EPA involving more
than one country for Japan.

Japan will gradually remove tariffs on agricultural products,
excluding rice and dairy products, and industrial products. The 10
ASEAN countries will scrap tariffs on flat-TV sets and other
products. In the next 10 years, Japan will repeal tariffs on 93
PERCENT of imports from ASEAN, while ASEAN will scrap tariffs on 91
PERCENT of imports from Japan. An official of the Ministry of
Economy, Trade and Industry said: "We can expect an expansion of
exports to the Asian market."

(4) Two weeks before G8 summit: Lake Toyako area already on high

SANKEI (Page 5) (Full)
June 23, 2008

Only two weeks are left before the July 7 opening of the Group of
Eight Toyako Summit in Hokkaido. An elaborate security setup has
already been enforced in Toyako Town where The Windsor Hotel Toya,
the venue for the Summit, is located. This is the second time for a
local Japanese area to be chosen to host a G8 summit, following
Okinawa. A source familiar with security affairs said: "Keeping
guard in Toyako Town is more difficult than it was in Okinawa. A
total of 1,200 police officers, more than double the number provided
to the 2000 summit, have been deployed to guard world leaders. A
Sankei reporter examined the Toyako area.

It takes about one hour to travel from New Chitose Airport to Lake

"This area is on a heightened state of alarm. May I see your
identification card?" said a police officer, who was checking
passers-by. Check points for passers-by are located at two places on
the mountain road leading to The Windsor Hotel Toya. Police are
enforcing a tight security measure everywhere in the hot spring town
of Toyako.

A middle-aged man who runs marine-products processing company said:
"What has been changed with the G8 summit coming closer is the fact
that the number of police officers has increased."

An elaborate security setup of about 22,000 police officers from
across the nation, including Hokkaido, the Tokyo Metropolitan
Department, and the Osaka Prefectural Police, has been enforced.
Approximately 22,000 police officers were deployed also to the
Kyushu-Okinawa summit. What is the major difference between the
Hokkaido and Okinawa summits is the security system guarding world
leaders having been enhanced.

TOKYO 00001719 005 OF 008

According to a person familiar with security protection, some 500
police officers were mobilized to guard world leaders at the Okinawa
summit, but more than 1,200 police officers will be responsible for
guarding them at the summit in Hokkaido. In addition to the G8
member countries, a total of 15 countries are invited to a meeting
to discuss anti-global warming measures, as well as to an expanded
meeting on African Development. The reason for the 1,200 police
officers is that the leaders of a record high of 23 countries will
attend the G8 Hokkaido Toyako Summit.

Another reason for the 1,200 police is heightened concern about
terrorist attacks because of the attacks on the United States in
September 2001.

The government is now constructing a heliport near The Windsor Hotel
for the transport of world leaders. However, the United States
demanded that a heliport be built in an area closer to the hotel
than the planned site. After a field investigation by its officials,
the U.S. government agreed to build a heliport at the planned site.
A U.S. government official said: "The United States is particularly
sensitive about terrorism."

The special conditions of the weather in the Toyako area prevent the
police from smoothly providing security. The Windsor Hotel is
located on the top of the Mt. Poromoi which is 625 meters high,
being surrounded by the Lake Toya and a crater lake. The hotel's
geographical condition to make security easy was one of the reasons
for it being chosen to be the venue for the G8 summit. But police
officers are suffering from the unexpected enemy called "fog." Since
the hotel is surrounded by the lake and sea, it is easily affected
by fog. According to the result of statistics in the past five years
by the Sapporo District Meteorological Observatory, the Lake Toya
area was covered by fog the average of seven to eight days in July.

If the visibility is poor, it will be unable to use helicopters and
the transportation method will have to be changed to ground
vehicles. The source familiar with security affairs said: "Since
land transportation has a greater risk of terrorism, police are more
sensitive." The government, therefore, is concerned about the
weather of the Toyako area during the three days of the G8 summit.

(5) Nago education board to start cultural heritage probe next month
at Camp Schwab

RYUKYU SHIMPO (Page 2) (Abridged)
June 20, 2008

NAGO, Okinawa Prefecture-Nago City's board of education will carry
out an archeological survey in a barrack construction area of Camp
Schwab for a period of four months from July through November in
line with the government's plan to build an alternative facility for
the U.S. military's Futenma airfield on Camp Schwab.

A study team from the city's board of education conducted
preliminary surveys at two points in Camp Schwab's hillside and
seaside areas. As a result, the team discovered the remains of a
paddy field in the seaside area, where fragments of earthenware were
found. The survey this time will be conducted in the seaside area

The board of education has asked the city's municipal assembly in
its current session for its approval of an extra outlay from the

TOKYO 00001719 006 OF 008

city's budget to probe cultural properties. The board will start a
full-fledged survey after the municipal assembly approves the

(6) "Objective data" prepared for U.S. on Futenma traffic pattern

OKINAWA TIMES (Page 2) (Abridged)
June 20, 2008

The Defense Ministry's Okinawa Defense Bureau conducted a monitoring
survey of aircraft flying to and from the U.S. military's Futenma
airfield through June 17 in response to a request from the city of
Ginowan, which had complained that the U.S. military does not follow
an intergovernmental agreement reached between Japan and the United
States on a traffic pattern set for Futenma-based aircraft to
prevent crashes onto private land. However, the Defense Ministry
will not make public the findings from the monitoring survey. "We'd
like to think about how effectively we can show our findings to the
U.S. military as objective data," Okinawa Defense Bureau Director
General Ro Manabe said. The question is whether the data will
reflect the facts noted by Ginowan and other base-hosting

The Okinawa Defense Bureau, according to its press office, started
the aircraft monitoring survey on May 28. Its personnel checked the
routes of aircraft flying near Futenma airfield between 7 a.m. and 7
p.m., except on Saturdays and Sundays, and ended the 15-day
monitoring period on June 17.

The review of aircraft traffic patterns was touched off by the crash
of a U.S. Marine Corps CH-53 helicopter into the campus of Okinawa
International University in August 2004. The Japanese and U.S.
governments held consultations and announced a safety plan in August
last year.

The U.S. Marines in Okinawa have told the Okinawa Defense Bureau
that the U.S. military follows the bilateral agreement, in which
Japan and the United States reviewed the traffic patterns of U.S.
military aircraft to and from Futenma airfield, according to the
bureau's press office. The bureau says the U.S. military has been
sincerely taking various specific measures.

"Local residents may wonder if the U.S. military follows the
agreement, so we're studying how to obtain objective data," a bureau
official said, explaining why the bureau conducted the monitoring

"Even if the U.S. military follows the traffic pattern, local
residents will be in danger and will suffer from noise as long as
helicopters fly." So saying, a senior official of the Okinawa
prefectural government showed a cold response.

Ginowan City takes a positive view of the Okinawa Defense Bureau's
monitoring survey as a result of its request to the government.
However, more than half of the Marine Corps' 27 Futenma-based
midsize and heavy lift helicopters, such as the CH-46 and the CH-53,
have been participating in the Cobra Gold exercise in Thailand since
early this May, and their return has yet to be confirmed as of June
19. The remaining six CH-53 helicopters have not been in training,
with their rotor blades removed early this month.

Shigeo Yamauchi, chief of the Base Policy Department at Ginowan

TOKYO 00001719 007 OF 008

City's municipal government office, noted that the frequency of
Futenma-based aircraft training has decreased sharply since May. "We
can't get accurate data from a survey at this point," Yamauchi said,
adding, "We don't want the government to use such data for its
consultations with the U.S. military." With this, the city
government is asking the bureau to look again into the flight paths
of Futenma-based choppers after their return.

(7) Schwab fit for Futenma relocation: USFJ chief

RYUKYU SHIMPO (Page 1) (Full)
June 21, 2008

U.S. Forces Japan Commander Lt. Gen. Edward Rice met the press
yesterday at the U.S. Air Force's Kadena base in Okinawa Prefecture
and stressed there that the United States would not negotiate
Okinawa Gov. Hirokazu Nakaima's call for moving the relocation site
of an alternative facility planned for Futenma airfield to an
offshore area. "Camp Schwab is fit for the Futenma relocation. I
hope the Futenma relocation will be carried out in accordance with
our agreement," Rice said. He added: "We've agreed on the
appropriate location, so we want to maintain this agreement as a
package. The agreement is not with a local government; it is with
the Japanese government."

Referring to the early morning takeoffs of Kadena-based F-15 fighter
jets, Rice underscored the U.S. military's efforts to alleviate
Okinawa's base-hosting burden. "We're also making efforts (to reduce
the impact of such early morning takeoffs)," Rice said. He went on:
"In terms of frequency, there are now fewer takeoffs. I also know
that each flight impacts on local residents."

Rice also touched on the tactic of turning around via another base,
saying: "You may simply think we can go to another place. But
actually, it's more complicated. In the case of Guam, it depends on
what kind of aircraft are already there."

Meanwhile, Nakaima has been calling for eliminating the danger of
Futenma airfield. "It's impossible to close down the base to remove
the danger," Rice said. He added, "When the replacement facility is
built and when we're ready to relocate the base, it will be

Rice also emphasized the importance of Okinawa's geographic
location, saying: "I can now better understand the importance of
Okinawa. Okinawa's location is very strategic. Futenma airfield's
relocation to the northern part (of Okinawa's main island) is very
important for our bilateral relations."

Concerning the question of how to prevent U.S. military personnel
incidents, Rice remarked that the U.S. military has been making
various efforts since February. "We will continue to improve (the
preventive measures)," he said. "Our efforts will continue as long
as we are in Okinawa."

This is the first time for Rice to visit Okinawa. He also visited
Camp Schwab, a U.S. military base located at Henoko in the
prefecture's northern coastal city of Nago, where Futenma airfield
will be relocated. Rice said: "I needed to see the relocation site
with my own eyes to understand how important the relocation plan is.
That's one of my major purposes."

TOKYO 00001719 008 OF 008


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