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Cablegate: Japanese Morning Press Highlights 06/24/08

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UNCLAS SECTION 01 OF 10 TOKYO 001726

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 06/24/08

Index:

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

North Korea problem:
4) DPRK nuclear declaration expected on June 26, after which U.S.
will start delisting process (Yomiuri)
5) U.S. eager diplomatic results on North Korea's nuclear program
and removing it from terror list while abandoning Japan's abduction
issue (Yomiuri)

Defense and security issues:
6) Prime Minister Fukuda at Okinawa memorial vows to put every
effort into resolving base issues (Asahi)
7) House Speaker Yohei Kono at same Okinawa event touches on
military's wartime responsibility there (Asahi)
8) No clue in sight in resolving stalemate over Futenma relocation
as Fukuda visits Okinawa (Yomiuri)
9) Government panel sees need to revise constitutional
interpretation regarding collective security for sake of missile
defense (Yomiuri)
10) MSDF vessel dropping off quake-relief goods at China port gets
cool welcome (Sankei)

11) Afghan reconstruction: G-8 foreign ministers meeting planning
separate statement (Nikkei)

12) Government's Economic and Fiscal Policy Council watered down
draft policy guidelines to avoid strains with LDP policymakers
(Nikkei)

13) Prime Minister Fukuda in news conference kicks consumption tax
hike issue down the road by saying that a decision will be made 2-3
years from now (Nikkei)

14) Government to remove Ikeo's name as Bank of Japan board nominee
due to DPJ opposition (Yomiuri)

Articles:

1) TOP HEADLINES

Asahi, Mainichi, & Tokyo Shimbun:
Fishing boat capsizes off coast of Chiba, 4 dead, 13 missing

Yomiuri:
U.S. to begin steps to take North Korea off list of terrorism
sponsors, possibly on June 26

Nikkei:
Fukuda: Consumption tax hike within 2 to 3 years

Sankei:
Russia already handed over Japanese fishing boat involved in
shooting to government enterprise

Akahata:
Nagasaki District Court recognizes 20 people as radiation
casualties


TOKYO 00001726 002 OF 010


2) EDITORIALS

Asahi:
(1) Properly invest in land
(2) Change of professional baseball commissioners

Mainichi:
(1) Stop heavy consumption of oil to cope with soaring prices
(2) "Momiji sticker" for drivers aged 75 or older unfavorably
received

Yomiuri:
(1) Economic and fiscal policy guidelines for 2008 must clarify
financial resources for social insurance
(2) Increase in oil output by Saudi Arabia expected to produce
positive results

Nikkei:
(1) Oil producing countries, U.S., China must make more efforts to
constrain oil demand
(2) Full preparations needed for new strains of influenza

Sankei:
(1) Fukuda urged to discuss delisting issue with U.S. President
(2) Strengthen cooperation with oil producing countries to deal with
rising prices

Tokyo Shimbun:
(1) Oil consumer countries should also make efforts, without only
relying on Saudi Arabia's measures
(2) False labeling of low-level beef as Hida-brand beef stains brand
name

Akahata:
(1) Golden opportunity to significantly raise lowest wages

3) Prime Minister's schedule, June 23, 2008

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

08:29
Left Haneda Airport on JAL flight no. 903

10:29
Arrived at Naha Airport.

11:23
Offered flowers on the Okinawa National Cemetery for War Dead in
Peace Memorial Park in Itoman City. Then met with Election Committee
Chairman Makoto Koga, chairman of the Japan War-Bereaved
Association. Then attended memorial service for all the war dead in
Okinawa.

13:59
Left Naha Airport on JAL flight no. 908.

16:12
Arrived at Haneda Airport.

16:40
Arrived at the official residence.

TOKYO 00001726 003 OF 010

17:22
Met with Chief Cabinet Secretary Machimura at the Kantei.

18:01
Meeting of the Conference on Economic and Fiscal Policy. Then met
with Welfare Minister Masuzoe, followed by Machimura and Deputy
Chief Cabinet Secretary Futahashi.

19:49
Arrived at the official residence.

4) U.S. may begin delisting the North as state sponsor of terrorism
as early as June 26, following Pyongyang's nuclear declaration

YOMIURI (Top play) (Abridged slightly)
June 24, 2008

White House spokesperson Dana Perino indicated in a press conference
on June 23 that North Korea is expected to make a declaration of its
nuclear programs to China, chair of the six-party talks on June 26.
Indicating her willingness to comment on the next step upon
receiving North's declaration, Perino pointed to the U.S. policy to
begin procedures for delisting the North as a state sponsor of
terrorism as early as June 26. Japan is opposed to the U.S. taking
the North off its nuclear blacklist until there is progress on the
abduction issue. Washington's step to delist the North is likely to
have an impact on Japan-U.S. relations.

Perino said: "The deadline is June 26. We expect the North will
fulfill its obligation." She also said, "That will be followed by
the principle of action for action follows," indicating that the
United States would begin procedures for removing the North from the
list of terrorist-sponsoring nations and put an end to the
application of the Trading with the Enemy Act to North Korea. U.S.
chief delegate to the six-party talks Christopher Hill categorically
said on June 23: "Once a nuclear declaration is presented, the
United States will fulfill its obligations (as agreed upon with
North Korea) generally at the same time."

Washington is required to notify Congress of its decision to delist
the North as a state sponsor of terrorism 45 days before the step
takes effect. Washington intends to closely verify what is in the
North's declaration during that period, and if the declaration is
found out to be insufficient, it might withdraw its decision to
delist the North.

Meanwhile, according to a six-party talks source, North Korea
informed the relevant countries that it would demolish a cooling
tower at the Yongbyon nuclear complex on June 27 as part of its
effort to disable its nuclear facilities. The United States and
North Korea are said to be in accord to blast the cooling tower
within 24 hours of the North's presentation of a nuclear declaration
and the start of procedures for delisting the North.

The North was supposed to present a nuclear declaration by the end
of 2007, but the country postponed it, citing a delay in the United
States to delist it as a state sponsor of terrorism.

5) U.S. in hurry to achieve results on diplomatic front; North Korea
to be delisted as state sponsor of terrorism regardless of abduction
issue

TOKYO 00001726 004 OF 010

YOMIURI (Page 2) (Abridges slightly)
June 24, 2008

The U.S. administration of President George W. Bush has pressed
North Korea hard for the presentation of a nuclear declaration by
making it clear that it would delist it as a state sponsor of
terrorism and stop applying the Trading with the Enemy Act to it.
Behind this lies the President's desire to score high marks on the
diplomatic front before leaving office next January.

The U.S. Congress is scheduled to enter a recess on the 27th. Given
the situation, in order for President Bush to notify it of his
decision to delist the North in time, Pyongyang must present a
nuclear declaration by June 26. The North's failure to meet the
deadline would decisively stall the process of dismantling its
nuclear program.

According to a six-party source, the North will present a
declaration to China, the chair of the six-party talks, early on
June 26, and the United States will begin procedures for delisting
the North and ceasing applying the Trading with the Enemy Act to it.
The United States wants to revitalize the six-party talks by
fulfilling its obligations based on the principle of action for
action.

Nevertheless, with a G8 foreign ministerial scheduled to take place
in Kyoto on June 26, the timing is not good for Japan.

In his talks on June 19 with U.S. Assistant Secretary of State
Christopher Hill, Foreign Ministry Asian and Oceanian Affairs Bureau
Director-General Akitaka Saiki urged the U.S. not to delist the
North unless there is progress on the issue of Japanese nationals
abducted by North Korea and other matters. Despite that, Washington
has repeatedly indicated that the United States will deliver on its
obligations once the North presents a declaration, effectively
ignoring Japan's concern.

Tokyo has persistently asked Washington to deal with the question of
delisting the North cautiously. Regarding Washington's hasty step to
delist the North at this point when the North's promise to
reinvestigate the abduction issue remains unclear, a senior
government official said before the dawn of June 24: "Is Washington
going to take the North off the list of terrorism-sponsoring nations
in defiance of Japan's wishes? It should wait until after closely
verifying what is in the declaration."

The North Korean issue will be on the agenda at the G-8 Lake Toya
Summit, which is only two weeks away. At the summit, leaders of the
relevant countries are likely to welcome progress on the six-party
talks on dismantling Pyongyang's nuclear programs. The Japanese
government will likely find it difficult to incorporate progress on
the abduction issue in the envisaged G-8 declaration.

U.S. Secretary of State Condoleezza Rice will also attend the G-8
foreign ministerial. Rice is scheduled to hold talks with Foreign
Minister Masahiko Koumura on the 27th. The government intends to
discuss closely future developments with the U.S. government.

6) Fukuda vows to do his best for base issues but remains unable to
pave way for solution


TOKYO 00001726 005 OF 010


ASAHI (Page 4) (Abridged)
June 24, 2008

Prime Minister Fukuda yesterday made his first official visit to
Okinawa Prefecture, where he attended a memorial service for the war
dead in the Battle of Okinawa in World War II. The government has
promoted Okinawa's industrial development while alleviating the
island prefecture's base-hosting burden. Fukuda will follow this
Okinawa policy and attach importance to dialogue with local leaders.
However, he remains unable to pave the way to resolve pending
issues, including Futenma airfield's relocation.

In his speech at the memorial service, Fukuda portrayed Japan as a
nation that cooperates for peace, declaring that Japan will fulfill
its role in the international community.

Referring to base issues, Fukuda stressed his stance of attaching
importance to dialogue with local communities. "I will do my best to
alleviate Okinawa Prefecture's burden while listening to the earnest
voice of local communities," Fukuda said.

Meanwhile, Okinawa has asked the government to move the construction
site of Futenma airfield's alternative facility to an offshore area.
In February, Chief Cabinet Secretary Machimura went further than
ever in his press remarks. "We want to reach a settlement at an
early date while bearing the option of offshore relocation in mind,"
he said. However, the United States is strongly opposed to revising
the agreement reached between Japan and the United States on Futenma
relocation to a coastal area of Camp Schwab in the island
prefecture's northern coastal city of Nago. As it stands, Futenma
relocation has been deadlocked.

"To resolve the Futenma issue, the prime minister will need to
display strong leadership that is convincing to both Okinawa and the
United States," one government official noted. The Diet is currently
divided, with the ruling coalition holding a majority of the seats
in its lower house and the opposition camp controlling its upper
house. Fukuda is therefore facing difficulties in steering his
government. The question is whether he is strong enough to settle
the base issues.

7) Kono refers to military responsibility

ASAHI (Page 4) (Full)
June 24, 2008

House of Representatives Speaker Yohei Kono delivered a speech in a
memorial service held yesterday in Okinawa Prefecture for the war
dead upon the 63rd anniversary of the end of the Battle of Okinawa
in World War II. "The military in those days might not have given
first consideration to the safety of local people in Okinawa," Kono
stated. "And," he added, "we must not turn our eyes away from this
doubt." This is the third time for Kono to deliver a speech there,
following his previous speeches in 2005 and 2006. However, this is
the first time for him to touch on the Imperial Japanese Army's
responsibility.

Kono noted, "Japan's leadership in those days was unable to bring
the war to an appropriate and early end, and this resulted in a
large number of victims in Okinawa." He also took up U.S. military
base issues in Okinawa. "In the long-term," Kono said, "we should
create a peaceful diplomatic environment in East Asia and we should

TOKYO 00001726 006 OF 010


change the security situation so the current large-scale U.S.
military presence will be unnecessary." With this, he emphasized
that Japan should work to stabilize East Asia in order to realign
and reduce U.S. military bases in Japan.

8) No clue in sight for Futenma relocation

YOMIURI (Page 4) (Full)
June 24, 2008

Prime Minister Fukuda made his first official visit to Okinawa
Prefecture yesterday to attend a memorial service held in the island
prefecture's city of Itoman for the war dead upon the 63rd
anniversary of the end of the Battle of Okinawa in World War II. In
the presence of reporters there, Fukuda voiced his willingness to
push for the pending issue of relocating the U.S. Marine Corps'
Futenma Air Station. In fact, however, there is no clue in sight to
realize the plan.

"Local sensitivity is very important. We'll have to resolve this
issue early. We're now doing an (environmental impact) assessment.
We will talk at length with Governor (Hirokazu) Nakaima and other
people, for we must reach a convincing conclusion."

Fukuda gave this comment after attending the memorial service to
underscore his intention of reaching a settlement on the issue of
Futenma relocation while attaching importance to local opinions.

Meanwhile, Japan and the United States have reached an
intergovernmental agreement on a plan to relocate Futenma airfield
to a coastal area of Camp Schwab, a U.S. military installation in
the prefecture's northern coastal city of Nago. The government plans
to build a V-shaped pair of airstrips there as an alternative
facility to take over the heliport functions of Futenma airfield.
However, Okinawa Prefecture has asked the government to move the
planned alternative's site to an offshore point. The government
intends to comply with the request. However, the United States is
strongly opposed to that change. As it stands, there has been no
specific progress in consultations between the central and local
governments. In April, the government held a meeting of its
officials and local officials from Okinawa Prefecture and its four
municipalities to consult on the issue of Futenma relocation. Since
then, the government's consultative meeting with Okinawa has been
suspended.

In early June, the government held a meeting in Tokyo of officials
from the Cabinet Secretariat, Cabinet Office, Defense Ministry, and
Environment Ministry to discuss what to do about the legal
interpretation of an environmental impact assessment if the plan is
retouched. As seen from this move, the government is now preparing
to revise the plan. Minister of State for Okinawa Affairs Kishida
also visited Okinawa on June 21-23. Kishida met with the heads of
municipalities in the prefecture's northern districts, including
Nago Mayor Yoshikazu Shimabukuro. In that meeting, they agreed to
resume a consultative meeting at an early date.

However, the United States maintains its tough stance. Moreover, the
ruling parties were defeated in the June 8 election for the
prefecture's assembly, losing their majority. As a result, some
officials deem it difficult to see progress in the situation for the
time being. In the prefecture's assembly, the opposition parties are
expected to occupy the posts of speaker and vice speaker and preside

TOKYO 00001726 007 OF 010


over most key committees. "The governor would be stuck on the
Futenma issue that rubs the opposition parties' nerves," a ruling
party lawmaker elected from Okinawa Prefecture said.

9) Security panel to call for change in constitutional
interpretation on missile defense

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

The government's council on reconstruction of legal foundation for
national security will present a package of proposals to Prime
Minister Fukuda today.

Under the current interpretation of the Constitution, the use of the
right to collective defense is banned. The package calls on the
government to change the interpretation to allow Self-Defense Force
(SDF) troops to use the right of collective defense to enable them
to (1) provide cover to U.S. Navy vessels under attack on
international waters; and (2) intercept ballistic missiles heading
toward the U.S.

The panel also points out that there are problems with the
government's current interpretation of the Constitution on the
propriety of the SDF going to the aid of other militaries engaged in
United Nations peacekeeping operations (PKO), etc., when they are
attacked and on the propriety of the SDF providing rear-line support
to its allies.

The panel held its first meeting in May 2007 under the former Abe
administration. But since Prime Minister Abe stepped down, the panel
had suspended activities.

10) China coolly accepts MSDF vessel's first port call, probably
reflecting anti-Japanese sentiment

SANKEI (Page 2) (Full)
June 24, 2008

(Zhanjiang, Guangdong Province, China)

The Maritime Self-Defense Force (MSDF) escort ship Sazanami will
visit a military port in China on June 24 on a military exchange
mission. This will be the first visit to China by an MSDF vessel.
The calling port is in Zhanjiang, where a fleet command center of
the Chinese military is located. Although Japan-China relations are
improving recently, some in China have protested the government's
acceptance of an MSDF vessel. Given such public opinion, some of the
planned exchange events will be canceled, and news-gathering
activities by Japanese reporters will be limited.

The visit to China by the Sazanami is in return for the first ever
port call to Japan by the PLA Navy missile destroyer Zhanjiang last
November. The Air Self-Defense Force planned to dispatch a relief
team to China to rescue victims of the massive earthquake in Sichuan
Province, but it forwent the dispatch. Instead, the Sazanami will
transport 300 blankets and 2,600 canned food products.

Not only anti-Japanese groups but even general people have reacted
to the MSDF vessel's port call to China. On the Internet, views
opposing the planned port call are appearing, with many asking
whether a port call by an "aggressor country's vessel" is proper.

TOKYO 00001726 008 OF 010

According to the China News Service, Rear Admiral Yang Yi sought
understanding for the MSDF vessel's planned port call to China, but
he also made the following remark, keeping in mind the voices of
protest in the military: "China suffered severe damage in Japan's
aggressive war. The port call by a vessel with the Japanese flag
will easily remind us of our painful memory."

Various events have been planned in commemoration of the port call,
but a concert by an MSDF musical band has been canceled. In
addition, the Japanese media will not be allowed to cover the
exchange gathering and games on the deck between crewmembers of the
Sazanami and the Zhanjiang. According to Japanese officials,
permission from China is necessary for gathering news.

An informed source analyzed that China's negative reaction to the
MSDF vessel's port call might be reflecting public reaction to the
recent agreement between the Japanese and Chinese governments on the
joint development of gas fields in the East China Sea.

11) Afghanistan reconstruction; G-8 to set up coordination framework
for assistance to border areas

NIKKEI (Page 2) (Slightly abridged)
June 24, 2008

The Group of Eight nations (G-8) have firmed up a policy of setting
up a framework for the coordination of their aid policies with the
aim of assisting areas bordering with Pakistan. The aim is to ensure
effective assistance. They are expected to reach a consensus at a
G-8 ministerial to be held in Kyoto on June 26-27 and then include
the agreement in a special statement on Afghanistan.

The border areas in Afghanistan have become a hotbed for terrorist
activities. Among various antiterror measures, the international
community is attaching importance to economic development and public
security measures in the border areas. The number of aid projects
has reached over 150. The total project size is estimated to be
between 2-3 billion dollars.

Under the envisaged framework, ambassador-level persons from various
international aid organizations, including G-8 nations that are
operating in Afghanistan and the UN, will meet and look into the
possibility of extending cooperation, by checking progress on
ongoing aid measures. As a framework tasked with checking
reconstruction assistance to Afghanistan, there is also the bureau
director-level Joint Coordination and Monitoring Board (JCMB) tasked
with monitoring progress on assistance measures as a whole.

Japan has provided assistance to Afghanistan totaling 65 million
dollars for areas related to health, education, border control and
assistance to refugees. At the G-8 foreign ministerial, Japan will
lead discussions as the host nation to make the venue as a milestone
for the realization of its being seen as a peace-cooperating nation,
a concept that Prime Minister Fukuda advocates.

12) Basic policy guidelines forgo pending issues: CEFP takes
moderate approach in drafting guidelines

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


TOKYO 00001726 009 OF 010


The government's Council on Economic and Fiscal Policy (CEFP) on
June 23 released the draft of basic policy guidelines for the 2008
national budget. The draft revealed that many pending issues, such
as a consumption tax hike, the reallocation of road construction
revenues, and the education budget, which could generate conflict
within the Liberal Democratic Party (LDP), have been put on the back
burner. The weakened basic policy guidelines reflect that the CEFP,
which former Prime Minister Koizumi used as the driving force of the
Kantei-led reform policy, has changed its nature.

Explaining the moderate stance of the CEFP, a government source on
June 23 noted: "The LDP fiercely opposed proposals made by the CEFP
during the Koizumi administration. However, Prime Minister Koizumi
forced his positions through."

Advocating "structural reforms with no sacred areas," Koizumi
appointed Heizo Takenaka from the private sector as state minister
in charge of economic and fiscal policy. Basic policy guidelines
issued during the Koizumi administration included proposals for the
disposal of nonperforming loans within two to three years and a 3
PERCENT cut in public works. LDP lawmakers tied to special
interests criticized Takenaka, with one saying, "We cannot possibly
follow a group led by a layman." However, it was the usual practice
that issues were in the end settled with Koizumi making a final
decision.

A compromising stance was visible in the fiscal 2006 basic policy
guidelines, though, the last set issued by the Koizumi
administration. The fiscal 2007 version of the guidelines did not
include a numerical target for public works, with consideration
given to the ruling parties, which were applying pressure for
increased expenditures on the eve of the Upper House election.

The basic policy guidelines for fiscal 2008 follow that same trend.
Since the importance of basic policy guidelines in terms of setting
a course for the next year's budget compilation has weakened, the
prime minister's decision will be put to the test.

13) Prime Minister Fukuda: Consumption tax hike to be decided within
2 to 3 years

NIKKEI (Top Play) (Excerpts)
June 24, 2008

When asked by the press about his view on raising the consumption
tax, Prime Minister Yasuo Fukuda said yesterday: "I want to consider
it from a long-term perspective of two to three years. So it will be
decided in the future." He indicated a cautious stance about raising
the consumption tax rate in fiscal 2009. His remark yesterday
slightly retreated from what he had said last week, namely, that now
was a crucial time to make a decision. At the same time, he revealed
that his government would come up in July with emergency
countermeasures to tackle the social security problem, including an
improvement in the medical service system.

During an interview on June 17 with news agencies from the Group of
Eight (G8) member countries, Fukuda stated on the possibility of a
consumption tax hike: "Considering Japan is becoming an aging
society, a path has narrowed." His remarks were taken that he would
look into raising the consumption tax rate through debate on drastic
reform of the tax system starting in the fall, with an eye on an
increase in the government's share of the basic pension from fiscal

TOKYO 00001726 010 OF 010


2009.

In his press conference yesterday at the Prime Minister's Office,
Fukuda underscored:

"The government has now been pushing with 'zero waste' approach to
expenditure reform. There is also an issue of shifting tax revenues
earmarked for road projects to the general account."

He indicated in his remarks that he would give priority to gathering
funds by slashing expenditures and integrating the special account
from road-related taxes into the general account funds for the time
being. He then said: "We also have to mull economic trends,"
indicating he would consider (a consumption tax hike) with the
country's economic performance in mind.

He also announced that in consideration of public criticism of the
new health insurance system for those aged 75 and older, his
government would come up with new measures, saying: "I will carry
out a general review of administrative management from the public
point of view." He then unveiled that a set of in 'five relief
measures,' which the government would be make public before the end
of July. The government, in order to restore public confidence in
it, would compile measures for supporting the elderly people,
improving the medical service system, supporting child-rearing,
improving the system for irregular employees, and straightening out
the pension-record mess.

14) Government gives up on nomination of Ikeo as BOJ Policy Board
member

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

The government yesterday gave up on its nomination of Keio
University Prof. Kazuhito Ikeo for a Bank of Japan (BOJ) Policy
Board post and decided to present another nomination to the next
extraordinary Diet session. The reason is that Democratic Party of
Japan (DPJ) Secretary General Yukio Hatoyama yesterday told Chief
Cabinet Secretary Nobutaka Machimura by phone: "In consideration of
relations with the People's New Party (PNP), we won't be able to
approve the nomination of Ikeo in the extra Diet session, either."

The DPJ had once decided to approve the government's nomination of
Ikeo, submitted to the latest regular session. However, the party
later refused to take a vote on the nomination, because the PNP
threatened to leave the parliamentary coalition in the Upper House,
reacting negatively to the nomination, arguing that it could not
accept the DPJ's approval of Ikeo, who promoted postal
privatization. As a result, the Upper House did not put it to a
vote.

The government also decided on a policy line of not resubmitting its
nominations, disapproved by the DPJ in the regular Diet session, for
members of an Oversight Commission on Reemployment, which would
oversee the practice of amakudari, or placing retired senior
bureaucrats into high-paying posts at private firms. The reason is
that the DPJ has opposed the system itself. A government official
said yesterday: "The prime minister will decide whether to approve
reemployment (of retired bureaucrats)."

SCHIEFFER

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