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Cablegate: Daily Summary of Japanese Press 07/03/08

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PP RUEHFK RUEHKSO RUEHNAG RUEHNH
DE RUEHKO #1828/01 1850808
ZNR UUUUU ZZH
P 030808Z JUL 08
FM AMEMBASSY TOKYO
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INFO RUEKJCS/SECDEF WASHDC PRIORITY
RHEHAAA/THE WHITE HOUSE WASHINGTON DC PRIORITY
RUEAWJA/USDOJ WASHDC PRIORITY
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RHHMUNA/HQ USPACOM HONOLULU HI
RHHMHBA/COMPACFLT PEARL HARBOR HI
RHMFIUU/HQ PACAF HICKAM AFB HI//CC/PA//
RHMFIUU/USFJ //J5/JO21//
RUYNAAC/COMNAVFORJAPAN YOKOSUKA JA
RUAYJAA/CTF 72
RUEHNH/AMCONSUL NAHA 1088
RUEHFK/AMCONSUL FUKUOKA 8712
RUEHOK/AMCONSUL OSAKA KOBE 2441
RUEHNAG/AMCONSUL NAGOYA 6941
RUEHKSO/AMCONSUL SAPPORO 9297
RUEHBJ/AMEMBASSY BEIJING 4226
RUEHUL/AMEMBASSY SEOUL 0216
RUCNDT/USMISSION USUN NEW YORK 0629

UNCLAS SECTION 01 OF 08 TOKYO 001828

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: DAILY SUMMARY OF JAPANESE PRESS 07/03/08

INDEX:

(1) Nuclear threat to Japan -- Repercussions from Korea's nuclear
declaration (Part 3 - conclusion): Success of verification
determined by Six-Party Talks members (Yomiuri)

(2) Interview with Masaharu Kohno, G-8 Sherpa: Pessimistic about an
agreement on long-term emission-cut goal; Global warming talks may
retreat (Asahi)

(3) Japanese vacuum pumps found at Yongbyon nuclear facility were
imported by North Korean trading firm headed by former liaison with
IAEA inspection team (Yomiuri)

(4) Agriculture minister pledges to set target of achieving food
self-sufficiency of over 50 PERCENT at order of premier (Asahi)

(5) Regulatory Reform Council releases interim report: Calls for
deregulation in seven areas, including medical services and
agriculture, but driving force for reform wanes (Nikkei)

(6) Interview with former LDP Secretary General Koichi Kato on
divided Diet (Tokyo Shimbun)

ARTICLES:

(1) Nuclear threat to Japan -- Repercussions from Korea's nuclear
declaration (Part 3 - conclusion): Success of verification
determined by Six-Party Talks members

YOMIURI (Page 1) (Full)
June 30, 2008

The Unites States has obtained North Korea's declaration of its
nuclear programs in return for its decision to delist Pyongyang as a
state sponsor of terrorism. The chief negotiators of the Six-Party
Talks on North Korea's nuclear programs will have to verify whether
or not the DPRK has lied in its nuclear declaration in their meeting
expected to take place in early July. According to Secretary of
States Condoleezza Rice, a group of nuclear experts from the United
States, China, and Russia, which are all nuclear powers, will visit
North Korea to verify the declaration by conducting spot inspections
at the nuclear facilities and interviewing North Korean nuclear
experts.

The initial focus is on the amount of plutonium North Korea has
produced. The DPRK has reportedly declared that about 30 kilograms
of plutonium was produced. It has said that the 30 kg of plutonium
was produced in 1992, 203 and 2005. The U.S. estimate is about 45
kg. There is a 15 kg difference, which corresponds at least to three
to four nuclear bombs, between the DPRK's declaration and the U.S.
estimate. Washington appears to have included in its estimate the
amount remaining in spent nuclear fuel rods and that disposed of
during the process of reprocessing spent nuclear fuel rods, besides
the amount Pyongyang wrote in its nuclear declaration. The U.S.
administration therefore intends to carry out thorough investigation
into from waste storage facilities to plumbing.

However, it is uncertain how far North Korea will cooperate with the
investigation, which will take several months at least.

Secretary Rice stated: "If Pyongyang's cooperation is insufficient,

TOKYO 00001828 002 OF 008


the United States will resume sanctions and apply more sanctions."
She even referred to the possibility of Washington cancelling its
decision to remove the DPRK from its terrorist blacklist before the
delisting is implemented on August 11. Larry Niksch, an expert at
the Congressional Research Service (CRS), said however: "If
sanctions are imposed, North Korea will withdraw from the
negotiating table. So it will be impossible for the U.S. to make
such a decision."

After the accuracy of the declaration is confirmed thorough the
verification, the process of disabling North Korea's nuclear
facilities, the most challenging part, will finally start. The
declaration, however, does not include how many nuclear weapons
North Korea has and where it stores them. It is certain that
Pyongyang will demand the provision of light-water reactors, in
addition to energy assistance. The reason is that even though the
building of two light-water reactors was promised in the framework
of the 1994 U.S.-North Korea Agreement in return for the DPRK
abandoning its nuclear development program, the construction of
light-water reactors was cancelled because the agreement was
nullified.

There is a possibility that Japan, which took part in the
construction of light-water reactors along with the United States
and South Korea, will be strongly urged to bear a commensurate
burden if debate on whether to provide light-water reactors to North
Korea starts moving on a full-scale.

Meanwhile, North Korea neither considers the Six-Party Talks "an
arena for negotiations on nuclear disarmament nor is it regarded
abandoning nuclear weapons as a precondition. Therefore, the more
negotiations go into the final stage, the more gaps will widen
between North Korea and the five other members of the Six-Party
Talks on denuclearization of North Korea.

Sung Kim, director of the Office of Korean Affairs of the U.S.
Department of State, said that the Bush administration, which is in
office until next January, "has not enough time to complete the
entire process" during its tenure. Although the Six-Party Talks will
enter a new stage, it has become increasingly difficult to drive
Pyongyang to disable its nuclear weapons in the limited time left.

(2) Interview with Masaharu Kohno, G-8 Sherpa: Pessimistic about an
agreement on long-term emission-cut goal; Global warming talks may
retreat

ASAHI (Page 7) (Full)
July 3, 2008

Foreign Ministry's Deputy Minister Masaharu Kohno, who will serve as
Sherpa of Japan at the Lake Toya Summit to open in Hokkaido on July
7, responded to an interview with the Asahi Shimbun yesterday. On
the controversial issue of global warming, he stated: "Negotiations
on a certain challenge might retreat from the situation of last
year," indicating that negotiations on signing an agreement on a
long-term global goal to reduce greenhouse gas emissions are
proceeding with difficulty.

In the Group of Eight (G-8) Summit last year in Germany, the G-8
leaders agreed to earnestly look into the long-term goal of halving
greenhouse gas emissions by 2050. The focus of attention is on
whether an agreement will be reached on this goal at the Lake Toya

TOKYO 00001828 003 OF 008


Summit.

But in a meeting held in preparation for the Conference of Major
Greenhouse Gas Emitters by 16 state leaders on the last day of the
Summit, the participants failed to come up with a shared numerical
target. Since the U.S. was saying that an agreement at the G-8
Summit alone will be ineffective, attention was being paid to what
moves the U.S. would make.

Kohno said: "An agreement on a long-term goal must be reached
without fail," but he added: "With their stances remaining apart,
there are wide discrepancies." He said: "No there is no nation that
suggests the preparatory work be stopped. There should be leeway to
create something," emphasizing that the countries will continue
efforts to find common ground.

Kohno indicated a pessimistic view about the possibility of an
agreement on the mid-term goal set forth by Prime Minister Fukuda to
have the growth of global greenhouse gas emissions peak out in the
next 10 to 20 years, saying: "There is still far to go before an
agreement is reached." On the Japan-proposed sector-specific
approach to determine potential reduction volumes in each industry,
he remarked: "There certainly is a gradually growing awareness that
this approach is important." It is expected that a declaration to be
issued at the G-8 Summit will specify the sector-specific approach
as "useful."

On the issue of soaring food prices, the G-8 leaders will adopt an
independent special document. The document will specify long-term
assistance measures, for instance, to improve developing countries'
productivity. Kohno said: "It will be possible to compile arguments
into a report with a strong message." The special document is also
expected to urge food exporters to eliminate and relax export
restrictions and to stress the need to promote the development of
second generation biofuel technologies.

Concerning skyrocketing oil prices, Kohno stated: "We will send out
a message expressing a sense of crisis about the current situation."
The declaration by the G8 leaders will present measures to make the
oil market more transparent, but it is unlikely to refer to
restrictions on investment money. Kohno said: "It will be difficult
to find common terms on the issue."

Some countries have suggested that such emerging countries as China
and India should be included in the Summit framework, but Kohno
indicated a negative view, remarking: "The current G-8 framework is
the most appropriate forum for the world's major industrialized
countries."

Statements by Kohno

Summary

Recent sharp rises in oil and food prices, both closely connected
with each other, and climate change are taking place simultaneously.
The G-8 countries must show measures and a political will to deal
with these issues, serving as a driving force to move the world
forward. Although (an agreement) might be a mirage, we are
conducting discussions from various angles in an effort to find
common ground. The G-8 leaders are climbing the last steep slope,
holding hands in a line. If they lose their holds, everything will
be thrown out. They are still holding hands.

TOKYO 00001828 004 OF 008

Global warming

It is important for us to show a low-carbon society vision and
discuss a roadmap for this initiative. Progress has been made to a
considerable extent since the German Summit last year, but
negotiations on some tasks might retreat. We are making utmost
efforts to bridge the gap up until the last minute.

Soaring food prices

We would like to build common perceptions on the stability of food
supplies and improvement in productivity, export restrictions, as
well as biofuel technologies. Russia has lifted export restriction
since July 1, so the G-8 countries are now fall in step with each
other on the policy of eliminating and easing export restrictions.
The countries will find it easier to share a common perception on
the development of next generation biofuels. Regarding current
biofuels (because such products threaten food supplies), countries
have different positions.

Rising oil prices

We will deliver a strong message. It is imperative to improve
transparency in the oil market and to avoid a murky flow of money.
The G-8 should not intervene in the market.

(3) Japanese vacuum pumps found at Yongbyon nuclear facility were
imported by North Korean trading firm headed by former liaison with
IAEA inspection team

YOMIURI (Page 1) (Full)
July 3, 2008

Japanese-made vacuum pumps were found at a North Korean nuclear
facility during an International Atomic Energy Agency (IAEA)
inspection (in 2007). It has been found through Kanagawa police
investigations that those pumps were first exported to Taiwan and
then shipped to a trading company in North Korea headed by a person
who served as the liaison with the IAEA inspection team. It has also
come to light through investigations in Germany that the trading
company in question bought devices that could be used at nuclear
facilities from a German company and that it exported them to Syria.
It has become clear that North Korea has been procuring WMD
components through the company closely connected with Pyongyang.

According to a senior investigator, the company in question is Nam
Chongang Trading (TN: phonetic) in Pyongyang. The company is
reportedly headed by a former diplomat who served as the North
Korean point of contact with the IAEA for its inspection of nuclear
facilities at Yongbyon.

The Kanagawa prefectural police yesterday sent to the Yokohama
District Public Prosecutors Office papers on the 66-year-old
president of Nakano Corp., a trade agent of Minato Ward, Tokyo, on
suspicion that the company exported eight items, including the
vacuum pumps, that might be used in developing nuclear weapons,
without the economy, trade and industry minister's permission in
violation of the Foreign Exchange and Foreign Trade Control Law. The
pumps were first exported to Trans Merits Co., a trading firm in
Taipei, in July 2003. They were found at a plutonium-reprocessing
facility at Yongbyon during the IAEA inspection in the spring of

TOKYO 00001828 005 OF 008


2007.

(4) Agriculture minister pledges to set target of achieving food
self-sufficiency of over 50 PERCENT at order of premier

ASAHI (Page 7) (Full)
July 3, 2008

Prime Minister Fukuda on July 2 met with Agriculture Minister
Wakabayashi at the Kantei and ordered him to look into specific
measures to raise Japan's food self-sufficiency, which now stands at
39 PERCENT . Wakabayashi replied, "I will map out a set of measures
with the target rate set at over 50 PERCENT ." The prime minister
appears to be aimed at indicating a stance of tackling to improve
food self-sufficiency with the Lake Toya G-8 summit in Hokkaido,
where the food issue will become a main item on the agenda, close at
hand.

According to Wakabayashi, the prime minister urged him to make
efforts to boost food self-sufficiency, noting, "Where does the
blame for the decline of self-sufficiency to 39 PERCENT lie? Are
there measures to raise the rate?"

(5) Regulatory Reform Council releases interim report: Calls for
deregulation in seven areas, including medical services and
agriculture, but driving force for reform wanes

NIKKEI (Page 2) (Almost full)
July 3, 2008

The government's Regulatory Reform Council, chaired by Takao
Kusakari, chairman of Nippon Yusen Kabushiki Kaisha (NYK Line),
released on July 2 an interim report on the third set of
recommendations to be finalized at year's end. The report lists
issues up for consideration in seven areas, including the medical
services and agricultural areas. Consultations on those issues with
concerned government agencies are now expected. Moves to strengthen
regulations are gaining ground in the employment and environment
areas. It is viewed that Prime Minister Fukuda, who advocates
promoting a consumer-driven administration, is cautious about
further deregulation. There has been a clear decline in the panel's
ability to promote reform.

Chairman Kusakari emphatically told reporters after the meeting:
"Talks will not progress unless government officials have awareness
that it is necessary to boost growth through regulatory reform. The
panel is pinning its hopes on the prime minister's leadership." The
showcase of the interim report is that it gives priority to such
viewpoints as a better quality of life and the revitalization of
regional areas. Regarding the child-care area, the report proposes
establishing child-care centers in a flexible way as part of
measures to address the declining birthrate, by revising the
existing minimum standards for the establishment of such.

For the reform of the tightly-regulated agricultural area, the
report proposes a broad-based plan aimed at revitalizing rural areas
and improving food self-sufficiency. Calls for revising the policy
of reducing the amount of land devoted to rice cultivation are
growing. In response, the report proposes establishing a market
where farmers can trade production quotas, based on the presumption
that the rice-acreage reduction policy should be abolished in the
future, as Acting Chairman Hatta has said. The panel wishes to

TOKYO 00001828 006 OF 008


promote new entries into the agricultural sector by scrapping
restrictions on the use of farmland, with the aim of putting an end
to the perennial lack of young farmers to work in the fields when
their elders retire.

However, all the proposals included in the interim report are ones
that the panel has failed to put into practice. The prevailing view
among government officials is that the panel has run out of
proposals, as one government source put it. The economic logic that
deregulation is growth has vanished from the report. There is
instead a stronger element of a wavering of the structural reform
line that has been in place since the Koizumi administration.

The Transport Ministry has started looking into reviving a
regulation on supply and demand adjustment, which was abolished in
2002, to address the issue of the oversupply of taxis. The ruling
parties are planning to place a ban on the dispatch of day workers,
as such a system is considered to be contributing to the growth of a
working- poor population.

Major points of interim report compiled by Regulatory Reform
Council

Measures on social security, declining birthrate
? Medical services: The government will take a second look at the
enrollment limit of medical departments at universities
? Social welfare, child-care, nursing care: Establish child-care
centers, according to a situation in each area

Agriculture, forestry, fisheries and areas for those industries
? Agriculture, forestry and fisheries: Scrap a regulation on the use
of farm land; Establish a nationwide market for trading rice
production quotas.

Basis for human life
? Anti-monopoly policy: Unify sanctions against violations of the
Antimonopoly Law into an administrative surcharge system

Improvement of international competitiveness
? Transport: Disclose payments balance of each airport for the
purpose of privatizing airports and introducing a self-support
accounting system to them; introduce free competition to the taxi
business

Social infrastructure
? Labor: Easing conditions for the application of employment
insurance

(6) Interview with former LDP Secretary General Koichi Kato on
divided Diet

TOKYO SHIMBUN (Page 2) (Abridged slightly)
July 3, 2008

-- You have indicated that political realignment is inevitable.

"I think political realignment will occur in two stages. First, the
Liberal Democratic Party will become the largest party in the
parliament after the next Lower House election. Next, another
political realignment will occur in order to eliminate the
lopsidedness in the parliament based on principle."


TOKYO 00001828 007 OF 008


-- What is the key principle that will trigger realignment?

"The question is no longer about socialism or anti-socialism. It's
about market principles or liberalism and whether to put high
priority on Asia diplomacy. There are similarities between being
liberal and attaching importance to Asia diplomacy. This can be a
definite factor."

-- What is the definition of liberalism?

"In my view, liberalism is not economic rationalism based on market
fundamentalism but political thought to revive political functions
to restore humanness. Simply put, it's about the heart."

-- Is the revival of political functions oriented toward a big
government?

"The government could be somewhat big in size as long as it is
equipped with proper political functions and can build a society in
which people can afford to think of others. We cannot leave
everything to the private sector. I want to remake Japan into a
people-oriented, community-based country."

-- Do you think the LDP will be able to remain the leading party
after the next Lower House election?

"If this situation persists, that's difficult"

-- Why is that?

"People were unhappy with market-oriented politics that lasted six
years under the Koizumi and Abe administrations. They expected
people-oriented politics under Prime Minister Yasuo Fukuda that is
distinct from the Koizumi policy course. But the divided Diet has
prevented him from exhibiting his own policy imprint."

-- Some think they cannot fight the next Lower House election under
Prime Minister Fukuda.

"It would be meaningless just to change the front page; the contents
should also be changed. Prime Minister Fukuda should shuffle his
cabinet in order to display his policy imprint. If he can put an end
to the Koizumi policy course, he can quite possibly enjoy high
popularity."

-- What should be done specifically?

"He should review the healthcare system for people 75 and older and
promote environmental measures in order to prove that he is
different from Mr. Koizumi. Further, in order for the LDP to retain
its dominant political position, the prime minister should also put
off dissolving the Lower House for a snap general election until the
Lower House members' term expires next year."

-- Are you going to aim at bringing LDP and DPJ liberal forces
together after the Lower House election?

"Political realignment will not proceed dynamically unless the two
sides need each other. If the DPJ, which controls the Upper House,
has a majority in the lower chamber as well, it will no longer need
the LDP."


TOKYO 00001828 008 OF 008


-- You held a meeting with former Prime Minister Yoshiro Mori the
other day.

"I offered an apology for my attempt eight years ago to vote for a
no-confidence motion against the then Mori cabinet. I also told Mr.
Mori that I will firmly support Prime Minister Fukuda."

-- In the party, there are active moves by some to become candidates
to replace Prime Minister Fukuda.

"People are free to express their views, but we must remain united
and pull through this critical situation; otherwise (we will not be
able to remain as the leading party) and become unnecessary in
political realignment."

(Interviewed by Yuji Shinogase)

SCHIEFFER

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