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

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UNCLAS SECTION 01 OF 10 TOKYO 001859

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 07/07/08

INDEX:

(1) Fukuda, Bush defend each other over abduction, nuclear issues
(Tokyo Shimbun)

(2) Japanese, U.S. leaders agree on need for trade liberalization to
prevent soaring food prices (Yomiuri)

(3) Editorial: Japan-U.S. relations -- Twilight of Bush era (Asahi)


(4) Editorial: Japan-U.S. summit -- How will two countries cooperate
on abduction issue? (Sankei)

(5) Editorial: Fukuda-Bush Lake Toya summit meeting eased Japan-U.S.
relations, but... (Nikkei)

(6) Editorial: Real value of Japan-U.S. alliance to be tested at
Lake Toya Summit (Mainichi)

(7) DPJ to submit to extra Diet session bills banning amakudari
(golden parachute) practice and reforming the road-related tax
revenues system (Nikkei)

(8) DPJ Secretary General Hatoyama: if DPJ defeated in Lower House
election, I and Ozawa will retire from politics (Mainichi)

(9) Prime Minister's schedule, July 5 (Nikkei)

ARTICLES:

(1) Fukuda, Bush defend each other over abduction, nuclear issues

TOKYO SHIMBUN (Page 3) (Full)
July 7, 2008

Yuji Nishikawa, Political Section
Yasuyuki Oguri, America Bureau

Yesterday's meeting between Prime Minister Yasuo Fukuda and U.S.
President Bush was the first Japan-U.S. summit since the United
States decided to delist North Korea as a state sponsor of
terrorism. This year's Group of Eight (G-8) summit at Lake Toya in
Hokkaido is Bush's last and Fukuda's first. However, Fukuda is the
host. In their meeting, the two leaders-both alike declining in
public support although they are in different political
situations-defended each other over the issue of Japanese nationals
abducted to North Korea, apparently in an attempt to avoid causing a
fissure in the Japan-U.S. alliance.

"I'm well aware that the abduction issue is a delicate issue," Bush
said in a press conference following the Japan-U.S. summit. "So,"
Bush went on, "I called Prime Minister Fukuda to tell him that the
United States will not forsake Japan on this issue." With this, Bush
directly sought understanding in his message to the Japanese public,
which has opposed his decision to delist North Korea.

Fukuda said he was "encouraged" by Bush's remark. In the summit,
Fukuda handed the English version of a book to President Bush about
Megumi Yokota, one of the abductees. The book was written by her
mother, Sakie Yokota, and titled Megumi, O-kaasan ga kitto tasukete
ageru (North Korea Kidnapped My Daughter). Fukuda and Bush showed

TOKYO 00001859 002 OF 010


that they will not forget the abduction issue.

In the summit, Fukuda and Bush seemed to give each other a helping
hand. The United States has decided to remove North Korea from its
terrorism blacklist. This decision dealt a serious blow to Fukuda
and his government, for it could cause Japan to lose leverage for a
solution to the abduction issue. The Fukuda government was under
fire for leaving the abduction issue behind.

Meanwhile, Bush is likewise being called into question in Congress
for his decision to delist North Korea in spite of its insufficient
declaration that does not include nuclear weapons.

In the press conference, Bush stated that he also has daughters and
he therefore knows well how serious it would be if one were to
disappear. Time and again, Bush stressed that he understands how the
Japanese people feel.

Fukuda noted: "We must not produce a situation where there is no
progress on the nuclear issue because there is no progress on the
abduction issue. We should resolve both issues together." So saying,
Fukuda gave consideration to President Bush, indicating that he
would not focus solely on the abduction issue.

Fukuda showed such a stance for he feared that a fissure between
Japan and the United States would only help North Korea. Fukuda
therefore did not ask Bush to reconsider delisting North Korea. He
showed a stance of seeking public understanding with Bush.

Meanwhile, President Bush's low profile has something to do with his
intention to make achievements. President Bush, who has had few
diplomatic accomplishments, is now being noted mainly for what he
did with former Prime Minister Junichiro Koizumi to strengthen the
Japan-U.S. alliance. He needs to see progress on the abduction
issue. For that, however, he does not want to hurt his achievements
during his remaining six months in office. He played up the
Japan-U.S. alliance.

In addition, the security situation in Afghanistan has also
deteriorated. The Maritime Self-Defense Force is currently deployed
to the Indian Ocean, where it is tasked with a refueling mission
under the Antiterrorism Special Measures Law. This law is slated to
expire next year. However, the United States is considering ramping
up its antiterror operations in Afghanistan. "Depending on the
circumstances," a source familiar with Japan-U.S. relations noted,
"Japan may be asked to make a further contribution." There is also
such a hidden calculation behind Bush's attitude toward Fukuda.

(2) Japanese, U.S. leaders agree on need for trade liberalization to
prevent soaring food prices

YOMIURI (Page 7) (Full)
July 7, 2008

U.S. President Bush and Prime Minister Fukuda in their meeting
yesterday agreed on the view that it is necessary to further
liberalize trade by lowering tariffs and other means as measures to
prevent natural resource and food prices from soaring any further.
The agreement is expected to prompt the now deadlocked new round of
global trade talks (Doha Round) under the World Trade Organization
(WTO) to move forward. Meanwhile, Bush acknowledged the U.S. economy
is slowing down, leaving an uncertainty over Japan's future economic

TOKYO 00001859 003 OF 010


prospects, which largely depend on developments in the U.S.
economy.

Eager for success of WTO Doha Round

In a press conference after meeting with Bush, Fukuda said: "Recent
sharp price hikes of primary products such as oil and food have
seriously affected the global economy. We agreed on the view that
prompt countermeasures are necessary."

Bush said that the two leaders shared the need for mid- to long-term
measures. He then said: "Establishing a free trade system is
necessary as an effective measure to help poor countries,"
indicating his determination to work hard to make the Doha Round a
success.

U.S. Trade Representative Schwab, the U.S. representative in the
Doha Round, was also present at the Japan-U.S. summit. This fact
represents the U.S. government's eagerness to make the New Round a
success.

The WTO is aiming to conclude the Doha Round by the end of this
year. To do so, the unofficial ministerial meeting to be held in
Geneva in late July will be the last chance. Some involved in the
negotiations are guessing that President Bush has begun to get down
to brass tacks in a bid to leave positive results on the economic
and diplomatic fronts before leaving office next January.

Recent skyrocketing food prices have contributed to increasing some
farmers' incomes in the U.S., as an exporter of farm products. Given
this, the U.S. government appears to be judging that a promotion of
discussion on a reduction in state subsidies to farmers in an effort
to bring about a settlement to the Doha Round will incur less
opposition from farmers.

It is expected that if countries reduce tariffs on agricultural and
other products following a settlement at the Doha Round, import
prices will drop and global inflation will be contained.

The issue of U.S. beef imports took center stage in past Japan-U.S.
trade talks, but in the meeting yesterday, the two leaders touched
on the issue only briefly.

South Korean consumers have strongly reacted to the resumption of
U.S. beef imports. Given this, the U.S. finds "it difficult to
strongly urge Japan to ease its import conditions," a U.S.
government source confided.

"Strong dollar" emphasized

President Bush frankly admitted in a joint press conference that the
"U.S. economy has not grown as strongly as expected." He added: "If
the U.S. economy perks up, the value of the dollar will be affected.
I believe in the effectiveness of our strong dollar policy." Bush
thus expressed his hopes that the measures his administration has
taken to stimulate the economy, such as tax cuts, will work
effectively and tried to hold in check moves to sell dollars in
international exchange markets.

Regarding the U.S. economy, there is an increasing possibility that
a period of inflation combined with stagnation - so-called
stagflation - may set in. Many are concerned about a vicious circle

TOKYO 00001859 004 OF 010


in which a further decline in the dollar makes oil prices higher and
eventually further slows down the economy.

The U.S. Federal Reserve Bank (FRB) now has few options for monetary
policy. Banking authorities in Europe are moving to raise interest
rates to stem inflation. As it stands, the difference in interest
rates is expanding between the U.S. and Europe. The expanded
difference could weaken the dollar further.

Many see the measures being taken by the U.S. government as
insufficient to buoy up the economy, so it is uncertain whether the
U.S. will be able to jack up the value of the dollar.

In the press conference yesterday, Fukuda emphasized that the
Japanese and U.S. economies are becoming ever more interdependent.
Ironically, his remark indicates that if the U.S. economic recovery
slows, the Japanese economy may also be forced to slow down, too.

(3) Editorial: Japan-U.S. relations -- Twilight of Bush era

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

"The United States will not leave the abduction issue behind," said
U.S. President George W. Bush in a joint press conference held
yesterday after his meeting with Prime Minister Yasuo Fukuda. Bush
took up the abduction issue first.

The Japan-U.S. summit was held on the day before the opening of the
Group of Eight Hokkaido Toyako Summit. Bush may have thought that he
should speak about the abduction issue first because he seems to
have felt that the Japanese public was concerned about U.S. policy
toward North Korea.

In stark contrast, Fukuda praised the state of bilateral relations
during the seven and a half years of the Bush administration,
saying, "The Japan-U.S. alliance has dramatically improved." He
might have been giving consideration to this being the last visit to
Japan by President Bush, who will leave office early next year.

Even though bilateral relations have deepened, Bush was moved to
say, "The United States will not abandon Japan," referring to the
North Korean nuclear and abduction issues. In the joint press
conference, Fukuda stated: "I'm encouraged" by the President's
remarks. The U.S. government must intensely tackle the abduction and
nuclear issues, aiming to resolve them.

Yet, the past seven and a half years of Japan-U.S. relations appear
to have been led around by the U.S.' foreign policy.

The government of Prime Minister Junichiro Koizumi supported the
"war on terror" launched by President Bush after the 9/11 terrorist
attacks on the United States. Koizumi backed the Iraq war, which had
created discord between major European countries and the United
States. With domestic public opinion split, Koizumi dispatched
Self-Defense Forces (SDF) personnel to a combat zone in Iraq.

The main reason for the SDF dispatch was the North Korean issue.

Prime Minister Koizumi might have thought that if Japan cooperated
with U.S. efforts on the Iraq war, which was internationally
unpopular, Japan would be sure to get support from the United States

TOKYO 00001859 005 OF 010


on the North Korean front on issues that greatly affect Japan's
security.

However, the crisis of North Korea's nuclear threat to Japan has
increased due to Pyongyang's test-firing of ballistic missiles and
defiantly carrying out of a nuclear weapons test. No progress has
been made on the abduction issue. It is not the first time for Tokyo
to rely on Washington for its diplomacy. It is good for Japan to
depend on the United States, as long as the United States values
international cooperation and is cautious about the use of arms.
However, if the United States acts unilaterally, it becomes
difficult for Japan to line up with it.

International politics will likely be increasingly complicated. In
addition to China's recent rapid economic growth, India has
accelerated its economic growth and Russia has boosted its presence
again. Whether Asia will continue to run along the path of stability
and prosperity in the 21st century is unclear. Fukuda appears to be
changing Koizumi's policy of solely tilting toward the U.S. by
putting relations with China back on a recovery track. His stock
argument of "resonance," meaning that good relations between Japan
and the U.S. have a positive effect on Japan's Asia policy, is still
untested.

Japan-U.S. relations will continue be the linchpin of Japanese
diplomacy, but Japan and the United States alone cannot resolve all
issues. Leaning that there are limits is a lesson from the past
seven and a half years.

(4) Editorial: Japan-U.S. summit -- How will two countries cooperate
on abduction issue?

SANKEI (Page 2) (Full)
July 7, 2008

The Japan-U.S. summit (held on July 6) between Prime Minister Yasuo
Fukuda and President George W. Bush agreed that the verification of
the declaration of nuclear programs and activities by Pyongyang was
vital for complete nuclear abandonment by North Korea. They also
confirmed close bilateral cooperation for resolving the abduction
issue.

The North's nuclear programs are especially important for Japan. The
North's nuclear declaration on June 26 is a far cry from complete
and correct, for it does not include information on its nuclear
weapons. Needless to say, the declaration must be verified
thoroughly.

Although President Bush referred to Pyongyang's uranium enrichment
program and nuclear proliferation, Washington will delist the North
as a state sponsor of terrorism on August 11, as it has informed
Congress of its step. Questions remain on the extent to which the
declaration will be examined. We would like to see the relevant
countries make all-out efforts to verify the declaration.

In a joint press conference after the bilateral summit, President
Bush said: "The United States will not abandon Japan. The United
States' intention to support Japan's position on the abduction issue
remains unchanged."

It is important to demonstrate the stance that Japan and the United
States will continue working closely in addressing the abduction

TOKYO 00001859 006 OF 010


issue. We welcome President Bush's statement. Nevertheless, the
President probably made such a statement in consideration of Japan's
strong concerns that the abduction issue is an ongoing act of
terrorism and that the United States might abandon Japan.

Prime Minister Fukuda said, "I was encouraged to hear the U.S.
position from President Bush." Did Prime Minister Fukuda convey to
President Bush Japan's apprehensions about Washington's decision to
take the North off its terrorist blacklist while leaving the
abduction issue behind? We wanted to see the two leaders spell out
how Japan and the United States will work together to resolve the
abduction issue.

Although Fukuda and Bush played up efforts to enhance the Japan-U.S.
alliance, some signs of weakening in the alliance worry us.

One is that the United States seems to be prioritizing multilateral
talks over the alliance with Japan. President Bush referred to
applying pressure to the North through the six-party framework,
though China and Russia are less committed to the abduction issue.

Another is that Japan's efforts to reinforce the alliance with the
United States have been insufficient. Japan for instance will not
intercept a U.S.-bound ballistic missile in line with its principle
of not exercising the right to collective self-defense. Such a
country is not regarded as a dependable ally.

There are a plethora of tasks the two countries must joint efforts,
such as global warming and soaring oil prices. Top priority must be
given to cementing the alliance.

(5) Editorial: Fukuda-Bush Lake Toya summit meeting eased Japan-U.S.
relations, but...

NIKKEI (Page 2) (Full)
July 7, 2008

What is the season that can be best likened to Japan-U.S. relations
after the U.S. government informed Congress of its decision to
delist North Korea as a state sponsor of terrorism? It is certainly
not balmy spring. Prime Minister Yasuo Fukuda and President George
W. Bush, however, endeavored to generate a spring-like mood at their
summit meeting held at Late Toya (on July 6).

After their talks, the two leaders, holding their first joint press
conference, stressed cooperation on such issues as the
denuclearization of North Korea, the abductions by North Korea, the
global economy, measures to combat global warming, and aid to
Africa. Prime Minister Fukuda said, "The verification of North
Korea's nuclear declaration is extremely important in order to bring
about the complete denuclearization of that country." President Bush
stated, "The United States will not abandon Japan (on the abduction
issue)."

The stress on unity between Japan and the United States apparently
comes from strategic decisions by both governments. A strained
Japan-U.S. relationship and an awkward mood between the two leaders
would only please the North. Fukuda and Bush managed to avoid that.
For both to fall in step with a conciliatory tone toward the North
would delight Pyongyang more than Washington and Tokyo. Such a
message was avoided by the two leaders.


TOKYO 00001859 007 OF 010


How has Washington's decision to take the North off its terrorist
blacklist affected the Fukuda administration? Some public opinion
polls showed severe results, faulting Prime Minister Fukuda for
going along with it. Although support ratings for the Fukuda cabinet
seem to have bottomed out, they still remain low.

There is discontent among conservative supporters of the Liberal
Democratic Party about the delisting the North as a state sponsor of
terrorism. If that is to weaken the Fukuda's administration's
foundation, albeit indirectly, the Bush administration's decision
would end up exacting a political toll on the top leader of an U.S.
ally whose footing is weak.

The North could respond sincerely to the verification of its nuclear
declaration and the abduction issue before it is removed from the
U.S. list of terrorism-sponsoring nations on August 11. Such would
change the mood in Japan and help Japan and the United States
restore unity.

The North might opt for buying time or throwing a curve ball to
drive a wedge between Japan and the United States. Forecasting the
North's action is not easy. The deadline will come in any event, and
America's delisting process will come to an end. The rainy season
will continue for Japan-U.S. relations.

North Korea, a dictatorship, can toy with the feelings of Japan and
the United States. A dictatorship can have an edge over an unpopular
leader of a democracy with a weak foundation at least over the short
term.

It is meaningless for Prime Minister Fukuda to hurl unpleasant words
at the President, whose days in office are numbered. It was natural
for the top Japanese and U.S. leaders to confirm bilateral
cooperation. Although it also was diplomatically wise, offering
healing words to each other does not help resolve pressing issues.

The Fukuda-Bush meeting has somewhat helped to reduce the
awkwardness in bilateral relations, but has it sent a strong message
to the North to respond earnestly to the nuclear and abduction
issues? The North will probably continue trifling with the feelings
of Japan, the United States, and China, as well.

(6) Editorial: Real value of Japan-U.S. alliance to be tested at
Lake Toya Summit

MAINICHI (Page 5) (Full)
July 7, 2008

In their meeting held prior to the opening of the Lake Toya Summit
in Hokkaido, Prime Minister Yasuo Fukuda and U.S. President Bush
agreed to closely cooperate in resolving the North Korean nuclear
and abduction issues. On the global warming issue, both sides failed
to bridge their perception gap. In discussions on these issues, the
real value of the Japan-U.S. alliance will be tested at the Group of
Eight (G-8) Summit.

This is likely to be the last visit to Japan by President Bush
before he leaves office next January. The Japan-U.S. relations over
the past seven and a half years under the Bush administration are
considered to have been good in general. In particular, the personal
relationship of trust established between President Bush and Prime
Minister Koizumi during the five years of the Koizumi administration

TOKYO 00001859 008 OF 010


favorably affected the whole bilateral relationship.

Japan has continued to support the President's "war on terror" by
dispatching Self-Defense Force troops to the Indian Ocean and Iraq
after the terrorist attacks on the U.S. The two countries have also
promoted cooperative relations on the military front, as represented
by their cooperation on missile defense, as part of efforts to
counter North Korea's nuclear and missile threats.

However, friction has marked recent relations between Japan and the
U.S., mainly due to a definite difference in both sides' positions
over issues related to North Korea.

The difference might reflect their perception gap regarding the
nuclear threat coming from North Korea. North Korea's nuclear
weapons have posed a threat directly to Japan, but what the U.S.
seems most fearful of is the possible proliferation of nuclear
weapons to terrorist groups. The Japanese government, too, harbored
this kind of concern.

The U.S. also began to take procedures to delist North Korea as a
state sponsor of terrorism despite no progress on the abduction
issue. This has made Japan even more apprehensive.

In the joint press conference, Fukuda proudly said: "The Japan-U.S.
alliance has deepened over the past several decades." If that is so,
he should show specifics to prove this.

Bush said that the U.S. would make utmost efforts to denuclearize
the Korean Peninsula. He also stressed the need to strictly verify
North Korea's nuclear declaration. He further expressed apprehension
about North Korea's uranium enrichment program, nuclear
proliferation, and development of long-range missiles.

After the G-8 Summit ends, the envoys of the six-party talks will
meet to discuss how to verify North Korea's nuclear report and other
matters. We hope China, the chair of the six-party talks, will work
on other members to establish a perfect mechanism to fully examine
the contents of the report.

On the abductions, President Bush said: "We are fully aware how
delicate this issue is for Japan. We will never abandon Japan on
this issue."

Among the members of the six-party talks, however, there are
differences in interest in the abduction issue. Fukuda, who has
emphasized the importance of resolving both nuclear and abduction
issues simultaneously, naturally should make utmost efforts to bring
about progress in negotiations with North Korea and make more
efforts to obtain understanding of Japan's position from the
countries concerned.

Regarding the global warming issue, the goal the G-8 leaders should
attain at least is to reach an agreement on the goal of halving
greenhouse gas emissions by 2050. We expect Fukuda to step up
efforts to elicit an agreement from President Bush, who remains
reluctant to set a goal.

(7) DPJ to submit to extra Diet session bills banning amakudari
(golden parachute) practice and reforming the road-related tax
revenues system


TOKYO 00001859 009 OF 010


NIKKEI (Page 2) (Full)
July 6, 2008

The main opposition Democratic Party of Japan (DPJ) will submit to
an extraordinary Diet session, which is expected to be convened in
late August, a bill to ban the practice of amakudari or a golden
parachute system under which retired senior bureaucrats take
high-paying posts in private firms or government-affiliated
organizations. The DPJ also plans to present a bill on reform of the
road-related tax revenue system to the upcoming extra session. The
aim is to play up differences in reform between it and the
government and ruling camp through policy debate. Some in the
largest opposition party are calling on their party to flexibly
respond to deliberations in the House of Councillors, to which the
DPJ submitted a censure motion against Prime Minister Yasuo Fukuda
in the latest ordinary session.

The DPJ intends to submit the legislation on management and control
of retired civil servants (tentative name) which includes such
measures as 1) prohibiting the system of finding amakudari positions
for bureaucrats; 2) banning the practice of encouraging early
retirement, and 3) lifting the retirement age of bureaucrats to 65.
Although the party advocates the complete scrapping of amakudari, it
failed to include the above measures in the bill to reform the civil
servant system, on which it reached agreement in the previous Diet
session, because the ruling coalition was opposed.

The government plans to free up revenues from the road-related taxes
now solely dedicated to road construction and maintenance and
reclassify them as general funds. In response, DPJ Deputy President
Naoto Kan said: "Under the government plan, the authority alone
would be transferred from the Ministry of Land, Infrastructure, and
Transport (MLIT) to the Ministry of Finance." The DPJ, therefore,
asserts that the authority related to road maintenance and fiscal
resources be transferred from the central government to local
governments. It is also looking into abolishing the MLIT's regional
bureaus. It intends to submit to the extra session a drastic reform
bill, including the scrapping of regional bureaus.

The DPJ will incorporate such policy measures in a manifesto (set of
campaign pledges) for the next Lower House election in order to play
up its political identity as a party with policies. It knows, also,
that the public pays little attention to the opposition camp while
the Diet is out of session.

(8) DPJ Secretary General Hatoyama: if DPJ defeated in Lower House
election, I and Ozawa will retire from politics

MAINICHI (Page 2) (Full)
July 7, 2008

Yukio Hatoyama, secretary general of the main opposition Democratic
Party of Japan (DPJ), delivered a speech on July 5 in Kanazawa City.
Referring to the next House of Representatives election, Hatoyama
said: "If our party is not able to win it, I and President Ichiro
Ozawa will have to retire from politics. With that determination in
mind, we are putting in every effort."

(9) Prime Minister's schedule, July 5

NIKKEI (Page 2) (Full)
July 6, 2008

TOKYO 00001859 010 OF 010

10:08
Arrived at his private residence in Nozawa.

13:43
Returned to his official residence.

15:51
Met deputy foreign ministers Kohno and Sasae and North American
Affairs Bureau Director-General Nishimiya.

16:41
Met Kohno and Sasae, and Economic Affairs Bureau Director-General
Otabe. Kohno and Otabe stayed on.

19:09
Went to dinner with his family at a Chinese restaurant in
Higashi-azabu.

20:38
Returned to his official residence.

Prime Minister's schedule, July 6

NIKKEI (Page 2) (Full)
July 7, 2008

09:16
Departed from Haneda Airport on a government plane to attend the G-8
summit.

10:34
Arrived at New Chitose Airport.

11:23
Visited Lake Hill Farm in the town of Toya.

11:35
Arrived at the Windsor Hotel Toya in the town.

13:09
Toured the International Media Center in Rusutsu.

15:33
Held a meeting with President George W. Bush at the Windsor Hotel
Toya.

17:12
Held a joint press conference.

18:05
Held a meeting with Canadian Prime Minister Stephen Harper.

19:07
Threw a dinner party for President Bush and his wife. Stayed
overnight at the hotel.

SCHIEFFER

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