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Cablegate: Daily Summary of Japanese Press 07/11/08

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UNCLAS SECTION 01 OF 09 TOKYO 001934

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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 07/11/08

INDEX:

(1) Six-party talks resumed: U.S. hurries toward final phase, North
Korea the on offensive (Asahi)

(2) Lake Toya Summit closes: Hopes pinned on Japan's environmental
technology (Nikkei)

(3) Future of this planet (Part 2): G-8 nations indicate no resolve
to share "pain" expected through solution of issues (Tokyo Shimbun)

(4) Prime Minister Fukuda mulling cabinet shuffle (Mainichi)
(5) Chief Cabinet Secretary Machimura: Decision on dispatch of GSDF
to Afghan by the end of August (Mainichi)

(6) No need to revise SOFA: Maher (Ryukyu Shimpo)

(7) Gov't begins to provide info about U.S. military fugitives
(Ryukyu Shimpo)

(8) Interview with Hiroyuki Sonoda, deputy chairman of LDP Policy
Research Council: Expand domestic demand by compiling second budget
(Nikkei)

ARTICLES:

(1) Six-party talks resumed: U.S. hurries toward final phase, North
Korea the on offensive

ASAHI (Page 4) (Abridged slightly)
July 11, 2008

Satoshi Ukai, Yoshihiro Makino, Toru Tamagawa, Beijing

The United States is hurrying toward the final phase of
denuclearization, North Korea, having presented a declaration of its
nuclear programs and activities, is on the offensive, while Japan
finds it difficult to take action in the wake of the United States'
decision to delist the North as a state sponsor of terrorism.
Against such a backdrop, the six-party talks resumed on July 10
after a nine-month hiatus.

The main topic on the agenda is how to verify North Korea's
declaration of its nuclear programs. Since arriving in Beijing on
July 8, U.S. Assistant Secretary of State Christopher Hill has
repeatedly met with his North Korean counterpart, Vice-Foreign
Minister Kim Kye Gwan, and vigorously carried out the necessary
spadework regarding the agreed-upon onsite inspections of nuclear
facilities and interviews with persons concerned in North Korea.

The administration of President George W. Bush desperately wants to
achieve results before he leaves office next January by reaching a
six-party agreement on how to verify the North's long-overdue
nuclear declaration. Washington's wishes were apparently strong
enough to brush aside Japan's reluctance to resume the six-party
talks early in connection with the Lake Toya summit and to strike a
deal to resume the talks on July 10.

Responding positively to talks with Hill, Vice Foreign Minister Kim
has acted as though he had aligned himself with the United States.
According to the source, when Vice Minister Kim met with South
Korean delegate and special representative for Korean Peninsula

TOKYO 00001934 002 OF 009


peace Kim Sook, the chief North Korean negotiator expressed a
willingness to cooperate in the verification process. The source
also presented an optimistic outlook, saying, "I felt a positive
reaction."

North Korea's proactive stance comes from Pyongyang's craving for
economic and energy aid. The North is supposed to receive aid
equivalent to 950,000 tons of heavy fuel oil in the second phase of
denuclearization, but things have not gone as planned.

A South Korean government source thinks that with the Bush
administration approaching its end, the North will make any move to
grab whatever is available.

The Korean Central News Agency applied pressure on Washington on
July 10 by saying in its commentary that the United States must
fulfill its obligations. The North Korean Foreign Ministry also
released a press statement on July 4 urging the six-party members to
fulfill their duties first. On July 10, A/S Hill implied a plan to
present a specific aid timetable to the North and seek its
understanding, saying, "North Korea wants to know the contents of
the aid program."

Japan under pressure

Japan feels pressure from the stances of the United States and North
Korea. Foreign Ministry Asian and Oceanian Affairs Bureau
Director-General Akitaka Saiki had to sit at the six-party table on
July 10 after briefly exchanging notes with his U.S. and South
Korean counterparts following his arrival in Beijing earlier in the
day.

Setting the highest hurdle among the participants is Japan's basic
policy. Saiki in the meeting pointed out the absence of information
on nuclear weapons from the North's declaration, while underlining
the need to establish a verification framework including Japan and
participation by the International Atomic Energy Agency (IAEA).

Other countries might also express discontent with Japan, which has
not supplied energy aid to the North. Saiki again emphasized Japan's
standpoint that it will not take part in aid unless there is
progress on the abduction issue. The United States and South Korea
have informally presented the idea of temporarily extending aid to
the North in place of Japan. But some countries are balking at the
idea, saying that it would turn the six-party framework into a mere
shell, according to the negotiations source. The reality is that
Japan has to continue insisting that the six-party members must
purse the denuclearization and abduction issues simultaneously.
Japan wants to continue working closely with the United States based
on President Bush's statement that the abduction issue must be
addressed under the six-party framework.

(2) Lake Toya Summit closes: Hopes pinned on Japan's environmental
technology

MAINICHI (Page 11) (Excerpts)
July 10, 2008

Leaders from the Group of Eight (G-8) nations at the Lake Toya
Summit agreed to share a long-term target to halve greenhouse gas
emissions by 2050. The phrase, "The G-8 nations will cooperate for
the development and dissemination of environmental technology," was

TOKYO 00001934 003 OF 009


incorporated in the G-8 statement. Environmental technology is the
forte of Japan, which has thoroughly promoted energy conservation.
Voices pinning hopes on Japan's technology are now beginning to be
heard. Japan will likely be pressed to strengthen joint efforts
between the government and the private sector in such areas as the
development of new energies, with the aim of achieving the emissions
reduction goal.

U.S. President Bush during a press conference held at the White
House on July 2 expressed expectations of Japan's environmental
technology, "I am sure the time will come in the near future when
electric cars will become widely available thanks to Japanese
technology."

The Japanese government has underscored from way back that technical
innovation is important in order to curb global warming. Japan in
May last year incorporated the development of innovative
technologies in the plan called Cool Earth 50, as proposed by Prime
Minister Shinzo Abe. The aim was to cut greenhouse gas emissions by
50 PERCENT by 2050. However, the Heiligendamm Summit, held right
after that proposal was made, adopted in its statement abstract
words "technology is the key to curb climate change." As such, the
international community did not pay much attention to environmental
technology.

However, environmental technology is now drawing increasing
attention due to the steep rise in crude oil prices since last fall.
Prime Minister Yasuo Fukuda at the World Economic Forum Forum's
Annual Meeting in Davos in January this year revealed a plan to
invest about 30 billion dollars (approximately 3.2 trillion yen) for
R&D in the environment and energy fields over the next five years.

The Ministry of Economy, Trade and Industry (METI) in March this
year mapped out the Cool Earth - Energy and Innovative Technology
Plan, which selected 21 technologies, including electric cars, solar
energy generation and next-generation-type nuclear power generation
and indicated an implementation road map up to 2050.

The G-8 statement on the environment this time incorporated words
"in order to map out a road map for environmental technical
innovation, an international cooperative system will be created."
The government wants to display international leadership in setting
measures against global warming, by achieving technical development
through cooperation between the private sector and the government,
based on METI's road map.

Many challenges to tackle before achieving emissions goal

METI has expedited technological development, such as the
development of new energies, for the purpose of achieving energy
conservation and cutting greenhouse gas emissions. However, there
remain many challenges to tackle before achieving the reduction
target.

Automobiles

The government plans to fully disseminate fuel-cell electric
vehicles, which are considered to be the ultimate eco-friendly car,
by the year 2010. Honda Motors has released this type of vehicle on
a leasing basis. The manufacturing cost per unit is tens of millions
of yen. The government plans to reduce the cost to produce fuel-cell
electric vehicles to a level similar to or slightly higher than the

TOKYO 00001934 004 OF 009


cost to produce gasoline-engine cars. However, this would require a
considerable degree of technical innovation, according to a leading
manufacturer.

The manufacturing cost of electric cars is relatively low. Marketing
for electric cars will start next year or later However, their
mileage per charge is less than half the gasoline cars. Improving
the performance of electric cars requires the development of new
batteries.

Solar power generation

The barrier to the adoption of solar power generation, an
environment-friendly energy, is the high cost. At present,
generating 1 kilowatt costs 46 yen, about seven times higher than
the cost needed for nuclear power to generate the same amount of
electricity. The government aims at lowering the cost to 14 yen by
2020 and 7 yen by 2030, the level similar to the cost needed in the
case of nuclear power generation. Of the solar power generating
cost, the manufacturing of solar batteries accounts for 60 PERCENT ,
and the cost of building related equipment for 40 PERCENT .
Manufacturers are making efforts to reduce such costs by reducing
the amount of silicon, a material used in batteries. However, with
the price of raw materials soaring, there are no prospects for
cutting the manufacturing cost.

Nuclear power generation

The government sees nuclear power generation, which does not emit
carbon dioxide, as the card in adopting measures against global
warming. Demand for nuclear power generation is on the rise
throughout the world in the wake of the soaring crude oil prices.
The government wants to establish small- and medium-size nuclear
power plants and become able to export such by 2015. It also aims at
developing a next-generation-type light-water nuclear reactor with
high energy consumption efficiency by 2030.

Biofuel

The government released a plan to boost the production of biofuel,
fuel derived from recently harvested plants, from about 30
kiloliters as of March last year to 50,000 kiloliters by 2011. At
present, various companies are constructing plants to produce
bio-ethanol, using rice that is not fit for human consumption. The
production of bio-ethanol using cellulose materials, such as rice
straw, which does not affect the food supply, will start next
summer. An authentication project for the production of bio-ethanol
using scrap wood has started. However, the project has not yet
reached the stage for practical application in cost terms.

(3) Future of this planet (Part 2): G-8 nations indicate no resolve
to share "pain" expected through solution of issues

TOKYO SHIMBUN (Page 1) (Full)
July 11, 2008

In forming a long-term goal for reducing greenhouse gas emissions at
the Group of Eight (G-8) Summit (Hokkaido Toyako Summit), it was
imperative to persuade the U.S. and elicit its agreement.

The U.S. insisted that China, India and other emerging countries
that are sharply increasing gas emissions should be required to

TOKYO 00001934 005 OF 009


commit themselves to attaining a long-term goal.

The challenge of curbing gas emissions may generate business
opportunities, but at the same time, the challenge could temporarily
hurt economic activities. China and India are now rivals to the U.S.
The U.S. could not approve a goal that would leave their greenhouse
gas emissions unrestricted while affecting adversely only the U.S.

President Bush continued to say: "A long-term goal that does not
involve China and India would be ineffective," indicating that the
U.S. did not mind even if an agreement was not reached at the G-8
summit.

Japan, Britain, and Germany accepted all assertions by the U.S. The
G-8 nations agreed to note in the leaders' statement that "The task
(of curbing greenhouse gas emissions) will be implemented for the
first time if all major economies offer contributions," including
China and India. The U.S. was satisfied with the agreement, with
Assistant to the President Daniel Price remarking: "What the
President said was all reflected in the statement."

The latest summit, however, resulted in underscoring the limits of
industrialized countries' (now Group of Eight countries (G-8))
capability to play a leading role in the international community,
although they have tried to do so since the first summit was held in
Rambouillet, France, in 1975.

There undeniably are areas that cannot be coped with only by the G-8
countries in dealing with climate change and other challenges.
Consideration must also be given to the historical background of the
rapid growth of such rising economies as China and India, as well as
changes in the international community.

But the joint statement stopped short of mentioning what specific
actions the G-8 nations should take to reduce greenhouse gas
emissions and instead urged emerging countries and developing
countries to share the burden and offer cooperation. This shows that
only the G-8 nations are no longer able to pave the way for
resolving international issues.

Although calling themselves the leaders of the international
community, the G-8 nations, which have discharged large volumes of
greenhouse gases, did not show enthusiasm or determination to take
the lead in sharing the pain expected from fighting global warming.
The G-8 summit has long been pointed out as turning into a mere
formality affair, but this was clearly proved true in the Toyako
Summit.

Attention was focused on a call for expanding the G-8 framework.
Setting aside the propriety of the proposal, the U.S., which
insisted on the involvement of China and India in the regime of a
long-term goal, is unwilling to include China and India in the list
of leaders in the international community. Such a stance is rather
odd.

(4) Prime Minister Fukuda mulling cabinet shuffle

NIKKEI (Page 2) (Slightly abridged)
July 11, 2008

With the closing of the Group of Eight (G8) summit, Prime Minister
Yasuo Fukuda has begun to seriously consider whether to shuffle his

TOKYO 00001934 006 OF 009


cabinet. In the past, Prime Minister Junichiro Koizumi took
advantage of cabinet shuffles on par with his right to dissolve the
House of Representatives, while Prime Minister Ryutaro Hashimoto
made his popularity decline by exercising such a right. An impact on
political management cannot be avoided,

Regardless of whether Fukuda shuffles his cabinet or not, his
administration is reaching a fork in the road.

Considering that ten months have passed since the inauguration of
the Fukuda cabinet, which he mostly inherited from the previous
government of Prime Minister Abe, it is safe to say that Fukuda is
eager to form his own cabinet. The government plans to come up in
late this month with a set of five policy measures, including
measures for the elderly and medical services, and it plans to adopt
budgetary request guidelines for fiscal 2009 (in August). There is a
rumor that he may shuffle his cabinet after setting the budgetary
request guidelines for fiscal 2009.

Fukuda probably expects that a cabinet shuffle would have the effect
of promoting his policies, in addition to improving the image of his
cabinet. Chances are that his cabinet approval rates may rise. With
the completion of his duty as chair of the G-8 summit, Fukuda
reportedly was surprisingly excited. When he telephoned New Komeito
leader Akihiro Ota yesterday afternoon, he told him: "I am so glad
that international leaders left Japan feeling satisfied." Fukuda's
aides anticipate that the Prime Minister would shuffle his cabinet
and then seek to turn the situation around in the extraordinary Diet
session that will follow.

There is a view in the ruling Liberal Democratic Party (LDP) that a
cabinet shuffle should be put off. Since there is no one in the LDP
ready to succeed Fukuda, a drive to topple him from his post has
never built up. This is pertinent to the fact that the Fukuda
government was formed backed by eight factions in the LDP and that
Fukuda brought faction leaders into his cabinet.

It is reasonable for Fukuda, who is known as a cautious person, to
think that in order to maintain his administration's stability, he
should prevent any move that would accelerate the process of someone
trying to succeed him. There are some who think that Koizumi and
Yoshiro Mori referred to the possibility of dissolving the Lower
House in a bid to put the idea into the mind of Fukuda, whom they
felt had no intention to do so.

When shuffling the cabinet, Fukuda needs to closely examine
candidates as to whether they may have done something wrong in the
past. A person close to Fukuda said: "The only thing we can do is to
check political funds reports." However, fresh in everyone's memory
is that Prime Minister Abe resigned just three months after the 2007
G-8 summit due to his cabinet members' scandals "involving money and
politics."

If a large part of the cabinet is shuffled, the number of ministers
subject to examination would increase and a risk of discovering
misconducts will also boost. To prevent uncontrollable situations as
many as possible, a minor cabinet shuffle would be good. However, a
senior LDP member said: "If the cabinet is shuffled, all ministers
should be replaced. Otherwise, those sacked would wonder why were
they replaced."

There is also a possibility that Fukuda will avoid a cabinet

TOKYO 00001934 007 OF 009


shuffle, calculating the loss and gain. In that case, he will not
escape a difficult situation. Because Fukuda would lose his grip on
the party as the view that he may quit his post if he does nothing
will spread in the party.

Late evening, LDP Secretary General Bunmei Ibuki suggested to
Fukuda: "It would be better not to hear the views of the parties and
those concerned." Fukuda reiterated as usual: "It is still a
completely clean slate. There is no change in my position."

(5) Chief Cabinet Secretary Machimura: Decision on dispatch of GSDF
to Afghan by the end of August

MAINICHI ONLINE (Full)
July 11, 2008

At his press conference this morning, Chief Cabinet Secretary
Nobutaka Machimura said that he thought the government would make a
decision on the dispatch of the Ground Self-Defense Forces (GSDF) to
Afghanistan by the end of August, when an extraordinary session of
the Diet is expected to be convened. "We would like to move ahead
with this effort while having in mind when the opening of the Diet
will occur," he stated. At the same time, he said, "There is a
strong view that we must give serious consideration as to whether
the oil assistance activity alone is sufficient, so we are studying
multiple options."

(6) No need to revise SOFA: Maher

RYUKYU SHIMPO (Page 2) (Full)
July 11, 2008

U.S. Consul General in Okinawa Kevin Maher was invited yesterday
afternoon to the University of the Ryukyus as a guest speaker at its
law school to lecture on U.S. military base laws, and he there
delivered a speech titled "U.S. Military Policy." There are now
growing calls across the nation, including Okinawa Prefecture, for
revising the Japan-U.S. Status of Forces Agreement (SOFA). In this
connection, Maher stressed the United States' logic of keeping the
SOFA intact with no revisions. "If there are moves (in Japan) for
revising the SOFA, people in the United States will start out to say
the Japan-U.S. security pact, which is very asymmetrical, is
unfair," Maher said. "This matter will be a very difficult problem
because it involves the security arrangements themselves," he
added.

Maher also took up incidents involving U.S. military personnel. In
this regard, he noted that Japan and the United States agreed to
improve the SOFA's implementation after the 1995 schoolgirl rape
incident in Okinawa. He explained that there has been no problem
since then, pointing out such procedures as turning over U.S.
military suspects to Japanese investigative authorities. He went on:
"If Japanese authorities arrest a (U.S. military) suspect, they will
have to decide within a period of 25 days on whether to prosecute
the suspect. The period of detention on the U.S. side is not
included in that period. If Japanese authorities enter a base, they
can investigate, so they can extend their time for investigations.
Japanese police don't want to arrest the suspect. It is better for
them if the U.S. military arrests the suspect." With this, he
asserted that for the convenience of the Japanese side, there may be
request to turn over the suspect.


TOKYO 00001934 008 OF 009


(7) Gov't begins to provide info about U.S. military fugitives

RYUKYU SHIMPO (Page 2) (Full)
July 10, 2008

The Foreign Ministry will now provide local governments with
information about U.S. military fugitives based on reports from U.S.
Forces Japan on U.S. military personnel whose whereabouts are
unknown and are classified as deserters. This information sharing
system began yesterday through a consultative body of 14 prefectural
governors hosting U.S. military bases across the nation. Okinawa
Prefecture's Military Base Affairs Division received a report on
this system yesterday from the body's secretariat (Kanagawa
Prefecture). The Okinawa prefectural government has yet to decide on
whether to disclose the provided information.

The ministry will inform base-hosting local governments about when
U.S. military personnel deserted, which U.S. military base asked
Japanese authorities to arrest them, how many U.S. military
personnel deserted, and whether they are in custody. Kanagawa
Prefecture, which serves as the secretariat, will transmit
information to other base-hosting local governments from the Foreign
Ministry.

In March, a taxicab driver was stabbed to death in Yokosuka,
Kanagawa Prefecture. In this incident, a Yokosuka-based seaman
apprentice of the U.S. Navy was arrested on robbery and murder
charges. The U.S. sailor was classified as a deserter two days after
he went missing. Nevertheless, the U.S. military did not report his
case to the Japanese government.

In the wake of the incident, Japan and the United States held a
meeting of their intergovernmental joint committee in May and agreed
to improve the Japan-U.S. Status of Forces Agreement in its
implementation so that the U.S. government will immediately provide
the Japanese government with information about deserters and ask
local police to arrest them.

(8) Interview with Hiroyuki Sonoda, deputy chairman of LDP Policy
Research Council: Expand domestic demand by compiling second budget

NIKKEI (Page 2) (Full)
July 11, 2008

-- What would you deal with the issue of a hike in the consumption
tax?

When considering the current political and economic situations, I
think it will be very difficult to increase the consumption tax
starting next fiscal year. We must first set clearly what direction
we will take, and then make efforts to seek public understanding.

-- Will the consumption tax be raised in two to three years?

It probably will be. It might be desirable to raise the rate by 5
PERCENT , to introduce a reduced rate (between 5 PERCENT and 10)
for some commodities, and to keep the current rate for things that
should be kept the same. The average rate is expected to be about 3
PERCENT , so some suggest that the government should consider hiking
the rate several years later again.

-- It will be necessary to raise the share of national treasury

TOKYO 00001934 009 OF 009


contributions in the basic pension account in FY2009, isn't it?

No matter which month the government starts increasing the share,
people will not be directly affected. To reduce national treasury
contributions as much as possible, the hike might come later in the
year.

-- Are you considering the option of revising the Pension Revision
Law, which calls for increasing (national government subsidy rate)
by FY2009, and putting off the increase to FY2010?

This option cannot be ruled out.

-- What is the purpose of compiling a supplementary budget that is
now under consideration for this fiscal year?

The major challenges that emerged after the passage of this fiscal
year's budget included surging oil prices, measures to benefit
senior citizens, and expansion of domestic demand. Measures to
expand domestic demand should cover such areas as agriculture,
fisheries, small businesses, and environment-protection
technologies.

-- If outlays for domestic demand-expansion measures are
incorporated in the supplementary budget, the budget will become
hefty.

I hope to see a considerably large package of measures included.
Although there are tax system reform and deregulation already on the
books, I think that measures that require fiscal expenditures should
also be included to some extent. We must abide by the basic line of
maintaining fiscal discipline, but fiscal resources might not be
enough only through spending cuts.

-- How about a cabinet shuffle?

"I don't think there will be a shuffle, because if something
undesirable crops up after a shuffle of the cabinet, there would be
a huge (risk).

-- You are positive about political realignment, but with whom in
the Democratic Party of Japan do you think you can join hands?

"If I mention the names of such persons, it will cause them trouble,
but they are those who have distanced themselves from President
Ichiro Ozawa. Yet, it will be very difficult to carry out
realignment before a House of Representatives election.

SCHIEFFER

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