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

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UNCLAS SECTION 01 OF 09 TOKYO 002185

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 08/08/08

INDEX:

(1) Nagasaki Prefecture to propose rejecting port calls by nuclear
sub at Sasebo (Mainichi)

(2) Economic slowdown (Part 1): 18 trillion yen estimated to flow
out of Japan due to soaring resource prices (Yomiuri)

(3) Government's study group opposes restrictions on foreign
investment in airports (Asahi)

(4) Interview with Foreign Minister Masahiko Koumura: Refueling
activities need to be continued (Yomiuri)

(5) Japan fed up with being betrayed by America's diplomacy (Sankei)


(6) Cabinet support rating varies with media outlets (Mainichi)

(7) TOP HEADLINES

(8) EDITORIALS

(9) Prime Minister's schedule, August 8, 2008 (Nikkei)

ARTICLES:

(1) Nagasaki Prefecture to propose rejecting port calls by nuclear
sub at Sasebo

MAINICHI (Internet edition) (Full)
August 8, 2008

In connection with the issue of the nuclear-powered submarine
Houston having leaked radiation, Nagasaki Prefecture today to reject
further port calls by that vessel at Sasebo Port (Sasebo City in the
prefecture) until the cause of the leakage is cleared up and steps
to prevent a recurrence are made clear. The prefecture then informed
the Foreign Ministry by phone. According to a prefectural assembly
member from the Japanese Communist Party, the prefecture's disaster
and crisis manager, Hiroshi Furukawa, called at the prefectural
office building this morning to discuss this issue.

Although the right to reject port calls by U.S. vessels is not held
by local governments, based on the Japan-U.S. Status of Forces
Agreement, Crisis Manager Furukawa pointed out, "The current
situation has cause great anxiety among the prefectural residents,
so consideration should be given." The prefecture then decided to
express its intention to reject port calls (by the submarine).

Governor Genjiro Kaneko on August 5 asked Chief Cabinet Secretary
Machimura for such responses as measures to stop reoccurrences.

(2) Economic slowdown (Part 1): 18 trillion yen estimated to flow
out of Japan due to soaring resource prices

YOMIURI (Page 1) (Full)
August 8, 2008

Isamu Jinguji, the head of the finance processing division of Japan
Airlines Corp., said in a press conference yesterday: "We will have
to raise fuel surcharges to absorb skyrocketing costs due to the

TOKYO 00002185 002 OF 009


recent steep rise in oil prices."

The company estimates its jet fuel costs for FY2008 at 532 billion
yen, 119.3 billion yen more than that in the previous year. All
Nippon Airways Co. also expects its fuel bill for the same fiscal
year to reach 307 billion yen, an increase of 41 billion yen over
the previous year.

Resource-poor Japan has to buy not only oil but even iron ore, coal
and other resources from overseas. If their prices rise; more money
will flow out of Japan.

The Japan Research Institute estimates approximately 18 trillion yen
in assets flowed outside the country in FY2008. This figure accounts
for about 3.5 PERCENT of the nation's gross domestic product
(GDP).

The funds that should have been used for renewing companies'
production facilities or have gone into household accounts have
decreased. The outflow of assets is exactly the main cause for the
current economic contraction in Japan.

During negotiations on coal prices, an executive of a major foreign
resource company suddenly showed pictures to an executive of a
certain leading Japanese steel company, saying: "See, coal mines in
Australia were flooded by torrential rains." The negotiations were
carried out at the pace of the seller, who emphasized that business
was declining. When a contract was concluded in April, the Japanese
company had to accept purchase prices about three times higher than
those in the previous year.


The foreign resource company executive also said: "If raw material
prices jump, why don't you raise steel prices?" The Japanese
executive grumbled: "If we could do that, we would not be in such
trouble."

The prices of coal and ironstone have soared about triple and up to
twice, respectively, but the prices of steel materials set when they
are delivered to automakers have been about only 40 PERCENT higher.
Toyota Motor Corp and Nissan Motor Co. see that they can raise
showroom prices by 1 PERCENT to 3 PERCENT , at most.

It is an imminent task for companies suffering from skyrocketing raw
material prices to pass along the steep rise in costs on the prices
of products. But consumers' awareness of protecting their livelihood
is becoming stronger. Companies close to the frontline of consumers
find it difficult to raise prices, so they eventually see their
profits shrink. Small businesses have been placed in a more serious
situation.

A forwarding agent in western Japan said: "I succeeded in persuading
a cargo owner to agree to a 3 PERCENT rise in freight charges, but
the owner suddenly canceled our contract." A fishing gear
manufacturer in Ishikawa Prefecture said: "Many of fishing nets are
petroleum-based products. Our customers are fishermen, who are
suffering from the steep rise in fuel prices, so we cannot increase
prices."

Major six leading banks earmarked a total of 234.4 billion yen in
funds to dispose of bad loans during the April-June period this
year, including added bad debt reserves. This figure is about three

TOKYO 00002185 003 OF 009


times larger than the 78.3 billion yen in the same period a year
ago.

The Financial Services Agency is keeping a closer watch on banks'
moves, based on the view that banks are becoming more reluctant to
lend money, though their tight lending attitude had been eased due
to economic recovery for a while." The environment surrounding
companies is rapidly deteriorating.

(3) Government's study group opposes restrictions on foreign
investment in airports

ASAHI (Page 5) (Full)
August 8, 2008

The government's study group to consider restricting investment in
airports on August 7 held its first meeting at the Kantei. A
representative from the Ministry of Land, Infrastructure and
Transport (MLIT) gave an explanation on the need to restrict foreign
investment from the perspective of security. A number of experts on
the panel offered negative views. The panel is charged with reaching
a decision on whether or not to restrict foreign investment in
airports.

The panel will look into in concrete terms the role of airports and
airport facility-related companies in security terms and what is
missing in regulations set under current law. It intends to
consider, as well as foreign investment restrictions, a wide range
of issues, including capital restrictions covering domestic capital
as well, a behavior regulation designed to designate in advance what
must not be done, and the government ownership of a designated
number of stocks for a long period of time.

The representative of MLIT reported on various capital regulations
in force in industry sectors other than domestic airports and cases
of foreign airports. This official also reported on cases of
airports being acquired by foreign funds in countries like Britain,
Italy and Belgium, where there are no foreign capital restrictions.
This official then indicated his ministry's stance that it is common
for foreign countries that have liberalized investment to allow
public involvement and impose foreign investment restrictions
regarding key infrastructures.

Though panel members took the stance that it would be necessary to
regulate airport operators, who usually monopolistically run an
airport, in some way or other, they took a negative stand to a
proposal for restricting foreign investment with one saying, "To
begin with, the reason that foreign companies cannot invest in
airports just because they are foreign companies is not valid."
Another member noted: "Shutting out foreign company will not settle
any security issues." There was also a view there that there should
a means to allowing local airports, which are in financial
difficulties, to introduce foreign capital.

MLIT was supposed to submit to the regular Diet session this year a
bill amending the Airport Consolidation Law (currently called the
Airport Law), which includes the introduction of a regulation
restricting the foreign ownership of stocks to less than one-third
in terms of voting securities to Narita International Airport
Corporation, which plans to join the market, and a company that
operates Haneda Airport facilities.


TOKYO 00002185 004 OF 009


However, the ministry deleted the segment concerning foreign
investment restrictions from the bill, meeting criticism from the
LDP. It has decided to continue intragovernmental discussions.

Regarding Haneda Airport, the purchase of about 20 PERCENT of
stocks of a passenger facilities company (Japan Airport Terminal
Col) by an Australian company has boosted a call for introducing
foreign investment restrictions.

(4) Interview with Foreign Minister Masahiko Koumura: Refueling
activities need to be continued

YOMIURI (Page 2) (Full)
August 8, 2008

-- Japan and North Korea will hold working-level talks from Aug. 11.
How will Japan deal with North Korea?

Foreign Minister Koumura: We want North Korea to come up with a
specific method for discovering survivors (abducted to North Korea)
and then to repatriate them.

-- Is it possible to hope for specific progress on the abductions
and other issues?

Koumura: If we think the possibility is zero, we would not be
holding talks with them. But we cannot be optimistic about them,
either.

-- Will Japan participate in energy aid to North Korea?

Koumura: If we're ready, we will do so. That means we are seeing
progress on the abduction issue. The other countries participating
in the six-party talks understand it. It all depends on North
Korea.

-- Did you work on the U.S. government over the issue of delisting
North Korea as a state sponsor of terrorism?

Koumura: I told U.S. Secretary of State Rice that North Korea is
doing nothing (on the abduction issue)

-- How about the issue of continuing the Maritime Self-Defense
Force's refueling activities in the Indian Ocean?

Koumura: The government has yet to make a formal decision on that
matter. But I myself want the MSDF's refueling mission continued.
Many countries have sent troops to Afghanistan for the war on
terror. However, Japan cannot send the Self-Defense Forces there.
The largest amount of crude oil that Japan imports comes through the
Indian Ocean. It is not too much to say that Japan is the largest
beneficiary. Can we ask other countries to do troublesome things for
us, and expect to only receive the benefits? Such a situation just
will not do. We must continue the mission there not only from the
aspect of Japan's contributions to the international community but
also from the aspect of Japan's national interests.

-- The Chinese government admitted that China also had victims
suffering food poisoning from frozen 'gyoza' dumplings made in
China.

Koumura: In early July, China told Japan that there was food

TOKYO 00002185 005 OF 009


poisoning from frozen gyoza dumplings that contained methamidophos.
They said they were still investigating the incident. They also said
if they found out something, they would let us know, so they did not
want us to make it public for the time being. They asked us not to
make it public, so we didn't make it public. Non-disclosure is a
general principle in the world of intelligence.

-- Do you think China will change its attitude on this issue?

Koumura: Yes. They reported it. I appreciate this fact. I hope they
will further investigate the incident and let us know anything they
find out about the cases.

(5) Japan fed up with being betrayed by America's diplomacy

SANKEI (Page 6) (Abridged slightly)
August 6, 2008

By Hiroshi Yuasa, Sankei Shimbun Tokyo special correspondent

Ambrose Bierce's Devil's Dictionary defines politics as "a strife of
interests masquerading as a contest of principles." At the same
time, principles and views can shift for political gain.

European history is filled with tales of alliances and ruptures.
Countries were reportedly constantly in fear of being betrayed by
their allies.

Japan has experience betrayals by its ally through two recent
events: the United States' decision to delist North Korea as a state
sponsor of terrorism and its changing of the geographical listing of
Takeshima.

The U.S. Board on Geographic Names (BGN) recently changed its
listing of Takeshima, which is Japan's inherent territory, from
"South Korean" to "undesignated sovereignty," but then quickly
reversed its decision in response to mounting criticism in South
Korea. In anticipation of fierce protest demonstrations, the United
States must have made the decision not to irritate South Korea ahead
of President George W. Bush's trip to that country on August 6.

The United States' decision was clearly wrong in view of its own
diplomatic documents. During the drafting of the text of the San
Francisco Peace Treaty, the United States listed Takeshima as
"Japanese territory."

Acting Political Advisor in Japan William J. Sebald's telegram
(dated November 14, 1947) to the Secretary of State also stated:
"Japan's claim to these islands is old and appears valid." A letter
(dated August 10, 1951) from United States Assistant Secretary Dean
Rusk to the South Korean ambassador also read: "This normally
uninhabited rock formation was never treated as part of Korea, and
since about 1905, has been under the jurisdiction of the Oki Islands
Branch Office of Shimane Prefecture of Japan."

The Bush administration made the decision on Takeshima under the
rule of The Devil's Dictionary in defiance of the past documents.
This can be called a betrayal or cunning.

In view of Japanese feelings, it is an act of disloyalty. A recent
Sankei-FNN opinion poll clearly showed that the Japanese public is
fed up with being betrayed by the U.S.

TOKYO 00002185 006 OF 009

In the poll, 32.3 PERCENT responded positively to an extension of
the new Antiterrorism Special Measures Law to logistically support
U.S. military operations, while 53 PERCENT responded negatively. In
last November's poll, the rate of approval was higher than the
disapproval rate five to four. This year's poll also posed questions
about assistance for the United States. Japan has assisted U.S.
forces in Iraq and Afghanistan, thinking its military strength is
the only way to prevent North Korea from carrying out provocative
acts. It was also a senior U.S. official that declared, "Abduction
is an act of terrorism."

The United States tends to adopt a reconciliatory policy toward an
adversary once it succeeds in carrying out a nuclear test. In fact,
The U.S. immediately shifted its stance toward France, Israel,
India, and Pakistan once they had completed their nuclear tests.

Kyoto University Professor Terumasa Nakanishi refers to such a trend
common in the Anglo-Saxon world as pragmatic thinking to join hands
with unbeatable rivals.

The Wall Street Journal, describing the delisting of North Korea as
betrayal of Japan, has warned that it would harm the U.S.-Japan
alliance. It is good to know that U.S. views are split on how to
handle North Korea.

If its alliance with the United States is indispensable in dealing
with China, Tokyo has no other option but to win Washington over to
its side by pulling the Bierce-style diplomatic stunt of telling a
patriotic lie.

(6) Cabinet support rating varies with media outlets

MAINICHI (Page 3) (Full)
August 6, 2008

Q: The news media conducted opinion polls in the wake of Prime
Minister Yasuo Fukuda's recent shuffle of his cabinet. The rate of
public support for the new Fukuda cabinet varied considerably
depending on the media outlets, didn't it?

A: It did. In the Mainichi Shimbun's poll, the new Fukuda cabinet's
support rate was 25 PERCENT , up 3 percentage points from the last
survey taken in July. In the Asahi Shimbun's poll, it was 24 PERCENT
, which is the same as in the last survey. Meanwhile, the Yomiuri
Shimbun and the Nihon Keizai Shimbun also conducted their respective
public opinion surveys almost at the same time. However, the two
dailies came up with comparatively high figures for the new Fukuda
cabinet, with the Yomiuri Shimbun posting 41.3 PERCENT and the
Nihon Keizai Shimbun scoring 38 PERCENT . In both dailies, the new
Fukuda cabinet's public approval rating rose more than 10 points
from their last surveys. So the various dailies were divided in
their evaluation of the cabinet shuffle. Some dailies said the
results were good, while other dailies said they were not.

Q: Do you mean the results of some polls do not accurately reflect
public opinion?

A: Umm... Indeed, there's a support rate gap of nearly 18 points
between the highest figure, which came from the Asahi, and the
lowest figure, which is from the Yomiuri. But then, I'd like you to
take a look at the disapproval ratings? Their gap is within a range

TOKYO 00002185 007 OF 009


of 8 points. In their findings, the Fukuda cabinet's disapproval
ratings are almost the same at around 50 PERCENT . So we cannot
definitely say certain data were inaccurate.

Q: If that is the case, I wonder why only the support ratings
differ.

A: That is, I think, primarily because of the different ways of
asking the question. Not all of the sampled persons decide
beforehand on whether they support the cabinet or not. There are
also some people who answer that they "don't know." These people may
be classified in the category of those who gave "no answer." Some
dailies may further ask, "If you had to choose, which would be your
answer 'yes' or 'no'?" In this way, depending on how to ask, we will
see different results. There are also some people who answer that
they are "not interested" or who give "other answers." Their
proportion is about 20 PERCENT in the polls taken by the dailies
that came up with low support rates. Meanwhile, this proportion is
only about 10 PERCENT in the case of the dailies that posted high
support.

Q: What does that mean?

A: There are people whose answer is unclear when they are asked
whether they support the cabinet or not. These people are asked
again to "dare" to choose between "yes" and "no." As a result, some
of them may reluctantly answer "yes." Their proportion could be
added up to the cabinet's support rate. This is conceivably included
in the data of high support for the cabinet. When asking the
question, pollsters from some dailies referred to Prime Minister
Fukuda shuffle of his cabinet. So respondents may have had a fresh
image and better impression of the new Fukuda cabinet. Masao
Matsumoto, a professor of political science at Saitama Prefecture,
says: "The Fukuda cabinet's image is unclear, so their different
polling methodologies can be easily reflected in the results of
their polls."

(7) TOP HEADLINES

Asahi, Yomiuri:
Japanese economy may enter contraction

Mainichi & Tokyo Shimbun:
Number of pupils refusing to attend classes increases 2nd straight
year

Nikkei:
TEPCO to set up recharging sites in 200 locations next fiscal year
for electric cars

Sankei:
Opening of Beijing Olympics today, with China's overreaction to
reputations

Akahata:
Sub leaked radiation for two years in 11 port calls in Japan

(8) EDITORIALS

Asahi:
(1) Opening of Beijing Olympics


TOKYO 00002185 008 OF 009


Mainichi:
(1) Prime Minister Fukuda must urge China to clear up truth of
tainted dumpling cases
(2) Government must hold on to principles on fiscal reconstruction

Yomiuri:
(1) Opening of Olympics: China is drawing world attention

Nikkei:
(1) Economic recession shows limits to dependence on exports
(2) Human rights problem still left in growing Asia

Sankei:
(1) Fukuda must tackle dumpling poisoning cases from viewpoint of
Japanese consumers
(2) Stop doling out subsidies and promote structural reform to perk
up economy

Tokyo Shimbun:
(1) Uncovering details of tainted Chinese dumpling cases the best
way to restore confidence
(2) Monetary policy holds key in dealing with economic recession

Akahata:
(1) Give priority to livelihood in economic policy

(9) Prime Minister's schedule, August 8, 2008
NIKKEI (Page 2) (Full)

10:41
Met with Special Advisor Ito at the Kantei.

11:12
Met with Japan Business Federation (Nippon Keidanren) Chairman
Mitarai.

12:44
Met with Chief Cabinet Secretary Machimura.

13:00
Administrative Expenditures Overall Check-up meeting

15:32
Met with a group of elementary and middle school "reporters" from
Okinawa and Hakodate. Then, met with incumbent Chairman Miyata and
incoming Chairman Mogi of the Central Union of Agricultural
Cooperatives (Zenchu).

16:03
Met with Finance Minister Ibuki. Then meeting of monthly economic
report-related-ministers.

17:11
Met with Cabinet Intelligence Director Mitani.

18:16
Met with Machimura and Deputy Chief Cabinet Secretary Futahashi.
Futahashi remained. Then roundtable to discuss the way welfare and
labor administration.

18:44
Arrived at the official residence.

TOKYO 00002185 009 OF 009

SCHIEFFER

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