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Cablegate: Daily Summary of Japanese Press 08/12/08

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UNCLAS SECTION 01 OF 14 TOKYO 002215

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 08/12/08

INDEX:

(1) North Korea to announce start of reinvestigation of abduction
issue, premised on Japan's conditions (Asahi)

(2) Postponement of removal of North Korea from U.S. list of state
sponsors of terrorism - part 1 (Yomiuri)

(3) Postponement of removal of North Korea from U.S. list of state
sponsors of terrorism - part 2 (Yomiuri)

(4) Japan welcomes U.S. decision to put off delisting North Korea as
state sponsor of terrorism (Mainichi)

(5) Editorial: Need for an approach that does not allow North Korea
to stall for time (Nikkei)

(6) Futenma Air Station noise pollution plaintiff's group adopts
resolution demanding Maher leave Okinawa (Ryukyu Shimpo)

(7) Man killed in traffic accident on local street in Uruma City
(Okinawa Times)

(8) Interview with Defense Minister Yoshimasa Hayashi: War on
terror-Its significance needs to be reconfirmed (Tokyo Shimbun)

(9) 90 PERCENT of DPJ prefectural chapters support Ozawa's third
term in office; 60 PERCENT call for carrying out presidential
election (Mainichi)

(10) Poll on Fukuda cabinet, political parties (Yomiuri)

(11) Gap in perspectives for economic measures between government,
ruling coalition (Nikkei)

(12) Interview with Daniel Berman, former U.S. Embassy
minister-counselor for agricultural affairs (Part 2) (Nihon Nogyo
Shimbun)

(13) Interview with Daniel Berman, former U.S. Embassy
minister-counselor for agricultural affairs (Part 3) (Nihon Nogyo
Shimbun)

(14) TOP HEADLINES

(15) EDITORIALS

(16) Prime Minister's schedule, Aug. 11 (Nikkei)

ARTICLES:

(1) North Korea to announce start of reinvestigation of abduction
issue, premised on Japan's conditions

ASAHI (Page 1) (Excerpts)
Eve., August 12, 2008

By Yoshihiro Makino in Shenyang, China

In formal working-level talks between foreign ministry officials of
Japan and North Korea, North Korea has basically accepted Japan's
request centering on the method of carrying out a reinvestigation of

TOKYO 00002215 002 OF 014


the abduction victims, and it is expected to announce that it will
start the actual reinvestigation process. In talks that started on
Aug. 11, North Korea informed the Japanese side of such a course of
action, and in the talks today, the timing of the investigation and
the length of the process are likely to be firmed up.

This was revealed by a source connected to North Korea. In the talks
that are being held in Shenyang, China, Song Il Ho, North Korea's
ambassador for normalization talks with Japan, and Akitaka Saiki,
director general of the Foreign Ministry's Asia-Pacific Bureau
participated. They met today, the final day of the talks, at a
Shenyang hotel mainly to exchange views on the method of the
reinvestigation.

(2) Postponement of removal of North Korea from U.S. list of state
sponsors of terrorism - part 1: U.S. remains hard-line about
verification; North Korea waiting for U.S. to make concessions with
only five months to go until term of Bush administration ends

YOMIURI (Page 3) (Excerpts)
August 12, 2008

U.S. Secretary of State Rice on August 11 announced the government's
decision to put off the removal of North Korea from its list of
state sponsors of terrorism. This is because the U.S. has yet to
reach an agreement with North Korea on procedures to verify its
nuclear report. The Bush administration, which was criticized for
making concessions to North Korea, is standing firm when it comes to
specific procedures for verification of North Korea's nuclear
report. Seeing through the Bush administration's impatience as its
term approached the end, North Korea is taking a strategy of buying
time. Whether the U.S. can stick to its severe stance toward North
Korea is unclear. With stagnation now inevitable in the six-party
talks' process, bilateral talks between the U.S. and North Korea are
taking on an aspect of a war of nerves.

The U.S. government had at first indicated an optimistic outlook
that both countries would reach an agreement on specific
verification procedures and that North Korea would be removed from
the U.S. list of state sponsors of terrorism within 45 days after it
notified the Congress on June 26 of its intention to rescind North
Korea's designation as a state sponsor of terrorism. According to a
U.S. government official, North Korea had pledged to render full
cooperation on verification.

North Korea completely changed its attitude after the U.S.
government handed over a draft for verification procedures to North
Korea at a meeting of chief envoys to the six-party talks held in
Beijing for three days starting on July 10. According to the draft,
which this newspaper has obtained, the U.S. called on North Korea:
1) to allow free access to all nuclear facilities and 2) accept
strict verification procedures targeting nuclear weapons that are
not included in the report, a nuclear program that uses
highly-enriched uranium, and nuclear cooperation that it has
provided to other countries.

North Korean Vice Foreign Minister Kim Kye Gwan, chief envoy to the
six party talks, wanted North Korea to be treated as a nuclear
power. He said: "North Korea cannot grant a request for the removal
of samples. We cannot approve the U.S. bringing in verification
equipment, either."


TOKYO 00002215 003 OF 014


The gulf between the U.S. and North Korea over verification
procedures remains wide. A source familiar with the details of the
talks revealed, "North Korea only intends to accept verification of
nuclear facilities at Yongbyon."

Given that President Bush's term of office will soon end, the DPRK
is determined to wait and see if Washington will give in and make
concessions. According to a former senior U.S. government official,
who was involved in the nuclear talks, North Korea hopes that the
U.S. will end its hostile policy toward it, once it is removed from
the U.S. list of state sponsors of terrorism with its nuclear
weapons still in hand. This official said that for North Korea, it
is out of the question to submit to verification that involves its
nuclear weapons. North Korea will likely press the U.S. to accept
its demand by delaying the nuclear disabling work now under way at
nuclear facilities at Yongbyon.

The Bush administration's true intention is not to lose momentum: In
order to chalk up achievements in its nuclear talks with North
Korea, it needs to delist it as soon as possible. However, if the
U.S. makes a compromise in an easy-going manner on the verification
process, plans to move to the next targets for denuclearization, the
six party talks' final goal, would collapse. Caught on the horns of
a dilemma, the U.S. is forced to negotiate from a tough stance.

(3) Postponement of removal of North Korea from U.S. list of state
sponsors of terrorism - part 2: Japan welcomes move

YOMIURI (Page 3) (Excerpts)
August 12, 2008

Following a telephone conversation with U.S. Secretary of State
Rice, in which she conveyed the U.S. decision not to remove North
Korea from its list of state sponsors of terrorism, Foreign Minister
Koumura, looking satisfied, told reporters, "I thought there could
not be a delisting of North Korea. This is the natural outcome."
Since the Japanese government had regarded the designation of North
Korea as a state sponsor of terrorism as a tool to promote its own
bilateral agenda, such as the abduction issue, it is welcoming the
outcome.

Since the U.S. government decided to take off North Korea from the
list, the Japanese government has repeatedly asked the U.S. through
foreign ministerial meetings and on other occasions to step up
pressure on North Korea regarding the abduction issue, as well. The
Japanese government takes it that North Korea agreed to hold the
Japan-North Korea formal working-level talks, now going on in
Shenyang, China, from August 11 after a hiatus of two months, in the
form of responding to the U.S. government call with an eye on its
removal from the list on or after August 11. As a matter of fact,
the ongoing talks were realized when the North Korean side proposed
a date in August. However, whether North Korea will come up with a
positive response at the negotiating table is still unclear.

Though at the outset of the talks on the 11th, Akitaka Saiki,
director general of the Asian and Oceanian Affairs Bureau of the
Foreign Ministry, and Song Il Ho, ambassador for normalization talks
with Japan, shook hands, they remained grim through the talks.
Concerning the lifting or easing of Japan's sanctions against that
nation, Saiki during the talks proposed, "If North Korea takes a big
step forward, Japan would take a big step forward, too. If it makes
a small step forward, Japan would do the same." However, North Korea

TOKYO 00002215 004 OF 014


stopped short of clarifying its stance toward a reinvestigation into
abduction cases, which it pledged.

If North Korea comes up with a concrete approach to the
reinvestigation of abduction cases, Japan would be pressed to make
decisions on when to partially lift or ease its sanctions against
North Korea and whether to take part in energy assistance to that
nation. If the Fukuda administration stumbles over this issue amid
public opinion in Japan remaining harsh toward the arrangement, it
could suffer a setback.

(4) Japan welcomes U.S. decision to put off delisting North Korea as
state sponsor of terrorism

MAINICHI (Page 2) (Full)
August 12, 2008

The Japanese government welcomes the U.S. government's decision to
put off delisting North Korea as a state sponsor of terrorism,
believing that it would become pressure to force Pyongyang to carry
out stricter nuclear verification. The U.S. decision to delay
removal of the North from its list of terrorism-sponsoring nations
will likely affect Pyongyang's response in bilateral talks between
Japan and North Korea, which are now going on in Shenyang, China.

The U.S. government notified Congress in June of its decision to
remove North Korea from the terrorism blacklist after carrying out
bilateral talks on delisting.

Japan, however, was concerned about the exclusion of nuclear weapons
from the subjects of the North's declaration report. It was also
concerned about the possibility of the process of North Korea's
denuclearization becoming ambiguous. Tokyo has insisted that the
verification of nuclear weapons is extremely important in order to
realize the denuclearization of North Korea.

Foreign Minister Masahiko Koumura told reporters: "I was convinced
that (delisting) would never occur unless North Korea agreed to
concrete verification." Since Japan's various efforts were meant to
make sure North Korea was effectively denuclearized, the U.S.
decision to postpone delisting this time around meets Japan's
policy.

However, there is no change in the situation that the U.S.
government can remove at anytime North Korea from the list of state
sponsors of terrorism. Moves over delisting will proceed centering
on U.S.-DPRK talks from now on, as well.

(5) Editorial: Need for an approach that does not allow North Korea
to stall for time

NIKKEI (Page 2) (Full)
August 12, 2008/08/12

U.S. Secretary of State Condoleezza Rice has told the Japanese
government that the United States will not remove North Korea from
its list of terrorist-sponsoring states on August 11, which was
considered the initial deadline. The reason is that North Korea
failed to respond sincerely to the flexible US policy. Not only the
Bush administration, but also the next U.S. presidency will be
pressed to review policy toward North Korea.


TOKYO 00002215 005 OF 014


On August 10 (U.S. time), 45 days will have passed since President
Bush notified Congress of his intention to remove North Korea from
the list of terrorist-sponsoring states. The Department of State
initially explained that North Korea would be delisted on August 11
unless Congress adopted a resolution opposing the move. However,
Dennis Wilder, senior director for Asian affairs at the White House,
gave a different interpretation at a news conference on August 4,
saying, "August 11th is the opening of the window for this; it is
not a deadline."

While Wilder's comments indicated that the United States plans to
further watch North Korea's moves, a presidential election will be
held in the United States in less than three months. It would be
difficult and unacceptable for the Bush administration to make
concessions that would tie down the next administration. The next
U.S. president, whether it be Obama or McCain, will have to review
policy toward North Korea during the closing days of the Bush
administration.

The Bush administration initially took a hardline policy toward
North Korea. At the six-party talks in September 2005, North Korea
pledged to "abandon all nuclear weapons and existing nuclear
programs," indicating that the Bush administration's approach seemed
to be working. However, North Korea then conducted a nuclear test in
October 2006, and the Bush administration suffered defeat in the
midterm elections held that November. Consequently, the Bush
administration shifted to a reconciliatory policy in January 2007.

The result of this policy shift was the agreement reached at the
six-party talks in February 2007. The US plan in June this year to
delist North Korea as a terrorist-sponsoring state is also an
extension of the policy shift. Although the details of an aid
package for North Korea were decided at the six-party talks in July,
no agreement was reached on the specifics of a verification protocol
for North Korea's denuclearization.

This outcome could have easily been predicted, considering North
Korea's strategy to use the nuclear issue for political purposes.
The Bush administration took the risk of pinning hopes on North
Korea's "good will" and notified Congress of its intention to remove
North Korea from the terrorist black list. The postponement of North
Korea's delisting signifies that the Bush administration itself
admitted that its hopes were betrayed. Just as expected, North Korea
merely took advantage of this matter to buy time, indicating that
Rice and Assistant Secretary of State Christopher Hill made an error
in judgement.

North Korea will likely present a small concession in the
not-so-distant future and press for implementation of the aid
package. Bush, who will be stepping down soon, cannot go along with
that. It even appears that the six-party talks framework, which was
initially established to contain North Korea, has been transformed
into an organization for assisting North Korea. The next
administration needs to conduct a thorough review of U.S. policy
toward North Korea, including this point. The day that North Korea
can be made to completely scrap its nuclear ambitions is still
regrettably far away.

(6) Futenma Air Station noise pollution plaintiff's group adopts
resolution demanding Maher leave Okinawa

RYUKYU SHIMPO (Page 3) (Full)

TOKYO 00002215 006 OF 014


August 9, 2008 evening edition

Ginowan - A plaintiff's group (headed by Zenjrio Shimada) in the
U.S. Marine Corps Futenma Air Station noise pollution suit held its
annual general meeting for fiscal 2008 on 8 August at the Ginowan
City Central Community Center. The group unanimously adopted a
resolution demanding that Consul General Kevin Maher of the US
Consulate in Okinawa "leave the island," in response to Maher's
remarks questioning "why Ginowan City has permitted construction (of
homes) in off-base areas near the runway." In the "resolution
demanding that Maher leave the island," the plaintiff's group
explained how US military bases were established on Okinawa,
pointing out that "the US military confiscated the local residents'
land after landing on Okinawa during World War II and built an
airfield (in Futenma)." It claimed that this was "a serious
violation of international law."

The plaintiff's group cited the verdict of the first hearing on the
Futenma noise pollution suit, in which "the judge ruled out the
central government's argument of "moving close to danger (kiken e no
sekkin)," (the argument that those who built homes close to the
runway should have known what to expect, and the government,
therefore, does not have to pay compensation) and condemned the
abnormal usage of Futenma Air Station as illegal. It went on to make
the following demand: "We protest with anger against anti-Okinawa
behavior that Consul General Maher has shown on a number of
occasions, even though he was fully aware of the verdict, and demand
that he leave Okinawa immediately."

The protest resolution was addressed to the U.S. Secretary of State,
the U.S. Embassy in Japan, and the U.S Consulate General in
Okinawa.

Shimada explained the significance of the resolution, saying: "We
cannot tolerate any behavior that defies the feelings of the
Okinawan people. In particular, we, who have filed a complaint, must
raise our voices. Tsutomu Arakaki, who heads the defense team,
called on more people to join the plaintiff's group, saying: "The
fact that the court for the first time condemned the roaring noise
at Futenma Air Station as illegal carries great significance.
Anyone who lives in an area where the W-value (Weighted Equivalent
Continuous Perceived Noise Level) exceeds 75 can become a plaintiff.
Please call out to get a lot of people to join the plaintiff's
group."

At the general meeting, Ginowan Mayor Yoichi Iha, who returned from
his US visit, gave a briefing on his petition mission. The
plaintiff's group also adopted its action policy for fiscal 2008 and
a general meeting declaration, among other matters

(7) Man killed in traffic accident on local street in Uruma City

OKINAWA TIMES (Page 5) (Full)
August 11, 2008 evening edition

A passenger vehicle driven by a member of the U.S. Navy in her 20s
collided head-on with a motorcycle driven by a 36-year-old man
around 0650 hours local time on August 11 on a local street in Taba,
Uruma City. The man was seriously injured and was carried
unconscious to a hospital, but was confirmed dead about one hour
later. The Uruma police are trying to confirm the man's identity and
investigating the cause of the accident.

TOKYO 00002215 007 OF 014

(8) Interview with Defense Minister Yoshimasa Hayashi: War on
terror-Its significance needs to be reconfirmed

TOKYO SHIMBUN (Page 2) (Full)
August 11, 2008

-- How will you reform the Defense Ministry?

Defense Minister Hayashi: We must recover public trust, and that
will lead to raising the Self-Defense Forces' morale. I will
steadily implement the Defense Ministry Reform Council's report of
recommendations (such as mixing the Defense Ministry's bureaucracy
and the SDF's staff offices).

-- On the issue of relocating the U.S. military's Futenma airfield,
Okinawa is calling for the government to change its plan.

Hayashi: The current plan is the one with a balance of various
factors, including the natural environment and feasibility. So it
would be difficult to change it without rational reason.

-- The Maritime Self-Defense Force is currently tasked with
refueling activities in the Indian Ocean under the new Antiterrorism
Special Measures Law. But this law is set to run out in January next
year. Will the government present a bill to the Diet to extend the
MSDF's refueling mission there?

Hayashi: The government has yet to decide on that matter. In the
Sept. 11, 2001 terrorist attacks on the United States, Japanese
nationals were also victimized. We must reconfirm the significance
of the war on terror and explain it.

-- Oil prices are now rising, and there is also a strong criticism
of Japan's free refueling services.

Hayashi: The MSDF's refueling activities there help secure the sea
lane (between oil producing countries and Japan). We need to
reconfirm this fact as well.

-- Liberal Democratic Party Secretary General Taro Aso has come up
with his idea of having the MSDF escort Japanese oil tankers.

Hayashi: I have the impression that it wouldn't be so easy to do so.
In that case, other countries may raise a question about Japan
engaging the MSDF in the task of escorting its tankers only.

-- What do you think about the idea of creating a permanent law
allowing Japan to send SDF troops overseas as needed?

Hayashi: That's important in the medium- and long-term. We used to
legislate special measures every time something happened. This is
not so beautiful a way of doing things under the legal system. But
I'm not so optimistic in the current Diet situation.

(9) 90 PERCENT of DPJ prefectural chapters support Ozawa's third
term in office; 60 PERCENT call for carrying out presidential
election

MAINICHI (Page 2) (Excerpts)
August 12, 2008


TOKYO 00002215 008 OF 014


The Mainichi Shimbun conducted an inquiry survey on the presidential
election of the main opposition Democratic Party of Japan (DPJ) of
senior officials of the DPJ prefectural chapters. The official
campaign for the DPJ presidential race will start on Sept. 8 and the
election will be on Sept. 21. According to the result of the survey,
90 PERCENT or 42 prefectural chapters responded that giving Ichiro
Ozawa a third term in the presidency was desirable, while 60 PERCENT
or 27 chapters sought the carrying out of an election with more
than one candidate.

The survey was conducted on Aug. 4-7 of the secretaries general and
other senior officials (excluding Diet members) of the 47
prefectural chapters in writing and by phone.

Regarding the reasons for supporting Ozawa for a third term, the
Hokkaido chapter said that considering the party's victory in the
Lower House by-election in the Yamaguchi No. 2 constituency, Ozawa
would be a suitable person to take the lead in the next Lower House
election. The Yamanashi chapter said that the party's mission was to
aim at victory in the next general election by keeping unity, with
an eye on a change ing government.

Of the five prefectural chapters that saw Ozawa's third term as
undesirable, four chapters including Fukushima and Tokushima were
"ambivalent" because potential candidates have yet to announce their
candidacy. The Kyoto chapter officials responded that they were
still considering.

(10) Poll on Fukuda cabinet, political parties

YOMIURI (Page 6) (Full)
August 12, 2008

Questions & Answers
(Figures shown in percentage. Parentheses denote the results of a
survey taken in July.)

Q: Do you support the Fukuda cabinet?

Yes 28.3 (26.6)
No 59.7 (61.3)
Other answers (O/A) 3.0 (3.3)
No answer (N/A) 9.0 (8.9)

Q: (Only for those who answered "yes" to the foregoing question)
Give up to two reasons for your approval of the Fukuda cabinet.

I can appreciate its political stance 23.7 (22.4)
It's stable 23.3 (18.7)
The prime minister is trustworthy 22.3 (27.8)
Something can be expected of its economic policy 6.1 (5.6)
Something can be expected of its foreign policy 6.3 (7.4)
Because it's a coalition of the Liberal Democratic Party and New
Komeito 10.7 (16.9)
Because the prime minister is from the LDP 36.0 (34.2)
It's better than its predecessors 11.5 (11.3)
O/A+N/A 6.3 (7.6)


Q: (Only for those who answered "no" to the foregoing question) Give
up to two reasons for your disapproval of the Fukuda cabinet.


TOKYO 00002215 009 OF 014


I can't appreciate its political stance 42.6 (44.6)
It's unstable 29.1 (31.4)
The prime minister is untrustworthy 20.3 (20.7)
Nothing can be expected of its economic policy 42.1 (44.6)
Nothing can be expected of its foreign policy 13.3 (14.4)
Because it's a coalition of the Liberal Democratic Party and New
Komeito 8.0 (7.7)
Because the prime minister is from the LDP 5.1 (3.5)
It's worse than its predecessors 9.7 (8.8)
O/A+N/A 2.8 (2.0)

Q: What issues do you want the Fukuda cabinet to pursue on a
priority basis? Pick as many as you like from among those listed
below, if any.

Economic, employment measures 63.2 (57.6)
Fiscal reconstruction 25.3 (25.5)
Tax reform, consumption tax 34.2 (36.6)
Social security reform, including pension and healthcare systems
60.2 (63.0)
Low birthrate countermeasures, including childcare support 25.0
(28.0)
Education reform 16.5 (17.2)
Social divide 19.6 (23.5)
Civil service reform 16.5 (21.1)
Politics and money issues 28.2 (31.6)
Asia diplomacy, including China and South Korea 12.3 (14.8)
North Korea 20.6 (27.5)
Defense, security 9.2 (8.9)
Constitutional revision 4.4 (5.3)
Crisis management, including disaster prevention 10.2 (11.4)
Public security, crime prevention 18.2 (22.5)
Environmental protection 22.9 (30.6)
Food safety 32.0 (37.9)
O/A + nothing in particular + N/A 2.9 (2.8)

Q: Which political party do you support now? Pick only one.

Liberal Democratic Party (LDP) 30.5 (27.2)
Democratic Party of Japan (DPJ or Minshuto) 18.7 (18.8)
New Komeito (NK) 2.4 (2.8)
Japanese Communist Party (JCP) 1.7 (1.9)
Social Democratic Party (SDP or Shaminto) 1.3 (0.8)
People's New Party (PNP or Kokumin Shinto) 0.1 (0.1)
New Party Nippon (NPN or Shinto Nippon) --- (0.1)
Other political parties 0.1 (---)
None 44.5 (47.8)
N/A 0.8 (0.5)

Q: When would you like the House of Representatives to be dissolved
for the next general election?

As early as possible 29.5
Within this year 21.3
Early next year 14.7
Sometime during the current term up until September 2009 26.6
N/A 8.0

Q: If an election were to be held now for the House of
Representatives, which political party would you like to vote for in
your proportional representation bloc?


TOKYO 00002215 010 OF 014


LDP 31.3
DPJ 25.1
NK 3.0
JCP 2.9
SDP 1.6
PNP 0.3
NPN 0.1
Other political parties ---
Undecided 35.0
N/A 1.0

Q: Would you like an LDP-led government after the next election for
the House of Representatives, or would you otherwise like a DPJ-led
government?

LDP-led government 43.2
DPJ-led government 35.1
O/A 1.3
N/A 20.4

Q: Do you think the Fukuda cabinet is appropriately dealing with the
recent rising prices?

Yes 6.9
No 88.5
N/A 4.6

Polling methodology
Date of survey: Aug. 9-10.
Subjects of survey: 3,000 persons chosen from among all eligible
voters throughout the country (at 250 locations on a stratified
two-stage random sampling basis).
Method of implementation: Door-to-door visits for face-to-face
interviews.
Number of valid respondents: 1,788 persons (59.6 PERCENT ).

(11) Gap in perspectives for economic measures between government,
ruling coalition

NIKKEI (Page 2) (Full)
August 9, 2008

The ruling Liberal Democratic Party (LDP) and its coalition partner,
New Komeito, asked on Aug. 8 the government to come up with such
economic measures as those against soaring crude oil prices, as well
as a tax cut for low-income earners. Their purpose is to reflect
them in the outline of economic measures the government will compile
as early as Aug. 11. Amid a growing sense of uncertainty about the
economy, pressure calling for expanding expenditures has suddenly
become stronger in the ruling camp with an eye on the next House of
Representatives election, propelled out by LDP Secretary General
Taro Aso's remarks. A fierce battle between the government and
ruling camp has intensified over the question of whether to maintain
fiscal discipline.

Prime Minister Yasuo Fukuda called economic measures that the
government would come up with "a comprehensive economic stimulus
package to realize peace of mind." Fukuda also called his new
cabinet formed on Aug. 1 "a peace of mind realization cabinet." The
reason for giving the same name is because the Fukuda government
considers the upcoming economic stimulus a showcase policy.


TOKYO 00002215 011 OF 014


However, there are gaps in views on the showcase policy between the
Prime Minister and the ruling coalition.

Fukuda instructed to Economic and Fiscal Policy Minister Kaoru
Yosano to keep sound public finance policy, including a surplus (in
the primary balance) for fiscal 2011. Secretary General Aso, who
also assumed his post just recently, announced a policy shift fairly
and squarely, noting: "It would be difficult to compile
comprehensive economic measures while implementing fiscal
reconstruction." Aso's remarks ignited pressure calling for an
expansion of expenditures in the ruling bloc.

After his meeting with Yosano on Aug. 8, LDP Policy Research Council
Chairman Kosuke Hori told reporters: "There are factors that would
bloat spending." Hori also referred in an interview to the
possibility of issuing deficit-covering government bonds in a
supplementary budget for fiscal 2008 as revenue sources for pump
priming.

The New Komeito, too, proposed measures for reducing and exempting
taxes for a certain period of time. It is said that if about 50,000
yen is exempted, nearly 2 trillion yen in resources would be needed
per year. A senior LDP official expressed expectations, saying: "It
depends on a decision by the Prime Minister, but the trillion-yen
range of economic stimulus will be needed since business is slow.

The government is desperately trying to put out the fire. Vice
Finance Minister Kazuyuki Sugimoto underscored that the ministry
would use reserve funds for revenue sources for economic measures.
Yosano also threw a wet blanket on it by saying: "We will consider
structural reforms and fiscal discipline as consistent with each
other."

Former Secretary General Hidenao Nakagawa, who attaches importance
to boosting tax revenues through economic growth in implementing the
fiscal reconstruction policy, criticized Aso severely on Aug. 6 on
his home page: "I cannot believe that a person opposing the Prime
Minister's policy is included in the party leadership, because a
policy shift means a change in the political situation."

Democratic Party of Japan (DPJ) Secretary General Yukio Hatoyama at
a press conference on Aug. 7 said: "(Aso) may come up with some
fairly bold actions in compiling the budget. I want to see the LDP
splitting."

(12) Interview with Daniel Berman, former U.S. Embassy
minister-counselor for agricultural affairs (Part 2): Key to
spreading GM products lies in promoting understanding

NIHON NOGYO SHIMBUN (Page 3) (Full)
August 3, 2008

-- What approach are you going to take to spread genetically
modified (GM) farm products?

I think it will become a major challenge to promote understanding of
biotechnology, including GM, among consumers and producers.
Biotechnology is environment-friendly and contributes to enhancing
productivity.

I believe Japanese farmers should introduce this technology and
bolster their competitiveness. A Japanese farmer, my acquaintance,

TOKYO 00002215 012 OF 014


harbors strong dissatisfaction at the unavailability of
biotechnology.

Japanese consumers tend to judge that products are good or not. They
are negative about biotechnology. Japanese companies are quite
conservative and don't want to be the first to introduce (GM farm
products).

But it is strange that there are few options about GM foods in
Japan. There might be consumers who opt for GM foods if they are
confirmed safe and low-priced. It is necessary to give freedom to
choose to consumers.

(13) Interview with Daniel Berman, former U.S. Embassy
minister-counselor for agricultural affairs (Part 3): Emphasizes
seller's market, pressuring Japan to open market wider

NIHON NOGYO SHIMBUN (Page 3) (Full)
August 3, 2008

"The global supply-demand relationship of farm products has
significantly changed, and we are now experiencing a switch from a
buyer's market to a seller's market," Berman said in the interview.
He indicated that with the end of an age in which Japan can buy farm
products from countries across the world without any restrictions,
the position of sellers is now stronger than that of buyers.

Berman pointed out the possibility that if Japan's government and
consumers continue to ignore the international "standards" over the
BSE issue and GM farm products, Japan may become unable to acquire
products on the international market. This remark appears to be
reflecting his irritation at the fact that he could not achieve
satisfactory results during four years of his term of office in
Japan.

The U.S. Agricultural Department has its overseas agencies in 68
countries and regions. Their major mission is to exploit new markets
for U.S. agricultural products. Berman made efforts to cultivate the
Japanese market, leading 20 members stationed in Tokyo and Osaka.

The Japanese market used to be the most valued customer for U.S.
agriculture, but the situation changed over the past several years.
In 2004, when Berman assumed office in Japan, Mexico became the top
importer of U.S. farm products, replacing Japan, affected by Japan's
suspension of U.S. beef imports in reaction to the discovery of the
first case of BSE in the U.S.

Exports of U.S. farm products to China are sharply increasing. The
value of exports to China was 1.3 billion dollars in 1998,
accounting for less than 3 PERCENT of the total. But its share
topped the 9 PERCENT level in 2007.

During this period, U.S. exports to Japan dropped from 18 PERCENT
to 11 PERCENT . Berman's main duty was to put trade in beef with
Japan on the right track and accelerate sales to the Japanese
market. The value of U.S. exports to Japan started increasing in
2006, but the rise is attributed to soaring grain prices due to a
tight global supply-demand situation, and it is not true to think
that only the value of exports to Japan has boosted.

In exploiting the Japanese market, the U.S. gives priority to having
Japan to further open up its market for U.S. beef. The U.S. is

TOKYO 00002215 013 OF 014


expected to ratchet up pressure on the Japanese market. Its second
priority is to spread genetically modified farm products across
Japan. The U.S. might be considering that it is necessary to change
Japanese consumers' consciousness about GM products, because it
plans to shift U.S.-made corn and beans to GM ones.

(14) TOP HEADLINES

Asahi: Mainichi: Sankei: Akahata
Kitajima wins second gold medal

Yomiuri:
Russian troops advance into Georgia: French president to broker
ceasefire today

Nikkei:
Retailers ready to kick drug over-the-counter drug sales into high
gear

Tokyo Shimbun:
South Ossetia: Georgia signs ceasefire paper

(15) EDITORIALS

Asahi:
(1) Postponement of US removal of North Korea from its list of state
sponsors of terrorism: Forward movement impossible without
verification
(2) Gold medalists smile in Beijing Olympic Games after 1400 days of
effort

Mainichi:
(1) Kitajima wins gold medal: We hope to see him win second gold
medal in men's 200-meter breaststroke
(2) Recommendation by National Personnel Authority: Can its
recommendation to reduce working hours help restore attractiveness
of working as bureaucrats?

Yomiuri:
(1) Delisting of North Korea from U.S. list of state sponsors of
terrorism: North Korea must accept nuclear verification first
(2) Minimum wages: Consistency with welfare benefits still long way
to go

Nikkei:
(1) Approach that does not allowing North Korea to gain time needed
(2) Terrorism in Xinjiang Uygur Autonomous Region reflects ethnic
problems

Sankei:
(1) Kitajima wins second gold medal, following Athens Olympic Games
(2) Attack on police in Xinjiang Uygur Autonomous Region

Tokyo Shimbun:
(1) Kitajima wins gold medal
(2) 23rd anniversary of JAL plane crash: We should not forget basis
of safety

Akahata:
(1) Food self-sufficiency at 40 PERCENT : It is urgent to
fundamentally change agricultural administration


TOKYO 00002215 014 OF 014


(16) Prime Minister's schedule, Aug. 11

NIKKEI (Page 2) (Full)
August 12, 2008

07:55
Had dental checkup at dental clinic in Shin-Aoyama building in
Minami-Aoyama.
10:30
Phoned Masato Uchishiba, judo gold medalist of Beijing Olympics.
12:06
Met at Kantei with Chief Cabinet Secretary Machimura, later joined
by Economic and Fiscal Policy Minister Yosano and Finance Minister
Ibuki.
13:01
Attended government-ruling coalition meeting on measures for
stimulating the economy.
14:25
Met with Finance Services Minister Motegi and National Civil Servant
System reform Promotion Headquarters Chief of Secretariat Tachibana.

15:03
Met with expert panel head to discuss Ainu policy Kato, attended by
Machimura and deputy chief cabinet secretaries Iwaki and Futahashi.
15:32
Met with National Personnel Authority President Tani. Met later with
Machimura and Futahashi. Machimura remained.
17:58
Returned to his official residence.

SCHIEFFER

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