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Cablegate: Daily Summary of Japanese Press 10/14/08-2

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PP RUEHFK RUEHKSO RUEHNAG RUEHNH
DE RUEHKO #2859/01 2880803
ZNR UUUUU ZZH
P 140803Z OCT 08
FM AMEMBASSY TOKYO
TO RUEHC/SECSTATE WASHDC PRIORITY 7914
INFO RUEKJCS/SECDEF WASHDC PRIORITY
RHEHAAA/THE WHITE HOUSE WASHINGTON DC PRIORITY
RUEAWJA/USDOJ WASHDC PRIORITY
RULSDMK/USDOT WASHDC PRIORITY
RUCPDOC/USDOC WASHDC PRIORITY
RUEAIIA/CIA WASHDC PRIORITY
RUEKJCS/JOINT STAFF WASHDC//J5//
RHHMUNA/HQ USPACOM HONOLULU HI
RHHMHBA/COMPACFLT PEARL HARBOR HI
RHMFIUU/HQ PACAF HICKAM AFB HI//CC/PA//
RHMFIUU/USFJ //J5/JO21//
RUYNAAC/COMNAVFORJAPAN YOKOSUKA JA
RUAYJAA/CTF 72
RUEHNH/AMCONSUL NAHA 2705
RUEHFK/AMCONSUL FUKUOKA 0352
RUEHOK/AMCONSUL OSAKA KOBE 4098
RUEHNAG/AMCONSUL NAGOYA 8421
RUEHKSO/AMCONSUL SAPPORO 0925
RUEHBJ/AMEMBASSY BEIJING 5810
RUEHUL/AMEMBASSY SEOUL 1810
RUCNDT/USMISSION USUN NEW YORK 2068

UNCLAS SECTION 01 OF 06 TOKYO 002859

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 10/14/08-2

INDEX:

(17) DPJ puts off security items from manifesto; Shies away from
presenting principles for SDF dispatch (Asahi)

(18) DPJ releases set of financial countermeasures; Some begin
drafting bill (Asahi)

(19) MOD reform plan: Joint Staff Office to have policy planning
function centered on operation of units (Asahi)

(20) Government, BOJ to freeze sales of 2 trillion yen worth of bank
shareholdings (Nikkei)

(21) Governments of Japan, India to reach agreement to establish
joint fund worth 15 billion yen before year's end: Consolidation of
infrastructure to be promoted (Nikkei)

(22) DPJ Lower House member Maeda found to have received 11 million
yen from pyramid sales companies as lecture fees and donations
(Asahi)

ARTICLES:

(17) DPJ puts off security items from manifesto; Shies away from
presenting principles for SDF dispatch

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

By Nao Fujita

The Democratic Party of Japan has unveiled a set of foreign and
security policies that will be included in its manifesto (set of
campaign pledges) for the next Lower House election. The manifesto
pledges to achieve a firm and equal alliance with the United States,
as well as active participation in UN peacekeeping operations based
on President Ichiro Ozawa's three principles. At the same time, the
manifesto, stopping short of specifying the principle for the
overseas dispatch of the Self-Defense Forces, contains many
ambiguous points. The major opposition party has obviously shelved
some difficult challenges until after taking over the reins of
government, which may or may not occur after the next general
election.

Defining the Japan-U.S. alliance as the cornerstone of Japan's
foreign policy, the manifesto specifies that Japan shall share roles
with the United States and actively fulfill its own
responsibilities. The manifesto, however, stops short of
specifically discussing the contents of role-sharing. It is unclear
whether role-sharing would be confined to matters that deeply
concern the security of Japan or would include the war on terror
going on in various parts of the world.

Although the manifesto proclaims Japan's active participation in UN
peacekeeping operations (PKO), it precludes the phrase "including
those under UN Charter Article 42" that was in the party's 2006
basic policy platform. Article 42 allows the use of force. Japan's
participation requires either constitutional amendment or changes to
the government's interpretation of the Constitution. Many in the
party are negative about Japan actively taking part in UN
peacekeeping operations. The party apparently needs to nail down its

TOKYO 00002859 002 OF 006


own position before taking over the reins of government.

Although President Ozawa bases the overseas dispatch of SDF troops
on a clear UN resolution, the manifesto does not specify it. As the
reason of opposing the refueling mission in the Indian Ocean, the
manifesto simply cites the government's lack of an explanation and
its efforts to verify the effectiveness of the mission without
referring to the absence of a clear UN resolution.

The manifesto also indicates the party will respond to strong U.S.
expectations for assistance to Afghanistan based on DPJ-presented
legislation on elimination of terrorism, which is now under
discussion. The DPJ-presented legislation, which is good only for
one year, is designed to allow the dispatching of ground troops
strictly on a humanitarian assistance mission based on a ceasefire
agreement, which seems difficult at this point in time. The
manifesto can hardly be taken as showing the DPJ's basic
principles.

About the fact that the manifesto contains many ambiguous points,
Policy Research Committee Chairman Masayuki Naoshima explained: "We
don't know how we will respond to some diplomatic issues until we
take power." The terrorism eradication legislation specifies that
the government shall swiftly enact a basic security law, alluding
that the DPJ will finalize the legislation after taking power.

(18) DPJ releases set of financial countermeasures; Some begin
drafting bill

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

By Shinji Muramatsu

A financial team of the Democratic Party of Japan on Oct. 10 came up
with a set of financial crisis countermeasures, which includes a
temporary reinstatement of the Law to Strengthen Financial
Functions, an approach the ruling coalition is also considering. The
DPJ aims to take the initiative in the discussion by setting forth a
policy ahead of the government and ruling bloc.

The team led by Kohei Otsuka, a former Bank of Japan official, and
Tsutomu Okubo, who used to work at a foreign securities firm, has
been discussing countermeasures since the collapse of Lehman
Brothers Holdings Inc. Both Otsuka and Okubo are Upper House
members. Some have begun drafting a bill with the aim of presenting
it to the ongoing extraordinary Diet session. They are set to press
the government and ruling bloc to accept the bill as is.

Main points in the DPJ's financial crisis countermeasures

(Protection of depositors and insurance policyholders)

? Reinstating the Financial Function Strengthening Law (for two
years)
? Extending public assistance to the Life Insurance Policyholder
Protection Corporation of Japan for two years

(Protection of corporations and securities market)

? Reinstatement of the special credit guarantee system for small and
midsize companies

TOKYO 00002859 003 OF 006


? Extension of tax breaks on dividends

(Securing the liquidity of funds)

? Using reserve funds in the special account on foreign exchange
funds
? Lowering the BOJ reserve deposit rate

(19) MOD reform plan: Joint Staff Office to have policy planning
function centered on operation of units

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

By Akihiro Yamada

The Ministry of Defense (MOD) has unveiled, as part of its
organizational reform, a step to strengthen the functions of the
Joint Staff Office (JSO) to be responsible for the operation of
units of the Ground, Maritime, and Air Self-Defense Forces. The
steps are designed to shift the civilian group's policy planning
function related to the operation of units to the JSO. Integrating
the shift in organizational reform basic views, to be drawn up later
this month, the MOD aims to implement reform plans starting in
fiscal 2010.

The government's Council on Reform of the Defense Ministry proposed
in July the operation and planning bureau, an internal bureau, be
abolished and the operation of units be placed under the JSO to
strengthen its functions. The council also called for the JSO be
staffed with personnel from both the civilian and uniformed groups.
The MOD has been considering how the new organization should be
based on the council proposals.

Defining the JSO as a special organ with the functions of an
internal bureau, the revealed steps to strengthen the JSO are
designed to add: (1) the planning function of the system; and (2)
the function to liaise with other government agencies.

From the viewpoint of civilian control, it has been customary for
nearly half a century that civilian MOD officers answer questions at
the Diet. For this reason, the MOD will continue considering Diet
measures and how bills should be drawn up with an eye on a MOD
reform plan to be produced in December.

(20) Government, BOJ to freeze sales of 2 trillion yen worth of bank
shareholdings

NIKKEI (Top Play) (Excerpts)
October 13, 2008

The government (GOJ) and the Bank of Japan (BOJ) purchased shares
worth 2 trillion yen from major banks between 2002 and 2006, a time
when the nation was in its own financial crisis. Now, with global
stock prices plunging, the government and BOJ have decided to freeze
the sales of those shares for the time being. The reason is the fear
that there is still a possibility of the market instability
continuing into the beginning of next week, even a meeting of the
finance ministers and central bank governors from the Group of Seven
Nations (G-7) came up with an action program designed to stabilize
the financial market. The GOJ and BOJ have been selling the
purchased stocks little by little since fiscal 2006. However,

TOKYO 00002859 004 OF 006


following the observation that the sales of such shares would work
as downward pressure on stock prices, they decided to freeze the
action in the hope of the decision leading to an improved
supply-demand situation on the stock market.

In an effort to address the nation's financial crisis in the wake of
the collapse of the asset-inflated "bubble" economy, the government
and BOJ bought bank stocks, including those they held in
cross-holdings, between 2002 and 2006 as an emergency measure. That
is because banks were at the time facing valuation losses on their
shareholdings due to a decline in stock prices, and concerns over
having too little capital were causing them to sell cross-held
shares and drive stock prices lower.

At the peak, the government-backed Banks' Shareholdings Purchase
Corp (BSPC) had approximately 1.6 trillion yen in terms of book
value, and the BOJ approximately 2 trillion yen in book value terms.
They began selling large numbers of these shares on the market in
fiscal 2006 due to a rise in stock prices. The outstanding
shareholdings as of March 31 were down to about 500 billion yen for
the government and about 1.4 trillion yen for the central bank.

Both the government and BSPC had indicated that they planned to sell
those stocks every six months -- in the spring and the fall. They
plan to undertake coordination with the possibility of freezing the
sales of those shares for about six months starting this fall. Since
the BSOC has purchased portions of bank stocks held by business
corporations as well, their freezing the sales of those stocks is
meant to shore up the prices of bank stocks, which are plunging due
to the financial crisis. They do not intend to sell stocks unless
the stock market recovers. Chances are that the moratorium period
will be extended further.

(21) Governments of Japan, India to reach agreement to establish
joint fund worth 15 billion yen before year's end: Consolidation of
infrastructure to be promoted

NIKKEI (Page 5) (Full)
October 11, 2008

The governments of Japan and India are expected to reach an
agreement to set up before year's end a project development fund
designed for feasibility surveys and development programs for the
consolidation of the infrastructure between New Deli, the capital,
and Mumbai, a commercial city. Their aim is to build commercial
facilities in areas located between the two cities. The two
countries will split the total investment cost of 15 billion yen.
The project will help India promote development of the area and
nurture the manufacturing industry there. As a result, Japanese
companies will find it easier to advance into that nation once
infrastructure has been developed.

A formal agreement is expected to be reached between Prime Minister
Singh, who will be visiting Japan starting on the 21st, and Prime
Minister Taro Aso.

The Japanese government, mainly the Ministry of Economy, Trade and
Industry, has been showing a cooperative stance toward the
Industrial Aorta Initiative designed to concentrate industrial
facilities along areas stretching for 1,500 kilometers between New
Deli and Mumbai.


TOKYO 00002859 005 OF 006


The fund to be launched by the two countries would conduct a
feasibility survey, including the building of infrastructure and
industrial complexes for individual development areas, and compile a
basic development program. It would then sell various plans as a
package to private companies in open public-bidding. Successful
private companies will be responsible for conducting the actual
consolidation of infrastructure. Twenty-four development areas are
up for the inclusion of the program. The plan is to promote the
development of six areas first.

The Japan External Trade Organization (JETRO) will likely join the
investment committee established within the fund. The government
wants to hear the views of Japanese companies that are considering
advancing into India and reflecting them in the development program,
thereby promoting the advance of Japanese companies into that
nation.

Many Japanese companies see India as a promising market. Some
questionnaire surveys found that some respondents cited the
insufficient infrastructure as a challenge.

Chances are that if the consolidation of infrastructure progresses,
more companies will consider advancing into India.

(22) DPJ Lower House member Maeda found to have received 11 million
yen from pyramid sales companies as lecture fees and donations

ASAHI (Page 1) (Full)
October 13, 2008

It has been learned that the two fund-raising bodies of Yukichi
Maeda, a House of Representatives member belonging to the main
opposition Democratic Party of Japan (DPJ), received at least 11.56
million yen as lecture fees and donations from many companies
involved in pyramid-style sales from 2004 through 2007. Maeda posed
questions supporting the multilevel marketing system at Diet
sessions over the four years. Therefore, his cozy ties with this
industry have now emerged.

According to the political funds reports submitted by Maeda's two
fund-raising bodies, of the 11.56 million yen, 9.96 million yen was
lecture fees. The pyramid companies paid Maeda 100,000 yen to 1.3
million yen per lecture, with most around 300,000 yen. Corporate
donations to individual politicians are prohibited. Some experts
have pointed out that paying a lecture fee is a different type of
corporate contribution.

A pyramid sales scheme is called a network business, under which
purchasers become salespersons to expand markets. Problems have
arisen in that end-salespersons carry excessive inventories.

Maeda, who serves as chief of the secretariat of a parliamentary
group backing pyramid schemes, has taken the floor as a questioner
at the subcommittee of the Lower House Budget Committee for the past
four years.

Maeda once said at a subcommittee session: "Some unscrupulous firms
in the pyramid scheme have caused many honest companies trouble." He
expounded his theory that corporate members should be included in
the government's Industrial Structural Council's sub-panel. In a
subcommittee session in March 2006, he stated: "A law to protect and
nurture the (multilevel marketing system) is necessary."

TOKYO 00002859 006 OF 006

According to the Network Business Political Union (NPU), Maeda
always conferred with senior NPU officials before posing questions.
NPU Deputy Director Kotaro Uchiyama said: "I asked him to do
something to dispel prejudice against pyramid schemes."

In 2005, a year later, Maeda said at the subcommittee, the NPU
contributed 500,000 yen to Maeda's fund-rising body called the
"Future Policy Study Group." Another pyramid firm donated to the
Aichi No. 6 chapter a total of 1.1 million yen in 2006 and 2007.


As lecture fees, Maeda received 2.9 million yen from three companies
in 2004, 2.6 million yen from five firms in 2005, 1.7 2.76 million
yen from seven companies in 2007. Of the lecture fees, about 45
PERCENT went to the Future Policy Study Group and about 55 PERCENT
went to the Aichi No. 6 chapter.

Dream of Total Communication Company (Minato Ward, Tokyo), which
paid Maeda 1.5 million yen in lecture fees over four years, was
ordered by the Ministry of Economy, Trade and Industry in November
2007 to suspend business for three months due to its misleading
advertisements.

Although the Asahi Shimbun sent a letter to and called on Maeda's
office on Oct. 8 -12 to respond to interview requests, it has not
yet received any reply.

Maeda, a native of Aichi Prefecture, is now serving his third term
in the Lower House. He also serves as chief of the secretariat of
the party's policy group "Isshin-kai," which supports DPJ President
Ichiro Ozawa. He is one of the official candidates the DPJ announced
on Sept. 12 as its first picks.

SCHIEFFER

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